Unpaid Share Capital in a Turkish Joint Stock Company: Default, Contract Penalty and Forfeiture of Shares (TCC 480-483)

What happens if a shareholder of a Turkish joint stock company (anonim şirket) does not pay for the shares they subscribed? Under Article 482(1) of the Turkish Commercial CodeTTKTurkish Commercial Code No. 6102The statute that governs merchants, companies, commercial paper, insurance and carriage — the framework a foreign business actually operates inside.Glossary → (TCC, Law No. 6102), a shareholder who misses the period for performing the capital contribution obligation owes default interest, and no warning is needed for it. Under TCC 482(2), the board of directors is also authorised to deprive the defaulting shareholder of the rights arising from the subscription undertaking and from the partial payments made, to sell the share concerned and take someone else in their place, and to cancel any share certificates issued to them; this is forfeiture (ıskat). Under TCC 483(1), forfeiture and a contract penalty require a prior warning giving the shareholder one month to pay. Below: what a shareholder owes and when (TCC 480, 344, 345), how the board calls for payment (TCC 481), the cost of default (TCC 482), the forfeiture procedure step by step (TCC 483), what forfeiture leaves behind (TCC 483(3), 519(2)(b)), transfers of partly paid shares (TCC 491, 501), a comparison table and a checklist for foreign investors and co-founders. The payment provisions of the Capital Markets Law are reserved by TCC 344(2) and are not covered here.

1. What Happens If a Shareholder Does Not Pay for Their Shares in a Turkish JSC? (TCC 482)

The direct answer. Three consequences sit in one article. Under TCC 482(1), a shareholder who does not perform the capital contribution obligation within the period is liable to pay default interest without the need for a warning. Under TCC 482(2), the board of directors is, in addition, authorised to deprive the defaulting shareholder (mütemerrit pay sahibi) of the rights arising from the subscription undertaking (iştirak taahhüdü) and from the partial payments made, to sell the share concerned and take someone else in their place, and to cancel any share certificates issued to that shareholder. Under TCC 482(3), the articles of association may oblige shareholders to pay a contract penalty in case of default, and TCC 482(4) reserves the company's rights to compensation.

Why the distinction matters. The four paragraphs of TCC 482 do not share one procedure. Default interest under TCC 482(1) arises without a warning. Forfeiture under TCC 482(2) and the contract penalty under TCC 482(3) are tied to the warning procedure in TCC 483(1), which opens with the words “for the second and third paragraphs of Article 482 to be applied”. A board that wants to remove a non-paying co-founder therefore works through TCC 483 first; a board that wants interest on a late instalment does not need to.

A board power. The verb in TCC 482(2) is “is authorised” (yetkilidir). The Code gives the board of directors the power to forfeit, exercised after the warning procedure in TCC 483(1).

Who this affects. Foreign investors who subscribe for cash, co-founders who agreed to pay the balance of their shares later, buyers of partly paid shares and the other shareholders of the company.

2. What Exactly Does a Shareholder Owe, and When? (TCC 480, 344 and 345)

The direct answer. A shareholder owes the share price and any issue premium. Under TCC 480(1), except for the exceptions provided by law, no obligation other than paying the share price or the premium exceeding the nominal value of the share may be imposed on a shareholder by the articles of association. For shares subscribed in cash, TCC 344(1) sets the timetable: at least twenty-five per cent of the nominal value is paid before registration, and the rest within twenty-four months following the registration of the company; the issue premiums of the shares are paid in full before registration.

The general rule behind it. In the Code's general provisions on commercial companies, TCC 128(1) states that every partner is indebted to the company for the capital they undertook to contribute in the duly drawn up and signed company contract. TCC 128(7) adds that the company may demand and sue for performance of each partner's capital contribution obligation, and may also claim compensation for the damage suffered because of delay in performance; a warning is required for the compensation claim.

Where the money goes. Under TCC 345(1), cash payments are deposited in a special account opened in the name of the company being formed, at a bank subject to Banking Law No. 5411, in such a way that only the company can use it. Payment of the amounts of the subscribed shares provided for by law, or provided for by the articles where higher than the statutory amount, is proven by a bank letter addressed to the trade registry, and the bank pays that amount only to the company upon presentation of a registry letter stating that the company has acquired legal personality. If the company does not acquire legal personality within the three-month period counted as set out in TCC 345(2), the amounts are returned by the bank to their owners upon presentation of a registry letter confirming this.

No refund of capital. Under TCC 480(3), shareholders cannot demand back what they gave to the company as capital; their rights to the liquidation share are reserved.

Secondary obligations. TCC 480(4) provides an exception linked to transfer restrictions: where share transfers are subject to the company's approval, the articles may also impose on shareholders, besides the debt arising from the capital undertaking, an obligation to perform non-monetary acts recurring at certain times. The nature and scope of these secondary obligations may be written on the back of the share certificates or interim certificates. TCC 481(2) allows the articles to provide a contract penalty for these secondary obligations as well.

Capital increases. The same payment rules follow new money. Under TCC 459(3), in a capital increase by subscription in the share capital system (esas sermaye sistemi), Articles 344 and 345 apply by analogy to the payment of the share prices, and TCC 460(3) applies Article 459 by analogy to the registered capital system for matters including the subscription of new shares and the minimum cash amount to be paid. Under TCC 459(2), the subscription form states, among other things, the amount paid in advance and the period for which the subscriber is bound.

Voting before full payment. Under TCC 435(1), the voting right arises upon payment of the minimum amount of the share determined by law or by the articles of association.

3. How Does the Board Call for the Unpaid Share Price? (TCC 481)

The direct answer. Under TCC 481(1), the share prices are requested from shareholders by the board of directors, by announcement, unless the articles of association provide otherwise. The announcement clearly states the rate or amount of the capital debt to be paid, the payment date and where the payment is to be made.

Reading the articles first. The words “unless the articles of association provide otherwise” leave room for the articles to set a different rule for the call. Co-founders who negotiated a payment schedule in a shareholders' agreement can align it with the articles so that the board's call and the agreed dates match.

Link to default. TCC 482(1) refers to a shareholder who does not perform the capital contribution obligation “within the period” (süresi içinde). TCC 482(1) does not itself define that period; the texts to check are the statutory timetable in TCC 344(1), the articles of association and the board's call, which states the payment date (TCC 481(1)).

4. When Is a Shareholder in Default, and What Does It Cost? (TCC 482(1), (3) and (4))

The direct answer. A shareholder who does not perform the capital contribution obligation within the period owes default interest under TCC 482(1), and the statute adds the words “without the need for a warning” (ihtara gerek olmaksızın). On top of the interest, the articles of association may oblige shareholders to pay a contract penalty in case of default (TCC 482(3)), and the company's rights to compensation are reserved (TCC 482(4)).

Default interest. TCC 482(1) does not itself state a rate; investors who need a figure can check the rate in force at the relevant time.

Contract penalty. TCC 482(3) is permissive: the articles may oblige shareholders to pay a contract penalty in case of default. Without such a clause in the articles, there is no statutory penalty under TCC 482(3). Where a clause exists, TCC 483(1) applies: the warning must state that the contract penalty will be claimed if the amount in default is not paid within one month.

Compensation. TCC 482(4) reserves the company's rights to compensation. In the general provisions, TCC 128(7) lets the company claim compensation for the damage it suffered because of delay in performance of the capital contribution, and requires a warning for that compensation claim. The warning requirement in TCC 128(7) is attached to the compensation claim; TCC 482(1) states that default interest arises without a warning.

Performance claim. The company may also demand and sue for performance of the capital contribution obligation (TCC 128(7)). TCC 482(2) frames forfeiture as an authority of the board of directors.

5. How Does the Forfeiture (Iskat) Procedure Work Step by Step? (TCC 483)

The direct answer. Under TCC 483(1), for the second and third paragraphs of Article 482 to be applied, the board of directors issues a warning to the defaulting shareholder by announcement in the gazette referred to in Article 35 and in the manner provided by the articles of association, with a message also to be published on the company's website. The warning states that the defaulting shareholder must pay the amount in default within one month, failing which they will be deprived of their rights relating to the shares concerned and the contract penalty will be claimed. The gazette referred to in Article 35 is the Turkish Trade Registry Gazette (Türkiye Ticaret Sicili Gazetesi) (TCC 35(4)).

Registered shares. Under TCC 483(2), for holders of registered share certificates (nama yazılı pay senetleri), this invitation and warning is made by registered letter with return receipt and by a website message, instead of an announcement. The one-month period starts from the date the letter is received.

The steps in order. Reading TCC 481, 482 and 483 together, the procedure runs as follows:

1. Call for payment. The board calls for the share price by announcement, unless the articles provide otherwise, stating the rate or amount, the payment date and the place of payment (TCC 481(1)).
2. Default. The shareholder does not perform within the period; default interest runs without a warning (TCC 482(1)).
3. Warning. The board issues the warning: announcement in the Turkish Trade Registry Gazette and in the manner provided by the articles, with a website message (TCC 483(1)); for holders of registered share certificates, a registered letter with return receipt and a website message (TCC 483(2)).
4. Content of the warning. It states the one-month period to pay the amount in default and that, failing payment, the shareholder will be deprived of their rights relating to the shares and the contract penalty will be claimed (TCC 483(1)).
5. One month. The period runs; for registered share certificates it starts on receipt of the letter (TCC 483(2)).
6. Board decision. If payment is not made, the board may exercise its authority under TCC 482(2): deprivation of rights, sale of the share and replacement of the shareholder, and cancellation of certificates issued.
7. Announcement of cancellation. If the cancelled share certificates cannot be obtained, the cancellation decision is announced in the Turkish Trade Registry Gazette and also in the manner provided by the articles (TCC 482(2)).

Drafting the notice. TCC 483 names the company's website in both routes, and the content of the warning is set by statute: payment within one month, deprivation of rights relating to the shares and the claim for the contract penalty. Boards and advisers can draft the notice from the text of TCC 483(1) itself.

6. What Are the Consequences of Forfeiture for the Defaulting Shareholder and the Company?

The direct answer. On forfeiture, the defaulting shareholder is deprived of the rights arising from the subscription undertaking and from the partial payments made, the board may sell the share and take someone else in their place, and any share certificates issued to them may be cancelled (TCC 482(2)). Under TCC 483(3), the defaulting shareholder remains liable to the company for the amount left open by the new shareholder's payments. TCC 483(4) reserves Article 501 on registered shares whose price is not fully paid.

Partial payments. TCC 482(2) speaks of depriving the defaulting shareholder of the rights arising “from the partial payments made” (yaptığı kısmi ödemelerden doğan haklarından). The wording covers the rights arising from the partial payments made as well as those arising from the subscription undertaking.

Sale and a new shareholder. The board may sell the share concerned and take someone else in place of the defaulting shareholder (TCC 482(2)). The Code does not set a sale method in this article. For any amount the new shareholder's payments leave open, TCC 483(3) makes the defaulting shareholder liable to the company.

Cancelled certificates. Where share certificates had been issued to the defaulting shareholder, the board may cancel them; if the cancelled certificates cannot be obtained, the cancellation decision is announced in the Turkish Trade Registry Gazette and also in the manner provided by the articles of association (TCC 482(2)).

Where the forfeited money goes. Under TCC 519(2)(b), the amount paid for the price of share certificates cancelled due to forfeiture, after deducting the issue expenses of the new certificates to be given in their place, is added to the general legal reserve, and TCC 519(2) applies this even after the twenty-per-cent limit in TCC 519(1) has been reached.

7. Can Partly Paid Shares Be Transferred, and Who Pays the Balance? (TCC 484, 486, 491 and 501)

The direct answer. Registered shares whose price has not been fully paid can be transferred only with the company's approval, unless the transfer takes place by inheritance, division of an estate, the matrimonial property regime or enforcement proceedingsİcra takibiEnforcement proceedingA state-run collection proceeding opened through an Enforcement Office (İcra Dairesi) to recover a debt — in many cases without first winning a lawsuit.Glossary → (TCC 491(1)). Under TCC 501(1), a person who acquires such a registered share becomes liable towards the company to pay the remaining share price once entered in the share ledger (pay defteri).

Approval may be refused only in the case the Code sets out. Under TCC 491(2), the company may refuse to give approval only if the acquirer's ability to pay is doubtful and the security requested by the company has not been provided.

When the original subscriber is released. Under TCC 501(2), where a person who made a subscription undertaking at the formation of the company or at an increase of the share capital transfers the share to someone else, the unpaid part of the price cannot be claimed from them, unless the company went bankrupt within two years from the date of its formation or of the capital increase and the acquirer was deprived of the rights arising from the share. Under TCC 501(3), a transferor who is not subject to paragraph 2 is released from their debts once the acquirer is entered in the share ledger.

No bearer certificates. Under TCC 484(2), bearer share certificates cannot be issued for shares whose prices have not been fully paid; certificates issued in breach of this rule are invalid, and the compensation rights of persons acting in good faith are reserved. Under TCC 486(2), for bearer shares the board prints and distributes share certificates within three months from the date the share price is paid in full.

Before registration. Under TCC 486(1), shares issued before the registration of the company or of the capital increase are invalid, but the obligations arising from the subscription undertaking remain valid. The subscription obligations remain valid even where a share issued before registration is invalid.

Capital increases and liquidation. Under TCC 456(1), except for an increase from internal resources, the share capital cannot be increased as long as the cash prices of the shares have not been fully paid; non-payment of amounts not considered significant relative to the capital does not prevent the increase. In liquidation, the liquidators are obliged, where necessary, to collect the parts of the share prices not yet paid (TCC 542(1)(a)).

Limited companies. For a limited liability company (limited şirket), TCC 585(1) applies the joint stock company provisions on payment of the share prices, place of payment, the obligation to perform, the consequences of non-performance and transfer of shares not fully paid by analogy; the requirement to pay at least twenty-five per cent of cash-subscribed shares before registration does not apply to limited companies, and Article 588(1) is reserved. This article focuses on the joint stock company.

8. Remedies for Unpaid Share Capital Compared

The table sets out each remedy, its statutory basis, whether a warning is needed and who acts.

TCC 482(2) opens with the word “also” (ayrıca), adding the board's forfeiture authority to the default interest in TCC 482(1), and TCC 482(4) reserves the company's rights to compensation.

9. Practical Checklist for Foreign Investors and Co-Founders

Foreign investors entering a Turkish joint stock company, and co-founders agreeing on how capital will be paid in, can work through these statutory points:

1. Map the payment timetable. At least twenty-five per cent of the nominal value of cash-subscribed shares before registration, the rest within twenty-four months following registration, and the full issue premium before registration (TCC 344(1)).
2. Check the bank route. Cash goes to a special account in the name of the company being formed at a bank subject to Law No. 5411, usable by the company alone (TCC 345(1)).
3. Read the articles on calls and penalties. Check whether the articles provide a different rule for the call (TCC 481(1)) and whether they impose a contract penalty for default (TCC 482(3)) or for secondary obligations (TCC 481(2)).
4. Diarise the period. Default interest runs without a warning once the period is missed (TCC 482(1)); keep the board's call and evidence of payment.
5. Prepare the warning. Draft it from TCC 483(1) and include the website message both routes require (TCC 483(1) and (2)).
6. Record receipt dates. For holders of registered share certificates, the month starts on receipt of the registered letter (TCC 483(2)).
7. Plan the replacement. If the board sells the share and takes someone else in the defaulter's place, the defaulter remains liable for the amount left open by the new shareholder's payments (TCC 483(3)).
8. Check transfers of partly paid shares. Company approval under TCC 491, security if the acquirer's ability to pay is doubtful (TCC 491(2)), share ledger entry for the acquirer's liability (TCC 501(1)) and, for the original subscriber, the exception in TCC 501(2) where the company went bankrupt within two years from its formation or the capital increase and the acquirer was deprived of the rights arising from the share.
9. Before a capital increase, confirm that the cash prices of existing shares are fully paid, subject to the exceptions in TCC 456(1).

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