The concept of the bearer share and legal transactions on bearer shares

Along with limited liability companies, joint-stock companies are the most common types of companies in practice in Turkey. In Article 329 of the Turkish Commercial Code, a joint-stock company is defined as a company whose capital is determined and divided into shares and which is liable for its debts only with its assets. To represent its shares, a joint-stock company may issue bearer share certificates as well as registered share certificates. This constitutes one of the characteristics which differentiates a joint-stock company from a limited liability company, another type of capital company in Turkish Law. The bearer share certificates issued by joint-stock companies are qualified as bearer instruments in terms of the Turkish Commercial Code. As a result, the ownership of a bearer share can be easily transferred to a third party merely by the transfer of possession of the share certificate. Considering that no share register is kept for bearer share certificates, this characteristic of bearer shares also enables shareholders to keep themselves anonymous in their relations with the company. Although according to the Turkish Commercial Code joint-stock companies must issue bearer share certificates within three months following the payment of the full nominal value, bearer shares may also be issued in uncertificated form. Furthermore, although it is not common in practice, a jointstock company can issue interim certificates to represent its bearer shares temporarily. It should also be taken into consideration that pursuant to the Capital Market Law, the bearer shares of a publicly held joint-stock company can only be issued in dematerialized form. Thus, this study not only deals with bearer share certificates but also with the other forms of bearer shares. In the first section of this study, the concept of the bearer share and the types of bearer shares are set forth and the bearer share certificates are compared with the registered share certificates. In the second section, the transfer and the pledging of bearer shares and the establishment of usufruct on bearer shares are examined in accordance with the type of the share. Since the subject of our study is limited to the concept of the bearer share and legal transactions on bearer shares, the other aspects regarding the bearer shares are excluded from the scope of this study.