Turkey's new Commerce Code promises transparency

Turkey needs to do more to ease bureaucratic procedures, end disputes over intellectual copyrights, modernize its tax system and fight the gray economy to draw more foreign direct investments to the country, according to a top businesswoman.

The Trade Ministry prepared training programs for companies to adapt to the new commerce code, says Minister Nihat Ergün (L).

The Trade Ministry prepared training programs for companies to adapt to the new commerce code, says Minister Nihat Ergün (L).

Turkey needs to do more to ease bureaucratic procedures, end disputes over intellectual copyrights, modernize its tax system and fight the gray economy to draw more foreign direct investments to the country, according to a top businesswoman.

Speaking at a meeting in Istanbul to introduce the country’s new commerce code, Ümit Boyner, head of the Turkish Industry and Business Association, or TÜSİAD, said Tuesday that the discussion during the shaping procedure of the code required cooperation among political parties in Turkey.

A need to change trade laws across the world emerges from a rise in the number of shareholders of companies, new businesses and globalization, she said.

Turkey has to support its growth – which has rocketed due to macro reforms – with micro reforms, she said. “The country has no time to lose in drawing in foreign investments.”

The new code brings transparency, providing an easier monitoring for stakeholders, she said. “This new structure will contribute to trust in [Turkish] companies internationally.”

Along with structural changes in auditing procedures of companies, the new code obliges companies to keep their registry books in international standards, an important step to ease international mergers and acquisitions. The code also allows limited liability companies’ mergers with joint-stock companies.

Poor laws cannot provide high-quality justice, said Industry and Trade Minister Nihat Ergün, who also spoke at the meeting. “But making good laws does not necessarily mean providing justice. The secondary regulations on law should also be undertaken carefully.”

A second round of meetings to improve the law with new regulations – a renewal of 22 items in the commercial code – will start this weekend, he said. This second round is planned to be ended before June 1, 2012, the day the code will go into effect.

“We will do all we can to sustain the legitimacy of the code,” Boyner said. Companies may face some difficulties in adapting to the new code, but the ministry has prepared training programs for companies, Ergün said.

Dr. Ünal Tekinalp, head of the commission that prepared the draft code that was approved by the Parliament earlier in December, said the law will provide easier monitoring of companies in Turkey. “I feel that some people are resisting this transparency,” he said. The regulations aim at modernizing trade for all sectors, he said, and the code “does not like the concept of ‘unlimited responsibility” and replaces it with “limited responsibility” for companies.

The right to access audited, correct and trustable data will change the climate for domestic and foreign investors, he said.

Some changes in the code

• Trade registers will be kept in an electronic environment and be updated. In this way, the loss of time during the accessing of trade register documents will be removed.
• Incorporated companies will become transparent and accept registered capital, even though they are not open to public. Audit reports have become an obligation for incorporated companies to determine whether they operate in accordance with the law and agreement in capital commitment and payment.
• On the other hand, capital control of limited companies is left to the initiative of the Ministry of Commerce.
• Companies will be able to hold their board meetings without the participation of an official from the ministry. The participation of an official will be left to the company’s request. This way, family companies will be able to hold their meetings without the government’s control.
• Each equity company will be obliged to launch their own websites. This will incorporate companies with the informatics world.
• Companies will be able to hold their meetings in an electronic environment.
• The code will make capital markets much safer and bring punishments to companies collecting money from the public without permission.