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LAW 300 Commercial Law. Glossary of Legal Terms Association: dernek Code: kanun Commercial enterprise: ticari işletme Cooperative: kooperatif Customary.

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Presentation on theme: "LAW 300 Commercial Law. Glossary of Legal Terms Association: dernek Code: kanun Commercial enterprise: ticari işletme Cooperative: kooperatif Customary."— Presentation transcript:

1 LAW 300 Commercial Law

2 Glossary of Legal Terms Association: dernek Code: kanun Commercial enterprise: ticari işletme Cooperative: kooperatif Customary rule: örf ve âdet hukuku kuralı Economic enterprise: iktisadi işletme Foundation: vakıf

3 Glossary of Legal Terms General Partnership: kollektif şirket Interpretory rule: yorumlayıcı kural Limited Liability Company: limited şirket Mandatory rule: emredici kural Mechant: tacir Ordinary Partnership: âdi şirket

4 Glossary of Legal Terms Partnership with Limited Liability: koman- dit şirket Presumption: karine; varsayım Principal: asil; müvekkil; temsil olunan Stock Corporation: anonim şirket Tradesman: esnaf Tradesman business: esnaf işletmesi

5 Development of Commercial Law In Turkish Law the first Commercial Code was enacted in In 1926 another Commercial Code was accepted. The latter was enacted in 1957 and applied until In January 2011 new Commercial Code is accepted. It came into effect in June 2012.

6 The Scope of Commercial Law What kind of relationships and transactions should be involved by commercial law? The answer to this question is rather political than theoretical. It is the law making body of a country that decides which issues should be included in commercial law, and which ones in other branches of law.

7 The Scope of Commercial Law A certain relationship or transaction can be regulated in commercial code in one country, during the same issue is covered by, for example, civil code or code of obligations. Some countries do not have a separate commercial code (for example, Switzerland).

8 The Scope of Commercial Law Example: Ordinary Partnerships are handeled by CO in Turkey and Switzerland; but by CC in Germany. In Turkey, provisions relating to (Joint) Stock Corporations belong to ComC; but in Switzerland to CO.

9 Hierarchy of Commercial Provisions 1. Mandatory rules of ComC. (Art. 14/1). 2. Contracts (Art. 8/1). 3. Interpretory rules of ComC. (Art. 10/1). 4. Commercial customary rules (applicable only for merchants). 5. General rules of CC (Art. 1 CC).

10 Commercial Enterprise (TCC art.11) commercial enterprise economic enterprise ee – ce = tradesman business tb

11 Requirements for Commercial Enterprise 1. Profit oriented aim. 2. Continuity. 3. Exceeding a Certain Size Limit. 4. Independence.

12 Head Office - Branch Every commercial enterprise must have a head office. Principal place of business is the place from where all the commercial, administrative, financial and legal affairs of a commercial enterprise are organized and conducted.

13 Branch is a unit of a commercial enterprise and it functions under the authority and directions of the head office. In order to qualify as a branch, the unit should be independent from head office in its dealings with third parties. Branch must be able to conduct and run the business falling within the objective of the commercial enterprise. Branch should have its own management and accounting.

14 Commercial Enterprise Pledge Under Turkish law, in order to establish a pledge over moveable assets, physical possession of such assets shall be transferred to the pledgee in order to perfect the pledge. However, in the case of a commercial enterprise pledge, pursuant to Article 4 of the Commercial Enterprise Pledge Law numbered 1447 and dated July 21, 1971 ("Law No. 1447") a pledge agreement shall be executed by the pledgor and pledgee.

15 The pledge agreement is required to be notarised by a Turkish Notary Public located at the same district where the commercial enterprise subject to pledge is registered and be registered with the Trade Registry therein.

16 Parties to the Pledge Agreement Article 2 of Law No states that commercial enterprise pledge agreement can be executed by and between the credit institutions having legal entity, cooperatives and credit sale institutions having real or legal entity and the real persons or the legal entities owning the commercial enterprise subject to pledge.

17 Scope of the Pledge Pursuant to Article 3 of Law No. 1447, a pledge registered over a commercial enterprise constitutes an encumbrance over the following: The trade name and commercial title; The machinery, equipment, tools and transportation vehicles that are allocated to the operation of the commercial enterprise, as of the date of registration of the pledge; and Intellectual property rights, like licences, trademarks, models, drawings, etc.

18 However, one or more of the above mentioned elements other than the trade name, commercial title and the moveable operational equipments, can be excluded from the scope of the pledge. A commercial enterprise pledge does not include real property on which the commercial enterprise is located. In order to establish a mortgage over the said real property, a particular mortgage agreement is required to be executed between the pledgor and the pledgee.

19 REGISTRATION OF THE PLEDGE Pursuant to Article 4 of Law No. 1447, a pledge agreement shall be entered into between the pledgor and pledge. The pledge agreement must be prepared by a Turkish Notary Public located at the same district where the commercial enterprise is registered; the assets which are within the scope of such pledge should be listed in the pledge agreement.

20 The pledge agreement must be registered with the relevant Trade Registry where the commercial enterprise subject to pledge is registered. As per Article 5 of Law No. 1447, the commercial enterprise pledge shall be effective as of the date of registration with the Trade Registry.

21 FORECLOSURE Lex Commissaria Prohibition is also applicable to commercial enterprise pledges; in other words, any kind of arrangements regarding the transfer of the title of any of the assets included in the pledge is null and void. If the pledgor does not pay its debts when due, the pledged assets shall be sold and the pledgee shall receive its receivables from the sale proceeds. Pursuant to Article 17 of Law No. 1447, the provisions of the Turkish Execution and Bankruptcy Law related to foreclosure procedures shall apply.

22 Transfer of Commercial Enterprise Under the currently applicable laws, “transfer of commercial enterprise” concept is governed by Turkish Code of Obligations numbered 6098 (“TCO”). According to Article 202 of the TCO, in case the “whole of an enterprise” is transferred including all assets and liabilities thereof, the transferee automatically becomes liable for the debts of the said enterprise,

23 starting from date of the notice to the creditors or the publication of newspaper advertisements to that effect. Transferor is liable for two years for the debts of the company which occured before transfer.

24 In addition, there is a complementary provision under Turkish Labour Law numbered 4857 (“TLL”). As a general rule of the Turkish Labour Law, the employees of a business place are automatically transferred and become the employees of the new employer, when such business place is transferred to a new owner, who will keep the business running.

25 Theoretically, in order to qualify an asset transfer as a “transfer of business” or “transfer of commercial enterprise”, it is necessary for the transferee to obtain the entirety of such business or a separable (stand-alone) part of a business (“line of business”) including all assets and liabilities thereto

26 Validity condition It must be written and registered in Commercial Registry and also announced.

27 MERCHANT Real Person Merchant (TCC art.12) Legal Person Merchant (TCC art.16) 1- Commercial Companies Stock Corporation (A.Ş.); Limited Liability Company (Ltd.Şti.); General Partnership (Koll.Şti.); Partnership with Limited Liability (Kom.Şti.); Cooperatives (Koop.) 2- Foundations and Associations that operate a commercial enterprise. But the associations and foundations which are registered as beneficial to public welfare do not acquire the status of merchant.

28 Real Person Merchant Merchant is the person who even partially operates a commercial enterprise in his/her own name. A legal representative who manages a commercial enterprise in the name of another person (principal) is not deemed a merchant. In case of representation the principal is the merchant, even if he/she is minor or under inderdiction or commission.

29 A person who has announced to the public, that he has established a commercial enterprise either trough circulars, announcements, radio advertisements, newspapers, letters or who has registered his enterprise in the commercial registrys is considered merchants, even though he did not effectively start to manage the enterprise. This rule is accepted to protect the good faith of third parties who have believed in this announcement.

30 If a person managing a commercial enterprise does not have capacity to act, the legal representative is not considered a merchant, but the minor underguardianship is a mercant. But the legal repr. is liable of the penalty provisions. A person whose profession does not allow managing a commercial enterprise, such as a civil servant, is considered a merchant when he manages a comm. ent. and he will be liable as merchant.

31 Consequences of being a merchant *commercial firm name *register in commercial registry in 15 days starting from opening date (art.40) *bankruptcy *due diligince expected from a careful and prudent businessman *an invoice must be issued by the mercant upon sale of a product or providing a service (art.21) * letter of confirmation (art.21)

32 * a merchant providing service concerning his commercial enterprise has the right to request an appropriate fee for his performance (art.20) * special rules for sale contracts are regulated in art. 23. *the notices and announcements among merchants to put each other in default or annul the contract shall be made by notary, registered mail, telegram or secured elect. Sign.

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35 Commercial Transactions Importance: The qualification of the legal nature of a transaction is of great importance to determine the scope of commercial law. The commercial transactions fall into the scope of Commercial Code, during the non- commercial (ordinary) transactions are governed by Turkish Code of Obligations and Turkish Civil Code.

36 Criteria for Commercial Transactions 1. Any transaction governed by Commercial Code (ComC art.3). 2. Any transaction and act that is related with a commercial enterprise. 3. Presumption for commercial transaction: a.) Any obligation that is undertaken by a real person merchant is a commercial transaction. Exception: If the merchant explicitly declares that the transaction is not related

37 Criteria for Commercial Transactions with his/her commercial enterprise, or the circumstances do not support this presumption, the transaction is deemed an ordinary one. b.) Any contract that is of commercial nature for one of the parties is a commercial transaction, unless the contrary is provided by law.

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