e-book2011

NEWSLETTER 2011

Innovations in the New Turkish Commercial Code Concerning

the Division and Conversion of Companies - I

Prof. Dr. H. Ercüment Erdem

The New Turkish Commercial Code (“New TCC”) has regulated

the concept of “division” in detail which was not regulated under the

Turkish Commercial Code (“TCC”) and which was being conducted

under Corporate Tax Law (“CTL”) numbered 5520 and Communiqué

Regarding Principles of Partial Division of Joint Stock Companies

and Limited Liability Companies (published in Official Gazette dated

16.09.2003 and numbered 25231). The division has been regulated in

accordance with the provisions of Swiss Federal Act on Fusion, Division,

Conversion and Transfer of Assets (“LFus”). Sixth Council Directive

82/891/EEC of 17 December 1982 concerning the division of public

limited liability companies was taken as basis for the provisions of the

New TCC, similarly to LFus. Therefore, a legal basis has been established

for the division, additionally to the tax legislation. The innovations

concerning the division in the New TCC shall be examined within two

articles since the provisions include detailed regulations.

Types of Division and Valid Divisions

Article 159/1 of the New TCC provides two types of division as

partial and complete division. In the complete division -also known as

division by acquisition-, all of the assets and liabilities of the company are

divided, and transferred to an existing company, or to a new company to

be established. The divided company -acquired company- ceases to exist,

and its shareholders are transferred to the acquiring -recipient- company.

Partial division is divided into two categories: Partial division and

establishment of an affiliate. In the partial division, parts of the assets of

the company are transferred to other companies. The shareholders of the

divided company are transferred to the acquiring company. The company

subject to partial division shall not cease to exist, and continues to subsist

with the remaining assets. In the division through the establishment of

Article of November 2011