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COMMERCIAL LAW
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In order to prevent possible problems, the Trade Registry Regulation
introduces detailed provisions and additional obligations with respect
to this type of conversion. The Regulation also lists the necessary
documentation for the registration of this conversion.
Pursuant to the provisions of the Trade Registry Regulation, Articles
190 and 194/3 regarding the liability of the shareholders of the converted
company and obligations arising from employment agreements shall
apply. Thus, it is foreseen that provisions governing conversion of type
in general regarding the liability of the shareholders, and governing the
obligations of collective and commandite companies shall apply to the
conversion of a company to an enterprise.
In order to prevent problems arising from the fact that the commercial
enterprise will be registered in the name of the shareholders of the
converted company and that such persons shall be personally responsible
for the company’s debts, the Trade Registry Regulation introduces an
additional requirement not regulated under the TCC. Accordingly,
joint stock and limited liability companies who suffer capital losses or
whose capital is not sufficient to cover their debts may not convert to a
commercial enterprise.
Conclusion
The conversion of a commercial enterprise to a commercial company,
and the conversion of a commercial company to a commercial enterprise
are among the innovations introduced with the TCC and are regulated for
the first time under both the TCC and the Trade Registry Regulation. With
these provisions, in addition to the transfer of a commercial enterprise
(an asset transfer), a new mechanism is introduced within the scope of
restructuring transactions governing the commercial enterprise. Acompany
that has a legal personality may convert to a commercial enterprise and
vice versa, and the company or the enterprise registered as a result of such
conversion of type shall be deemed the continuity of the former organism.
In practice, problems related to dissolution without liquidation,
protection of creditors and liability from debts may arise from the
conversion of a commercial company to a commercial enterprise.