The Law No. 7262 on Preventing the Financing of Proliferation of Weapons of Mass Destruction ("Law No. 7262") was published in the Official Gazette dated December 31, 2020 and numbered 31351, in order to implement the United Nations Security Council's decisions regarding the prevention of proliferation of financing of weapons of mass destruction. Accordingly, Law No. 7262 amends, alongside other laws, certain provisions of the Turkish Commercial Code No. 6162 ("TCC") regulating the bearer share regime of non-public companies.
Before this amendment, as per the TCC, the bearer shares were to be transferred by way of delivering the share certificate and there was no formal monitoring mechanism for such transfer. However, since this transfer procedure was not easily traceable and may; therefore, facilitate the financing of the weapons of mass destruction through companies established in Turkey having shareholders with bearer shares, Law No. 7262 brought notification and registration obligations with the view of facilitating the monitoring of such transfers.
With the amendments brought by Law No. 6272, as of April 1, 2021;
- The existing owners of bearer shares will be obliged to apply until 31 December 2021 to the companies, which they are a shareholder of, with their share certificates for the company to notify the Central Registry Agency ("CRA")., The companies will then be obliged to notify the information of the these shareholders to the CRA within 5 business days as of the application of the relevant shareholders. The shareholders who fail to fulfil this notification obligation cannot exercise their rights arising out of the share certificates until they apply to the company, and will be imposed with an administrative fine up to TL 5,000. The companies which fail to fulfil their notification obligation will be imposed with an administrative fine up to TL 25,000.
- In case of a transfer of a bearer share, the transferee will be obliged to notify the CRA; otherwise the transferee cannot exercise their rights arising out of the share certificates towards the company which they are a shareholder of, or towards any other third party. In order for the transferee to exercise such rights towards the company or a third party, the date of the notification made to the CRA shall be taken into consideration. In case the transferee fails to fulfil this notification obligation, they will be imposed with an administrative fine up to TL 5,000.
- For the issuance and delivery of bearer shares, companies will be obliged to notify the CRA on the information of the shareholders of the bearer shares and the shares held by them, before delivering the bearer share certificates to the relevant shareholders. In case the companies fail to fulfil this notification obligation, an administrative fine up to TL 25,000 will be imposed on them.
- In order to determine the holders of bearer and/or dematerialized shares who will attend the general assembly meetings, the Board of Directors of non-public companies will be able to prepare the list of attendees in accordance with the shareholder table provided by the CRA. Therefore, the holders of bearer share certificates will no longer be required to obtain an entrance card in advance of attending the general assembly meetings.
- The CRA will be entitled to submit relevant records regarding the bearer shares and their holders to the pertinent authorities.
It should be noted that, the secondary legislation to be published by the Ministry of Trade, which will regulate the rules and procedures of notification and registration of bearer shares to the CRA and the fess to be paid within this scope, is still pending.
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.