How to Issue Registered Stock Certificates in Turkey?
Issuing registered stock certificates are mandatory under specific conditions. However, joint stock companies can issue these certificates without the condition.
Mandatory Issuance of Registered Stock Certificates
Under the old Turkish Commercial Code No. 6762, there was no requirement for joint-stock companies to issue stock certificates. Before the implementation of Law No. 6102, many companies did not issue stock certificates unless they recognized tax benefits from share transfers that were documented through certificates. However, with the enactment of the TCC numbered 6102 on July 1, 2012, there became a statutory obligation for joint-stock companies to issue registered shares when certain conditions are met.
Issuance of Registered Stock Certificates Without Minority Request
If the minority shareholders do not request the issuance, there is no legal requirement to issue registered stock certificates. However, the legislative intent was to prevent unfair practices such as pressuring shareholders by withholding stock certificates, which could limit their proof of ownership and restrict share transferability, especially in closely held family companies. The legal commentary supports the issuance of registered stock certificates even without a minority request, thereby preventing potential abuses in private corporations.
Decision Making by the Board of Directors on Registered Stock certificates
Article 486 of the TCC also mentions that the decision by the Board of Directors to issue bearer stock certificates should be recorded and announced, and posted on the company’s website. While there is no similar stipulation for registered shares, the board may decide to issue registered stock certificates based on a minority request without needing to record or announce this decision.
Timeliness and Conditions for Issuing Registered Stock certificates
Registered shares can be issued at any time depending on the minority’s request or the board’s decision. However, registered shares should not be issued before the company or its capital increase is registered in the trade registry, as shares issued prior to registration are deemed invalid.
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