Prohibition Of Financial Aid Under Turkish Commercial Code

I. Introduction

Unlike the former Turkish Commercial Code, the Turkish Commercial Code numbered 6102 ("TCC") implemented a provision that allows joint stock companies ("JSC") to acquire their own shares within certain limits and conditions set forth therein. This provision was adopted from the Second Council Directive of European Economic Community numbered 77/91 and dated 13/12/1946 ("Directive").

As per the limits and conditions defined under the TCC, JSCs can neither grant third parties the right to acquire its shares on behalf of such party and on the account of the JSC nor grant security. Even though the Article derives from the Directive, the main purpose of implementing such restriction arises from Article 379 of the TCC. According to paragraph 1 of Article 379, a JSC is allowed to acquire and pledge its own shares in return of consideration for an amount that does not exceed or will not exceed as a result of a transaction, one tenth (1/10) of its principal