Upon application of Yozgat 2nd Civil Court of First Instance, the Turkish Constitutional Court has annulled articles 1, 2, 3 and 4 of the Law on Transfer of Companies’ Time-Barred Coupon Bond and Share Amounts to the Treasury numbered 2308 (“Law”).
The provisions subject to the application stipulate the transfer of the following to the government:
- Benefits of share certificates of joint-stock companies, limited companies and silent partners of partnerships limited by shares, such as interest, dividends, and bonus which are time-barred for five years without a legal excuse, and
- The fees transformed by these companies’ share certificates and stocks, which are time-barred for ten years.
Yozgat 2nd Civil Court of First of Instance stated in its application that provisions subject to the objection:
- Interfere with the relationship between the companies and their shareholders; consequently, violate the right of property,
- May have irrecoverable results for companies and their shareholders.
Turkish Constitutional Court reviewed these provisions and stated that they result in:
- The termination of property right on benefits and amounts qualified as companies’ debts which are statute-barred,
- Elimination of companies’ probability to pay their debts to their shareholders,
- burdening companies with extraordinary and excessive loads when compared to the public interest.
In the light of these assessments, the Constitutional Court annulled the articles 1, 2, 3 and 4 of the Law as these provisions excessively limit the companies’ right of property.
Please see this link for the full text of the decision of the Turkish Constitutional Court dated 10 April 2019, numbered 2018/136 E. 2019/21 K, published in the Official Gazette dated 20 June 2019 and numbered 30807 (only available in Turkish).
Information first published in the MA | Gazette, a fortnightly legal update newsletter produced by Moroğlu Arseven.