Capital increase in Joint Stock and Limited Companies in Turkey is one of the most common corporate actions, widely used to achieve growth objectives and strengthen financial structure. This process is regulated under the Turkish Commercial Code (TCC) and the Capital Markets Law (CML), supported by specific requirements and reporting obligations in practice.
In particular, Article 462 of the TCC sets out the procedures and principles of capital increase. However, certain ambiguities that arose in practice were clarified by the Ministry’s opinions and regulations published in the Official Gazette. The regulation published in the Official Gazette dated 30 December 2012, No. 28513 provided clear guidelines on the steps to be followed during capital increases.
Legal Basis of Capital Increase
- Turkish Commercial Code (TCC) Article 462: Determines the methods of capital increase.
- Capital Markets Law (CML) No. 6362: Governs capital increase practices in publicly held companies.
- Ministry Circulars and Communiqués: Sent to Trade Registry Directorates to ensure uniform application.
Accordingly, companies may increase their capital either through capital commitment or by adding internal resources to capital.
Methods of Capital Increase
1. Capital Commitment Method
Shareholders commit a specific amount of capital, which can be contributed in cash or in-kind.
- Publicly held companies may apply to the Capital Markets Board (CMB) to use this method.
- The same method applies to non-public joint stock and limited companies.
2. Capital Increase from Internal Resources
Reserves such as legal reserves, retained earnings, or revaluation funds shown in the balance sheet may be capitalized.
- This allows the company to strengthen its capital structure without an external cash inflow.
- For registration, the existence of such resources must be documented.
3. Simultaneous Increase
In some cases, companies may both convert internal resources into capital and commit additional capital simultaneously.
- If the committed capital exceeds the amount converted from internal resources, unanimous approval at the general assembly is required.
- This ensures that shareholders’ rights are protected.
Reporting Obligation for Capital Increase in Turkey
Capital increase in Joint Stock and Limited Companies in Turkey must be supported not only by the will of shareholders but also by audit reports. Without such reports, the Trade Registry does not proceed with registration.
- Increases from Equity:
- Verification of whether the company’s capital is genuinely preserved within equity is required.
- A report prepared by a Sworn-in Certified Public Accountant (YMM) or a Certified Public Accountant (CPA) must be submitted.
- In joint stock companies, the report must also state whether the funds to be capitalized comply with the legislation.
- Increases from Internal Resources:
- Annual financial statements approved by the board of directors are taken as the basis.
- To prove the actual existence of resources, a YMM or CPA report is required.
- If more than six months have passed since the balance sheet date, an interim balance sheet approved by the general assembly must be prepared.
General Assembly and Registration Process
For a capital increase to be valid:
- A General Assembly Resolution must be adopted.
- The resolution must clearly state the method of increase, the amount, and the sources.
- The resolution must be notarized and submitted to the Trade Registry Directorate.
- Reports showing that the increase is completed, payments are made, or resources are transferred must be attached.
The Trade Registry Directorate registers the capital increase only if all documents are submitted completely.
Importance of Capital Increase
Capital increase not only strengthens the company’s financial structure but also:
- Enhances the company’s creditworthiness,
- Provides financing for new investments,
- Builds trust among shareholders,
- Increases attractiveness for both domestic and foreign investors.
Errors or omissions in this process may jeopardize both the company’s financial health and shareholders’ rights.
Secure Process with Professional Support
Capital increase in Joint Stock and Limited Companies in Turkey is a process requiring technical expertise and experience.
- Incorrectly prepared petitions,
- Missing documentation,
- Insufficient audit reports
may cause delays or rejection of the application.
Professional consultancy ensures the process is completed correctly and efficiently.
At ÖzbekCPA, we provide expert support in capital increase procedures for both Joint Stock and Limited Companies in Turkey, managing every step from preparation to registration on your behalf.
Useful Links
- Turkish Trade Registry Gazette
- Incorporating a Joint Stock Company in Turkey
- Incorporating a Limited Company in Turkey
- Opening a Branch in Turkey
- Opening a Liaison Office in Turkey
- Turkish Commercial Code
- Ministry of Industry and Technology
- Social Security Institution of Turkey (SGK)
- Revenue Administration of Turkey (GIB)
- Istanbul Chamber of Commerce (ITO)
