One of the most preferred types of companies in the world of finance and trade is the Joint Stock Company. When we compare Joint Stock Company with Limited Company, which is another popular type; the Joint Stock Company clearly wins considering the advantages. For this reason, it is extremely important to have shares in a Joint Stock Company and to have the majority of these shares in hand. In this article, shares, their types, ownership and transfer in a Joint Stock Company will be discussed.
1. SHARES IN A JOINT STOCK COMPANY
The capital of Joint-Stock Companies is determined and divided into shares. The division of this capital into parts is called shares. In this regard, we can say that a share is part of its capital. On the other hand, if there is a share, there will also be a share ownership, which is why the concept of shares is actually the source of rights and debts.
The share is born from the registration of the articles of association or the capital raised in the capital increase in the establishment of the Joint Stock Company in the commercial register. As a rule, it is fixed and may change only in the increase or decrease of the capital.
Each share in the joint stock company has a nominal value. There are no shares without a nominal value. Furthermore, article 476 of TCC it is ruled that the nominal value of the shares would be at least one penny. The sum of the nominal value of all shares equals the company's working capital. Equity shares are not issued at a price below the nominal value. The number of shares in the joint stock company and the nominal values of these shares must be indicated in the prime contract of the company.
If there are various groups of shares in a Joint Stock Company, the nominal value of these groups of shares may differ from each other. But, as a rule, the nominal values of shares in the same group cannot differ from each other.
2. CLASSIFICATION OF SHARES
Shares can be classified in various ways: voting shares, non-voting shares, priced shares, free shares, ordinary shares and privileged shares. In this article, we will focus on ordinary shares and privileged shares, which are one of the most important in the classification of shares.
The shares are not required to be equal. Therefore, while some shares are privileged, others are not. Non-privileged shares are called ordinary shares.
A. PRIVILEGED SHARES
Joint Stock Companies that want to increase their capital and make contributions to their capital from outside issue privileged shares in order to obtain this contribution.
The privilege is not granted to the shareholder, but to the share. At the same time, the privilege can be granted not only to the share, but also to a certain group of shares.
The privileged share is issued by the Board of Management. In order for the board of management to issue privileged shares, they must be authorized by the prime contract. In this regard, privileged shares may be established in the company's prime contract, or they can be determined by an amendment to the contract that was made later on.
Issues that may constitute a privilege;
1- Profit Share Privileges: Obtaining a larger share of the profit and primarily using the profit share.
2- Liquidation Share Privileges: These shares have a priority right over the company's assets that will be obtained at the end of the liquidation of the company. The right arising from this privilege cannot be asserted against the company's creditors.
3- Priority Privileges: In the establishment of a joint-stock company, the priority right in the prime contract can only be granted to certain shares or a group of shares.
4- Voting Privileges: Shareholders exercise their voting rights in accordance with the rate of participation in the capital. The cases in which the voting privileges become invalid are the amendment of the prime contract, the election of the transaction auditor, and the filing of a discharge and liability lawsuit.
3. SHARE OWNERSHIPS IN A JOINT STOCK COMPANY
Both natural and legal entities can own shares in a Joint Stock Company. The rights and obligations of shareholders in a joint stock company depend on the share, not on the shareholder themselves. In other words, the person who has the partnership position is the person who has shares. Therefore, shares can be transferred or inherited.
In case of transfer of the share, the person who takes over the share becomes the new owner of the rights and debts. The former owner of the share will no longer be able to have the rights arising from the share, nor will they be held liable for debts.
It is possible for a shareholder to have more than one share, and a share to have more than one owner. In this sense, the number of shareholders does not have to be equal to the number of shares.
In a Joint Stock Company, the company's assets belong to a legal entity together with assets and liabilities. For this reason, partners can obtain certain rights to the partnership only at the rate of their shares, and take on debts. Therefore, due to the debts of the partnership, creditors can only refer to the partnership, since the shareholders have no responsibility for the debts of the partnership. At the same time, shareholders cannot claim the right they want from the Joint Stock Company at any time.
The share constitutes rights and obligations to the extent of its ratio to the whole of the capital. In this regard, all debts, rights and privileges depend on the share. In order to have them, all that the shareholder has to do is to pay the capital debt they have pledged.
4. TYPES OF SHARES
Shares are divided into;
1- Bare Shares
2- Stock Certificate Shares are divided into three main branches:
A- Certificate of Bearer Share
B- Certificate of Registered Share
3- Dematerialized Shares
. In this article, stock certificate shares will be examined.
5. SHARE CERTIFICATES
Shares issued by Joint Stock Companies and representing a certain amount of the company's capital are called share certificates. In this regard, shares and share certificates are different concepts from each other. A share certificate is either a registered share or a bearer share.
A. TYING THE SHARE TO THE CERTIFICATE
Tying the share to the certificate ensures and facilitates transferring the share rights. In this regard, the certificates ensure that the troubles that shareholders will face during the transfer of shares are prevented. However, there are also tax advantages to issuing the share certificate.
In the old Turkish Commercial Code, there was no obligation to tie share to the certificate. On the other hand, article 486 of the renewed TCC has made issuing the bearer share certificates mandatory. In this regard, the certificates issued before the registration of the company or before the registration of the capital increase decision in non-public Joint Stock Companies are invalid. In public Joint Stock Companies, it is mandatory that the certificates be issued and given to the owners before the registration of the decision to increase the capital of the shares.
According to paragraph 3 of article 486, issuing a registered share certificate is mandatory only if a minority in a Joint Stock Company makes a request. Except for this situation, we can say that there is no obligation to issue a certificate of registered share.
B. CERTIFICATE OF BEARER SHARES
If it is clear who the bearer is from the text or form of the certificate to which this person will be entitled to is called "certificate of bearer share".
These certificates, unlike registered ones, cannot be issued without paying their full price. If the shares have been issued before their full value has been paid, they will be invalid. Thus, the share prices must be fully paid.
In case of a registered share, the board of management prints the shares and distributes them to the shareholders within three months from the date of paying the full share price. The decision of the board of management on the issuing of bearer share certificates is registered and announced. If the Joint Stock Company is a company that has an obligation to open a website, the said decision will be placed on the company's website.
C. CERTIFICATE OF REGISTERED SHARES
Registered share certificates are written on behalf of a certain person, they represent the share in a Joint Stock Company, disclose and ensure the exercise of the rights arising from the share. Registered share certificates contain the name, surname and the trade title of their owners. These certificates are recorded in the company's share ledger.
The essential certificates in joint stock partnerships is registered share ones. Yet, this can be changed by making an arrangement in the prime contract.
6. OBTAINING SHARE OWNERSHIP
As a principle, shares can be transferred whether they are tied to certificates or not. In this regard, we can say that both bearer and registered shares can be transferred. But there are also exceptional cases where the transfer is subject to official permission.
Owning shares occurs by either original acquisition or by derivative acquisition. Accordingly, derivative acquisition is the acquisition of a share or a share certificate from the owner after establishing a Joint Stock Partnership and becoming a legal entity.
In original acquisition, the share is acquired directly. This acquisition is made by purchasing shares issued by the Board of Management at the establishment of the Joint Stock Company or at the increase in the principal capital. In the same way, changing the type of the company or merging the company is an original acquisition. For acquiring the share, it is extremely important that the Joint Stock Company was registered in the trade register at the establishment stage. In order to own shares in a capital increase, it is not enough to make only cash or non-cash capital commitments, because the minimum amount of shares in the law or in the contract must be paid.
Unless there is a provision in the prime contract restricting the transfer, the Joint Stock Company's board of management is obliged to put the transferee in the share ledger. Because only a person registered in the share ledger is considered a shareholder. Unless the transfer is recorded in the ledger, share ownership cannot be asserted against the Joint Stock Company, and the person who takes over the share cannot earn the title of company partner. Therefore, in case of non-registration of the person in the ledger due to arbitrariness, the transferee and the transferor may apply to court.
7. SHARE TRANSFER IN JOINT STOCK COMPANIES
Each share has its own form of transfer.
A. TRANSFERRING BEARER SHARE CERTIFICATES
Although transferring registered share certificates may be prohibited in Joint Stock Companies, it is not possible to prohibit transferring bearer share certificates and to impose any conditions. This issue cannot be subject to the approval of the Board of Management. In other words, there is a complete freedom of transfer.
It is only possible with ownership for the transfer of the bearer share certificate to take effect.
As there is a convenience of circulation in the transfer of bearer share certificates, these shares are dematerialized. Since the certificate is not physically printed, the share changes hands electronically. Accordingly, the records are kept by the Central Registry Agency and these records are then notified to the Joint Stock Company by the Board.
B. CERTIFICATE OF REGISTERED SHARES
Transferring registered share certificates is made with revenue and delivering the certificate. However, in order for the transferee to become a shareholder in a Joint Stock Company, the company must also put them in the share ledger. Owners of bearer share certificates are not required to be registered in the share ledger.
Registered shares can be transferred through blank endorsement, like other promissory notes. However, there are also a minority of people who argue whether the transfer of registered shares with blank endorsement is possible or not.
Registered shares which are not yet fully-paid can only be transferred with the approval of the company. If the share price is fully paid, the company's approval is not required for the transfer.
8. CONCLUSION
Every year thousands of people open Joint-Stock Companies, taking into account their advantages and earnings. In the process of transferring shares in Joint Stock Companies, various problems are encountered. In this context, with this article, it is aimed to shed light on the issues of shares, types of shares, ownership of shares, general principles of shares and transfer of shares in a Joint Stock Company. In order to manage the Joint Stock Company well and to make smooth transfers, it is extremely important to know these basic concepts and execute them correctly.
This article provides a detailed overview of the transfer of shares and the types of share certificates in Public Limited Companies, which are the most common type of company under Commercial and Corporate Law. It is very important to be familiar with the types of share certificates and the share transfer process in order to become a shareholder in a Public Limited Company or to add new shareholders to the company.
