Share transfer in limited companies is regulated by Article 573 of the Turkish Commercial Code (TTK) and its subsequent provisions. These transactions are subject to procedures that must be carried out carefully, especially in companies where family members are among the partners. In practice, various problems are encountered as a result of skipping these procedures.
Share Transfer in Limited Companies within the Framework of Turkish Commercial Code
Compared to joint stock companies, share transfer in limited companies is limited by stricter rules under the Turkish Commercial Code. While shares in joint stock companies can generally be transferred freely, except for legal and voluntary restrictions, certain conditions must be met in order for share transfer to occur in limited companies.
Form Requirement for Share Transfer in Limited Companies
The first and most important step in share transfer transactions in limited companies is to make a written transfer agreement between the parties. This contract must also be approved by a notary. Share transfer agreements made without notary approval are deemed invalid in accordance with the Turkish Commercial Code. This form requirement ensures that the transfer process becomes official and the rights of the parties are protected.
These details constitute the legal framework for share transfer transactions in limited companies, and company partners must manage these processes carefully. Any errors or omissions may result in the transaction being deemed invalid and possible legal issues.
Content and Legal Processes of Share Transfer Agreements in Limited Companies
Share transfer agreements in limited companies should be drawn up with detailed and complete content. Important items such as the identity information of the parties, additional payment obligations, if any, ancillary acts, non-competition conditions, and pre-emption rights should be clearly stated in the contract. In addition, arrangements regarding the offer to be addressed between the parties, redemption rights and contractual penalties should also be included in the contract. If these details are missing, it will not be approved at the registration stage in the Trade Registry, and even if approved, the transaction may be deemed invalid due to deficiencies detected later.
General Assembly Approval and Registration in the Trade Registry
Share transfer transactions in limited companies generally require general assembly approval. There is no specific decision or meeting quorum specified for this approval in the Turkish Commercial Code; Therefore, the transaction can be carried out with the approval of the majority of the members attending the meeting. In some cases, it may be possible to remove the general assembly approval requirement in the company's articles of association.
If the general assembly's approval is not given in writing within three months, this approval is deemed to have been given. After approval, the share transfer must be recorded in the share ledger and registered in the trade registry. This registration is explanatory, not constitutive.
Registered Shares and Transfer Transactions
For registered shares, conditions such as notary approval must be met in accordance with Article 595 of the Turkish Commercial Code. Since there is no transfer exemption for registered shares in limited companies, share transfer does not occur solely by delivering the share certificate. This may complicate the circulation and transfer of shares.
For these reasons, it is recommended to work with a lawyer who is an expert in his field in order to carry out share transfer processes in limited companies meticulously in accordance with legal requirements and to prevent potential legal problems.
Exceptions to the Requirement for General Assembly Approval in Share Transfer and Non-Approval Situation
Exceptions to the General Assembly Approval Requirement:
According to the Turkish Commercial Code, there are special situations in which general assembly approval is not required for share transfer in limited companies. These exceptions are:
1. Transfer by Inheritance: If the capital share passes to an heir, there is no need for general assembly approval.
2. Transfer by Forced Execution: If the share transfer takes place as a result of a process executed by court decision, general assembly approval is not required for this transfer.
3. Property Regime Provisions Between Spouses: General assembly approval is not required for share transfers between spouses based on the property regime provisions applied during the marriage process.
Non-Approval of Share Transfer by the General Assembly:
The general assembly has the authority to approve the share transfer, but is not obliged to give this approval. If the general assembly does not approve the share transfer, the transfer transaction is deemed invalid. However, in doctrine and legal practices, it is not considered appropriate for the general assembly to reject the share transfer arbitrarily or contrary to the rule of honesty and the interests of the company.
Additional Conditions of the General Assembly:
Within the framework of the additional and ancillary performance obligations specified in the company's articles of association, if the general assembly thinks that the transferee has insufficient solvency, it may request a guarantee from the transferee. If the guarantee is not provided, the general assembly may not exercise its right to approve the share transfer.
These processes and conditions are critical for the execution of share transfer transactions in accordance with internal dynamics and legislation. Since share transfers can have major impacts, especially on internal company relations and financial structure, it is recommended that such transactions be carefully planned and executed.