corportae law Flashcards
business association
2 or more combine their capital and skill
ordinary partnership
simplest most common
constractual joint vertures and consrtiums
construction of mega projects
when 2 or more undertake
each partner contribute money credit property
no formal requirement (written or oral expect when property contribution is made)
doesntneed commercial registry
limited partnership
partners = co-owner
all partners run administrative unless when is authorized solely
partners enter into contract in their own name when dealing with 3rd parties
partners have unlimited(if in debt partners can go after personal assets to satisfy them) and personal liability (responsible for actions in the business)
composed of general (manage and represent partnership, unlimited liability) + limited partners ( don’t represent administrative rights limited liability unless they enter into contracting the name of partnwership)
5 core structures of entities
1- legal peronality
2-limited liability
3-transfarable shares
4- cnetralised management-
5-investor ownership
1- legal personality
company is a legal person
distinct from individuals who areSH
protection from SH’ creditors= entity shielding
entity shielding = 1.grants the creditors as security for the frim’s debts
2.liquadion protetction; SH cannot withdraw their share of firm asset at will nor can the personal creditors : to proetct the concern of the firm against destruction by individial SH
seperate legal pers: organiational forms which wnjoy the benefit of each of the 3 foregoing foundational rule types
2-limited liability
creditors are limited to making claims against assets that are held by the firm no claim against asset that the firm’s SH hold in their own names
protection of SH and owners that prevent being personally responsible or debts = ownershiedling
claims against asset that are property of the firm itself
transfarable shares
conducting business uninteeruptedly
allows SH to have diversified portfolio
flexibility in raising capital
dont mean freely tradable
open corp= trade or stock ex
ınvestor onwership
right to control the firm(approval of tansactionsi, voting)
right to reviece net earning
hard to protect
in non profir = no ownership or earning
joint stock companies
1.incoprporation
2. capital structure
3.general assembly
4. board of directors
- capital structure
may choose basic or registered capital system
initial capital requirement:5000TL 10000 (registered)
basic= max money a company is allowed to raise by selling share
registered= the actual money that SH put into the company by buying shares
- shareholder
A. general assembly
B.SH rights
- incorporation
the company requires legal personality upon entry into the commercial registry
registration at central office
may be formed by a single SH (she can solely exercise all powers of the GA)
founding SH may be legal or real persons
phase 1: drafting signing notorizing the articles
mantarory content of the AoA
person signing : founders
1/4th of subscribed capital should be paid before the registration of the company remain = 24 month
phase 2= registration = the company is registered to the trade registry published at the commercial registry gazette
A. general assembşy
highest organ
the last word in vital matters (removal of BOD member, dividend distribution, modification of articles, capital inc or dec)
i) GA meeting:
main forum of SH
at least once a year
ordinary meeting = first 3 months
may coneved by; the BOD, minority SH who owns at least 10%, individual SH
ordinary quorum= 1/4 of capital (first) member present (second)
quorum of important matters= 1/2 of capitaş (first) 1/3 of capitaş (second)
procedure of invasion: at least 2 week notice, must include agenda
ii) resolution of GA:
simple majority votes
in certain cases 2/3 required
iii) power and duties of GA:
amendment of AoA
election removed absolving of members
election, removing of auditors
decisions
dissolution of company
sale of assets
iv) resolution of GA void if they;
remove the right to participate in general meeting
restrict the right to information of SH
impait ht ebasic structure of the company
B. SH rights
i) right to recieve dividend:
dividend = paid out of net profits and accumulated profits (not all profits distributed every year BOD proposes GA decides)
ii) right to subscribe for new share:
subscribe to newly shared to its existing %
goal=maintain existing capital %
may be rejected with 60% quorum
iii)right to attend GA meeting;
participate
vote : at least 1 vote, acquire the right to vote upon payment,
iv) tight to obtain info:
only GA meetings
may demand info from BOD or auditors
may be refused if jeoprodizes company secret
imspect commercial books with the permission of BOD on GA
if declined = from court
v) right to instigate a special audit
SH may request clarification of suspicious matters at GA by special audit
if denied= SH with min %10 may apply to court
- BOD
i) formation :
1 or more members elected by GA
may or may not be SH
legal persons can be BM
may not be elected for more than 3 years
AoA may determine other conditions
ii) duties:
non-transfarable: management
fixing company structure
organisation of accounting
appointment and dismissal od representatives
supervision of persons involved
representational power: default rule : joint structure
least 2 members
can be delegated to member or non member
at least pf BM should represent the company
iii) resolutions majority of votes
may be adopted w/o conveying any meeting
dissolution of company
SH. with min %10 can request disolution
remedies: dissolution
leave the company
alternative solution
Raison d’être of ‘corporate dissolution for just causes’
Compared to one-off agreements (eg. sale), market failures are inevitably more
obvious in corporate contracts
o Unequal negotiation powers btw majority and minority SH
o Informational asymmetries – devoid from contractual mechanisms (eg. put option) o Opportunistic behaviour: Corporate decisions taken by majority
* Minority SH is locked-in the company o Share transfer restrictions
o Lack of a liquid market of shares
* Enabling minority shareholders to force corporate dissolution in cases of serious oppression is justified by these market failures - to escape opportunistic controllers
Aims to protect minorities against abuse of the majority rule by giving the claimant
an opportunity to exit with a fair value of her investment
* Example:
- The controller receives excessive payments as a board member
- No dividend distribution for 4-5 years
- Thecompanylosescredibility➔increaseoffinancingcosts; Corporate assets are reduced ➔ decrease of the value of shares
- Negative externalities upon the minority while the controller makes profit
✓Buy-out remedy: a kind of put option conditional upon serious oppression, and sweeps potential profit for the controller – How?
chartr
the contract that binds participants
basic terms of the relationship among the SH directors and amnagers
default provisions
standart contract
saves cost
simplifies
public good
benefit from gap filling
a degree of assurance that the provision will not become anachrachtic
SH
primal value
statuary amendement
can provide for non foreseable situations as they arise by altering existing rules
GA can be coneved by
BOD
minority SH at least 10%
isndividual SH if there is a lock up in BOD
lock up= preventing insiders from selling their shares for a long period of time
liability of board members
Board may convene with the majority of the members and pass resolutions with majority of votes cast
▪ Resolutions may also be adopted in writing w/o convening any meeting (circular resolution)
✓Members settled in different countries
they are;
jointly liable
vis-a-vis the SH and creditors
for the damages of the company
in case of delegation of power to a 3rd person, the board is still liable for damages if it did not act with a reasonable level of diligence when delegating
4) private limited company
4i) incorporation
mandatory info:
name + seat
amount of basic capital
object activity of company
nominal value of shares
names of managers
producer to be followed
registration in the commercial register
4 ii) capital structure
min=10000 tl
amount stated paid in 24 months
AoA may state the obligation to make additional financial and material contributions
4 iii) SH
resolutions may be adapted by circular resolution = not in JSC
different power from JSC = consenting to transfer of shares
4 iv) sh rights
- liable for public debt
-may need additional contributions
-duty of loyalty ( cant enter transactions for their own benefit when in conflict with corporate purpose, safeguard secrets, AoA may further prohibit SH from carrying on any activities in competition with the company) - dividends (net profit + funds reserved) (dividend + additional financial contribution)
-right to obtain indo(on JSC only in GA meeting, inspection approved by GA or BOD in JSC )
-transfer of company shares(unlike JSC should be in written agreement, requires consent AoA may prohibit consent)
4v) management
-management should be regulated bu AoA
- at least 1SH should be empowered to manage (unlike JSC)
- a legal entity may be appointed as manager, but a person should be designated at function(must be registered and publicly notified in gazette)
corporarte governance
rltship btwn management-SH-stakeholders
cominant concept in TCC
Corporate governance is the system of rules, practices and processes by which a company is directed and controlled.
corporate gıvernence features
transpereny
right to informatiın and to inspect
corporate governance report
use of new technologies
under tcc every limited liability compnay must establish website
mandatory public notificaiton
docs, explanationa
auditing reports
financ,al stats
single SH company
introduced by TCC
a single or real person may own a company
GA and BOD may consist of 1 person
