Conversion of a Limited Company into a Joint Stock Company

General Information

Pursuant to subparagraph (a) of the first paragraph of Article 181 of the Turkish Commercial Code No. 6102, a limited company may be converted into a joint stock company. In such conversions, the incorporation provisions applicable to the newly established joint stock company apply. However, the provisions on the minimum number of shareholders and on contributions in kind in capital companies do not apply. In a conversion, the shares and rights of the shareholders in the company are protected. In return for privileged shares, shares of the same value are granted or appropriate compensation is paid. In return for founders' shares (usufruct certificates), rights of the same value are granted, or the real value is paid as of the date on which the conversion plan is drawn up.

The procedures relating to the change of type are set out below:

1- Change of type plan (Art. 185)

A written conversion plan is prepared by the manager or managers of the company.

The change of type plan must include:

• The trade name and head office of the company before and after the change of type, and information on the new type,
• It must contain the articles of association of the joint stock company,
• and statements on the number, type and amount of the shares that the partners will hold in the joint stock company after the change of type.

2- Change of type report (Art. 186)

The manager or managers of the company prepare a written report on the conversion.

In the report, the following matters are explained from legal and economic perspectives, with their justifications:

• On the purpose and consequences of the conversion into a joint stock company,
• On the fact that the incorporation provisions applicable to joint stock companies have been fulfilled,
• On the articles of association of the joint stock company,
• The exchange ratio concerning the shares that the shareholders will hold in the joint stock company
• On any additional payments and other personal performance obligations and personal liabilities of the partners arising from the conversion into a joint stock company, if any,
• The obligations arising for the partners from the change of type.

(By decision of all partners, small and medium-sized companies may waive the preparation of the change of type report.)

3- The following documents are made available for the partners' review thirty days before the general assembly takes its decision: (Art. 188)

• The change of type plan,
• The change of type report,
• The financial statements of the last three years,
• An interim balance sheet, if more than six months have passed between the balance sheet date and the date on which the change of type report was prepared, or if significant changes have occurred in the company's assets since the date of the last balance sheet.

copies of the said documents are provided free of charge to partners who so request. The company informs the partners that they have the right to examine them in an appropriate manner.

4-Approval of the general assembly and quorums (Art. 189)

The manager or managers of the company submit the conversion plan to the general assembly for approval thirty days after the above procedures have been completed and the shareholders have been granted the right of inspection. The conversion resolution is adopted with the following quorums:

In limited companies, the conversion plan is adopted by the decision of three-fourths of the partners, provided that they hold at least three-fourths of the capital.

5- Registration (Art. 189/2)

The manager or managers of the company shall register the conversion and the articles of association of the new company. The conversion acquires legal validity upon registration. The conversion decision is announced in the Turkish Trade Registry Gazette.

DOCUMENTS TO BE SUBMITTED TO THE REGISTRY DIRECTORATE (TSY-130)

1. Conversion Plan (TTK-185) (1 original)
2. Notarized General Assembly Resolution on the Conversion of a Limited Company approving the conversion plan (TTK-189) (1 original, 1 photocopy).

   (The minutes must state that, pursuant to Article 188 of the TTK, the conversion plan, the conversion report and the financial statements of the last three years (together with an interim balance sheet, if any) were made available for examination by the partners at the company headquarters thirty days earlier and that the right of examination was exercised, that the conversion plan was approved, and that it was decided to convert the Company into a Joint Stock Company.)

   • In single-shareholder companies, the shareholder present at the meeting or the shareholder's representative must also sign the meeting minutes. (Regulation Article 26).
   • In companies with a single shareholder, (Amended phrase: Official Gazette 9/10/2020-31269) it is sufficient to elect a Meeting Chair; there is no need to elect a minute secretary or a vote-collecting officer. If a minute secretary and a vote-collecting officer have not been elected, their duties shall be performed by the meeting chair. (Regulation Article 14)
3. List of Attendees (1 original).

   In single-shareholder companies, (Amended wording: Official Gazette 9/10/2020-31269) it is not mandatory to prepare the list of persons entitled to attend the general assembly meeting. (Regulation Article 14)

4. Notarized power of attorney, if attending by proxy.

   In order for company partners to be represented at the meeting through their proxies, the power of attorney must be issued in notarized form (Repealed wording: Official Gazette 9/10/2020-31269) (…). (Regulation Article 18/7)

5. For general assemblies held upon invitation, the Agenda Resolution (1 photocopy), a photocopy of the trade registry gazette in which the agenda was published, and photocopies of the registered mail with return receipt
6. Conversion Report prepared by the manager or managers of the company (TTK-186) (1 original).

   However, small and medium-sized companies may omit the change of type report if all partners approve, on the basis of an SME Report prepared by a certified public accountant (YMM) or an independent certified public accountant (SMMM).

7. The latest balance sheet approved by the auditor in companies subject to audit, or by the company manager(s) in other companies, together with an interim balance sheet where necessary and the stamp duty receipt (1 original)
8. Newly drawn up Joint Stock Company articles of association (1 original, 1 photocopy).

   (Approval of the articles of association by a notary or by our Trade Registry Directorate is not mandatory, but it can be approved upon request.)

9. A YMM or SMMM report (1 original) determining whether the capital of the company changing its type has been paid, whether it remains uncovered, the company's net assets, and, if the company has assets registered in the land, ship, intellectual property or similar registries, the fair values of those assets, together with the consultant's activity certificate; or, if the company changing its type is subject to audit, the auditor's report on these determinations together with the auditor's certificate

   (If there are no assets or rights required to be recorded in the said special registries, this must be declared.)

10. Declaration containing the list of the assets and rights of the converting company that are registered in the land registry, ship registry, intellectual property registry and similar registries, the registries in which they are registered, and information on the entries relating to such assets and rights in the relevant registries (1 original)
11. If the converting company is subject to the permission or favorable opinion of the Ministry or other official institutions, this permission or letter of favorable opinion (1 original)
12. Specimen signatures/signature declarations of the members of the board of directors authorised to represent the company

    (If no signature record is held in the databases of public institutions and organisations or the record cannot be obtained, the signatures of the persons concerned are submitted to the directorate either by having them physically notarised or by making a written declaration at any Trade Registry Directorate.) (1 original)

    The signature specimens of persons added as authorised signatories with the new identity card can be obtained electronically from the General Directorate of Civil Registration and Nationality (NVİ) and recorded in the MERSİS database. A physical signature declaration will not be requested for such authorised persons. (Ministry Circular No. 72558467 dated 4/3/2022)

13. Written statements by board members who are not shareholders and who also have no power of representation, declaring that they accept this duty. (TSY Article 69 / h)
14. If there is a capital increase, the receipt showing that four ten-thousandths of the increased capital has been paid in accordance with Law No. 4054 on the Protection of Competition.

    (It will be paid at the cashier's office of the Chamber to which our Directorate is affiliated or into the Chamber's bank account.)

15. If there is a cash capital increase, a bank letter and receipts showing that ¼ of it has been blocked
16. New Registration Request Petition

Notes

• NOTE-1: At least 25% (1/4) of the capital of a limited company converting into a joint stock company must have been paid.

• NOTE-2: In a change of type, in order to ensure that the assets and rights included in the property of the converting company and registered in the land registry, ship registry, intellectual property registry and similar registries are registered promptly in the name of the new type, the directorate notifies the relevant registries immediately, simultaneously with the registration of the new type.

• NOTE-3: If, owing to the change of type, the company has a branch or branches registered with our directorate where the company headquarters is located or with another Trade Registry Directorate, a signed Branch Information Declaration must be submitted with the documents; if there are no branches, a signed declaration stating that there are none must be submitted.

NOTE:

You must submit an electronic application at https://mersis.ticaret.gov.tr/.

For Information and Support

Phone:

0 (378) 227 10 46

Extension: 125 E-mail:

info@bartintso.org.tr