New Notification Requirements Regarding Issuance and Transfer of Bearer Shares

With the publication of the Law No. 31351 on the Prevention of the Financing of the Propagation of Weapons of Mass Destruction (“Law”) on 31st of December 2020, the obligation to notify the Central Securities Depository has been imposed in transactions related to bearer bills share certificates.

Along with the changes made in the Law, there has been no change regarding the printing of bearer share certificates. For this reason, according to the provision in the second paragraph of Article 486 of the Turkish Commercial Code numbered 6102; for bearer shares, the obligation of the Board of Managers to print and distribute the share certificates to the shareholders within three months from the date of the payment of the total price continues and also the decision of the Board of Directors regarding the printing of bearer share certificates will be registered and announced. However, with the publication of this Law, an obligation has been brought to the agenda by the Board of Managers to notify bearer shareholders and their share certificates to the  Central Securities Depository before the shares are distributed to the shareholders.

Thus, with the aforementioned Law, the legal form of transfer valid for bearer shares that has been in force for years has been changed. As is known, for the transfer of bearer shares, it was sufficient to pass the ownership of the bearer shares, in other words, to deliver the share certificate to the transferee. However, with the published of the Law, the transfer has become possible for the company and third parties only by notifying the Central Securities Depository by the transferee of the share certificate. Accordingly, with the delivery of the shares; the transfer of share certificates will be implemented by the transferee by making a notification to the Central Securities Depository. If the notification required for the transfer is not fulfilled, those who have bearer share certificates  will not be able to exercise their rights related to the share arising from this Law until the necessary notification is made.

In case of failure to comply with the obligations specified in the Law in question, an administrative fine is also foreseen. Before the shares are distributed to the shareholders; an administrative fine of 20 thousand TL will be applied to bearer shareholders and those who do not inform the Central Securities Depository about their shares. An administrative fine of 5 thousand TL will be applied to those who do not notify the Central Securities Depository despite having taken over the bearer share.

These regulations concern not only those who will transfer bearer shares as of the date of publication of the Law, but also those who already hold bearer shares. Persons who currently hold bearer shares must apply to the company that they are a shareholder  of until December 31, 2021. The Board of Directors of the Company is required to inform the Central Securities Depository of the information regarding bearer shareholders and shares. If the said notification is not made, an administrative fine of 20 thousand TL will be applied to the shareholder and the members of the Board of Managers.

The amendments made in the Law regarding the Turkish Commercial Code will enter into force on April 1, 2021, and other amendments will enter into force on the date of publication of the Law.

 

İrem Soyman Alevok, Attorney At Law

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