• It is the spirit and not the form of law that keeps justice alive.
    Earl Warren

RECENT DEVELOPMENTS ON THE FACILITATION OF INVESTMENT

The Act No. 7099 Amending Certain Acts for the Improvement of Investment Environment ("Act”) has been published in the Official Gazette No. 30356 on 10 March 2018 and has introduced significant developments especially upon the provisions of the Turkish Commercial Code No. 6102 (“TCC”), the Law No. 6750 on Pledge of Movables in Commercial Transactions (“PMCT”) and title deed transactions.

 

(i)             Amendments Regarding the Turkish Commercial Code

 

Several alterations regarding signature declarations, opening transactions of the commercial books and articles of associations of the cooperatives, limited companies and joint stock companies have been made. Accordingly, the requirement of authentication of signature declarations of companies before the notaries public has been amended. Thus, besides the notaries public, the Act empowered the trade registry directorate for the authentication of signature declarations. The Act does not explicitly state the scope of implementation of such transaction, however, according to the current announcement of the Directorate of Istanbul Trade Registry of Commerce, the signature declarations for the incorporation shall only be submitted before trade registry officials. Consequently, this amendment, in practice, may cause an additional burden upon the founders by requiring them to sign the signatory declarations, in-person, before the trade registry officials. Additionally, opening transactions of books of limited and joint stock companies shall be made before the trade registry officials. Furthermore, the shareholders of the limited companies shall sign the articles of association only before the trade registry officials; on the other hand, both trade registry officials and notaries public can approve the signatures of the shareholders of the joint stock companies.

The impracticable requirement for the corporate representatives to attend the general assembly meetings of the non-public companies has been abrogated. Even though the corporate representatives were primarily intended mainly for the protection of the minority shareholders in the publicly held companies, the provision of the Capital Markets Law No. 6362 has implicitly blocked their purpose by stating that this requirement shall not be implemented upon such companies. Ultimately, the complications in the enforcement of this rule for private companies shall no longer exist with the removal of the relevant provision of TCC.

The requirement to pay at least the 25% of the company’s capital before the registration of the newly incorporated limited companies has been repealed.

All changes within the scope of the provisions of the TCC has entered into force on 15 March 2018.

 

(ii)           Amendments Regarding the Movable Pledge in Commercial Transactions

 

Some of the notable changes in respect of the movable pledge in commercial transactions are as follows:

 

PMCT entered into force on 1 January 2017 with the aim of improving the investment environment by increasing the use of pledges of movable property in financing, thus allowing all sizes of enterprises an easier access to the financing sources. With the new amendments, this aim is supported by broadening the scope of the PMCT which was previously limited to movables expressly listed under the legislation. Within this context, all types of movables and rights thereupon are included within the context of the movable pledges.

The provisions of PMCT regarding merger and consolidation have been completely repealed and all revenues arising from movables, including interest revenues, insurance revenues, natural products, and substitute goods are now covered within the context of the movable pledge.    

 

(iii)         Amendments Regarding the Title Deed Transactions

 

With amendments to the Law on Land Registry No. 2644, the mortgage transactions of the real estates provided as collaterals against all debts and credits that have been lent by the state institutions and organizations, credit agencies, banks, cooperatives of merchants and craftsmen and agricultural cooperatives, can be registered to the title deed in respect of the facility or debt agreements and without the need to execute the relevant transaction before the land registry.

 

According to the changes regarding the Law No. 6083 on Organization and Functions of the General Directorate of Land Registry and Cadastre, the transactions which are registered by the directorates of land registry can be directly registered, cancelled and amended electronically by the relevant authorities upon the request of the judicial authorities and competent institutions and organizations.

 

Condominium Law No. 634 has been amended to allow the transactions of construction servitude, condominium ownership and land use conversion in relation to the building to be constructed in virtue of the construction agreement in return for flat, assignment agreement in return for flat, notarial agreement regarding the allotment of independent sections executed between the landowner and the contractor, to be made by the relevant administration upon the request of the contractor, on the condition for the independent sections of the right-holders to be determined. With this amendment, the architectural project and the management plans, which are issued electronically and approved by the relevant administration, shall be taken as a basis in the title deed registration transactions. Following the registration notification made by the licensed map cadastre engineering offices or cadastre directorates for the buildings in which the occupancy permit is required in the land use conversion, the registration notification, the annexed documents and the occupancy permit shall be electronically sent to the directorate of land registry. Afterwards, the directorate of land registry shall automatically make the land use conversion and registration.

 

These above-mentioned changes facilitating the title deed transactions entered into force on 10 March 2018.

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