How to Assign the Privileged Shares in Joint Stock Company? 26 September 2016
I. Assignment of Shares
There are several remarkable issues related to assignment of shares, in Joint Stock Company. These issues are specifically whether assigned shares are certificated share or uncertificated share and whether share value is completely purchased by former shareholder.
Although, assignment of uncertificated shares are not regulated in Turkish Commercial Code numbered 6102 (“TCC”), the assignment of uncertificated share is possible under the assignment of claim provisions in Turkish Obligations Code numbered 6098 in accordance with decisions of Supreme Court of Appeal.
If assigned uncertificated shares’ value is fully purchased then the procedure of assignment shall be pursuant to assignment of claim but, assigned uncertificated shares’ value is not fully purchased then the shares shall be transferred according to assignment of liability. It is also stated that uncertificated shares shall be assigned subject to the provisions of assignment of claim in the decision of 11th Civil Chamber of Supreme Court dated 31.5.2016 and numbered E.2015/12225 K.2016/5995.
In related to assignment of certificated shares, the difference between registered shares and bearer shares is important. Pursuant to article 489 of the TCC, the basic principle concerning the transfer of ownership of bearer share certificates is that the transfer is only valid by the transfer of possession of the share. On the other hand, according to TCC Art.490/2, the basic principle concerning the transfer of registered shares is the endorsement and the transfer of possession.
Moreover, it is regulated in TCC Art 491/1 that assignment of registered shares not fully purchased is only valid under the consent of the company.
II. Privileged Share
Privilege is defined as paramount right to share under TCC Art.478/2. Privilege is enfranchised as dividend, share of liquidation, right to preference, right to vote and so forth.
In addition to aforementioned condition, according to TCC Art.360/1-2 it is possible that privilege can be enfranchised to specific shareholders related to right of representation in Board of Directors. This condition is the exception of the rule of enfranchising privilege to share.[1]
III. Special Committee of Privileged Shareholders
In order to protect privilege, several special provisions are regulated in the TCC. The most important of these provisions is the Article 454 headed “Special Committee of Privileged Shareholders”. Under this article, the Committee convenes in three situations as follows;
a.If the decision of General Assembly about the amendment of articles of incorporation violates privileged shareholders’ rights
b. If the decision of General Assembly about conferring of power to Board of Directors for capital increase violates privileged shareholders’ rights
c. If the decision of Board of Directors about capital increase violates privileged shareholders’ rights
Then the consent of the Committee is obligatory for the validity of aforementioned decisions.
There are two points to consider about the Special Committee of Privileged Shareholders. Firstly, the situations that privileged shareholders’ consent is obligatory are numerus clausus in the TCC. In other words, Special Committee of Privileged Shareholders can only convene and give consent in above mentioned circumstances that are regulated in TCC. In addition, privileged shareholders whose privileges are violated might solely participated to the committee.
IV. Assignment Of Privileged Share
The requirement of Special Committee of Privileged Shareholders’ consent in order to validity of assignment of privileged shares has to be evaluated under two conditions.
Before mentioned, the circumstances for the requirement of the committee’s consent are numerus clausus. If the assignment of privileged share actualize with mentioned situations, then the consent of the committee is obligatory for the validity. For instance, the capital increase occurs with the assignment of privileged share and this situation might violate the rights of privileged shareholders, then the committee has to give subsequent consent.
However, solely assignment of privileged shares cannot be counted as the conditions in the TCC Article 454. Therefore, the consent of Special Committee of Privileged Shareholders is not obligatory for the validity of assignment and the ordinary procedure about assignment of share might be accomplished.
[1] Prof. Dr. Hasan Pulaşlı, Şirketler Hukuku Genel Esaslar, Adalet Yayınevi, Ankara 2016, p. 546
Türkçe Versiyonu İçin
http://www.kasaroglu.av.tr/tr/28631/Anonim-Sirketlerde-Imtiyazli-Paylar-Nasil-Devredilir
