Deadline For Compliance With Minimum Capital Requirement: 31 December 2026

Articles 332 and 580 of the Turkish Commercial Code (the "TCC") regulate the minimum capital requirements for joint stock companies and limited liability companies, respectively, and stipulate that such amounts shall be determined and may be increased by a Presidential Decree. Pursuant to this authority, with Presidential Decree No. 7887 published in the Official Gazette dated 25 November

• The minimum capital amount for joint stock companies has been increased to 250.000.-TRY,
• The minimum capital amount for limited liability companies has been increased to 50.000.-TRY,
• For non-public joint stock companies that have adopted the registered capital system and whose issued capital is at least 250.000.-TRY, both the initial capital and the issued capital have been required to be increased to 500.000.-TRY,
• These processes must be completed by 31 December 2026.

It has been explicitly stipulated that, otherwise, the company shall be deemed to have been dissolved, or, for companies that have adopted the registered capital system, that such companies shall be removed from the system.

In this context, the date of 31 December 2026 does not merely constitute a compliance period, but rather represents a critical issue that directly affects the legal existence of the company in the event that the required actions are not completed.

Legal Process and Provisional Article 15

Within the scope of this regulation, for which a limited compliance period had initially been granted, Provisional Article 15 has been added to the TCC by virtue of the Law No. 7511 on the Amendment of the Turkish Commercial Code and Certain Other Laws, published in the Official Gazette dated 29 May 2024 and numbered 32560.

While the said provisional article grants an additional period until 31 December 2026 for companies whose capital remains below the newly prescribed minimum amounts to increase their capital, it also clearly sets forth the legal consequences of non-compliance with this obligation:

"Joint stock companies and limited liability companies whose capital is below the minimum capital amount shall increase their capital to the amounts stipulated under Articles 332 and 580 by 31/12/2026; otherwise, they shall be deemed to have been dissolved."

Consequences of Non-Compliance

The most critical aspect of the regulation introduced under Provisional Article 15 is that companies failing to effect the required capital increase within the prescribed period shall, without the need for any further action, be deemed to have been automatically dissolved. This consequence entails that the company will be deregistered from the trade registry and will lose its entire legal existence, constituting an extremely severe sanction.

For non-public joint stock companies that have adopted the registered capital system, the nature of the sanction differs. Such companies shall not be deemed dissolved if they fail to increase their initial and issued capital to 500.000.-TRY; however, they shall be removed from the registered capital system.

Facilitating Provisions Regarding Capital Increase

Provisional Article 15 does not merely establish an obligation and a sanction regime, but also introduces significant procedural exceptions aimed at facilitating the capital increase process, limited to this specific matter. Accordingly:

• No quorum shall be required for general assembly meetings where capital increase resolutions are to be adopted,

• Resolutions may be adopted by the simple majority of the votes present at the meeting,

• Privileged voting rights may not be exercised against such resolutions.

This regulation constitutes a deliberately adopted facilitative mechanism aimed at preventing minority shareholders or holders of privileged shares from blocking the process.

Extension Authority and Existing Uncertainty

Provisional Article 15 grants the Ministry of Trade the authority to extend the deadline of 31 December 2026 for up to two times, each for a period of one year. However, it remains uncertain whether the Ministry will exercise such authority. In light of this uncertainty, as well as the time required for administrative and legal processes, reliance on such authority would constitute a legally and practically risky approach.

Recommended Action Timeline and Practical Considerations

Considering that the statutory deadline is 31 December 2026, postponing the relevant processes until such date entails significant practical risks. It is well known that, during the last quarter of each year, trade registry directorates experience substantial congestion -particularly due to independent auditor appointments- and that notarial and registry procedures tend to progress with delays. Accordingly, we recommend that companies subject to the minimum capital requirement complete the preparations for the general assembly resolving on the capital increase and the required documentation by no later than September 2026, and finalize all processes, including registration, by the end of October 2026.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.