Evasion of the law in joint stock company transfer transactions

Article 356 of the Turkish Commercial Code, which is regulated under the heading of "Evasion of the Law", stipulates that if a joint stock company acquires or leases a property or an enterprise for a price exceeding one tenth of the capital within the first two years after the establishment of the company, the validity of the contract is subject to certain rules. The validity of the agreements described as "post-formation acquisition" requires the preparation of a valuation report by an expert for the acquired or leased property or businesses, as well as the approval of the agreement by the general assembly and registration in the trade registry. The rules set forth in Article 356 of the TCC are envisaged in order to prevent circumvention of the mandatory procedures for joint stock companies established with capital in kind commitments. For this reason, this legal situation regulated under Article 356 of the TCC obliges the joint stock company to fulfil a procedure similar to the qualified incorporation in case of acquisitions after incorporation. The relevant provision has been in German law since 1884 and in Turkish law since 1956. Although it has been included in both legal systems for a long time, the " post-formation acquisition" have not found much application in both legal systems. The fact that it has not been implemented does not mean that the post-formation acquisition regulations will not have significant legal consequences on the transactions of joint stock companies. In the event that the post- formation acquisition procedure is not carried out or is not successfully completed, Turkish Commercial Code stipulates that the legal consequence is the invalidity of both the legal transaction under the law of obligations and the legal transaction in kind. Since the scope of Art. 356 of the TCC is very wide and may cause problems in practice, this study will address these problems and try to find solutions. The problems within the scope of Art. 356 of the TCC will be discussed in the study, and its applications in corporate law will be included. Key Words: Joint Stock Company, Evasion of the Law, Post-Formation Acquisition.