HOW ARE THE SEIZED SHARES OF THE CAPITAL COMPANIES TRANSFERRED? 28 May 2020

IS IT POSSİBLE TO SEIZE THE SHARES OF CAPITAL COMPANIES?

The seizure of the shares of the capital companies are regulated under the Article 133/2 of the Turkish Commercial Code. According to this provision, creditors can demand the seizure of the shares belonging to the debtors.

As can be understood from the aforementioned provision, since the shares belonging to the shareholders in the capital companies are accepted as seizable, it is possible for such shares to be subject to foreclosures in accordance with the Execution and Bankruptcy Law.

SEIZE AND TRANSFER OF UNCERTIFICATED SHARES

As is known, the issuance of the share certificates is not compulsory for joint stock companies. For this reason, it is necessary to evaluate separately in terms of certificated and uncertificated shares in the evaluation to be made for joint stock companies.

Since the Article 133/2 of the Turkish Commercial Code refers to the Execution and Bankruptcy Law, this law should also be examined in the evaluation to be made.

According to the Article 94 of the Execution and Bankruptcy Law;

“If no share certificates of provisional certificates are issued for the shares in joint stock companies, the share of the debtor in the company is seized through the enforcement office’s notification to the company. It is mandatory for this seizure to be recorded in the company’s share ledger; however, the seizure shall be deemed that it has been made on the date of notification to the company even if it has not been recorded in the company’s share ledger. The Trade Registry shall be notified of the seizure which, in turn, will be registered by the enforcement office. In this case, the transfer of the seized shares is void to the extent that it violates the rights of the creditor. The sale of the seized shares is subject to the procedure of the sale of movable goods. In other movables, the enforcement office shall take measures in order to prevent transfer to others.”

According to the relevant provision, in order for the uncertificated shares to be seized, such seizure must be notified to the company by the enforcement office. The notification will be made by the enforcement office with a notice to be sent to the company in this regard. Thereupon, by the company; the seizure of the share must be recorded in the share ledger. Although the seizure of the uncertificated bare share must be recorded in the share ledger by the company, such record is not constitutive for the validity of the seizure.

In this context, the seizure on the uncertificated share will be established by notifying the company by the enforcement office, and then the seizure must be reported to the Trade Registry by the enforcement office. In the continuation of the same provision, it is stated that “In this case, the transfer of the seized shares is void to the extent that it violates the rights of the creditor.”

According to the provision in question; it is concluded that the transfer of the seized share is possible, provided that no restriction is imposed on the creditors, even if a restriction is imposed on the shareholder to exercise certain rights.4

ARE THE SEIZURE THE SHARE CERTIFICATES AND THE TRANSFER OF SEIZED SHARE CERTIFICATES POSSIBLE?

As is known, there are two types of shares in the capital companies. These are registered and bearer shares. As the aforementioned shares are negotiable instruments, they can be transferred by endorsement.

At this point, upon the examination of the Article 133/2 of the Turkish Commercial Code, it is concluded that the provisions of the Law on Enforcement and Bankruptcy regarding the seizure of certificated and uncertificated shares will be applied. According to the provisions of the Law on Enforcement and Bankruptcy, the certificated share must be kept by the enforcement office in the enforcement proceedings initiated.

At this point, it is necessary to examine the Execution and Bankruptcy Law 86/1 clause in order for the shareholder to transfer his shares.

Accordingly, the debtor cannot make any transaction on the property that is seized without the consent of the creditor and the permission of the executive officer.In this case, the shareholder who is willing to transfer the seized share must have the approval of the creditor and the executive officer.