Consequences of capital losses in joint-stock companies and measures

Joint-stock companies are companies whose capital is determined and divided into shares, and which are only responsible for their own assets due to their debts. Shareholders are only liable to the company for the capital shares they have pledged.

Public limited companies (mainly capital companies) to achieve the objectives set out in their articles of association and to successfully continue their activities depend to a large extent on having sufficient capital and maintaining their capital. For this reason, it is determined in the Turkish Commercial Code that the capital of the joint stock company cannot be less than 50,000 TL.

However, over the course of economic life, companies face negative outcomes; capital losses may occur. Today, in our article, we will focus on the loss of capital and its consequences, the measures to be taken, and the regulations introduced by Law No. 7394.

Loss of capital and heavily in debt

In Article 376 of the Turkish Commercial Code, the necessary measures to be taken in the event of a large capital loss affecting the success and continuity of business activities are regulated step by step.

1- Loss of half the capital

If it emerges from the last annual balance sheet that half of the total capital and legal reserves is not reinvested due to loss, the board of directors immediately convenes the general meeting and presents the corrective measures it deems appropriate. at this general meeting. (376/1)

These measures include capital increase, replacement of certain production systems, etc. it might be. Precautions may already have been proposed for listed companies by the Early Hazard Detection Committee pursuant to Section 378 at earlier dates. For the provision to be executed, the total open reserves excluding legal reserves must be greater than half of the total.

The board of directors must immediately convene the general meeting, clearly explain that the company is in a bad financial situation, even present a report on this subject, show the causes (sources) of the damage and propose remedies.

It is up to the board of directors to call the general assembly for a meeting. If the deterioration is detected from the monthly accounts, an interim balance sheet may also be required based on the annual balance sheet.

2-Technical bankruptcy

If, according to the last annual balance sheet, it is understood that two-thirds of the total capital and legal reserves are not reinvested due to loss, the company is dissolved by operation of law unless the general meeting, which is convened on the spot, not to decide to be satisfied with a third of the capital or to supplement the capital. (376/2)

If it emerges from the last annual balance sheet in the second paragraph that two-thirds of the total capital and legal reserves are not reinvested due to losses, the general meeting may pass one of the two resolutions upon convocation by the board of directors. administration. (1) the contentment of one-third of the capital, that is, the reduction of the capital and the elimination of the loss; (2) completion.

If one of these two decisions is not taken, the public limited company will be dissolved. The reason why the law obliges the general meeting to choose between these options is the idea of ​​clarifying the company’s situation as quickly as possible. With the realization, it must be understood that there is a capital increase equal to or greater than the reduced capital, or that the balance sheet deficits are filled by all or part of the shareholders, or that the claims of certain creditors are written off. If unanimous agreement is reached in completion, each shareholder is required to donate cash to cover the balance sheet deficit.

3- Deeply in debt

In the event of indications suggesting that the company is in debt, the board of directors draws up an interim balance sheet both on the basis of the continuity of operation and on the probable sale prices of the assets. If it emerges from this balance sheet that the assets are not sufficient to meet the claims of the company’s creditors, the board of directors notifies this situation to the commercial court of first instance of the registered office and requests the bankruptcy of the company. It turns out that before the bankruptcy decision was issued, the creditors of the company’s debts in an amount that will cover the company’s deficit and eliminate the indebtedness situation agreed in writing that the order of their claims be placed in the next the order of all other creditors, and the advisability, reality and validity of this declaration or this contract, the application for bankruptcy will be notified by the council of administration and will be verified by forensic experts. Otherwise, the request for expertise made to the court is worth declaration of bankruptcy. (376/3)

In the third paragraph of article 376, it indicates the rules to be applied in the event of indebtedness of the company. The concept of being in debtEven if the company’s assets are not valued by their book value (acquisition) as in the annual balance sheet, but by their real value (probable sale value), this means that creditors cannot receive their claims, that is, the company cannot meet its debts and commitments. Signs of insolvency may appear in the annual balance sheet, the monthly, quarterly or half-yearly accounts, the reports of the auditor, the early detection committee and/or the management and the board of directors. If such indications exist, the Board of Directors draws up an interim balance sheet based on both the continuity of the activity and the probable realizable values ​​of the assets. There are several advantages to doing two balance sheets. The balance sheet, whose assets are based on probable sale values, reveals whether the board of directors should go to court for the bankruptcy of the company.


Article 377(1) of the ICC, the board of directors or any creditor, in accordance with articles 285 to 309 of the law n° enforcement and bankruptcy, may request a composition.

With the concordat of Chapter 12 of Law No. 2004, the possibility of restructuring capital companies and cooperatives by way of compromise was introduced.

Regulations made in the Corporation Tax Law with Law No. 7394

The third paragraph has been added to Article 6 of the Corporation Tax Law regarding the net income of corporations, along with Article 23 of Law No. 7394, which has been accepted by the Turkish Grand National Assembly on 08.04.2022. The paragraph is as follows: “Sums transferred by the shareholders of the company, whose capital it has been decided to supplement in accordance with Article 376 of the Turkish Commercial Code dated 13/1/2011 and numbered 6102, of an amount intended to cover the part not rewarded due to a loss, are not taken into account in the determination of the result of the company.

According to the provisions of the Turkish Commercial Code, the general meeting decides whether to suffice one-third of the capital or to supplement the capital so that companies whose latest annual balance sheet shows that two-thirds of the total capital and reserves do not are not reimbursed due to a loss, so the companies are not considered automatically dissolved. To this end, the sums paid by the partners as capitalization funds are not considered as investment capital or loans within the framework of the said law, and it is specified that they have the quality of a payment without consideration. . Furthermore, these payments are not considered as an advance on the forthcoming capital increase.

With this regulation, if it is decided to supplement the capital, it is ensured that the sums transferred by the partners to the companies falling within this scope are not taken into account in the determination of the company’s result.

In recent years, due to emerging needs, companies have provided funds from their partners under names such as capital replenishment fund, loss compensation fund, etc. These funds, which are provided by the partners of companies with high losses in administrative practices and examinations, have started to be accepted as income. When this view began to gain acceptance in the tax jurisdiction, the partners backed away from providing such funds. The new regulations introduced by the law appear to be the definitive solution.

Statement on Foreign Exchange Losses and the Implementation of Section 376

In the calculations related to bankruptcy or technical insolvency until 1.1.2023, with provisional article 1 of the communiqué on the procedures and principles relating to the implementation of article 376 of the GIC published in the Journal official of 15.9.2018 and numbered 30536, liabilities in currencies that have not yet been met. The provision that resulting exchange losses will not be taken into account has been regulated. In this way, it aims to ensure that the negative effects of severe and sudden fluctuations do not affect the calculations.

Good business management and independent audit

The above-mentioned measures indicate what can be done in the event that companies find themselves in a difficult situation. However, the important thing is that the companies are well managed and that the financial statements are regularly audited each year by people or institutions outside the company to see the real financial situation and operating results of the company and take action in a timely manner.

Articles 397 to 406 of the Turkish Commercial Code stipulate that the financial statements of joint-stock companies are audited by independent auditors or independent audit firms within the standards announced by the Public Supervision, Accounting and Auditing Authority. ‘audit. Depending on the size of the companies (small, medium, large and open to the public), regular audits within the framework of the determined standards will bring important advantages to the companies in terms of good management. It will also help the audience to make the right decision with the right information.

Independent auditing increases the possibility of making realistic analyzes and forecasts and making the right decisions by providing an accurate flow of information to the management of the company. It helps company management and employees prevent cheating and misuse of company resources and assets. The rights of all business partners are better protected.

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