OBLIGATION TO HIRE A LAWYER IN JOINT STOCK COMPANIES 27 June 2024

The Turkish Commercial Code No. 6102 ("TCC") stipulates that joint-stock companies, while offering numerous advantages, also bear a multitude of obligations. These obligations are regulated not only in the TCC but also in various other legislative instruments.

I. What is the Legal Regulation Concerning the Obligation to Retain a Lawyer?

One significant regulation for joint-stock companies is Article 35/3 of the Legal Profession Act No. 1136. According to this article, joint-stock companies with a paid-in capital amounting to five times or more of the minimum capital requirement stipulated by the TCC are obliged to retain a contracted lawyer. Following the Presidential Decree published in the Official Gazette numbered 32380 and dated 25.11.2023, effective from 01.01.2024, the minimum capital requirement for joint-stock companies has been raised from 50.000 TL to 250.000 TL. Consequently, the obligation to retain a lawyer as regulated under Article 35, Paragraph 3 of the Legal Profession Act now applies to companies with a capital of 1.250.000 TL and above.

II. What are the Sanctions for Non-Compliance with This Regulation?

Joint-stock companies that fail to comply with the obligation to retain a contracted lawyer are subject to an administrative fine imposed by the Public Prosecutor. The fine is equivalent to twice the gross amount of the minimum wage for workers over sixteen years of age in the industrial sector for each month they fail to appoint a lawyer.

Moreover, according to Article 73/C of the Legal Profession Regulation (“Regulation”), bar associations located in the company's headquarters can file criminal complaints against legal entities that act contrary to the Legal Profession Act Article 35/3. Thus, in addition to the prosecution's initiative, bar associations are also granted the right to file a criminal complaint if they detect such non-compliance. The presidency of the bar association reports the results of these efforts, including the contracted lawyers, to the Union of Turkish Bar Associations at the end of each year.

III. What Does the Obligation to Retain a Contracted Lawyer Entail?

The obligation to retain a lawyer refers to an attorneyship contract, not an employment contract. The lawyer that joint-stock companies are required to retain is a "freelance/independent lawyer" and not an "employed lawyer/company lawyer" working under an employment contract within the company. Thus, joint-stock companies will fulfill this obligation by entering into an attorneyship contract with a lawyer or law office registered with any bar association in Türkiye. Even if a company lawyer is already present within the company, this obligation will not be deemed fulfilled, as, in such a case, an employment contract rather than an attorneyship contract would have been established between the company and the lawyer. The contract must be made in writing in accordance with the Regulation.

References

Özkan, A. F. (2018). The Obligation of Joint Stock Companies to Retain a Contracted Lawyer. Journal of the Turkish Justice Academy.

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