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without the presence of a special provision containing such content, a
conditional capital increase cannot be prompted by a general assembly
decision. The content of this provision is specified under Art. 465 TCC
in detail. The provision regarding conditional capital increase may be
inserted after the establishment through an amendment to the articles
of association or in the establishment of the company by inserting a
provision regarding this issue.
The persons who may gain the title of shareholder in the company
through conversion or purchase rights are counted as (i) the creditors
of the company or the group of companies, who became creditors by
owning newly issued bonds or similar debt instruments and (ii) the
employees as defined under paragraph 1 of Art. 463 TCC. In addition,
it has to be stipulated that conversion or purchase rights are provided
not to any creditor of the company but only to creditors of the compa-
ny or the group of companies who are the holders of the newly issued
bonds or similar debt instruments.
The share capital shall automatically increase when and to the
extent the conversion or purchase rights are exercised and the
obligation to pay the share capital is fulfilled by swap or payment.
(Art.463 f.2).
As it is clearly understood from the second paragraph of Art. 463
TCC, the obligation to pay the share capital via a conditional capital
increase may be realized through swap in case of exercise of conver-
sion rights and through payment in cash in case of the exercise of pur-
chase rights. It is not possible to return new capital in-kind. The capi-
tal of the company shall be automatically increased when, and to the
extent that, the conversion and purchase rights provided to the credi-
tors or the employees are exercised through unilateral declaration of
intention and the capital commitment arising due to this exercise is ful-
filled by swap or payment
3
.
The Statutory Restrictions on Conditional Capital Increase
Article 464 TCC sets forth certain restrictions with respect to con-
ditional capital increase.
COMMERCIAL LAW
39
3
KENDİGELEN,
p. 320.