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Capital Reduction within the Scope of the Turkish
Commercial Code
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Prof. Dr. H. Ercument Erdem
General
Capital reduction is regulated under articles 473-475 of the
Turkish Commercial Code No. 6102 (“TCC”). The capital of a joint
stock company can be reduced in order to (i) return some of the capi-
tal to the shareholders, and (ii) recover the company’s loss.
A capital reduction may also be made concurrently with the capi-
tal increase where fully paid new shares will be issued in the amount
of the reduced capital.
Capital reduction requires an amendment to the Articles of
Association. Board of directors shall prepare an amendment text con-
cerning the reduction.
Decision regarding capital reduction is reserved to the competence
of the general assembly. Pursuant to Article 408/1,a TCC, the general
assembly cannot delegate said power to another body.
The Board of directors shall prepare and submit to the general
assembly a report stating the purpose, scope and procedure of the cap-
ital reduction. This report shall be registered and announced together
with the resolution for capital reduction.
There are certain limitations regarding the amount of the capital
which can be reduced. According to Article 332 TCC, basic capital
representing the entire capital subscribed in the articles of association
may not be less than fifty thousand Turkish Liras and the initial capi-
tal may not be less than one hundred thousand Turkish liras in joint
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NEWSLETTER 2014
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Article of August 2014