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Amendments on Transfer of “shares” to debtees of multi-stakeholder companies - Tailor-made laws in the Western Balkans and Turkey

Amendments on Transfer of “shares” to debtees of multi-stakeholder companies

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Introduction

Law No. 7194 makes amendments to various laws including Capital Market Law No. 3332, Corporate Tax Law No. 5422, Tax Procedure Law No. 213 and Banking Law No. 3182.

Specifically, Article 41 of the law stipulates that all instruments that are considered to be publicly held owing to the number of shareholders and that were sold as shares by joint stock companies before 31 December 2014 will be considered shares under the Turkish Commercial Code, regardless of the dematerialisation conditions listed in the Capital Market Law.

Country
Turkey
Type of Law
Capturing a market, an industry or public resources

Description of the law

Law No. 7194 makes amendments to various laws including Capital Market Law No. 3332, Corporate Tax Law No. 5422, Tax Procedure Law No. 213 and Banking Law No. 3182.

Specifically, Article 41 of the law stipulates that all instruments that are considered to be publicly held owing to the number of shareholders and that were sold as shares by joint stock companies before 31 December 2014 will be considered shares under the Turkish Commercial Code, regardless of the dematerialisation conditions listed in the Capital Market Law. Payments to shareholders will be considered to be made in return for shares and the partnership relationship will be accepted as established. The dematerialisation of shares will not prejudice any partnership rights, nor can it be claimed that no partnership relationship has been established.

Crucially, according to the second part of the article governing the partnership relationships established under the framework of the first part, all actions commenced against such a partnership based on unjust enrichment, tortious act, contradiction to pre-contractual negotiations or contradiction to the contract can be concluded as undecidable.

As a result, the amendment has been criticised as an opportunity for multi-shareholder companies, because the second part of the article permits the discontinuance of action in many lawsuits against the allocation of shares to debtees of the companies.

One specific example is Kombassan Holding, which changed its name to Bera Holding. According to criticisms, the amendment in question is tailor-made for Bera Holding. Under the law, the company is saved by Parliament. While the law manipulates the share market, it also constrains shareholder rights to demand justice.

Acun Papakçı, the legal representative of the Kombassan victims, has suggested that investors are forcibly made shareholders of the companies and prevented from claiming that they are not shareholders. Bera Holding has agreed that roughly 3,000 cases would be concluded thanks to the amendment and that the company would save in the region of TL140 million.

The law in general was criticised for its omnibus structure, which brings together regulations on various subjects and amendments to different laws and therefore is extensive in content.

For further details of the legislative proposal, its justification and the counter-statement, see the committee report.