Paylaş: Capital Reduction in Joint Stock Companies
Capital reduction decisions in joint stock companies fall under the exclusive authority of the general assembly. This authority is exercised based on a report prepared by the board of directors regarding the proposed reduction. The board of directors must demonstrate that sufficient assets exist to cover all company liabilities, even after the reduction. This report should be prepared and certified by a sworn financial advisor.
Decision and Implementation
The general assembly reviews the report prepared by the board of directors. To approve the capital reduction, at least 75% of the shares must vote in favor. If the company is not issuing new shares to replace the reduced capital, the general assembly must amend the articles of association accordingly.
The announcement for the general assembly meeting must include the reasons for capital reduction, its purpose, and detailed explanations of the reduction process. The approved report must then be registered and announced publicly.
Simplified Capital Reduction
If the reduction aims to offset balance sheet losses resulting from financial deficits, the company may use simplified procedures without notifying creditors. The following conditions must be met:
- Actual balance sheet loss is confirmed.
- The company has not lost more than two-thirds of its capital due to the financial deficit.
- Even after the reduction, the company's assets sufficiently cover its liabilities.
- The board of directors prepares a report confirming the above criteria.
Call to Creditors
If the general assembly decides to reduce the capital, the board of directors must notify creditors through an announcement in the Turkish Trade Registry Gazette and on the company’s website. Known creditors should also be notified directly by letter. Creditors may demand payment or security for their receivables within two months of the third announcement.
Implementation of Reduction
The capital reduction cannot be implemented until the creditor notification period ends and all claims are either paid or secured. If necessary, the company can cancel shares not returned for exchange or update its share registry.
Documents demonstrating compliance with Articles 473 and 474 of the Turkish Commercial Code must be submitted before the reduction can be registered.
Capital reduction in joint stock companies is a regulated process requiring transparency, creditor protection, and adherence to legal procedures.
Prepared by Attorney Hüseyin Bayar of Bayar Law Firm. Unauthorized use or reproduction of this article is prohibited.
