Introduction
Capital increases in line with the Presidential Decree No. 7887, dated November 24, 2023, which mandates higher minimum capital amounts for joint stock and limited liability companies in Türkiye are expected to strengthen the financial stability and equity capital structure of companies operating in the country.
Our article provides a comprehensive guide on the steps and documents required for capital increases in limited liability companies. From initial decisions on capitalization to the final stages of registration and public announcement, this guide will ensure a smooth and efficient transition for companies seeking to comply with the latest legal standards.
- Decisions Prior to Application
- Capital Determination
Although companies established before the Presidential Decree 7887 dated November 24, 2023 are not mandated to comply with the new minimum capital requirements set by this decree, it is advisable to do so in order to strengthen the equity structure.
According to this regulation, as of January 1, 2024, the new minimum capital amounts for limited liability companies will be as follows:
|
Minimum Capital Amount According to the Previous Legislation |
Minimum Capital Amount According to the New Legislation |
|
TRY 10,000 |
TRY 50,000 |
- Procedure for Application
- MERSIS Application and MERSIS Request Number
MERSIS is the central database for companies in Türkiye. Every trade registry application must be made via MERSIS with the company's account and must obtain a request number to physically present the documents to the Chamber of Commerce.
- Documentation Requirements
3.1. Power of Attorney for General Assembly: An apostilled and notarized Power of Attorney (PoA) must be issued for the upcoming General Assembly for the representation of shareholders who will not be present in the General Assembly meetings.
In accordance with Article 21 of the Regulation on the Procedures and Principles of General Assembly Meetings of Joint Stock Companies and Ministry Representatives' Attendance (Official Gazette No. 28481), the PoA must include the company's title, the date of the relevant General Assembly meeting, the full name of the proxy, the number of shares held by the shareholder, and the full name or title and signature of the shareholder. Any PoA lacking this information shall be deemed invalid.
A PoA shall remain valid for the specified General Assembly meeting and for any subsequent meetings that are legally considered continuations of the original meeting, unless a new proxy is appointed. Meetings that are reconvened due to the lack of quorum, at the request of a minority, by a decision of the General Assembly, or postponed for any reason, provided there is no change in the agenda, shall be regarded as continuations of the original meeting.
3.2. Amendment to the Articles of Association: The provisions concerning capital structure in the Articles of Association must be amended to reflect the new capital requirements.
3.3. General Assembly Resolution and the List of Attendees: A resolution must be prepared to formally authorize the capital increase.
3.4. Petition for Submission of the Documents regarding Capital Increase to the Istanbul Chamber of Commerce: The wording of the petition is standard and should be filled and signed by the shareholder or their representative.
3.5. Financial Documents:
3.5.1. Certified/Independent Accountant Financial Advisor Report and Financial Advisor Activity Certificate: If the capital increase is made solely from internal sources or through capital commitment, or a combination of both, the report should indicate whether all the capital has been paid or remains unpaid, as well as provide the determination of the company's equity The report should state that, according to Article 376 of Turkish Commercial Code, the equity is protected in accordance with the last balance sheet. The equity determination should be written in figures and include a calculation table, and the balance sheet date should not be older than 6 months. Additionally, the report must detail the amount covered by internal sources actually existing within the company (Trade Registry Regulation Article 94/1-c). If the capital increase is covered by partners' receivables, the financial advisor's report must clearly state that the amount listed in the partners' receivables account stems from cash borrowing. If the partners' receivables do not arise from cash borrowing, the original or a certified copy of the expert's report along with the court's appointment letter for the expert should be presented, as required by Trade Registry Regulation Article 94/1-d.
3.5.2. Competition Authority Fee: The Competition Authority's share, amounting to four ten-thousandths of the capital, must be deposited into the Chamber's treasury (Trade Registry Regulation Article 94/1-g).
- Registration
- Registration and Public Announcement
4.1. Trade Registration and Announcement: The capital increase must be registered and announced in the Turkish Trade Registry Gazette within 30 days following the General Assembly.
In accordance with the "Trade Registry Fees, Trade Gazette Announcement Fees, and Service Fees for 2024" published by the Istanbul Chamber of Commerce, the registration fee for a capital increase for limited companies is estimated at TRY 2,000. Additionally, there is a charge of TRY 2.95 per word for the announcement in the Registry Gazette.
4.2. Capital Payment: The company capital committed in cash may be paid within twenty-four months following the registration of the capital increase. If all or part of the company capital is paid, a bank letter confirming the payment must be submitted, as required by Article 94/1-ç of the Trade Registry Regulation.
Conclusion
Navigating the capital increase process requires meticulous attention to detail and adherence to a series of complex procedures. From determining capital requirements and completing applications to preparing documentation and ensuring timely public registration, each step involves specific legal intricacies. Successfully managing these complexities fortifies the company's legal standing and positions it for sustainable growth and market confidence in Türkiye's evolving business landscape. Given the detailed and challenging nature of these processes, seeking professional legal support is crucial for an efficient and smooth capital increase.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.