Obligation to Have a Lawyer in Joint Stock Companies in Turkey
OBLIGATION TO HAVE A LAWYER
Under the regulations, joint stock companies whose capital exceeds five times the lower limit of the principal capital amount and building cooperatives with at least one hundred members are subject to the obligation to have a lawyer under contract. According to the Turkish Commercial Code, joint stock companies are required to have a minimum capital amount of fifty thousand Turkish Liras, which represents the fully committed capital in the company’s articles of association. For non-public joint stock companies that have adopted the registered capital system, the board of directors is authorized to increase the capital up to a certain ceiling. However, the initial capital amount cannot be less than one thousand Turkish Liras.In this regard, it is worth noting that joint stock companies with a principal capital of 250 thousand Turkish Liras or more, which is five times the amount required for joint stock companies with principal capital, are also required to have a contracted lawyer. As for building cooperatives, the main determinant for the obligation to have a contracted lawyer is the number of members, with building cooperatives established to meet housing needs requiring at least 100 members.
The role of a contracted lawyer in joint stock companies is significant as they carry out various responsibilities such as offering legal counsel to the board of directors and other company officials. They also represent the company in legal proceedings, ensuring compliance with laws and regulations, and minimizing legal risks. Lawyers play a crucial role in preventing legal disputes which can negatively impact the company. It is essential for joint stock companies in Turkey to have a contracted lawyer as it is a crucial aspect of corporate governance. Compliance with this requirement ensures that the company operates within the legal framework, protecting the interests of all stakeholders. Additionally, compliance can help to minimize legal risks and avoid penalties, providing appropriate legal support to joint stock companies.
Even if joint stock companies or cooperatives have attorneys working under an employment contract, they cannot consider the obligation to have a contracted attorney fulfilled. They must establish an attorneyship contract based on the conditions stated below.
Non-compliance with the obligation to hire a contracted lawyer for joint stock companies is considered a criminal offense. The Office of the Chief Public Prosecutor may impose an administrative fine of twice the minimum gross wage of the consumer for each month that the obligation remains unfulfilled. This penalty serves as a deterrent for fulfilling the legal obligation of hiring a general contract attorney.
KEY ELEMENTS OF A ATTORNEY SERVICES AGREEMENT
The Turkish Law on Attorneyship No. 1136 and the Minimum Attorneyship Fee Tariff mandates the production of a written, long-term agreement for the provision of attorney services for continuous legal representation. It is required that this contract be generated in multiple copies, surpassing the number of parties involved by one. Each party involved should receive a copy of the attorney services contract, and the attorney who is a party to the agreement must also provide an extra copy to the bar association where they are registered. If there are any discrepancies in the contract text, the copy held by the Bar Association will take precedence.
The attorney services contract must contain the following essential elements:
1. Full name, professional or commercial title, address, tax/T.R. identification number of the parties involved
2. Full name, title, tax/T.C. identification number of the attorney or the law firm
3. Description of the services to be provided
4. Attorney’s fee and payment terms
5. Provisions regarding adjustment to changes in the Minimum Attorney Fee Tariff
6. Time frame for the services
7. Termination conditions
8. Clarification that the employer is responsible for the duties and expenses associated with the work, which must be paid in advance or upon the lawyer’s first request; that the address listed in the contract is the point of contact for requests and notifications, and that communications sent to this address are deemed to have been received by the employer.
VIOLATING THE OBLIGATION TO HIRE A CONTRACTED ATTORNEY: WHAT ARE THE RISKS?
Joint Stock Company Liability
As previously mentioned, joint stock companies with a principal capital of five times or more as stipulated in the Turkish Commercial Code and building cooperatives with one hundred or more members must employ a contracted attorney. Failure to comply with this obligation results in a penalty imposed by the Public Prosecutor, which equates to an administrative fine of two times the gross minimum wage for each month in which the company does not have a contracted attorney. It is important to highlight that the penalty for non-compliance with the obligation to have a contracted attorney is not a one-time sanction, but rather a separate penalty is imposed for each month in which the obligation remains unfulfilled. In other words, the penalty is imposed continuously for each month in which the company fails to appoint a contracted attorney. In case of non-compliance with the obligation to hire a contracted attorney, legal entities are monitored by the bar association in the area where their headquarters are located, and a criminal complaint is filed against them. The Presidency of the Bar Association presents a report to the Union of Turkish Bar Associations at the end of each year, which includes details of the lawyers who have entered into a contract, as well as the outcomes of their investigations on this matter. If a joint stock company fails to comply with the requirement of having a contracted lawyer, they can contest the administrative fine decision by filing an application with the criminal judge of peace within 15 days of notification or annulment of the decision. Failure to apply within this period results in the administrative sanction decision becoming final. If the decision becomes final, it is still possible to object to it by making a statement to the court clerk within seven days of learning about the decision. The statement must be recorded in the report or submitted as a petition to the authority that made the decision.
Lawyers’ Disciplinary Responsibility
Not only joint stock and cooperative companies, but lawyers also have disciplinary responsibility for acts that violate the obligation to have a contracted lawyer.
The lawyer’s disciplinary responsibility covers two situations. Firstly, it relates to the violation of the provisions concerning the conclusion of the contract, as explained above. Secondly, the lawyer’s obligation to submit the self-employment receipt or payroll samples related to attorney fees collected based on continuous attorneyship services in the form of a list annex to the bar association presidency in which they are registered at the end of each year is also a crucial factor. Failure to meet this obligation will be considered a violation, and the lawyer will be held responsible accordingly.
Another situation where a lawyer can face disciplinary action is related to the determination of the attorney’s fee. The Professional Rules prohibit lawyers from deciding on the fee below the Attorney’s Minimum Fee Tariff. If a lawyer violates this rule, they may face disciplinary responsibility.
In summary, the obligation for joint stock companies in Turkey to hire a lawyer is a crucial legal requirement that serves to safeguard the interests of both the company and its shareholders. Engaging the services of a lawyer enables companies to prevent legal disputes and potential penalties while ensuring compliance with relevant legal provisions. Furthermore, a lawyer can offer specialized advice on various legal matters, such as corporate governance, mergers and acquisitions, and conflict resolution. Hence, it is imperative that joint stock companies in Turkey engage a competent lawyer who can assist them in safeguarding their legal rights and interests.
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