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ed in the articles of association. In other words, being a surety may not
be regarded as a transaction, which is beyond the company’s subject of
activity, pursuant to Art. 371/2 of the TCC. Art. 371/2 of the TCC shall
not apply to surety and guarantee transactions and, thus, joint stock
companies may not claim that they are not bound by such transactions.
In this respect, a company’s capacity of becoming a surety and provid-
ing a guarantee shall be determined pursuant to Art. 125 of the TCC,
and the guarantee provided by a joint stock company shall be valid.
Considering the fact that the relevant decisions were rendered when the
ultra vires principle was valid, Art. 125 of the TCC, which does not
refer to the ultra vires principle, will not introduce any novelty on the
freedom of becoming a surety, which was already acknowledged by the
commercial companies, but will assure the application of this practice
setting forth such freedom
7
. For all these reasons, in practice, the banks’
requiring an explicit provision in the articles of association of the joint
stock companies with respect to being a surety, or providing a guaran-
tee when taking a guarantee from the companies in order to secure their
loans, is inconsistent with the spirit of the TCC, as well as being incon-
sistent with the established Court of Cassation precedents.
Conclusion
Following the entry into force of the TCC, the principle that limits
the companies’ ability to be the subject of rights concerning their sub-
ject of activity has lost its validity. However, Art. 371/2 of the TCC, by
setting forth a special provision for joint stock companies, ensures that
the effect of a company’s subject of activity over representation con-
tinues against third parties. In this respect, it is important to understand
and examine the meaning of the subject of activity. Pursuant to the
established precedents of the Court of Cassation, and pursuant to the
doctrine, surety and guarantee transactions are considered to be ordi-
nary transactions of companies, and they are included in companies’
subjects of activity in accordance with the ordinary flow of commer-
cial life even, if they are not explicitly set forth in those companies’
articles of association. Therefore, joint stock companies are entitled to
become a surety and provide guarantees even though there is no explic-
it provision in their articles of association.
COMMERCIAL LAW
49
7
Burak Özen
, Kefalet Sözleşmesi, İstanbul 2012, p. 172.