With the Law on Prevention of Distribution and Financing of Weapons of Mass Destruction numbered 7262, published in the Official Gazette dated 31 December 2020, numbered 31351 (“Law”), bearer shares and bearer shareholders in joint stock companies are obliged to be notified and recorded to the Central Registry Agency in Turkey - Merkezi Kayıt Kuruluşu A.Ş. (“MKK”). This Law intends to enhance the transparency by recordkeeping the information and transfer process of bearer shares and bearer shareholders at MKK and so, increase the trust in Turkish business. As per the Law, the principles that are explained below will enter into force on 1 April 2021.
With this Law, the following principles are adopted to Turkish Commercial Code numbered 6102 in relation to the bearer shares held in joint stock companies incorporated in Turkey.
- The Law requires the joint stock companies to notify MKK before the issue or transfer of bearer share certificates. In this regard, information regarding the bearer shares and bearer share certificates will be recorded to MKK before distributing them to the shareholders.
- Transfer of bearer share certificates through transfer of the physical possession of such share certificates will become valid and binding once the acquirer notifies this transfer to MKK. Otherwise, the bearer shareholder will not be entitled to use its rights attached to these shares until the notification is made to MKK. For any rights to be claimed against the company and third parties in respect of these shares, the date of notification to MKK will be considered.
- The procedure and principles for notification to MKK will be determined via a communiqué to be issued by the Ministry of Commerce.
- The Law imposes administrative fines on the shareholders and
the directors of joint stock companies,
- who do not notify MKK of the issuance of bearer share certificates and such will be subject to an administrative fine of 20,000 TRY;
- who do not notify MKK of the transfer of the bearer share certificates and such will be subject to an administrative fine of 5,000 TRY.
- The Law requires the bearer shareholders to apply to the joint stock company with their share certificates until 31 December 2021. Following this, within 5 business days, the board of directors of the joint stock company will notify the bearer shares and share certificates to MKK. The shareholders, who fail to apply to the joint stock company within the given time, will not be able to exercise any of their rights attached to these shares.
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.