Problems on Pledge on Joint-Stock Company Shares and Proposed Solutions

Res. Asst. Hüseyin Bahadır Çolak

I have tried to examine selected problems on pledge on joint-stock company shares in my article published on Banking and Commercial Law Journal’s (Banka ve Ticaret Hukuku Dergisi) September 2021 issue (XXXVII/3). Joint-stock company shares can be certified; hence the establishment of share pledge is subject to different procedures depending on whether the share is certified or uncertified and the type of share certificate. There are also differences in terms of the legal consequences of the method preferred. The paper (i) puts forward the legal regime to which establishment of pledge is subjected within the scope of different methods for certified and uncertified shares, then examines the problems on (ii) endorsement in pledge on registered share certificates, (iii) acquisitions by the third party in good faith on shares subject to pledge and (iv) legal implications of certification of uncertified shares following the establishment of the pledge.

Share pledge is directly regulated by neither the Turkish Code of Obligations (“TCO”) nor the Turkish Commercial Code (“TCC”). Thus, joint-stock company share has unique characteristics as a pledge subject, and the examined problems require applications of general principles set by TCO and TCC. Conflict of interest between shareholder and pledgee is also at the core of the problems discussed. Therefore, the paper aims to propose solutions consistent with the general principles of property law and commercial law and set a balance between conflicting interests.

Keywords: Joint Stock Companies, Company Share, Share Pledge, Establishment of Pledge, Certification of Pledged Shares

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(*) Koç University Law School, Department of Civil Law