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.
- Type of Law
- Capturing a market, an industry or public resources
Description of the law
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.
Full Law Name
Type of law
Act of Parliament, amendment
Scope of application
Substantive: transfer of shares to debtees of multi-stakeholder companies
Personal: debtees of multi-stakeholder companies
Temporal: until abrogated
Time of adoption and entering to force
Date of adoption: 5 December 2019
Date of entry into force: 7 December 2019
Who drafted it
Justice and Development Party
Who submitted it to Parliament or to another collective body
Justice and Development Party
Relevant developments in the process of adoption that show signs it’s tailor-made
An omnibus bill Law No. 7194 with 45 articles, which amended the Digital Services Tax Law, various other laws and Legislative Decree No. 375, was submitted to committee on 30 October 2019. Following discussions in Parliament, the bill was approved by the Presidency, now with 51 articles, on 5 December 2019 (see page 23).
The bill was heavily criticised in public, not only because it was another omnibus bill making changes to various laws at the same time, but also because it was tailor-made for a specific multi-shareholder company, namely Bera Holding (formerly Kombassan Holding), and would only create new victims rather than regulating the economy.
Kombassan Holding was established in the 1980s and changed its name to Bera Holding as part of an image renewal campaign. Ali Rıza Alaboyun, who had served as minister for energy during the 63rd government led by the Justice and Development Party, became chairman of Bera Holding (see here).
Specifically, Article 41 was heavily criticised by the opposition (People’s Democratic Party) on the grounds that the amendment seeks to eliminate thousands of lawsuits against Bera Holding, whose shares were publicly traded and sold to tens of thousands of people since the 1990s. According to the opposition, the arrangement would prevent the collapse of Bera Holding, İttifak Holding and Umpaş Holding, the so-called green capital companies that had been set up with the investments of small investors in the 1990s, and stop victimised citizens from filing lawsuits and demanding their rights before the law. In this respect, the government was criticised for having undermined its legislative quality through the application of a tailor-made law for the benefit of certain holders of capital.
The Republican People’s Party has also raised criticisms against the amendment, arguing that it would prevent the opening of cases against Bera Holding (formerly Kombassan Holding) and save the company through the new partnership formula, resulting in what they described as “robbery by legislation”.
Who adopted it
Initiatives to challenge it and their outcomes
Following its submission to Parliament, the omnibus bill was discussed in the Planning and Budget Committee on 30 and 31 October and 1 November 2019. After deliberations, the bill was submitted to the General Assembly on 6 November 2019. During deliberations, the opposition drew attention to the government’s ineffective budgeting policies and stated that the law was an economic crisis regulation that was far from bringing long-term solutions (see pages 36-38). The bill was deemed to be against the Constitution (see page 40). The opposition argued that Article 41, the provisional clause to the Capital Market Law, favoured companies that had been set up with investments collected through illegal methods from Turkish citizens living abroad in the 1990s, and would victimise investors (see page 57, here and here for further details of the opposition’s arguments).
Following the bill’s approval in committee, legal representatives of the Kombassan victims sent a letter to MPs in the General Assembly calling for the bill’s rejection.
While the victims and opposition MPs voiced their criticisms of the law, Bera Holding Chairman Alaboyun called on the victims to be patient, arguing that the company would compensate them for their losses in the long term once there was an increase in investment.
Against all criticism, the bill was approved in the General Assembly on 5 December 2019. Subsequently, the Republican People’s Party applied to the Constitutional Court to overturn the bill. However, the court rejected the request.
Direct beneficiaries and related networks
The direct victims include 3,000 shareholders who filed suit against Bera Holding (formerly Kombassan Holding) with a claim for compensation as well as other investors living abroad who had invested in Jetpa, Yimpaş or Endüstri Holding in the past.
In total, there are 70,000 victims, 95 per cent of whom are Turks living abroad. Most of them live in Germany, Belgium or the Netherlands (see here). Under Article 41 of the law, these shareholders will not be able to make profits from their shares in the companies as a result of the changed partnership structure, which eliminates the possibility that Kombassan Holding will repay money collected from investors.
Kombassan Holding was one of the corporations that claimed to offer a “profit share partnership”. Using this model, the company collected money from almost 70,000 people, especially Turks living abroad. However, the company collapsed and was not able to pay back any “profits”. Tens of thousands of people who were defrauded by the company have suffered trauma, while some have even committed suicide and their families have been destroyed. Before the law’s adoption, the Court of Cassation upheld previous court decisions that ordered Kombassan to return all money to the profit owners (see here for different court decisions). Despite the court decisions, the law’s adoption diminished people’s trust in law and justice.
Under the new law, the “profit share partners” of holdings such as Kombassan are considered shareholders of the companies, resulting in the dismissal of their lawsuits for debt collection (see here). Therefore, the individuals who filed lawsuits now assert that they have been victimised by the law.
Impact on rule of law
Seydi Koparan, a lawyer from the Cologne Bar Association, has argued that the proposal is a serious breach of the law. He has further noted that the aim of the law is to protect one company and enacting a law for a particular company or person is against the principles of the rule of law. Legal principles are being trampled by the law (see here). According to the universal rules of law, no personal legal arrangements can be made (see here).
CHP MP Utku Cakirozer has argued that the law hinders citizens’ right to legal remedies and that, contrary to the functioning of the General Assembly, only Bera Holding (formerly Kombassan Holding) Chairman Ali Rıza Alaboyun was invited to take part in deliberations and share his opinion, whereas the victims were not invited and their voices were simply ignored (see also here). Lawyer Mustafa Elagöz, the President of the Eskisehir Bar Association, has described the situation as legally awkward.
Elagöz has further claimed that while grievances have been resolved with final judicial decisions by the Court of Cassation and other courts, the proposal ignores the judiciary and results in a personalised law. Therefore, the situation clearly hinders citizens’ trust in the law and contradicts the rule of law (see also here).
Seval Eyyüpoğlu, one of the victims’ lawyers, has underscored that the new law is against property rights protected by the Constitution. She argues that the shareholder principle introduced by the new law does not provide the same rights and powers provided by property rights. The only condition for the limitation of property rights is the public interest. Eyyüpoğlu adds, however, that the public interest cannot be mentioned in this case, where a law has been adopted solely for the benefit of a few companies (see here).
Is there any corruption case that is linked to the tailor-made law?