TÜRKIYE Trends and Developments Contributed by: Selim Keki, Çisem Altundemir and Erkin Tuzcular, Balcıoğlu Selçuk Eymirlioğlu Ardıyok Keki Attorney Partnership
Challenges in E-Signature and Financial Seal Acquisition for Foreign Company Representatives The transition to electronic statutory financial books requires companies to obtain a financial seal, which is executed using a secure electronic signature (e-signature) by the company repre - sentative. A secure e-signature is the only legally recognised form of electronic signature under Turkish law with the same effect as a wet-ink signature. These e-signatures can only be issued to natural persons through licensed service pro - viders, following a KYC process. As the financial seal system is fairly new, further regulations are expected, and the details of how the implemen - tation will progress remain unclear. Term of Office of the Chairman and Vice Chairman of the Board of Directors Aligned With the Board’s Term of Office In 2024, an amendment to Article 366 (1) of the Turkish Commercial Code (TCC) introduced a significant change regarding the term of office for the chairman and vice chairman of the board of directors. Previously, companies were required to elect the chairman and vice chairman from among the board members on an annual basis, creating a recurring administrative obligation regardless of the board’s overall term. With the new regulation, this annual re-election require - ment has been abolished. Now, the chairman and vice chairman may be appointed for a term of up to three years, aligning their term of office with the maximum term permitted for members of the board of directors. Change in Minimum Share Capital Requirements The Presidential Decree on the Increase of the Required Minimum Capital Amount for Joint Stock and Limited Liability Companies was pub -
lished in the Official Gazette on 25 November 2023 and came into effect as of 2024. With this Decree: • the minimum share capital of limited liability companies was increased from TRY10,000 to TRY50,000; • the minimum share capital of joint stock companies was increased from TRY50,000 to TRY250,000; and • the minimum share capital of non-public joint stock companies that have adopted the registered capital system was increased from TRY100,000 to TRY500,000. Whilst the increase rate looks drastic, the respective minimum amounts are still low when compared to the real needs of businesses. The earlier minimum share capital amounts had remained unchanged since back in 2012 and had been deteriorating in real value. With the addition of a temporary article to the Turkish Commercial Code, which entered into force on 29 May 2024, the following apply. • Joint stock companies and limited liabil - ity companies whose capital is below the minimum capital requirement must increase their capital to the amounts specified above by 31 December 2026, otherwise they will be deemed dissolved. The Ministry of Trade may extend this period by one year maximum, twice. • Non-public joint stock companies that have adopted the registered capital system with a minimum issued capital of TRY250,000 shall be deemed to have withdrawn from this system if they fail to increase their initial capital and issued capital to TRY500,000 by 31 December 2026.
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