Capital Increase
"How is a capital increase executed in a Turkish company?"
Quick Answer
A capital increase is generally approved by the competent corporate body (general assembly, and in some cases the board under authorized/registered capital rules) and becomes effective upon Trade Registry registration. Capital may be increased through cash, in-kind contributions, internal resources, or set-off, subject to statutory conditions such as payment status of existing capital and required valuation/reporting for in-kind assets.
Key Aspects Under Turkish Law
A capital increase changes the company’s registered capital and, depending on the structure, may impact shareholder ratios, governance, and creditor protection. Turkish law regulates who may resolve the increase, how contributions are made (cash, in-kind, internal resources, set-off), and which documents must be prepared and registered to complete the process.
Key Points to Remember
- Turkish Commercial Code No. 6102 provides the primary legal framework
- Trade Registry registration is the step that generally makes the capital increase effective and opposable to third parties (publicity).
- Existing shareholders often have pre-emptive (subscription) rights in cash increases unless validly restricted under the applicable rules, and structuring must account for dilution and corporate approvals.
- Proper documentation and corporate formalities are essential
Practical Considerations for Businesses
When dealing with capital increase in Turkey, businesses should consider engaging qualified legal counsel familiar with both Turkish law and international business practices. This ensures compliance with local requirements while meeting global standards.
In practice, the process is driven by documentation: resolutions, amended articles (where applicable), contribution evidence for cash (often through banking documentation), and statutory reports/valuations for in-kind contributions. Many Trade Registry applications also expect confirmation that previously subscribed capital has been paid to the required extent, so planning the sequence and funding mechanics early helps prevent rejection or delays.
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