Joint stock companies (JSCs) in Turkey are regulated by the Turkish Commercial Code (TCC), which defines the rights and responsibilities of shareholders, especially regarding capital increases and reductions. These processes are critical for a company's growth, financial restructuring, or compliance with legal requirements. This guide explores the legal framework for capital increase and reduction under the TCC, highlighting shareholders' rights and protections.

• Ordinary Capital Increase: Shareholders decide to increase the company's share capital, usually by issuing new shares.
• Conditional Capital Increase: This is often done to issue new shares related to convertible bonds or employee stock options.

• Pre-Emptive Rights: Shareholders have the right to purchase newly issued shares in proportion to their existing holdings, ensuring they can maintain their ownership percentage.
• Voting Rights: Shareholders must approve capital increases in the General Assembly, and decisions are made through a voting process in line with the company's articles of association.

• General Assembly Approval: The capital increase must be approved by shareholders at a general assembly meeting.
• Registration and Announcement: The decision is then registered with the Trade Registry and published in the Turkish Trade Registry Gazette.

• Capital reduction is generally used to eliminate losses, return capital to shareholders, or adjust the company’s financial structure when the current capital exceeds business needs.

• Approval by Shareholders: Shareholders must approve the capital reduction at the general assembly.
• Creditor Protection: Creditors must be informed of the reduction, and if they object, they have the right to demand security for outstanding debts before the reduction is finalized.

• Shareholders are entitled to proportionate returns of capital when applicable and must be provided detailed information regarding the reasons and consequences of the reduction.
• Any reduction of capital is subject to strict legal protections to prevent abuse, ensuring that minority shareholders’ interests are protected.

• With recent amendments to the TCC, the minimum capital requirement for joint stock companies has been increased to TRY 250,000, effective from 2024. This update has implications for companies planning capital increases or reductions

• Shareholders have enhanced rights to inspect company records and request financial reports related to capital increases or reductions, ensuring transparency and accountability.
• Any significant changes in capital structure require detailed disclosure to shareholders and third parties through the Trade Registry.

Capital increase and reduction processes in joint stock companies under the Turkish Commercial Code involve intricate legal steps designed to protect shareholders’ rights. Shareholders play a key role in approving these decisions and are provided with various legal protections to ensure that their financial interests are safeguarded.