ERDEM-NEWSLETTER-2018-metin

31 COMMERCIAL LAW Additionally, in accordance with Article 12 of the CML, in the event that the market price or book value of the issued shares are higher than their face value, the Capital Markets Board is entitled to order a particular capital increase where the shares must be issued at premium, or the pre-emption right must be used on the market price. Pursuant toArticle 460 of TCC, in order to make a premium capital increase, a joint stock company must declare the principles regarding the premium and the application of the procedure in accordance with its articles of association, and publish these principles and procedures on its web site, and it must provide all other necessary information according to the principles of public disclosure. Furthermore, as for the publicly quoted joint stock companies that have adopted a registered capital system, the consideration of the shares to be issued within the scope of Article 12 of the CML must be paid fully, and in cash, together with the premium amount. Premiums Obtained Through Capital Increase Pursuant to Article 519 of the TCC, the premiums must be added to the company’s legal reserve funds after deducting the issuance costs, redemptions, and charitable provisions. According to the same Article, unless the total amount of the legal reserve fund does not exceed one-half of the principle or registered share capital, the legal reserve funds may only be used in order to recover company losses, to continue the company’s operations when it is experiencing financial distress, or to take the necessary measures to prevent unemployment. If the legal reserve funds exceed one-half of the company’s share capital, the general assembly of the company is entitled to decide how to use this overage amount 5 . Even though there is no consensus between the scholars as to whether or not premiums that exceed one- half of the principle or registered share capital can be distributed to shareholders, according to the Ruling of the Revenue Administration dated 20.10.2015 and numbered 62030549-125[6-2014/105]-88462, any premiums that exceed the abovementioned legal threshold may be distributed to the shareholders. 5 Poroy/Tekinalp/Çamoğlu , p.323.