ERDEM-NEWSLETTER-2018-metin

10 NEWSLETTER 2018 Share Pledges in Limited Liability Companies * Prof. Dr. H. Ercument Erdem Shareholders of limited liability companies may pledge the shares of limited liability companies for their debts, debts of the limited li- ability company, or the debts of third parties. The subject of the pledge right established on the company’s share is partnerships rights regard- ing assets. Thus, the limited company share pledge is subject to the Turkish Civil Code (“Civil Code”) regulations regarding the right of pledge over receivables and other rights. In addition, the Turkish Commercial Code (“TCC”) also introduces special regulations on the pledge of shares of limited liability companies. While examining the regulations regarding the pledge of shares of a limited company, the distinction made in TCC Article 600 shall be taken into account. Accordingly, if the share pledge is subject to the approval of the general assembly, TCC Articles 595 to 598 also apply to the pledge of the shares of a limited liability company. In cases where the shareholder’s pledge is not subject to the approval of the general assembly, only the provisions of the Civil Code regarding the right of pledge on the rights are applied. In this article, parallel to the regulation of the TCC, the establish- ment of a pledge on the share of a limited company is examined by making a dual distinction according to whether or not the pledge is subject to approval of the general assembly. The Condition where the Share Pledge is Subject to Approval of the General Assembly The pledge of the share of the limited company is distinctly regulated under Article 600 of the TCC. Article 600(2) of the TCC stipulates that the pledge of the capital share may be subject to the * Article of June 2018

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