TÜRKIYE Trends and Developments Contributed by: Selim Keki, Çisem Altundemir and Erkin Tuzcular, Balcıoğlu Selçuk Eymirlioğlu Ardıyok Keki Attorney Partnership
• No quorum shall be required for general assembly meetings convened to increase the capital to the amounts specified above. Resolutions shall be taken by a majority of the votes present at the meeting, and no privileg - es may be exercised against such resolutions. Amendments to the Rules on Technical Insolvency The consequences of a deterioration of the financial status of joint stock companies and limited liability companies are regulated in the section titled “Responsibilities and Authorities of Board of Directors” of the TCC, and in a specific communiqué regulating the implementation of the corresponding provisions of the TCC (the “Communiqué” ). In this context, a company’s assets minus its liabilities on the one hand are measured against its share capital plus its legal reserves on the other. Any shortfall of the former position against the latter will be deemed a depletion (also called a loss) of the share capital. The legal implications of such depletion and the relevant responsibilities of the board of directors (the “board” ) vary depending on what percent - age of the share capital was lost. If half of the share capital is depleted, the board must immediately convene the general assem - bly. At such general assembly meeting, the board must provide a detailed explanation of the financial situation of the company, reasons for the loss and the measures which may be taken for the reduction of the loss and for the recovery. Thereby, a process is initiated which alerts the shareholders to the danger and enables them to take the actions necessary to improve the finan - cial position of the company.
If two thirds of the share capital is lost, the com - pany will be deemed in technical insolvency and the board must immediately convene the general assembly. In this case, the general assembly can decide on certain measures to fix the technical insolvency, by: • decreasing the share capital, in order to bring it down so that the ratio of the lost share capital is improved to an acceptable level; • increasing the share capital, so as to increase the assets position of the company, again with the same objective; • making a capital replenishment, whereby the lost share capital is replenished without any new shares being issued (leading to the same outcome); or • a combination of the above-mentioned meas - ures. If the general assembly does not resolve to enact any measure and omits to fix the technical insol - vency, the company will enter into a dissolution procedure, which will most likely trigger an insol - vency. If there are strong indications that the company is heavily indebted, the board must prepare two sets of “special purpose interim balance sheets” : one set on a going-concern basis, and one set based on the predicted disposal values of the assets. If these interim balance sheets show that the assets of the company do not adequately cover its debts to its creditors, the board must immediately notify the competent court and file for bankruptcy of the company. This may be avoided, if creditors of the company represent - ing a sufficient number of debts agree to subor - dinate their receivables to the receivables of the other creditors.
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