Turkish Company Law PDF

# Chapter 9 - Turkish Company Law Assoc. Prof. Dr. Ferna İPEKEL KAYALİ This chapter examines the provisions of the second book of the TCC (i.e., commercial companies). ## SECTION I - OVERVIEW OF COMPANY LAW IN TURKEY ### 1. General The second book of the TCC underwent major reforms following th...

# Chapter 9 - Turkish Company Law Assoc. Prof. Dr. Ferna İPEKEL KAYALİ This chapter examines the provisions of the second book of the TCC (i.e., commercial companies). ## SECTION I - OVERVIEW OF COMPANY LAW IN TURKEY ### 1. General The second book of the TCC underwent major reforms following the introduction of the TCC. Indeed major events took place during the second half of the twentieth century, including the creation of the EEC/EU, as well as regional unions such as the EEA and the NAFTA, the creation by the latter of substantial rules and supranational legal regimes, the fact that, starting from mid-sixties, the concepts of a free market and a competitive economy gained wide currency in all countries and that these concepts figure among the Copenhagen criteria; the escalation of the conflict between the legal dogma according to which the undertaking acts independently and should always take decisions in its own interest and the reality, thus the growth of "konzerns," the fact that e-commerce fundamentally affected commerce as well as the calling of, the participation and voting in BODs and GMs; the fact that the consumer, the insured and the addressees of standardized terms of contracts are considered as persons who ought to be protected by mandatory rules in the last fifty years. Not only new subject-matters became law, but also fundamental laws underwent regular changes. Furthermore, being a candidate country to join the EU since 1999, Turkey has the obligation to transpose the *acquis communautaire* into Turkish law. It has therefore become inevitable to change the old TCC in line with the EU directives and regulations. Lastly, technological developments and the internet also played a significant role in the enactment of the TCC. In particular, the internet, which is widely used in all areas, also affected commercial law. Major reforms regarding the second book of the TCC include, *inter alia*, the introduction of single-member capital companies, registered capital, conditional capital increase, and groups of companies. ## II. Commercial Companies There are six types of commercial companies (*ticaret şirketleri*) in Turkey. These are: * The collective company (*kollektif şirket*) * The commandite company (*komandit şirket*) * The joint stock company (*anonim şirket*) * The limited liability company (*limited şirket*) * The cooperative company (*kooperatif şirket*) The collective company and the commandite company are referred to as “partnerships” (*şahıs şirketleri*). The joint stock company, the limited liability company, and the commandite company divided into shares are referred to as “capital companies” (*sermaye şirketleri*) (Art. 124 TCC). It should be noted that, although the cooperative company is considered as a commercial company, it is not regulated by the TCC. Instead, the cooperative company is regulated by the Cooperatives Law. It is worthwhile to give some information about commercial companies in Turkey. Indeed, according to data released by _Ministry of Treasure and Trade_, as of November 2015: * 4,014 limited liability companies * 1,060 joint stock companies * 1 collective company * 69 cooperative companies were set up. No commandite company was set up at the said period. It should be mentioned that, out of 5,074 capital companies that were set up in November 2015: * 3,054 were single-member limited liability companies (2,458 single-member limited liability companies and 596 single-member joint-stock companies) As of November 2015, there are: * 745.430 active limited liability companies * 108.274 active joint stock companies * 12.101 active collective companies * 1.928 active commandite companies * 56.403 active cooperatives. Thus, limited liability companies and joint stock companies are the most common company types in Turkey. Hence this study focuses on these two types of companies. ## SECTION II - CAPITAL COMPANIES ### I. Joint Stock Companies The joint stock company (*"JSC"* ) is regulated between Articles 329 to 562 of the TCC. Since the entry into force of the TCC, JSCs may be formed by one shareholder only. There is no maximum number of shareholders. The minimum capital requirement for the establishment of a JSC is 50,000.- Turkish Lira (approx. USD 25,000.-) (Art. 332 TCC). The joint stock company is legally formed once the founders express their intention in the articles of association to set up a joint stock company. The articles must be drawn up in accordance with the law, the founders must undertake therein to pay the entire capital unconditionally, and the signatures of the founders must be certified by the notary public (Art. 335 TCC). The company acquires legal personality upon registry to the Trade Registry. Joint stock companies may choose to issue registered or bearer shares. However, partly paid-up shares can only be in the form of registered shares. Registered shares are recorded in the company's share ledger. If the shares are bearer shares, the BOD is required to issue share certificates within three months following the date when the shares are fully paid-up. In the meantime, the JSC is free to issue temporary certificates (*ilmühaber*). If the shares are registered shares, the BOD id required to issue share certificates and allocate them to all the holders of registered shares upon the minority shareholder(s)' request. The JSC's capital is divided into shares and the liability of shareholders is limited to the subscribed capital. In other words, shareholders are not liable for the company's debts. Instead, the company is responsible for its own debts. Once the shares are fully paid, shareholders have no further liability. This component is also present in limited liability companies (LLC), so that JSCs and LLCs are classified under the heading “capital companies”. ### A. General Assembly The general assembly has a number of duties and powers that cannot be delegated to any other person or organ (Art. 408 TCC). These are: * Amendment to the articles of association; * Election of the members of the board of directors (*"BoD"*) and the determination of their term of office as well as their financial rights, including their remuneration, meeting attendance fees, perquisites and premiums; decisions regarding their discharge and their dismissal. * Without prejudice to the exceptions laid down in the TCC, the election and dismissal of the auditor. * Decisions regarding the financial statements, the annual activity report of the BoD and the annual dividend, the determination of dividends and profit shares, decisions regarding the use of the reserve funds. * Without prejudice to the exceptions laid down in the TCC, the dissolution of the company. * Wholesale of a significant amount of company property. It should be noted that, in single-member JSCs, the single shareholder holds all the powers of the general assembly. In order to be valid, the decisions taken by the single shareholder in his/her capacity as the general assembly must be in writing. Pursuant to the _"Regulation on the Procedure for General Assembly Meetings of JSCs and the Representatives of the Ministry of _Customs and Commerce in Such Meetings"_ , government representatives are required to be present at the following general meetings (“GMs”). These are: * All general meetings of companies whose incorporation and amendments to the articles of association are subject to the approval of the *Ministry of Customs and Commerce*; * General meetings of other companies where the agenda contains the following items: amendment of the articles of association relating to capital increase or decrease; adoption of the authorised capital system; increase of the registered capital ceiling; change of the field of activity; decisions relating to a merger, division, or change of the company type. * Electronic general meetings. * General meetings that are held abroad. * Special meetings of holders of privileged shares that are held abroad. It should be noted that the BOD is required to draw an internal directive (*iç yönerge*). The latter contains the following: opening of the meeting; formation of the chairmanship; duties and powers of the chairmanship; activities before discussing the items of the agenda; process of holding the floor and voting; preparation of the minutes of the meeting; acts to be carried out following the meeting. The internal directive must be approved by the general meeting and must be registered to the Trade Registry and published in the *Turkish Trade Registry Gazette (TTRG)* following the GM approval. The rules regarding the internal directive are also applicable to single-member joint stock companies. However, the single shareholder himself/herself/itself is entitled to carry out all the tasks envisaged for the meeting chairmanship. GMs can be ordinary (or annual) or extraordinary. Ordinary meetings *(OGM)* are meetings where the following decisions are taken: election of the company organs, determination of the financial statements, the annual activity report of the BOD and the usage as well as the percentages of dividends, the discharge of the board members and other items as deemed necessary. Ordinary meetings must be held within three months following the end of the fiscal year. Thus, in companies where the fiscal year is the same as the calendar year, general meetings must be held within the first three months of the year; in companies which adopt a special fiscal year, general meetings must be held within the first three months following the end of the fiscal year. An _Extraordinary General Meeting (EGM)_ is any meeting other than an OGM. The agenda of such meetings consists of items that require a meeting. The directors may convene an EGM whenever they think fit. Both ordinary and extraordinary meetings are convened by the BoD, even if the term of office of the latter has come to an end. If the BoD is unavailable or cannot meet regularly or if the quorum cannot be reached, the shareholder who is authorised by the court in accordance with Article 410 of the TCC may call the general meeting. Shareholders representing at least one-tenth of the capital (and shareholders representing at least one-twentieth of the capital in public companies) may request the BoD to convene a general meeting or add certain items to the agenda should a meeting has already been scheduled. Such request must contain the leading motives as well as the agenda and must be in writing and certified by the notary public. Should the board accept the minority shareholder(s)' request but does not call the meeting within forty-five days, the minority shareholder(s) are allowed to call the general meeting. On the other hand, should the board reject the minority shareholder(s)' request or not respond affirmatively within seven days, the meeting can be convened by the court-appointed trustee. The general meeting must be called at least two weeks prior to the date of the meeting. The convocation must be published in the TTRG and in the manner stipulated by the articles of association. Companies that are required to create a website must further publish therein the details of the convocation. Moreover, the date of the meeting, the agenda and the journals where the publication is/will be made must be notified by way of registered mail with advice of delivery to the shareholders registered in the share ledger as well as to the shareholders who previously delivered their share certificates to the company and notified their address (Art. 414/1 TCC). The general meeting can exceptionally renounce these convocation formalities and meet without formal convocation, so long as the shareholders do not raise an objection. This meeting is referred to as the “general meeting without notice” (*çağrısız genel kurul*). Resolutions in such meetings can be taken provided the latter quorum is present (Art. 416 TCC). The agenda is determined by the person(s) who convenes the GM. The agenda of the OGM consists of the following items: election of the company organs, the determination of the financial statements, the annual activity report of the BoD and the usage of the profit as well as the percentages of dividends, the discharge of the board members and other items as deemed necessary (Art. 409 TCC). The agenda for an EGM consists only of those items proposed for consideration in the request for the holding of the extraordinary meeting. Only items included in the agenda can be discussed and resolved. It should be noted, however, that the dismissal of existing board members and the election of new members are deemed related with the item regarding the deliberations on the approval of the annual financial statements (Art. 413/2 and 3 TCC). The executive directors and at least one board member must be present at the GMs. Other board members may, however, participate in the GMs, if they think fit. It should be added that the auditor must be present at the GMs of companies that are subject to audit (Art. 407/2 TCC). GMs may also be held in electronic form. Electronic participation and voting have the same legal result as physical participation and voting. Electronic meetings are subject to the _"Regulation on Electronic General Meetings of Joint Stock Companies"_. Without prejudice to the higher quorums laid down in the TCC or the articles of association, in principle, a general meeting is held by the presence of shareholders (or their representatives) representing at least one-fourth of the capital. The latter quorum must be maintained throughout the meeting. If the quorum cannot be reached at the first meeting, then no quorum is required at the following meeting. Resolutions are taken by the majority of the votes of shareholders present at the meeting (Art. 418 TCC). However, resolutions regarding the amendment to the articles of association are taken by the majority of the votes present at the meeting where at least half of the company capital is represented, unless otherwise provided in the law or the articles of association (Art. 421/1 TCC). The following decisions regarding the amendment to the articles of association require the unanimous consent of all the shareholders: * Decisions imposing commitments (*yükümlülük*) and secondary commitments (*ikincil yükümlülük*) with a view to covering the negative balance sheet. * Decisions on the transfer of the company’s seat abroad. Moreover, the following decisions regarding the amendment to the articles of association require the affirmative votes of shareholders representing at least seventy-five percent of the capital: * Decisions on the complete change of the company’s field of operation. * Decisions on the creation of privileged shares. * Decisions on the restriction of the transfer of registered shares. It should be noted, however, that in publicly listed companies (“plc”), the following decisions require the presence of shareholders (or their representatives) holding at least one-fourth of the capital¹⁴: * Decisions on the amendments to the articles of association regarding the increase of the company capital or the ceiling’s of the authorised capital; * Decisions on mergers, divisions and type changes. Resolutions of the GM are also binding on shareholders who were not present at the meeting as well as shareholders who voted against the resolutions (Art. 423 TCC). ### B. Board of Directors The BOD must consist of one or more members who have been designated by the articles of association or elected by the GM. Legal persons may also be elected as board members. The right to be represented at the BoD may be conferred upon certain share groups, shareholders composing a specific group due to their features and attributions and/or the minority, provided the articles of association contain such provision (Art. 360 TCC). Board members are elected for a maximum of three years. Board members may be re-elected, unless otherwise provided in the articles of association (Art. 362 TCC). If a membership becomes vacant, the BoD itself elects a person who possesses the legal conditions as board member and submits him/her to the following GM for approval (Art. 363/1 TCC). If a board member goes bankrupt or if his/her capacity is restricted or if he/she loses the legal conditions required to become a member or the attributions provided in the articles of association, his/her membership shall cease *ipso facto* (Art. 363/2 TCC). Board members (including those designated by the articles of association) may be dismissed by the GM at any time, provided the agenda contains a related item or for just cause if the agenda contains no such item. The dismissed member has a right to compensation. Unless otherwise provided in the articles of association, the quorum for BoD Meetings is the majority of the total number of members. The BoD takes its decisions by simple majority of the members present at the meeting. Resolutions of the BoD may also take the form a “circular resolution” (*sirküler karar*). In this scenario, a board member makes a proposal which has the nature of a written resolution, and at least the majority of the total member number approves such resolution in writing, provided no single member requests a meeting to be held. As stated above, the JSC is managed and represented by the BoD. It is however possible to delegate the management of the company. Indeed the articles of association may provide that the BoD is entitled to delegate the management partly or wholly to one or more board members or third parties. To this end, the BoD must draw up an internal directive. Moreover, as stated above, the JSC is represented by the BoD. Indeed, the power to represent the company belongs to the BoD, unless otherwise provided in the articles of association or the BoD is a single-member board. Indeed, the BoD may assign its power to represent the company to one or more board members (“executive members”) or third parties (“executive directors”). It should be noted, however, that at least one board member must have the power to represent the company. Those who are authorised to represent the company may carry out on behalf of the company all acts and legal transactions that are within the scope of the company’s field of operation. To this end, they may use the corporate name. It should be noted, however, that even if those who are authorised to represent the company carry out acts that are outside the scope of the company’s field of operation, such acts shall also bind the company, unless the company proves that the third party knows or is capable of knowing that the act is outside the scope of the company’s field of operation. It should be noted that only the following restrictions of the directors’ power to represent the company can be validly registered to the Trade Registry and published in the TTRG: * allocation of the power to represent the company to the registered office or the branch office; * joint use of the power to represent the company. Other restrictions shall have no legal effect vis-à-vis bona fide third parties. The BoD has a number of duties and powers that cannot be delegated to any other person or organ. These are: * Top management (*üst düzeyde yönetim*) of the company and giving related instructions * Determination of the organizational structure of the company management. * Establishment of the necessary organization for the accounting, financial supervision and, to the extent necessary for the management of the company, financial planning. * Appointment and dismissal of the managers and persons having the same functions as well as persons authorised to sign. * Top supervision (*üst gözetim*) of persons who are authorised to manage the company as to whether they act in accordance with the laws, articles of association, internal directives and written instructions of the BoD. * Keeping the share ledger and the books regarding BoD decisions and GM resolutions; preparation of the annual activity report and the corporate governance statement as well as their submittal to the GM; implementation of GM resolutions. * Notifying the court in case of over-indebtness (*borca batıklık*). Other duties of the BoD include the duty of care and loyalty, the duty not to conclude a transaction with the company, the duty not to become indebted to the company and the duty not to compete with the company. The rights of board members include, other than the above-mentioned right to manage and represent the company, the right to information and examination, and financial rights. The above-mentioned duties and rights are regulated by the TCC. ### C. Shareholders’ Rights #### 1. Personal Rights of the Shareholders ##### a. Right of participation in the GM: * When the shareholder wishes to use their rights attaching to their shares, they can participate in the GM * They can send a representative (who is a shareholder or not). ##### b. Right to vote: * Every shareholder has at least one vote, even though he/she only holds one share. * The number of votes bestowed on shareholders holding more than one vote may be restricted by the articles of association. * The voting privilege may be conferred upon some shares through the articles of association. However, the voting privilege can only be granted by allocating a different number of voting rights to shares of an equivalent nominal value. * A share can carry a maximum of fifteen votes. This restriction is not applicable, however, if institutionalization so requires or where there is a just cause. * In the latter cases, the commercial court of first instance situated at the company’s registered office must render a decision exempting the company from the said restriction, after examining the institutionalization project or the just cause. Every amendment to the institutionalization project is subject to the decision of the court. * It should be noted that in cases where the just cause disappears or it is understood that the institutionalization will not realize, then the court may revoke the "exemption decision" (*istisna etme kararı*). It should be added that the voting privilege cannot be invoked in the following circumstances: * amendment to the articles of association * discharge (*ibra*) * filing an action for liability. ##### c. Right to information and examination: * Financial statements, consolidated financial statements, the annual activity report of the BoD, the audit reports and the proposal of the BoD regarding the distribution of dividends are submitted to the shareholders for review, at least fifteen days before the GM. * The financial statements and the consolidated financial statements must be kept available to the shareholders for a period of one year, at the registered office and (if any) branch offices. * Every shareholder is entitled to request a copy of the income statement and the balance sheet. * In a GM, shareholders may request information from the BoD about the company affairs; they are entitled to request information from the auditors about the way they conduct the audit and its results. The information to be given must be diligent and truthful in terms of the principles of accountability and good faith. * If information regarding a matter is provided to a shareholder outside the GM, then the same information must be provided to another shareholder who so requests, in the same scope and detail, even if this does not feature within the agenda. * A shareholder whose request for information and examination has been left unanswered or has been rejected unjustly or has been delayed may apply to the commercial court of first instance situated at the company’s registered office within ten days from the rejection decision, in other cases after a reasonable period of time. ##### d. Right to request the appointment of special audit: * In case of approval by the GM: Every shareholder may request the general assembly to appoint a special auditor, provided such request is necessary to use the shareholding rights and the right to information or examination has been previously used. This request can be made even if such item does not figure on the agenda. If the general assembly approves this request, the company or every shareholder may, within thirty days, request the court to appoint a special auditor. * In case of refusal by the GM: In case the general assembly refuses to appoint a special auditor, shareholders who represent at least one-tenth of the capital (in public companies, shareholders who represent at least one-twentieth of the capital or shareholders whose shares have a total nominal value of at least one million TRY) may, within three months, request the court to appoint a special auditor. In this case, the court will appoint a special auditor only if the applicants submit convincing proof that the founders or the organs of the company have caused damage to the company or the shareholders by violating the law or the articles of association. ##### e. Right to request the nullity of GM resolutions: * Shareholders who fulfil the conditions set forth by Article 446 of TCC, the BoD itself and the members of the BoD (provided the execution of the resolutions bring about their personal liability) may file a suit for nullity against GM resolutions that violate the law, the articles of association or the good faith, within three months following the date of the resolution. * It should be added that some decisions of the GM are unlawful to the extent that it is sufficient to file an action for absolute nullity (butlan) from the court (Art. 447 TCC). #### 2. Financial Rights of the Shareholders Financial rights of shareholders include dividends, interests for the preparation stage, pre-emption rights and liquidation dividends. It should be added that the TCC regulates the grounds for termination of the JSC. The termination for just cause is a new ground which was not regulated at the time of the old TCC. Without prejudice to the exceptions laid down in the TCC, the dissolving company gets into liquidation. The company in receivership maintains its legal personality until the end of liquidation and uses its corporate name by adding the expression "in receivership". The powers of the organs of such a company are limited to the purpose of completing the liquidation process. ### D. Share Transfer Unless otherwise provided in the law or the articles of association, the registered shares can be transferred without any restriction. The registered shares are transferred by endorsement and delivery. The transfer of partly-paid up registered shares is subject to the company’s approval, unless the transfer is carried out as a result of inheritance, the provisions of the matrimonial property regime or enforcement. The articles of association may provide that the transfer of registered shares requires prior approval of the company. It should be noted that the TCC distinguishes between listed and non-listed registered shares and provides two different sets of rules. ## II. Limited Liability Companies The limited liability company (*"LLC"* ) is regulated between Articles 573 to 644 of the TCC. Since the entry into force of the TCC, LLCs may be formed by one shareholder only. LLCs cannot be formed with more than fifty partners. In other words, unlike JSCs, there is an upper limit to the number of partners. The minimum capital requirement for the establishment of a LLC is 10.000.- Turkish Lira (approx. USD 3.442- as of June 5th, 2016) (Art. 580 TCC). As in JSCs, the LLC’s capital is divided into shares. However, unlike JSCs, the value of capital shares of limited liability companies shall be twenty-five Turkish Lira or its multiples. The company can produce capital share certificates (*esas sermaye pay senetleri*) as proof of ownership. The company must keep a book containing the capital shares. As in JSCs, the liability of partners is limited to the subscribed capital. In other words, partners are not liable for the company’s debts. Instead, the company is responsible for its own debts. Once the shares are fully paid, partners have no further liability. This component is also present in JSCs, which is the reason behind the classification of LLCs and JSCs under the heading “capital companies”. However, if the articles of association provide for additional payment obligations (*ek ödeme*) and/or auxiliary commitments (*yan edim yükümlülükleri*), partners shall be liable to fulfil such obligations and commitments as well. As in JSCs, the articles of association must be in written form and the signatures of the founders must be certified by the notary public. Also, as in JSCs, the articles of association must expressly contain a number of statements. However, unlike JSCs, it is possible to stipulate provisions that shall be binding, provided they are laid down in the articles of association. Examples of such provisions include *inter alia*, the following: provisions that confer upon the partners or the company pre-emption (*önalım*), repurchase (*geri alım*) or purchase (*alım*) rights related to their capital shares; provisions that prescribe additional payment obligations, the form and scope of such obligations; provisions that prescribe auxiliary commitments, the form and scope of such commitments; provisions that give a veto right to determined or determinable partners or provisions that give a superior voting right (*üstün oy hakkı*) to determined partners if the votes are even after the vote of a GM resolution; penalty clauses (*sözleşme cezası*) that are applicable in cases where the commitments prescribed by law or the articles of association are not complied with; “enabling provisions” (*yetki hükümleri*) delegating the management of the company to a third party. It should be noted that, as in JSCs, the articles of association of a limited liability company can derogate from the TCC provisions governing limited liability companies only if this is expressly authorised by the TCC. As in JSCs, the limited liability company is legally formed once the founders express their intention in the articles of association to set up a limited liability company. The articles must be drawn up in accordance with the law, the founders must undertake therein to pay the entire capital unconditionally, and the signatures of the founders must be certified by the notary public (Art. 585 TCC). The company acquires legal personality upon registry to the Trade Registry. ### A. General Assembly The general assembly has a number of duties and powers that cannot be delegated to any other person or organ (Art. 616 TCC). These are: * Amendment to the articles of association; * Election and dismissal of the director(s); * Election and dismissal of the auditors and the group auditor; * Approval of the annual financial statements and the annual activity report of the group; * Approval of the annual financial statements and the annual activity report; decision on the annual dividend, determination of profit shares. * Determination of directors’ fees and their discharge; * Approval of the share transfer; * Making a request to the court in order to squeeze out a partner; * Authorisation of the director to acquire the company’s shares or the approval of such acquisition; * Dissolution of the company. * Deciding on matters where the GM has been authorised by the law or the articles of association or on matters submitted to the GM by the directors. On the other hand, the GM has a number of powers that cannot be delegated to any other person or organ provided they are expressly stipulated in the articles of association: * Instances where the articles of association require the approval of the GM and the approval of directors’ activities. * Resolutions regarding the use of pre-emption, repurchase and purchase rights. * Approval of the establishment of a lien on the capital shares. * Issuance of an internal directive regarding auxiliary commitments. * In cases where, in accordance with the second sentence of Article 613/4 of the TCC, the articles of association require the approval of the GM authorising the directors and partners to carry out activities that are not compatible with their duty of loyalty (*bağlılık yükümü*) or their duty not to compete (*rekabet yasağı*). * Expulsion of a partner from the company on grounds stipulated in the articles of association. It should be noted that, in single-member LLCs, the single member holds all the powers of the general assembly. In order to be valid, the decisions taken by the single member in his/her capacity as the general assembly must be in writing. As in JSCs, GMs can be ordinary (or annual) or extraordinary; they can also be held in electronic form. The general meeting must be called at least fifteen days prior to the date of the meeting (Art. 617/2 TCC). Both ordinary and extraordinary meetings are convened by the directors. Ordinary meeting are held annually, within three months following the end of the fiscal year. Extraordinary meetings, on the other hand, are held whenever it is deemed necessary. It should be noted that the provisions governing joint stock companies - except those relating to the representative of the Ministry - apply by analogy in regards to the notice to attend the general meeting, the right of the minority to convene a general meeting, the agenda and the general meeting without notice. Without prejudice to the higher quorums laid down in the TCC or the articles of association, all GM resolutions (including election resolutions) can be taken by simple majority of the votes represented at the meeting. However, the below listed GM resolutions can be taken only if at least two-thirds of the votes represented at the meeting and the simple majority of the entire share capital are present: * Change of the company’s field of operation. * Issuance of capital shares having voting privilege. * Restriction, prohibition, or facilitation of the transfer of capital shares. * Capital increase. * Restriction or removal of pre-emption rights. * Change of the company’s registered office. * Authorisation of the directors and partners to carry out activities that are against the duty of loyalty or the duty not to compete. * Application to the court with a view to expulsing a partner for just cause and expulsion of a partner from the company on a ground stipulated in the articles of association. * Dissolution of the company. ### B. Directors The articles of association contain provisions relating to the management and representation of the company. The management and representation of the company may be delegated to one or more managing partners or all the partners or third parties. It should be noted, however, that at least one partner must have the power to manage and represent the company. If a manager is a legal person, then it must determine a teal person who will perform this task on behalf of the legal person. Managers are authorised to take decisions regarding all management-related matters reserved to the GM by law or the aricles of association and to implement such decisions. If there is more than one manager, decisions are taken by majority. In case of a tie, the vote of the chairman of the board prevails. Managers cannot delegate the below-listed duties and powers nor can they renounce to such duties and powers: * Top management (*üst düzeyde yönetim*) of the company and giving related instructions. * Determination of the managerial organization according to law and the articles of association. * If necessary for the management of the company, establishment of the accounting, financial supervision and financial planning. * Supervision of persons to whom certain parts of the management have been assigned as to whether they act in accordance with the laws, articles of association, internal directives and instructions. * To the exclusion of small limited liability companies, formation of an early determination of risk committee. * Preparation of the financial statements, the annual activity report and, if necessary, the group financial statements and the annual activity report. * Preparation of the GM and the implementation of GM resolutions. * Notifying the court in case of over-indebtness. The articles of association may provide that the manager(s) are required to submit certain resolutions or individual issues to the approval of the GM. It should be noted that the provisions governing joint stock companies apply by analogy in regards to the scope of the managers’ power of representation and the restriction of this power, the determination of those authorised to sign, the form of signature, and the registration and publication of these issues. It should be added that, as in JSCs, the managers of limited liability companies are subject to the duty of loyalty as well as the duty not to compete. Unlike JSCs, every partner is entitled to request from the court the removal or restriction of the management and representation power of the managers in cases where there is just cause. A serious violation by the manager of the duty of care and loyalty or the obligations arising from other laws or the articles of associations, or his/her loss of ability to manage the company are considered as just cause. ### C. Share Transfer The transfer of capital shares must be in writing and the signatures of the parties must be certified by the notary public. Unless otherwise provided in the articles of association, the approval of the GM is necessary for the transfer of capital shares. The transfer shall be valid upon approval. Unless otherwise stated in the articles of association, the GM may reject the approval request without showing a cause. If the GM does not reject the approval request within three months following application, approval shall be deemed granted. It should be noted that the articles of association may prohibit the transfer of shares altogether, in which case or in case the GM has rejected the approval request, the partner(s) have the right to exit the company due to a just cause. In cases where the capital share is transferred by way of inheritance or the provisions relating to marital property or by way of execution, all rights and obligations shall be transferred to the acquior, without the necessity to obtain the GM approval. For more information on the share transfer in joint stock companies, see Ali Murat Sevi, Anonim Ortaklıkta Payın Devri (*Transfer of Shares in Joint Stock Companies*), 3rd Ed., Ankara 2014.