CORPORATE LAW

Corporate Law is a branch of law that regulates commercial activities and plays a crucial role in determining the legal structures of companies. Companies benefit from corporate law to conduct their economic activities within a legal framework, protect their rights, and fulfill their obligations. Corporate law covers many essential topics, including company formation, internal partnership relationships, trade regulation, mergers and acquisitions, and bankruptcy. This article addresses fundamental areas of corporate law, such as company formation, partnership structures, management bodies, responsibilities, mergers and acquisitions, and bankruptcy.

Company Formation and Legal Structures

The establishment of a company is the first and most fundamental step in corporate law. The company formation process requires certain legal procedures and documents. In Turkey, the establishment and types of companies are governed by the Turkish Commercial Code (TCC), and company types are generally divided into three main categories:

• Joint Stock Company (A.Ş.): A company whose capital is divided into shares, and shareholders are only responsible for their invested capital. This type of company is generally preferred for large businesses and public companies.

• Limited Liability Company (LTD.): A company in which shareholders' liability is limited to their capital contribution. This type of company is preferred for small and medium-sized enterprises.

• Simplified Companies: These companies require fewer bureaucratic procedures and are typically suitable for new ventures.

When forming a company, several important details must be determined, such as the company’s name, purpose, field of activity, capital, and management bodies. A memorandum of association, containing these details, is prepared and registered with the relevant trade registry.

Partnership Structures and Contracts

Companies consist of partners who come together to carry out a specific commercial activity. The partnership structure varies depending on the type of company. In joint-stock companies, shareholders generally do not directly participate in the management, but they have voting rights based on their shareholding percentage. In limited liability companies, partners have more say in the management and decision-making processes.

A partnership agreement determines the rules for the company’s operations. It covers issues such as profit sharing, management bodies, the rights and obligations of the partners, and the company’s dissolution. The company’s memorandum of association also serves as the primary legal document in case of disputes between partners.

Management Bodies and Responsibilities

The management of a company ensures that its activities are carried out in an orderly and lawful manner. The management bodies vary according to the type of company:

• Joint Stock Companies (A.Ş.): Management bodies typically include the General Assembly, the Board of Directors, and the Audit Committee. Shareholders gather at the annual general meeting to make decisions about the company’s future. The Board of Directors handles the company’s daily operations.

• Limited Liability Companies (LTD.): In limited liability companies, management is generally conducted by one or more partners. Management is more flexible and based on agreements between the partners.

Company managers are commercially responsible for the company’s activities. However, their liability is generally limited to the company’s assets. If managers fail to report the company’s financial situation properly or engage in illegal activities, they may face legal liability. Therefore, it is crucial for managers to comply with all legal requirements related to the company’s operations.

Internal Disputes and Resolution Methods

Companies are complex structures where disputes may arise among partners, potentially leading to legal processes. Disagreements among partners can also lead to management issues. In such cases, the resolution is sought according to the provisions outlined in the company’s memorandum of association.

To resolve internal disputes, methods such as mediation or commercial courts are often preferred. Corporate law offers solutions to protect the rights of the parties involved. Professional legal guidance from a corporate lawyer is essential in resolving disputes effectively.

Mergers and Acquisitions

Mergers and acquisitions involve the joining of companies or one company purchasing another according to economic strategies. These processes may be driven by goals such as company growth, increasing market share, gaining financial strength, or other strategic objectives. However, mergers and acquisitions are legally complex and usually require a thorough examination process.

Mergers and acquisitions are subject to several legal regulations, both in commercial law and corporate law. Competition law is also an important factor, as mergers or acquisitions may lead to market monopolization. As a result, mergers and acquisitions may be monitored by competition authorities.

Company Bankruptcy and Liquidation

Companies may sometimes face economic difficulties and enter bankruptcy. Bankruptcy is a legal process that occurs when a company cannot repay its debts. In Turkey, bankruptcy proceedings are regulated within the framework of Bankruptcy and Enforcement Law. If a company is unable to pay its debts, a liquidation process can be initiated, and the company’s assets may be sold to be distributed to creditors.

Bankruptcy means the cessation of the company’s operations. However, legal oversight during the liquidation process and agreements with creditors are essential. The bankruptcy process should aim to protect the rights of both the company and its creditors.

Conclusion

Corporate law plays a vital role in ensuring the smooth operation of commercial activities. It has a wide application scope, from company formation and mergers and acquisitions to resolving internal disputes. Companies that fulfill their legal obligations can ensure long-term success and sustainability.

Since corporate law is a complex and detailed field, working with an experienced corporate lawyer is crucial for business owners and managers. A corporate lawyer helps ensure that business relationships are maintained effectively and legal issues are prevented. The legal framework provided by corporate law secures the company’s legal structure and offers a significant advantage in commercial life.