Corporate law: seizure of shareholder's private assets

Doing business is usually taking risks. Of course, it is preferable to do business with companies that are financially powerful. But the main issue is; how do we know for sure that a company is financially strong enough, or that it will last through time?

In case you have a right of claim against a company that appears to be no longer solvent; there is a very minimal chance that the claim will be successful. You will understand, that a won court case does not guarantee the recovery and collection of your claim.

If you are doing business with a company (a Turkish Ltd. or A.Ş.), your contact person is the company as legal entity and not its shareholders personally. If the company is a "bare chicken", a simple debt collection procedure against the company will not yield.

Nevertheless there are still possibilities to hold the shareholders of the company privately liable in addition to the company. This is possible if the company has right of claim against its shareholders. In that case the creditor certainly has a chance to recover his claim from the private assets of shareholders of the company.
Situations where the shareholder can be held personally liable are as follows;

• Be in default with the capital full payment,
• Loan from the company account,
• Owe money to the company for obtained services or goods,
• Claims in the benefit of the company that have been collected privately,
• Personal debts advanced by the company.

You will understand that the accounting of the company is very determining as a burden of proof.

In short, if you have a claim against an insolvent company while the shareholders are driving in expensive cars, or a legal claim against a company that in the meanwhile has gone bankrupt, or otherwise let us advise you further about your legal options.

Or do you have a company in Turkey and you are not sure about proper accounting, let our experts advise you in order that you later on will not be private liable for unexpected collection procedures.

Compulsory Electronic Mailing Address for your Turkish Enterprise

Turkey is rapidly switching to the electronic or digital age. To this end, the Turkish government has recently taken a new step within the scope of the Notification Act. This is a regulation that has been in force since 1 January 2019, whereby certain target groups are required to be in possession of an electronic mailing address (electronic notification), the so-called 'E-tebligat adresi'.

Under the new regulation, public authorities as well as  private companies and sole traders are required to be in possession of an electronic mailing address in order to be able to make all official notifications at this electronic address. This address is issued on request by the local post offices. Although the mandatory deadline for private companies and sole traders  was set for January 31, 2019, this date has been moved to a date yet to be determined. The expansion of the exchange of information between the post office and the Ministry of Commerce is causing the necessary delay.

The electronic mailing address is intended to receive digitally all official notifications from government agencies such as, the courts, the tax authorities, the notaries, the Chamber of Commerce and similar bodies. The purpose of this application is to simplify or speed up the service of official documents to private legal entities and thereby reduce the workload in the public services such as the court and the post office.

If you own or related to a company or enterprise in Turkey, contact your accountant or bookkeeper on time to be sure that he or she has already requested the electronic mail address.

Of course you can also contact us with all your questions regarding your company.

No need for a pass photo on a Tapu

No need for a pass photo on a Tapu (ownership title)

In the past 15 years, the Turkish government has worked hard to digitize civilian personal data in the country. Now it's time to reap the benefits. Simplifying the well-known Turkish bureaucracy has started. As of 10.07.2019 the legal obligation to place a certified passport photo on the official deed of ownership has been lifted.

Whatever action you took at the Tapu, it was previously required that you could identify yourself with a recently taken passport photo not older than 6 months in addition to your ID document. The passport photo was stuck in the official transaction books of the cadastral service and had to be signed by the parties with the deed of purchase and delivery.
The purpose of this was to prevent scams. The official on duty was to ensure as far as possible whether the identity of the applicant corresponds to the person who was registered in the deed.

With the digitization of Turkey, this is no longer necessary. Nowadays getting the very last personal data via the national digital system is a matter of a few minutes. This saves a lot of time and administration for both the civil servant and the citizen.

However, a passport photo is still placed on the Tapu (read: certified copy of proof of ownership) if one so wishes.

Finally, we would like to draw your attention to the fact that there is a so-called QR code on all new extracts (Tapu Senedi). By scanning this with your telephone, the location on which your property rests will be visible. This is a good tool so that you can object on the spot when another lot is shown.

If you have any questions regarding cadastral operations at the Tapu office, do not hesitate to contact us.

Obligation for Property Valuation in Turkey

The Turkish real estate market is dealing for years with unregistered money circulation. Herewith the government is missing a lot of tax rates, due to the fact that investors are not giving up the fair market value with property transactions. The reason therefore is that the legal transfer fees are calculated on base of the purchase amount that the parties declare independently at the title of deed office. And that's the point where it goes wrong. Actually the basic indication for the purchase value is the municipal current market value, but often the municipal market value differs from the fair market value.

Besides the lost tax rates, the buyer is often the victim of unrealistic purchase amounts, with the result that Turkey can not create a stable trade name on the international real estate market.

So far the imposed measures proved to be ineffective. That is the reason why the Ministry is  introducing the obligation of a valuation report starting from 4th of March 2019! Before the deed of purchase and delivery can take place, a valuation report with the fair market value of the object must be established by a recognized valuation company, which will serve as the basis for calculating the property transfer fee.

The regulations are laid down in a Land Registry Regulation by the Ministry of Environment and Urban Development (TKGM). In accordance with this regulation, the procedures of purchase and sale of a property will have to deal with a recognized valuation office that has been approved by the government, the so-called "SPK lisanslı uzmanlar".

With this new regulation, all foreign investors will be subject to the mentioned conditions.  The established valuation report has a validation period of maximum of 3 months from the date of issue. Obtaining a new valuation report within those 3 months is not necessary unless there is such a change to the property that will have an effect on the value. In case of buildings who are under construction, the value will be based on the details of a completed object.

The purpose of the government may be clear, but the remain main question is; whether the intervention of a recognized valuation office will actually benefit the foreigner. On the other hand, it is certainly a fact that the intervention of an recognized valuation office will considerably delay the ownership transactions in a country where the economy is running very fast.

For more information and guidance on your real estate sale or purchase, please contact us.