Usufruct rights are defined as rights of an individual to use and enjoy the property of another, provided its substance is neither impaired nor altered. Normally, the person who holds the ownership of a property has the right to use and benefit from such property. Usufruct rights are regulated under the Turkish Civil Code Law in articles 794 et seq.
Can usufruct rights established on shares of joint stock companies (Hereafter referred to as "JSC")?
According to article 794 of the Civil Code, usufruct rights can be established on movables or immovable goods, rights, or an ownership. Accordingly, usufruct rights can be established on shares of a JSC .
How Can Usufruct Rights Be Established on Shares of a JSC?
Usufruct rights can be established on various ways according to the type of the share. Shares can be printed and not printed shares. In case a share certificate has not been printed, establishing a usufruct right may become more complicated since several issues need to be also considered in such shares such as contribution of capital obligation. However, in this memorandum, we will focus on shares, which are printed.
Printed share certificates can be either bearer share certificates or registered share certificates. Usufruct rights on printed share certificates can be established by simply delivering the share certificate to the transferee for bearer share certificates, endorsing and delivering the share certificate to the transferee for registered share certificates. However, since transfer of share certificates are also done by delivering (plus endorsing for registered share certificates) the share certificate, it shall be better if parties sign a written agreement stating that the share certificate has been delivered to transferee to establish a usufruct right. Otherwise, the transferee may argue that the share was transferred to him instead of establishing a usufruct right. In such agreement parties may determine other details, such as period etc.
What are the Rights of Holder of Usufruct Rights on a Share?
Since a usufruct right gives the right to use and get benefit, the holder of a usufruct right will have the right to get profit distribution of company and other financial rights if there are any (Such as interest rights, periodic payments of Company etc.), attending to general assembly and vote, go to court to terminate a general assembly if there are valid grounds.
What Does the Rights of Holder of Usufruct Rights on a Share Cease?
Usufruct rights on share certificates ceases when the share certificate has been lost and a decision of court terminating the lost share certificate has been obtained. Liquidation of company, end of period (when determined) of usufruct right, waiver of owner of usufruct right also ceases the right of usufruct.
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.
