ABSTRACT
The usufructary right, which gives beneficial owner full enjoyment, may be established on the joint-stock company share certificates. The beneficial owner has property and management rights. As property rigths, the beneficial owner is entitled to benefit from share of profits and legal sums. Regarding the right to participate in the management, the beneficial owner has right to file a case aganist general assembly resolutions, right to attend general meetings, receive information and inspection in accordence with the right to vote. At this point, in relation to managing rights of the beneficial owner of the usufructary right established on the share, it is contradictive in doctrine whether whether the owner or the beneficial owner wil will exercise these rights. In this study, the conflict between the owner’s and beficiary’s rights will be discussed.
I. INTRODUCTION
In accordence wıth the latest economıc developments, the rights arising from joining the partnership especially from joint-stock company shares, have importance for real and legal persons’ assets. The shares of join-stock company not only gives the owner property and personal rights but also become subject to different legal transaction such as usufructary right.
The usufructary right, as right in rem, provides beneficial owner full enjoyment on the subject matter. Turkish Civil Code no. 4721 provides that the usufructary right may be established on movables, immovables and and rights. The establishment of usufructary rights on the joint stock company share is stated in the related articles of Turkish Civil Code and accepted in High Court decisions1. A negotiable instrument such as share certificate may be the object that the usufruct rights on the jointstock company shares to be established. It is possible to establish both statutory usufruct in accordence with Turkish Commercial Code no. 6102 and contractual usufruct in accordence with Turkish Civil Code on the jointstock shares.
In this study, firstly the usufructary right on the share certificates will be explained in general and afterwards the scope of the right will be discussed. This matter will be handled separately as property rights and managing rights. The limitation to the rights of owner by the managing rights of the beneficiary is still a contradictive issue today. At the last section, which rights the beneficiary and the owner can use will be discussed besides the explicit provision of right to vote.
II. THE USUFRUCTARY RIGHT ESTABLISHED ON THE SHARE CERTIFICATES
A. THE USUFRUCTARY RIGHT IN GENERAL
Within the scope of property law, the usufructary right provides the widest possession of property to the beneficiary, which belongs to someone else. The full enjoyment arising from usufructary right includes the use of it, as long as right to obtain its products, income, without harming the eigenvalue of the usufruct. The right of usufruct is basically a property law regime (Article 794- 795 of Code no. 4721). It can be established on movable, immovable, rights or property. It provides the right and power to take full advantage of the subject matter, unless otherwise provided in accordance with the provisions of the Turkish Civil Code.
The usufruct is regulated in the Turkish Civil Code in respect of joint stock companies’ shares. Accordingly, the usufruct, in terms of content and scope, gives the right to benefit from economic and regular rights arising from the shares of the company during the usufruct2. The usufructary right established on the share certificates may arise from the law or contract. In the case of establishment of usufructary right over the capital share, provisions related to transfer of the main capital share shall be applied. According to the relevant provision of Turkish Commercial Code (TTK), the usufructary right is subject to the limitation, since the limitation for a joint stock company to not to acquire more than 10% of its own shares is also applicable for the usufruct (Article 379 of Turkish Commercial Code).
Company shares that are of economic value may be subject to usufruct3 and it is not necessary that the share is attached to a bill for the usufruct to be established on the share4. For instance, it is possible that the basic share may be subject to the usufruct. The beneficiary of the right of usufruct may request the transfer of the subject matter and negotiable instruments to him within three (3) months following the beginning of the usufruct. At this point, delivery is an obligation for the establishment of usufructary right on the shares5. It should be noted that, in joint stock companies, it is not obligatory to attach the right to a share in order to have usufruct rights. The share itself may be the subject to usufruct.
However, it is worth mentioning that the usufruct shares and the usufructary right on the joint stock companies shares, which are frequently mistaken in practice, do not mean the same, and the usufruct shares are based on a contract between the company and the shareholder. The main difference between usufructary rights on company shares and usufruct shares is that the beneficial owner has rights such as voting, receiving information, filing a cancellation case, right to receive dividends while usufruct shareholders do not have such management rights.
On the other side, the usufruct shares give the owners to purchase the bonds issued by the company as well as the rights of net profits and capital that arise after the liquidation of the company.
B. ESTABLISHMENT OF THE USUFRUCTARY RIGHTS ON THE SHARE CERTIFICATES
Establishment of the usufruct on the share certificates finalise after the usufruct is entered in the company’s book of shares. Since there was no regulation related to this issue in the time of the Turkish Commercial Code no. 6762, there were opinions that the right of usufruct was a right not registered in the book of shares. Later, with the new rule added to the article 499 of the Turkish Commercial Code numbered 6102 as “the company shall record the owners of uncertificated shares and registered shares and benefical owners with their names, surnames, titles and addresses”, this debate has ended. Today, the usufruct is registered in the book of shares. The amendment is especially important in joint stock companies which have not issued share certificates. Because, in case of share certificates, these certificates are finalized by the establishment and the transfer of the rights in rem or by the transfer of possession. However, if the share certificate is not issued, these transactions are finalised when entered in the book. As a result, a protection for the third parties is being established.
In principle, the establishment of usufructary rights on joint-stock company shares is based on a statutory provision or legal process. However, in exceptional cases the usufruct on the share can also be established by a court decision6. In case of the establishment of the usufruct right on the capital share, provisions regarding the transfer of the capital share are applied.
1. Establishment of the Usufruct on the Bearer Shares Certificates
Bearer share certificates must be delivered to the beneficiary whom the right will be established in favor of. Accordingly, promissory and dispositive transactions are sufficient for the usufruct rights to be established. The parties must have agreed that the delivery has been made for the purpose of the usufruct and must clarifiy the reason for the delivery. This condition is provided by a written contract for the transfer or by a registration for the usufruct by the owner to be effecttive against the third party.
2. Establishment of the Usufruct on the Registered Shares
In order to establish the rights on the registered share, it is necessary to endorse and to write an expression relating to establishment of usufruct on it (for example, a phrase like “usufruct”)7. It may be endorsment in full or endorsement in blank.
Pursuant to Article 499 of the Turkish Commercial Code, the beneficiaries shall be registered in the book of shares by the board of directors. Only those who are registered in the book of shares shall be deemed to have usufruct rights8. Unless the usufructary rights are proven as registered in accordence with the rules, the beneficiaries cannot be written in the book of shares.
Apart from the endorsement, a usufructary right on the registered share certificate can be established by assigment. For this purpose, a statement concerning the establishment of the usufruct shall be included in the declaration of assignment and the certificate must be delivered to the person whom the right is established in favor of. The declaration of assigment containing the usufruct can be written on the certificate or on a separate sheet from the certificate. However, in this case, registered share certificates shall be delivered to the person whom the usufruct right is established in favor of9.
III. THE SCOPE OF THE USUFRUCTARY RIGHTS ESTABLISHED ON THE JOINT STOCK COMPANY SHARES
The rights and powers of the beneficiary of the usufructary rights on the joint-stock company shares are divided as property rights and management rights. The legal sums, such as dividends on shares, belong to the beneficiary. In terms of the management rights of the beneficial owner established on the shares, it is the matter of dispute that whether the beneficial owner or the owner will have the rights.
The usufructary rigts give the beneficial owner property and management rights. As property right, there is a right to take advantage of the property. Hence, beneficiaries benefit from share of profits and legal sums (interest and other periodic income). With respect to the right to participate in management, the right to vote and the extension thereof, the right to cancel the general assembly decisions, the right to participate in the general assembly, the right to receive and control information. However, taking into account the interests of the owner, the legislator has also foreseen that the administration of the usufruct may be entrusted to a guardian by taking away form the benefical owner, in the event of not showing a guarantee for the protection of the interests of the owner or continuing the unlawful use10.
A. SCOPE OF THE USUFUCTURAY RIGHTS IN TERMS OF PROPERTY RIGHTS
Shareholders who can be defined as owners of the assets in economic terms, have the right to participate in the rent allocated from the company’s net profit each year, also may take the preliminary period interest determined by the Articles of Association, in exchange for the dividends for which they will be deprived during the preparation period required for company to go into action. They may also obtain material benefit from an indirect way by using their right to benefit from the facilities of the partnership given to them.
1. The Right to Profit Share
The right to profit share can be regarded as the most important right of the shareholder in terms of joint-stock partnership law. The right to profit share means the participation of the shareholder in the annual earnings or reserve fund allocated to the distribution according to the provisions of the articles of association and general provisions of the law. The right of usufruct, in accordence with its nature, gives right to benefial owner to benefit from the matter of the usufruct.
2. Benefiting From Company Facilities
Although this right is not foreseen in the Turkish Commercial Code, it is a right arising from the nature of some joint stock companies and recognized by the Articles of Association. In order to promote this right, it is necessary to have facilities available for the company. For example, a joint-stock company that operates a beach, sports facility, or thermal spa may grant its shareholders priority rights to enjoy or benefit from their facilities. This right does not constitute an obligation of the company unless it is recognized by the Articles of Association.
3. Pre-Emption Rights on Shares
In case of a usufructary right on the share, there is a question of who will have the right in terms of pre-emption rights on shares. Since the right of usufruct gives the beneficial owner to use only the usufruct and to enjoy without touching its eigenvalue, only those things that can be described as the sums of the usufruct will belong to the beneficial owner. In this respect, since the right of pre-emption can not be regarded as the sums of the usufruct, it shall belong to the shareholder alone and not to the beneficial owner.
4. Right to Have Non-Paid Up Shares
By taking into account the legal nature of the non-paid up share certificates, these shares only belong to the owner and can only be demanded by the owner. Right to have non-paid up belongs to shareholder, since the beneficial owner only has right to benefit from legal sums when considering the general principles of the usufruct and the eigenvalue of the usufruct only belogs to the shareholder.
5. Right to Liquidation Share
Shareholders can not reclaim the capitals they gave to the company and shareholders’ rights to liquidation share are reserved11. On the other hand, shareholders have ownership over the property of the joint stock company, in the economic sense. In the course of the company’s activities, this right, which is intertwined with the ownership of the share, comes only when the company is liquidated. The shareholder has the right to participate in this liquidation at the rate of its share, unless otherwise agreed in the articles of association and with the condition that a positive balance remaining in the result of the liquidation of the company.
B. SCOPE OF THE USUFRUCT FOR THE RIGHT TO PARTICIPATE IN MANAGEMENT
The share representing the participation in joint stock ownership provides some management rigths as well as property rights to the owner. As is known, in joint stock companies, management, representation and supervision responsabilities are carried out by company organs not by shareholders as an extension of legal entity. In this sense, usufruct gives right shareholder to participate indirectly in the administration, representation and control of the company by means of management rigths such as the right to vote, the right to participate in the general assembly, the right to receive information and the right to revoke. Likewise, individual rights granted to all shareholders, which can be assessed under management rights, and minority rights recognized in the minority representing a certain proportion of the main capital help shareholders to effectively participate in company management, or helps minority or individual shareholders at least to control activities of the company managed by the majority.
1. Right to Vote
Article 360 of the Turkish Commercial Code No. 6762 stipulated that the right to vote arising from a usufructary right establihed on the joint-stock company share, shall be exercised by the beneficial owner. It was recognized in the doctrine that the right to vote for a beneficial interest in this provision was not a mandatory rule12. As per Article 432 of TTK No. 6102, which was put into effect later, it was stipulated that the right of vote on the share could be used other than benefial owner, by adding a clause “if not otherwise agreed” to the previous provision.
Although the issue of voting rights is no longer a problem today, the issue of whether other rights such as participation in the general assembly, right to demand information, right to audit and right to revoke, which are other management rights arising from shares, will be exercised by the beneficial owner or by the owner is still controversial today.
In doctrine it is stated that in addition to participating in the general meeting based on right to vote arising from usufruct, the right to propose, the right to inspection and right to revoke is given to the beneficial owners. Also it is accepted that the right of usufruct on the share does not prevent the owner from using of these rights. On the contrary, opponents right to vote and right to revoke of the beneficial owner constitutes a whole and right to revoke only can be used by the beneficial owner13. Another accepted view is that even in cases where voting right is left to the owner with the contract, the beneficial owner may continue to use management rights such as joining the general assembly and filling a cancellation case14.
The power to exercise the right of vote arising from the share certificate, whether established by a usufruct, a law, or by a contract, has been given only to beneficial owner, unless otherwise agreed. However, the beneficial owner shall act with due regard to the interests of the owner when he exercises his right, otherwise will be responsible to the owner.
In the case of a usufruct right on the share certificate, the voting right shall be exercised by the beneficial owner and not with condition that the usufruct on the share is established to cover the whole share in order to use the right.
2. Right to Participate in General Assembly Meetings
Since the right of usufruct shall be exercised only at the General Assembly meeting, the right to participate in the General Assembly meetings shall also belong to the beneficial owner. It is a precondition for joint-stock companies to have the right to participate in general assembly meetings to exercise the right to file a cancellation case and access to information. Because it is the rule for using the right to file a cancellation case that to participate in the general meeting and oppose to the decision which shall be recorded to the meeting minutes. However, as explained below, the right to receive information is not only a right that is used outside the general assembly but is also considered within the scope of this right to “ask a question” and “request clarification” at general assembly meetings. As a shareholder has the right to file a cancellation case and to receive information and to inspect, it is obligatory that he / she is given right to participate in the general assembly meetings in order to exercise these rights effectively.
3. Right to Receive Information
The beneficial owner has the right to receive information as a natural extension of the right to vote in order to fulfill the obligation “to act fairly” in Article 432 of the Turkish Commercial Code. It is also claimed that even though the right to receive information is recognized to beneficial owner, it must also be recognized to the owner15.
4. Right to File a Cancellation Case
As stated in Article 446 of the Turkish Commercial Code, the right to file a cancellation case is only recognized to the owners. They can file a lawsuit against the decisions of the General Assembly which are contrary to the provisions of the law or the articles of assosiations and particularly aganist the good faith. Pursuant to the same article, within three (3) months from the date of the general meeting’s decision, the beneficiary may file a cancellation case in the commercial court of the place where the head office is located. It is a natural result of the right to vote. If it is accepted that the beneficial owner who has right to voke does not have right to file a calletion case, that would restrict the basic stareholder rights that the beneficial owner is using. This acceptance is contrary to the structure of the joint stock company.
IV. CONCLUSION
As there is no clear provision in the legislation, the powers of the beneficial owner are still being discussed today. In this study, the rights and power of the beneficial owner of the usufructary rights established on the shares of the joint stock companies are emphasized. In determining the scope of the usufruct which is established on the shares in the joint-stock companies constituting the subject of the examination, the general provisions concerning the joint-stock companies are important as well as the general provisions drawing the limits of the usufruct. In this context, the subjects such as the rights and responsibilities arising from usufructary right on shares are determined according to the Law on Joint Stock Companies. Apart from that, the general provisions related to the usufructary right are used to solve the special problems that may arise in that context.
In joint-stock companies, the beneficial owner shall not damage the substance of the usufructary rights when s/ he uses the rights and power. This obligation belongs to the beneficial owner. In particular, s/he should act as a “good manager” when s/he fulfills his management right and responsibility. In addition, the beneficial owner shall make necessary repairs and renewals for the preservation and ordinary maintenance of the subject matter. If the owner refrains from doing the necessary work, the beneficiary can make them on behalf of the owner.
BIBLIOGRAPHY
Hasan Pulaşlı, Bağlı Nama Yazılı Pay Senetleri, Dayınlarlı Yayıncılık, Ankara, 1992.
Zühtü Aytaç, Sermaye Piyasası Hukuku ve Hisse Senetleri, Ankara, 1988.
Abuzer Kendigelen, Anonim Ortaklık Payı Üzerinde İntifa Hakkı, İstanbul, 1994.
Ar. Gör. Arzu Oğuz, Pay Senetleri Üzerinde İntifa Hakkı Kurulması ve İntifa Hakkının Kapsamı, AÜHF Roma Hukuku Anabilim Dalı, Ankara Barosu Dergisi 1991.
Dr. Bülent Köprülü Dr. Selim Kaneti, Sınırlı Ayni Haklar, İstanbul, 1972.
Reha Poroy, Ünal Tekinalp, Ersin Çamoğlu, Ortaklıklar ve Kooperatif Hukuku, Vedat Kitapçılık, İstanbul, 2009.
Prof. Dr. Hasan Pulaşlı, 6102 sayılı Türk Ticaret Kanunu’na göre Şirketler Hukuku Şerhi, Adalet Yayınevi, Ankara, 2011.
Ömer Teoman, Anonim Ortaklıkta Pay Sahibinin Oy. Hakkından Yoksunluğu Konusundaki Yargıtay Kararlarının Değerlendirilmesi, Ankara, 1978.
FOOTNOTE
1 The 12th Civil Chamber of the Court of Appeal, file no. 2013/36079 and decisions no. 2014/2087 of 28.01.2014.
2 Hasan Pulaşlı, Bağlı Nama Yazılı Pay Senetleri, Ankara, 1992, sf. 171’den naklen Zühtü Aytaç, Sermaye Piyasası Hukuku ve Hisse Senetleri (Sermaye Piyasası), Ankara, 1988, p. 121;
3 Kendigelen Abuzer, Anonim Ortaklık Payı Üzerinde İntifa Hakkı (Pay Üzerinde İntifa Hakkı), İstanbul, 1994, p. 2.
4 Kendigelen, Pay Üzerinde İntifa Hakkı, p. 4.
5 Ar. Gör. Arzu Oğuz, Pay Senetleri Üzerinde İntifa Hakkı Kurulması ve İntifa Hakkının Kapsamı, AÜHF Roma Hukuku Anabilim Dalı, Ankara Barosu Dergisi 1991/1, p. 24.
Dr. Bülent Köprülü Dr. Selim Kaneti, Sınırlı Ayni Haklar, İstanbul, 1972, 116 ve devamı.
7 Kendigelen, Pay Üzerinde İntifa Hakkı, p. 91.
8 Reha Poroy, Ünal Tekinalp, Ersin Çamoğlu, Ortaklıklar ve Kooparatif Hukuku (Ortaklıklar Hukuku), İstanbul, 2009, p. 616.
9 Prof. Dr. Hasan Pulaşlı, 6102 sayılı Türk Ticaret Kanunu’na göre Şirketler Hukuku Şerhi, Ankara, 2011, p. 1570.
10 4721 sayılı Türk Medeni Kanunu md. 810.
11 6102 sayılı Türk Ticaret Kanunu m. 480.
12 Tekinalp/Poroy/Çamoğlu, Ortaklıklar Hukuku, p.579.
13 Ömer Teoman, Anonim Ortaklıkta Pay Sahibinin Oy. Hakkından Yoksunluğu Konusundaki Yargıtay Kararlarının Değerlendirilmesi, Ankara, 1978, p.49 ve devamı.
14 Kendigelen, Pay Üzerinde İntifa Hakkı, p.320.
15 Aytaç, Sermaye Piyasası, p. 124.
