Share Buybacks Under The New Turkish Commercial Code

The purchase by a company of its own shares is generally referred to as a "share buyback." Companies follow this process in order to reduce the number of their shares in the market. The two main reasons that companies may elect to reduce their shares in the market are: (i) increasing the value of shares still available; and (ii) eliminating any threats by shareholders who may be looking to hold a controlling stake.

Although share buybacks are allowed in many common law countries along with many European Union countries since the mid-1970s, share buybacks are generally prohibited under the currently applicable principles of Turkish law. However, New Turkish Commercial Code No. 6102 that was enacted on 13 January 2011, and which will be effective from 1 July 2012, allows for share buybacks by companies under certain conditions.