What is a bearer share?
Pursuant to Articles 486 and 487 of the Turkish Commercial Code, if the share capital of a Joint Stock Company has been issued to bearer, bearer shares must be issued and distributed to the shareholders within 3 months after the full payment of the share price.
The start date of the 3-month process to take advantage of bearer shares is the date on which the bearer shares are paid in full. If the full share price has not been paid, it is not possible to issue bearer share certificates since a Board decision is required in order to issue bearer shares, and the decision must be registered in the trade registry. If the capital has not been fully paid, the trade registry will not register the decision and ask the company to pay the capital in full and apply again. This is clearly set out under Article 484 of the Turkish Commercial Code: “Bearer shares cannot be issued unless the share price has been fully paid. Those issued in violation of this provision shall be invalid. The rights of bona fide purchaser to compensation are reserved.”
Article 486 of the Turkish Commercial Code also stipulates that the Board decision for issuance of bearer shares shall be published on the website of the company after being registered and announced in the Trade Registry Gazette. As can be understood from the Article, a Board decision must be taken to issue bearer shares. The Board of Directors makes a decision to issue bearer shares, and then this decision is registered in the trade registry and announced. In addition, the decision is also published on the company's website.
Documents required for issuing bearer shares
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The Trade Registry Gazette issue where the establishment of the Joint Stock Company has been announced;
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If the Joint Stock Company used to be a Limited Company, the Trade Registry Gazette issue where the change of type has been announced;
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If the capital has been increased after the establishment, the Trade Registry Gazette issue where the latest capital increase has been announced;
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If the title of the company has been changed, the Trade Registry Gazette issue where the title change has been announced;
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The Board decision for the issuance of shares;
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The Trade Registry Gazette issue where the Board decision has been announced.
Advantages of bearer shares
The most important advantage of bearer shares is the ease of transfer. Additionally, it has certain advantages since it is not registered in the share ledger. Bearer share certificate should be well protected. Losing the certificate may cause a serious headache. In the event that the certificate is lost, it is important to report it immediately to the relevant authorities.
In addition, you can easily transfer any part of your share in the company to a second person without anyone knowing. It is not known who has what percentage of the shares in a company that has issued bearer shares. The person may have transferred a certain portion to someone else. Of course, companies can issue some of their shares as registered shares and some as bearer shares while preparing the articles of association. The major shareholder or the Board of Directors of the company may issue their own shares as bearer shares and other shares as registered shares in order to track the shares outside the Board more transparently. If you have any questions about the advantages of bearer shares, you can call our company and get free support.
Registered Shares
What is a registered share?
Registered Shares, which are widely preferred by joint stock companies today, have become almost mandatory for the interests of a company. If a company's shares are not fully paid, the company is not entitled to issue bearer shares. In this case, it is easier and safer to issue registered shares.
A significant advantage of registered shares over bearer shares is that they do not carry the risk of being lost. If the share certificate is acquired by someone else, no transaction can be made since the name and surname of the shareholder are on the registered share certificate as well as the wet-ink signature of the owner of the share. There is a transfer table on the back-side of the certificate for transfer of the registered share The documents required from joint stock companies for issuing registered shares are listed below in detail.
Documents required for issuing registered shares
– The Trade Registry Gazette issue where the establishment of the Joint Stock Company has been announced;
– If the Joint Stock Company used to be a Limited Company, the Trade Registry Gazette issue where the change of type has been announced;
– If the capital has been increased after the establishment, the Trade Registry Gazette issue where the latest capital increase has been announced;
– If the title of the company has been changed, the Trade Registry Gazette issue where the title change has been announced;
– The Board decision for the issuance of shares;
– The current list of participants (shareholders' address information).
The transfer of registered shares must be registered in the company's share ledger after issuance. Registering and announcing the Board decision are not required for issuance of registered shares. If there are more than two authorized signatories in the company, the Board decision must be signed by at least two authorized signatories. If the joint stock company does not have more than two authorized signatories, a single signature is sufficient.
Transfer of registered shares
It is quite easy to transfer registered shares of a joint stock company. The shares can be transferred easily by using the transfer table on the backside of the share certificate. This process can be carried out anywhere. The transfer takes place when the name, surname, and signature of the transferor, the name, surname, and signature of the transferee, and the signatures of the authorized signatories of the company are put on the certificate.
After this process, the transferee becomes the new owner of the shares. Therefore, it should be ensured that all conditions in the agreement are fulfilled before the transfer. On the other hand, the transfer process is not complete at this point. After this process, the transfer must be recorded in the share ledger. Unless it is proven that the shares have been duly transferred, the transferee cannot be recorded as the new owner of the shares in the share ledger. The person is not considered to be a shareholder of the company without being registered in the share register. If the transfer is not registered in the share ledger for any reason, the transfer is only a sales contract between two parties, and the transferee is not considered to be a shareholder.
Difference between registered shares and bearer shares
The most significant difference between registered shares and bearer shares is that the name of the shareholder is written on the registered share certificate, whereas no name is written on the bearer share certificate. Another difference is the process of share transfer. Registered shares are transferred using the transfer table on the back side of the share certificate, whereas bearer shares are simply transferred by delivering the certificate to the transferee without any name or signature.
Joint stock companies may issue bearer shares provided that the share prices are paid in full and the relevant article of the Articles of Association of the company includes a provision that bearer shares may be issued. However, joint stock companies usually prefer issuing registered shares. Upon the request from minority shareholders, it becomes mandatory for the joint stock company to issue registered shares. In the event that minority shareholders make a written or oral request for issuance of registered shares, the Board of Directors must immediately process this request, issue registered shares, and distribute the shares to shareholders.
Joint Stock Companies are not obliged to issue registered shares if the minority shareholders do not have such a request. However, many experts recommend Joint Stock Companies to print registered shares immediately, as the holders of registered shares have tax and VAT advantages.
In order for a shareholder of a Joint Stock Company to benefit from these tax and VAT advantages introduced by the new law, they must have printed shares. If the shares are transferred after 2 years following the issuance, the income generated from this transfer is exempt from taxation. Also, the company is exempt from a significant portion of the accrued VAT for increase in value.