ANKARA
2004
COOPERATIVES LAW
Law No: 1163 Adopted on: 24/4/1969
Law No: 3476 Adopted on: 6/10/1988
CHAPTER ONE
COOPERATIVE AND ITS ESTABLISHMENT
A) DEFINITION:
Article-1: A cooperative is defined as a body with variable members, variable capital and legal identity that is established by natural and public legal entities and private administrations, municipalities, villages, societies and associations in order to ensure and maintain certain economic interests and specifically the needs of their members toward professional life and living standards by means of mutual assistance, solidarity and service as trustees to each other.
B) ESTABLISHMENT, TERMS OF VALIDITY, AUTHORIZATION FOR USING NAME
Article-2: A cooperative shall be established under a Memorandum of Incorporation to be signed at least by 7 members. The signatories therein should be notarized.
The undertakings, in the Memorandum of Incorporation, of the building societies and other cooperatives the scope of which includes the transfer of immovable properties, to the effect that immovable properties will be transferred to members are deemed as valid irrespective of other official procedure.
In establishing cooperatives, the capital of the cooperative may not be limited to a certain amount. The name ‘cooperative’ can solely be used by the bodies that have been established in accordance with this law.
The titles of the cooperatives and their superior authorities may not contain the names of public bodies and institutions. The members of the Board of Directors of the cooperatives and their superior authorities that violate this paragraph shall be sentenced to penalties such as imprisonment from 1 month up to 6 months and heavy fines such as fifty thousand to five hundred thousand Turkish Liras depending on the type and degree of the act.
C) PERMISSION, REGISTRATION AND PROCLAMATION
Article-3: The Memorandum of Incorporation shall be submitted to the relevant Ministry. Should the Ministry permit the establishment, it shall be registered with the local Trade Registry Office and proclaimed accordingly. The particulars to be registered and announced are as follows:
1. The date of the Memorandum of Incorporation,
2. The objects, the field of activity and the duration, if any, of the cooperative,
3. The title and the registered office of the cooperative,
4. The capital of the cooperative, and the minimum amount paid in return for the cash portion thereof and the value of the share of each membership,
5. That the membership share certificates are straight certificates,
6. What the capital in kind and the valuable assets taken over consist of and the values designated for them,
7. How the cooperative shall be represented and audited,
8. The names of the members of the Board of Directors and the people authorized to represent the cooperative,
9. How the announcements by the cooperative shall be made and how the decisions to be made by the Board of Directors shall be notified to the shareholders, where a provision is made on this matter in the Memorandum of Incorporation,
10. Branch offices of the cooperative: Cooperatives can establish branch offices within and out of the country, should they deem it necessary. Branch offices shall be registered with the local registry authorities of the city they are established in, with reference to the registered head office thereof.
The relevant Ministry cannot withhold its approval to the establishment of the cooperative claiming that it is in poor conformity with the optional provisions of the Law.
The amendment of the Memorandum of Incorporation shall be based on the procedures of the organization.
D) THE PROVISIONS TO BE CONTAINED IN THE MEMORANDUM OF INCORPORATION
I. Obligatory Provisions
Article-4: The Memorandum of Incorporation of the cooperatives has to contain the provisions pertaining to the following particulars.
1. The name and the registered head office of the cooperative,
2. The purpose and the field of operation of the cooperative,
3. The states and conditions that result in the gain or loss of the position of membership,
4. The value of the shares of the members and the way the cooperative capital is paid; cash payment of at least ¼ of the cash capital,
5. Whether the members shall deposit capital in kind or not,
6. The state and the degree of responsibility of the members with regard to the liabilities of the cooperative,
7. The duties, authorities and responsibilities of the managing and auditing organs of the cooperative and the way they are elected,
8. Provisions concerning the representation of the cooperative,
9. The ways to calculate and utilize annual income/expenditure differences,
10. The names, surnames and the residence addresses of the founders.
II. Optional Provisions
Article-5: The Memorandum of Incorporation may also contain the following provisions:
1. The provisions concerning the meeting of the General Assembly, the way decisions are made, and the procedure of voting,
2. The procedures concerning the way the cooperative operates,
3. The relations of the cooperative with the associations,
4. The provisions concerning the merging of the cooperative with another cooperative,
5. The term of the cooperative.
III- Interpretative Provisions
Article-6: In case no provision is made in the Memorandum of Incorporation pertaining to the particulars written in points 1 and 2 of Article 5, the following provisions shall apply:
1. The General Assembly shall be called for meeting through letters signed by the persons authorized to represent the cooperative, or local newspapers, or through written and signed notices if in villages.
2. The activities of the cooperative: These are restricted to the purpose and the field of operation of the cooperative.
E) ACQUISITION OF A LEGAL IDENTITY AND RESPONSIBILITIES
Article-7: A cooperative shall acquire a legal identity through registration with the Trade Registry Office. The persons acting for and on behalf of the cooperative before registration shall be personally and successively responsible for their actions.
CHAPTER TWO
Acquisition and Loss of Membership Status
A) REQUIREMENTS FOR MEMBERSHIP AND NUMBER OF MEMBERS
Article-8: The natural persons should be able to use their civil rights in order to be eligible for acquiring cooperative membership. The natural and legal entities wishing to become a member shall apply to the Board of Directors of the cooperative along with a written notice documenting that they fully agree with the provisions of the Memorandum of Incorporation including all rights and duties specified therein. Should the cooperative be assigning certain personal responsibilities or additional payments, other than its own assets, to its members, then the intention to become a member shall be valid solely on the condition that such liabilities are agreed upon in writing.
Board of Directors is obliged to inspect whether the members and those applying for membership are eligible as per the requirements specified in the Memorandum of Incorporation. The members of the Board of Directors of the cooperatives and their superior authorities that violate this paragraph shall be sentenced to penalties such as imprisonment from 1 month up to 6 months and heavy fines such as fifty thousand to five hundred thousand Turkish Liras depending on the type and degree of the act.
In case of construction cooperatives, the number of housing units, offices (or work places), and members shall be established by the General Assembly. The Board of Directors cannot enroll members exceeding the number specified by the General Assembly. The members of the Board of Directors of the cooperatives and their superior authorities that violate this paragraph shall be sentenced to penalties such as imprisonment from 3 months up to 2 years and heavy fines such as one-hundred thousand to one million Turkish Liras depending on the type and degree of the act.
I- Membership of legal entities
Article-9: The legal public entities such as private administrations, municipalities, villages, societies and associations, state economic enterprises, and cooperatives may support, have a leading role in, or become members of the establishment of the cooperatives with respect to their purpose of operation.
B) CESSATION OF MEMBERSHIP
I- Freedom of withdrawal from membership – indemnity
Article-10: Each member shall have the right to withdraw from membership. In case the act of withdrawal endangers the presence of the cooperative, a provision stipulating that a fair indemnity is paid to the cooperative by the withdrawing member can be included in the Memorandum of Incorporation.
II- Restriction of withdrawal from membership
Article-11: The exercise of the right to withdrawal from membership can be restricted under the Memorandum of Incorporation up to a maximum term of 5 years.
A provision can be made in the Memorandum of Incorporation stipulating that any member can withdraw from membership prior to the end of this term provided that he or she has justified and important reasons.
The engagements promising that a member can in no way withdraw from the cooperative are invalid.
III- Notice period and time of withdrawal
Article-12: A member may withdraw only as of the end of the fiscal year and with a prior notice of at least 6 months. Should a shorter period be specified in the Memorandum of Incorporation, then withdrawals within the fiscal year may be permitted.
IV- Abstinence from accepting withdrawal from membership
Article-13: Should the Board of Directors abstain from accepting the withdrawal of any given member from membership in spite of a withdrawal request made in compliance with the Memorandum of Incorporation, the member shall notify his/her request of withdrawal through a notary-public. The withdrawal shall have been realized as of the date of such notice.
V- Death of the member and transfer of membership
Article-14: The status of membership shall be terminated upon the death of a member.
Pursuant to the provisions stipulated in the Memorandum of Incorporation, the status of membership can be passed on to the heirs of the late member.
Membership may be transferred. If the person taking over the membership is eligible for membership, the Board of Directors shall accept the membership of such person.
VI- Termination of duty or service; membership in return for immovable properties or enterprise
Article-15: If the status of membership is subordinate to the execution of a particular duty or service, the status of membership shall be terminated upon the termination of such duty or service. In such cases, the status of membership can be perpetuated through the addition of a particular provision to the Memorandum of Incorporation.
The acquisition of the status of membership can be made subordinate, under the Memorandum of Incorporation, to the enjoyment of certain rights in connection with the ownership of a given immovable asset or to the operation of a given enterprise. In such cases, the Memorandum of Incorporation may provide that the ownership of an immovable property or the enterprise, or the status of membership can be transferred to third persons as a right to the new owner in case of transfer of them or their rights. The validity of such immovable property acquisition against third persons shall be dependent on the conditional delivery made in this manner to the Title Deed Registry.
C) PRINCIPLES OF DISMISSAL FROM MEMBERSHIP AND OBJECTION
Article-16: The reasons necessitating a dismissal from cooperative membership shall be clearly specified in the Memorandum of Incorporation. The members cannot be dismissed from cooperative membership for reasons other than those justified in the Memorandum of Incorporation. The members of the Board of Directors of the cooperatives and their superior authorities that violate this paragraph shall be sentenced to penalties such as imprisonment from 1 month up to 6 months and heavy fines such as fifty thousand to five hundred thousand Turkish Liras depending on the type and degree of the act.
Dismissal from membership shall be decided upon by the General Assembly upon the proposal of the Board of Directors. The Board of Directors may be authorized on this matter under the Memorandum of Incorporation, without prejudice to the right of the dismissed member to appeal to the General Assembly.
The decision for dismissal shall be written with cause in the minutes as well as in the members’ book. The attested copy of the decision shall be delivered to the notary public within ten days, for being notified to the dismissed member. The said member may file an action for objection within three months as of the date of notification. If the notified decision has been made by the Board of Directors, the member may also forward his/her objection to the General Assembly within the three-month period. This objection shall be raised through a notarized notice in writing to the Board of Directors, for being submitted to the first meeting of the General Assembly. Where the objection is forwarded to the General Assembly, an action for objection cannot be initiated against the decision of dismissal by the Board of Directors. The right to file an action for objection against the decision to be made by the General Assembly is hereby reserved.
The decisions of dismissal against which no objections are raised either to the General Assembly or to the courts within a three-month period shall become conclusive and final. The members, against whom the decisions of dismissal have not become conclusive, cannot be replaced with new ones. The membership rights and liabilities of such persons shall continue to be valid until the decisions of dismissal about them become final. The members of the Board of Directors of the cooperatives and their superior authorities that violate this paragraph shall be sentenced to penalties such as imprisonment from 3 months up to 2 years and heavy fines such as one-hundred thousand to one million Turkish Liras depending on the type and degree of the act.
D) PERIOD OF ACCOUNT SETTLEMENT WITH THE MEMBERS WHO HAVE WITHDRAWN OR BEEN DISMISSED AND RELEVANT LIABILITIES
Article-17: The Memorandum of Incorporation shall demonstrate whether the members that have withdrawn or been dismissed from the cooperative have, for themselves or their heirs, any rights on the assets of the cooperative and, if so, what these rights are. These rights shall be designated according to the balance sheet of the year of their separation from the cooperative, excluding the reserves.
The returns and the payments which tend to endanger the presence of the cooperative may be delayed by the General Assembly for a period not exceeding three years, even if shorter periods are specified in the Memorandum of Incorporation. In such cases, the cooperative shall reserve its right to ask for a fair indemnity. The credits and rights of the withdrawn or dismissed members and their heirs shall be prescribed, in case they are not asked for within a period of five years as of the date of acquisition of such rights.
The terms stipulating that the withdrawn or dismissed member shall be totally or partially deprived of their capitals or credits are invalid.
CHAPTER THREE
Rights and Liabilities of the Members
A) DEED OF MEMBERSHIP
Article-18: It is obligatory for the membership rights of each member to be represented with a deed of membership issued to the name. The title of the cooperative, the name and surname and business and residence addresses of the owner of the bill and the dates of entering into and parting from the cooperative shall be included in the said deed of membership. The holder of the deed of membership and the persons authorized to represent the cooperative shall sign these particulars. The money deposited or withdrawn by the member shall be recorded in the order of time. If these records are related to the money paid by the cooperative, the member shall sign the related documents. The signed deed of membership shall be regarded as a receipt for payment. The said deed of membership may be prepared in the form of a membership account book, on the condition that it includes the Memorandum of Incorporation. The deeds of membership shall not be regarded as valuable assets, but only as documentary evidence.
B) MEMBERSHIP SHARES – PERSONAL CREDIT ORS
Article-19: It is required to collect at least one membership share from every member entering into a cooperative. The Memorandum of Incorporation may permit the collection of more than one share by a member within a maximum limit to be specified in the Memorandum of Incorporation.
The value of a single membership share is TL 10,000. Those entering into a cooperative may subscribe a maximum of 1 000 shares. On the other hand, those entering into a superior organ of a cooperative shall subscribe a minimum of 50 shares. The value of a single membership share may be increased up to ten times subject to the decision of the Council of Ministers.
Several shares may be represented on one single deed of membership. The shares not represented by deeds of membership shall be regarded as equivalent to TL 10,000.
The loan demands of each cooperative shall be responded with priority by the banks, institutions, or companies, depending on the field of operation of such cooperative. The investment activities of the agrarian cooperatives shall be supported by low-interest loans to be delivered in the form of appropriations to be spared from the budgets, subject to the provisions of the regulation prepared by the Ministry concerned.
The personal creditors of any member may only seize the amount equivalent to the share of the member arising from the interests and income-expenditure differences and the share to be paid to the member upon the dissolution of the cooperative.
C) CAPITAL IN KIND
Article-20: The subscription of the same kind of capital or the taking over of a present enterprise or the capitals in kind may be provided for and accepted under the Memorandum of Incorporation.
1- Valuation, expert
Article-21: If the value of the capital in kind is not specified in the Memorandum of Incorporation, this shall be established by the expert to be elected by the majority of the members representing two third of the whole number of members at the first General Assembly to be convoked by the founders.
In case the members entering into the cooperative following its foundation are to subscribe capital in kind, the call for that purpose shall be made by the Board of Directors.
In cases where it is not possible for two third of the members to agree upon a unanimous decision, the election of the expert shall be asked from the Civil Court of Peace.
The report submitted by the expert or experts may be disputed at the local Civil Court of Peace within one week as of the date of notice. The decision to be made by the court shall be conclusive.
2- Quorum, acceptance of the reports
Article-22: The matter shall be discussed after the expert appointed in accordance with the Article 21 draws up the reports and submits them to the General Assembly meeting. A copy of the expert report shall be enclosed to the letters of invitation.
Following the perusal and examination of the expert reports on the condition that at least half of the number of members are present at the meeting either in person or by proxy and, where deemed necessary, after hearing the explanations of those who have put capitals in kind or the owners of the enterprises or the capitals in kind to be taken over, the decisions shall be made, on a majority basis, with respect to the approval or refusal of the same values or their evaluation upon the consent of the parties concerned.
Ç) EQUALITY IN RIGHTS AND OBLIGATIONS
Article-23: The members are equal in rights and obligations subject to the principles adopted under this Law.
1- Right of access to information, balance sheet
Article-24: The annual work report including the proposals of the Board of Directors about the form of distribution of the income-expenditure differences and the balance sheet and the report to be prepared by the auditors in accordance with the provisions of Article 66 shall be made available for examination by members at the headquarters and the branches, if any, for a period of one year, as of 15 days prior to the annual General Assembly meeting.
It is obligatory to present one copy of the balance sheet and the income-expenditure difference accounts to the members upon request.
The right of the members to access to information may not be eliminated or restricted neither by the Memorandum of Incorporation nor by a decision of one of the organs of the cooperative.
2- Provisions on the commercial books and confidentiality and penalty
Article-25: The examination of the commercial books and the matters concerning communication of the cooperative shall be enabled upon an explicit permission of the General Assembly or by the decision of the Board of Directors. None of the members are authorized to be informed about the business secrets of the cooperative, except for the information to be acquired from the books and documents allowed to be accessed. Every member shall be obliged to always keep the business secrets which they happen to find out by any means as confidential, even where they lose membership status at any time afterwards. Apart from being responsible to the cooperative for the losses to arise, the member who does not conform to this obligation shall be sentenced to imprisonment up to one year or with a heavy fine from TL 15,000 to TL 300,000 or both upon any complaint raised by the cooperative, even if any kind of losses were not expected.
3- Right to attend General Assembly meetings
Article-26: Except for the members who were not members three months ago, every member shall have the right to attend General Assembly meetings. As for the construction cooperatives, such condition shall not be required for attending General Assembly meetings.
E) OBLIGATIONS AND RESPONSIBILITIES OF THE MEMBERS
I- Term of membership and termination
Article-27: The amount of money that can be paid by the members for the shares undertaken shall be specified in the Memorandum of Incorporation. The cooperative shall ask the fulfillment of these obligations from the members indebted with capital or other payment obligations through letters submitted personally or delivered via registered mail or, if this is not possible, by notices, specifying a reasonable term. The membership of those who failed to satisfy the first call and who failed to perform their obligations within one month following the second call shall be automatically terminated. The termination of the membership of such persons shall not require relieving of the same from the debts arising under the Memorandum of Incorporation or otherwise.
II- Responsibility of the Cooperative
Article-28: Unless otherwise provided in the Memorandum of Incorporation, the cooperative shall be responsible to its creditors only to the extent of its properties.
1- Unlimited liability
Article-29: In case the assets of the cooperative are not adequate to cover up the debts of the cooperative, the Memorandum of Incorporation may include an article providing that the members can be held responsible in person and in an unlimited manner. In such cases, if the creditors cannot obtain whole of their receivables upon the liquidation of the cooperative either through bankruptcy or for other reasons, the members of the cooperative shall be responsible, in succession and with all their assets, due to the debts of the cooperative.
2- Limited liability
Article-30: A provision may be incorporated in the Memorandum of Incorporation rendering each member liable, as successor of the cooperative, for the cooperative debts in excess of his own share in person and up to a certain amount. The amount that the members will be personally liable may also be shown in proportion to the amount of their shares in the cooperative.
This liability shall be set forth by the bankruptcy administration until the end of the bankruptcy procedure.
3- Additional payment burden
Article-31: The Memorandum of Incorporation may impose a burden of additional payment on the members. However, it is obligatory to use the additional payments only for the purpose of covering up the balance deficits. The additional payment burden may not only be unlimited but also limited as proportional to specific amounts or volume of work or shares.
In case of bankruptcy of the cooperative, the right to demand an additional payment shall rest with the bankruptcy administration.
4- Non-permitted limitation
Article-32: The provisions of the Memorandum of Incorporation deferring the liability to a certain time or burdening on some member groups shall not be valid.
5- Procedure in case of bankruptcy
Article-33: In case of bankruptcy of the cooperatives the members of which are liable in person or are responsible for additional payments, the bankruptcy administration shall ask for the payment of the debts corresponding to the share of each member, and prepare the relevant sequence schedule.
The amounts not collected shall be shared among the other members. The actual remainder shall be returned following the definite designation of the share schedules. The members shall reserve their right to have recourse to each other. The members shall be entitled to object to the temporarily fixed debts and the share schedules, in accordance with the provisions of the Execution and Bankruptcy Law.
6- Modification of the provisions on responsibility
Article-34: The modifications about the liability of the members and the additional payment burden shall only be possible through the modification of the Memorandum of Incorporation. The introduction of a liability and additional payment burden or any increase thereof shall operate in favor of the entire credits of the cooperative upon the registration of the related decision. The decisions about the reduction of a liability shall not cover the debts arising prior to registration.
7- Liability of the new members of the cooperative
Article-35: In a cooperative where the members are liable in person or burdened with additional payments, any individual newly entering the cooperative, being aware of his condition, shall become equally responsible as the other members for the debts previously incurred. Any contract terms contrary to this and the contracts between the members shall not be valid and binding for the third persons.
8- Responsibility following the withdrawal of a member or the dissolution of the cooperative
Article-36: As of the date a member with limited or unlimited liability dies or it becomes definite that he/she withdraws from the cooperative for any other reason, in case the cooperative goes bankrupt within one year or a longer period if specified in the Memorandum of Incorporation, the member may not be relieved of responsibility for the debts incurred prior to his/her withdrawal.
The burden of additional payment shall continue to be present under the same conditions and within the same period.
Where a cooperative dissolves, the members are responsible likewise for the additional payments, in case it is decided upon announcing the bankruptcy of the cooperative within one year as of the registration with the Trade Registry Office or within a longer period if indicated in the Memorandum of Incorporation.
9- Prescription in responsibilities
Article-37: The demands of the creditors for rights arising from the personal liabilities of the members may be put forward by each of them for a period of a further year as of the termination of the bankruptcy transactions, unless not invalidated earlier with the enforcement of a legal provision.
The recourse rights of the members against each other shall be prescribed within one year from the settlement of the payment forming the basis for such right.
CHAPTER FOUR
Cooperative Accounts
A) INCOME-EXPENDITURE DIFFERENCES – DIVISION THEREOF AND APPLICATION OF INTEREST ON SHARES
Article-38: Unless otherwise provided in the Memorandum of Incorporation, the entire income obtained at the end of a one-year activity as a result of the transactions made with the members shall be added to the reserves of the cooperative as the income-expenditure difference.
If the distribution of the income-expenditure difference among the members is provided for, such distribution shall be performed in proportion to the level of operation of the members.
A provision may be made in the Memorandum of Incorporation stating that an interest being no more than the maximum interest rates applied for the State Bonds can be paid for the capital shares of the members upon the decision of the General Assembly after the distribution of at least 50% of the income-expenditure difference.
A provision may also be inserted in the Memorandum of Incorporation providing that the revenues obtained from the non-member transactions can be distributed to the members in proportion to their capital shares. If not distributed, these shall be accumulated in a special fund to be used for works that will contribute to the development of the cooperative.
In case the results of the one-year activity are negative, the deficit shall be covered up from the reserves or, if these are not adequate, by additional payments or by joint capital shares.
Unless the negative results are recovered, no distribution of income-expenditure differences and interests shall take place.
B) RESERVES
Article-39: No distribution to the members shall take place unless at least 10% of the income-expenditure difference is spared as cooperative reserves, and an additional 5% is set aside as extraordinary reserves in case of cooperative superior authorities.
The provisions to be introduced in the Rules about the distribution of the reserves to the members are not valid.
C) CHARITY FUNDS FOR THE MEMBERS AND PERSONNEL
Article-40: The Memorandum of Incorporation may make provisions for the establishment and operation of charity funds for the officials, workers and the members of the cooperatives.
If the assets spared for charity purposes are identified, these shall cease to be a property of the cooperative and be deposited in a special account in order to be used for the intended purpose for which they are assigned.
D) FUNDS TO BE SPARED WITH PRIORITY FROM THE INCOME-EXPENDITURE DIFFERENCE
Article-41: The reserves and the money to be deposited in other funds set up in accordance with the Memorandum of Incorporation and by law shall be set aside with priority from the income-expenditure difference to be divided.
The methods and conditions for using the reserves and special funds shall be established in the Memorandum of Incorporation.
CHAPTER FIVE
Cooperative Organs
A) GENERAL ASSEMBLY
I. Authority
Article-42: The General Assembly is the organ with highest authority representing all members.
The General Assembly may not transfer or renounce from its power to:
1. modify the Memorandum of Incorporation,
2. elect the members of the Board of Directors and Auditors as well as the Board of Liquidation, where necessary,
3. decide upon the division of the operating account, balance and, where necessary, income - expenditure difference.
4. acquit of the Board of Directors and Auditors,
5. decide upon the items left to the discretion of the General Assembly by law or in the Memorandum of Incorporation,
6. establish the methods to be followed in the purchasing and selling of an immovable asset as well as the nature, location and the maximum price of the immovable asset to be purchased and minimum price of the property to be sold,
7. determine the performance method for manufacturing and construction works,
8. establish the number of the members of the cooperative and number of buildings and work-places to be constructed in case of construction cooperatives.
II- Call for meeting
1- Those authorized to call for meeting
Article-43: The Board of Directors and any other organ authorized in this matter under the Memorandum of Incorporation, and also the Board of Auditors, where appropriate, the association with which the cooperative is associated and the liquidation officials shall hold the right to call the General Assembly for a meeting. However, in case the General Assembly is failed to meet in the foregoing manner, the Ministry concerned shall be entitled to call the General Assembly for a meeting.
2- Request of the members, call from the Ministries, permission of the court
Article-44: The General Assembly shall be called for a meeting with the request of at least 10% of the number of members, on the condition that such number is not less than four members.
In case the General Assembly does not comply with this request within a minimum of ten days, the General Assembly may be convoked upon the application of the requestors or directly by the Ministry concerned.
If the General Assembly does not still meet, the requestors may resort to the local court to obtain a permission to call the General Assembly for a meeting in person.
3- Form
Article-45: The General Assembly shall meet ordinarily or extraordinarily whenever deemed necessary. It is obligatory to hold the ordinary meeting within six months as of the end of each account period and at least once in a year. The members of the Board of Directors who do not or fail to call the General Assembly for the ordinary meeting shall be sentenced to imprisonment from one month up to six months and to a heavy fine of TL 50,000 up to TL 500,000, depending on the type and degree of the act.
The General Assembly shall be called for a meeting in accordance with the form and method specified in the Memorandum of Incorporation.
The meeting quorum shall be indicated in the Memorandum of Incorporation. However, it is obligatory that at least one fourth of the members are present in person or by proxy at the general meetings of the construction cooperatives.
The date, place, and agenda of the General Assembly meeting shall be notified to the relevant Ministry and the civil administrative officer in writing, at least 15 days prior to the meeting.
The control and direction of the General Assembly shall be performed by the chairman and the members elected from among the members or the representatives of the superior authorities.
III- Agenda
Article-46: The agenda shall be inserted in the meeting invitation and the announcement. If the amendment of the Memorandum of Incorporation is in question, it shall be sufficient to designate the numbers of the articles to be amended in the announcement to be made.
It is compulsory to include in the agenda the item to be notified in writing, at least twenty days prior to the General Assembly meeting, by at least one tenth of the members, the number thereof being not less than four.
Any items not included in the agenda shall not be discussed. However, upon the written request of at least one tenth of the members registered in the cooperative prior to the commencement of the discussion of the agenda items, the election of the account examination commission, the deferral of the examination of the balance sheet and the acquittal, the decision-making about the withdrawn or dismissed members, the calling of the General Assembly for a new meeting, the annulment of the decisions of the Board of Directors claimed to be conflicting the General Assembly decisions by Law, Memorandum of Incorporation and the principles of good faith as well as the subjects regarding the dismissal of the members of the Board of Directors and the auditors and replacement thereof shall be included in the agenda upon the consent of one more than half of those attending the meeting.
IV- The condition of presence of the entire shareholders
Article-47: Insofar as all of the members of the cooperative are present at the General Assembly meeting and in case there are no objections, the decisions can be made even if the provisions related to the meeting invitation have not been adhered to, without prejudice to the other provisions concerning the General Assembly meetings. It is obligatory that such decisions are signed by the members or by the representatives to be elected unanimously by the members at the meeting.
V- Right to vote
1- General
Article-48: Each member shall have the right to cast only a single vote at the general assembly.
2- Representation
Article-49: Where provided for in the Memorandum of Incorporation, any member may transfer the right of voting at the General Assembly meeting to another member by authorizing the latter accordingly in writing. No members may represent more than one member at the General Assembly. As for the cooperatives with members exceeding 1,000, it may be allowed in the Memorandum of Incorporation that each member shall represent up to nine other members at the General Assembly. No requisite of being a member shall be sought for representation by the spouses and first degree relatives.
3- Those ineligible to vote
Article-50: Those who have, in any manner, participated in the performance of the cooperative works may not participate in voting with regard to the decisions on the acquittal of the Board of Directors. This provision shall not apply to auditors. None of the members may cast vote in the discussions about a personal business matter, or a case between the cooperative and himself/herself or his/her spouse or ancestors and descendants.
4- Decisions
1- General
Article-51: Unless otherwise provided by law or in the Memorandum of Incorporation, one more than half of the votes shall be required for the decisions of the General Assembly and the elections.
Two third of the votes actually cast shall be required for the decisions upon the liquidation of the cooperative or merger into another cooperative or the amendment of the Memorandum of Incorporation. The Memorandum of Incorporation may introduce heavier provisions regarding the majority of the votes for making these decisions.
2- Increasing the shares of members
Article-52: For the decisions upon the hardening of the personal responsibilities of the members or the introduction of additional payment obligations, the consent of three fourth of the whole members shall be required.
However, this condition shall not be sought for the decisions to be made for the purpose of benefiting from the increase in the amount of credit, for the cooperatives obtaining credits from state institutions, and the provisions dictated in paragraph 1 of Article 51 shall apply.
These decisions shall not bind the members who have not participated in the decision-making process and who have notified the cooperative that they have withdrawn from the cooperative within three months as of the date of relevant notice. Under such circumstances, the declaration regarding withdrawal from the cooperative shall take effect as of the effective date of the decision.
The exercise of the right of withdrawal from the cooperative in this manner cannot be related to the payment of withdrawal indemnity.
3- The cancellation of decisions and relevant terms
Article-53: The following persons may apply to the court against the decisions of the General Assembly, where the cooperative headquarters is located, with the claim that the decisions are in poor compliance with the Law, the provisions of the Memorandum of Incorporation and the principles of good faith, within a period of one month from the following date of meeting:
1- The shareholders who were present at the meeting but were against the decisions and who caused the recording of such situation in the form of minutes, who were unjustly prevented from casting their votes and who claim that the invitation to the General Assembly meeting was not performed in compliance with the procedures, that the agenda was not announced or notified as it should have been, or that some of the people supporting the decision were not authorized to attend the General Assembly meeting;
2- The Board of Directors;
3- Each of the members of the Board of Directors and the auditors, in case the fulfillment of the decisions necessitate their personal responsibility.
The date on which the action for cancellation is filed and the trial will be held shall be duly announced by the Board of Directors.
The trial may not commence prior to the end of one-month period that results in the loss of rights, as dictated in paragraph 1. If more than one case is filed, the cases shall be merged to allow a single trial.
Upon the request of the cooperative, the court may decide upon the submission of a guarantee by the plaintiffs against probable losses. The court shall specify the nature and the amount of guarantee.
The cancellation of a decision shall apply to all members.
4- Voting by mail and meeting of representatives
Article-54: With regard to the cooperatives with members exceeding 1,000, the following practices may be considered as a General Assembly, provided that a relevant provision is made in the Memorandum of Incorporation:
1. That all or part of the decisions of the General Assembly are taken by the votes of the members sent by mail,
2. A group of representatives elected from among the members, consisting of divided groups, with a view to casting their votes in accordance with the instructions to be specified by the decisions to be made.
In case of voting by mail, the content of the letters shall be stated following its examination in the presence of the Board of Directors and the representative of the related Ministry, and recorded in the form of minutes. Any decision found to have been taken according to the minutes signed by those present shall be duly put into effect.
At the General Assembly of the group representatives, each representative shall possess votes equal to the number of members he/she represents. The voting of the representative contrary to the instruction he/she has received shall have no effect on the decision.
B) BOARD OF DIRECTORS
I- Obligations and number of members
Article-55: The Board of Directors is the executive organ of the cooperative, managing the activities of the cooperative and representing the same in accordance with the provisions of the Law and Memorandum of Incorporation.
The Board of Directors shall consist of at least three members. It is obligatory that these members and their substitutes are the members of the cooperative.
The legal entities elected for the Board of Directors shall notify the cooperative of the names of their representatives.
II- Membership requirements and fee
Article-56: The members of the Board of Directors shall be required to meet the following requirements:
1- To be citizens of the Republic of Turkey,
2- Not to be members of the Boards of Directors of other cooperatives with similar fields of activity,
3- Not to have been tried and found guilty as per the provisions of the Turkish Criminal Law with regard to embezzlement, theft, corruption, bribe, misuse of duties, forgery, thievery, cheating, fraudulent bankruptcy, misuse of trust, and the crimes committed against the personality of the State or as per this Law.
The auditors shall investigate the eligibility of the members. The Board of Directors shall terminate the assigned duties of those who were selected though they did not have these qualifications and those who lost such qualifications afterwards. The members of the board of auditors of the cooperatives or the superior authorities violating this paragraph shall be sentenced to imprisonment from 1 up to 6 months and a heavy fine of TL 50,000 up to TL 500,000, depending on the type and degree of the act.
Although the offices of those against whom public cases are filed for the aforesaid offenses continue until holding of the next General Assembly meeting, an item shall be included in the agenda of the first General Assembly meeting by the Board of Directors with regard to the dismissal or the continuation of the offices of such members.
If the Board of Directors fails to meet the meeting quorum due to this reason or any other reason to be indicated in the Memorandum of Incorporation, adequate number of substitute members shall be invited immediately for the vacant memberships of the Board of Directors by the board of auditors. The members of the board of auditors of the cooperatives or the superior authorities violating this paragraph shall be sentenced to imprisonment from 1 up to 6 months and a heavy fine of TL 50,000 up to TL 500,000, depending on the type and degree of the act.
One or several of the members of the Board of Directors may be elected as delegate members, with the authority to represent the cooperative. The election and replacement of the delegate members should be registered with the Trade Registry Office.
No payments under any name whatsoever may be delivered to the members of the Board of Directors, except for the salaries, attendance fees, patronage dividend, and allowances allowed by the General Assembly. The members of the Board of Directors and the officials of the cooperatives or the superior authorities violating this paragraph shall be sentenced to imprisonment from 3 months up to 2 years and a heavy fine of TL 100,000 up to TL 1,000,000, depending on the type and degree of the act.
III- Term of membership
Article-57: The members of the Board of Directors shall be elected for a maximum period of 4 years.
Unless otherwise provided in the Memorandum of Incorporation, they can be re-elected.
IV- Administration and representation
1- Delegation of powers
Article-58: The Memorandum of Incorporation may confer upon the general assembly or board of directors the authority to assign one or several directors or members of the Board of Directors who are not required to be cooperative members, for the administration and representation of the cooperative in whole or in part.
2- Scope and restriction
Article-59: The persons authorized to represent shall be entitled to take all legal actions for and on behalf of the cooperative to the extent they are required by the corporate objects thereof.
The restriction of the said representative power shall not impose any provisions against the third persons with good faith. The records registered with the Trade Registry Office regarding that the representative authority is retained only for the works related to the main establishment or a branch thereof or the usage of the cooperative title together shall be reserved.
The cooperative shall be responsible for the losses arising from the unjust actions taken by the persons authorized to manage or represent, during the execution of their duties.
It is compulsory that the purchase of the immovable properties decided to be purchased by the cooperative shall be performed through a title deed transfer or an agreement for sales undertaking, with an annotation be delivered to the real estate registry office.
It is required that any immovable asset to be purchased is in accordance with the purpose and objects of the cooperative.
The members of the Board of Directors or the personnel of the cooperative may not pursue any commercial transactions falling within the corporate domain of the cooperative in their own names or in the name of others, whether in person or indirectly, except for the membership transactions.
Any announcements, advertisements and explanations to be made by the cooperatives and their superior authorities for the purpose of introduction and registering members shall not be incomplete or untrue, including misleading information and elements.
The members of the Board of Directors and the persons authorized to represent may not enjoy the powers which can not be delegated by the general assembly. The members of the Board of Directors and the officials of the cooperatives or the superior authorities violating paragraphs 4, 6, 7 and 8 of this Article shall be sentenced to imprisonment from 3 months up to 2 years and a heavy fine of TL 100,000 up to TL 1,000,000, depending on the type and degree of the act.
3- Signature
Article-60: The persons authorized to represent the cooperative may only bind the cooperative by putting their signatures under the title of the cooperative.
4- Registration
Article-61: The cooperative shall present to the Trade Registry Office the names and signatures of the members of the Board of Directors and the persons authorized to represent the cooperative and copies of the notarized decisions based on such authority.
5- Due diligence and responsibilities of the members
Article-62: The Board of Directors shall show due diligence for the administration of the cooperative works and shall make its best efforts for the success and the development of the cooperative.
The Board of Directors shall be responsible for the due preparation, keeping and the maintenance of its own minutes, the minutes of the General Assembly, the necessary books and the list of the members, and for presenting to the board of auditors the operating account and the balance sheets prepared in accordance with the legal provisions for inspection purposes.
The members of the Board of Directors and the officials of the cooperative shall be responsible for the losses attributable to their own faults. Such persons shall be punished in a manner similar to the ‘Civil Servants’ with regard to the actions and behaviors deemed as a crime, and especially for the crimes they have committed on money and properties, balance sheets, minutes, reports and other papers, books and documents of the cooperative.
V- Actions to be taken in insolvency of the cooperative
Article-63: Where there are serious reasons to prove the insolvency of the cooperative, the Board of Directors shall immediately draw up an interim balance sheet on the basis of the current market prices. In case the last year’s balance sheet or a liquidation balance sheet prepared afterwards, or the interim balance sheet referred to above implies that the resources of the cooperative are not sufficient any more to cover the debts, the Board of Directors shall notify the related Ministry thereof and call the General Assembly for an extraordinary meeting.
In a cooperative where share promissory notes have been already issued, if half of the resources of the cooperative remains to be bounced within the last year’s balance sheet, the Board of Directors shall call the General Assembly for a meeting and address the situation to the information of the members. The Board of Directors shall at the same time notify the court and the related Ministry thereof. However, in case of cooperatives where the members are obliged with additional payments, if the deficit shown in the balance sheet is not covered up with the additional payments of the members within three months, the related Ministry shall be notified thereof.
Where it is deemed possible that the financial situation can be rectified, the court may delay the filing of an action for bankruptcy, upon the request of either the Board of Directors or one of the creditors, in which case it shall take the necessary precautions related to the protection and the maintenance of the resources of the cooperative, such as keeping the assets book or the appointment of an administrator.
VI- Dismissal
Article-64: The Board of Directors may, at any time, dismiss the personnel it has assigned for the performance of the works, the directors appointed and the other representatives and deputies.
Those who are dismissed shall reserve the right to claim indemnity.
C) AUDITORS
I- Election
Article-65: The auditors shall inspect the entire transactions and accounts of the cooperative for and on behalf of the General Assembly. The General Assembly, as the supervisory organ, shall elect one or more auditors for a period of at least one year. The General Assembly may elect substitutes for the auditors. It is not compulsory for the auditors and their substitutes to be members of the cooperative.
The provisions laid down in subparagraphs 1 and 3 of Paragraph 1, Article 56, shall also apply to the auditors.
II- Operation
1- Obligation of examination
Article-66: The auditors shall be obliged to examine whether or not the operating account and the balance sheet conform to the books, whether or not the books are kept duly and orderly, and whether or not the transactions are pursued in accordance with the provisions to be followed as regards the consequences of the relevant operation and the property. In case of cooperatives where members are personally responsible for or obliged with additional payments, the auditors shall be obliged to examine whether or not the list of members is kept in due manner.
The administrators shall submit the books and the documents to the auditors for this purpose.
Upon the request of the auditors, all kinds of information with regard to the content book and the principles according to which the latter has been drawn up and any other subject must be provided. The members of the board of auditors of the cooperatives or the superior authorities violating this paragraph shall be sentenced to imprisonment from 1 up to 6 months and a heavy fine of TL 50,000 up to TL 500,000, depending on the type and degree of the act.
The members are authorized to call the attention of the auditors to issues they deem necessary and to ask for an explanation in that respect.
The members of the board of auditors of the cooperatives or the superior authorities violating this paragraph shall be sentenced to imprisonment from 1 up to 6 months and a heavy fine of TL 50,000 up to TL 500,000, depending on the type and degree of the act.
2- Drawing up reports
Article-67: The auditors are obliged to submit their proposals annually to the General Assembly along with their written report.
The auditors are also obliged to notify the related organs and, where necessary, the General Assembly of the faults and wrongdoings in the execution of the works falling within their scope of assignment and the actions contradictory with the Law and the Memorandum of Incorporation.
The auditors shall attend the meetings of the Board of Directors and the General Assembly, without a right to cast a vote at the meetings of the Board of Directors.
The members of the board of auditors of the cooperatives or the superior authorities violating this Article shall be sentenced to imprisonment from 1 up to 6 months and a heavy fine of TL 50,000 up to TL 500,000, depending on the type and degree of the act.
3- Obligation to keep secrets
Article-68: The auditors shall not disclose to the cooperative members or third persons the particulars they have learnt or accessed in pursuance of their duties and which are expected to damage the cooperative or the members if so disclosed.
III- Special Provisions
Article-69: It is possible to make broader provisions regarding the auditing organization, to increase the tasks and powers of the auditors and in particular to provide for interim audits under the Memorandum of Incorporation or by a decision of the General Assembly.
CHAPTER SIX
Cooperative Unions, Central Union of Cooperatives, Turkish National
Cooperatives Union and Advisory Board
Tasks and Responsibilities
Article-70: The cooperative unions, central unions of cooperatives and the Turkish National Cooperatives Union shall be established for the purpose of providing the services such as the protection of the common interests of the cooperatives, the performance of economic activities for achieving objectives, coordinating and auditing the activities of the cooperatives, organization of the relations with foreign countries, development of the cooperative-business and the providing of training activities and recommendations on the cooperative-business.
The provisions of Article 62 shall apply to the members and officials of the cooperative unions, central unions of cooperatives and the Turkish National Cooperatives Association.
Obligation
Article-71: In joining a union, the members of a cooperative may not be imposed obligations in excess of those provided by Law or under the respective Memorandum of Incorporation.
A) COOPERATIVE UNIONS
Article-72: The fact that unions can be established by 7 or more cooperatives the fields of which are either the same or related to each other, may be provided for in their respective Memorandum of Incorporation. Such unions shall be established in the form of cooperatives.
Where the related Ministry determines specific regions, no more than one cooperative union may be established in these regions with the same field of operation.
1- General Assembly
Article-73: Except as otherwise provided in the Memorandum of Incorporation, the top-authority organ of the cooperative unions shall be the General Assembly which consists of the representatives of the cooperatives.
The members of the Board of Directors may be elected as representatives.
2- Board of Directors
Article-74: The Board of Directors of the union shall be elected from among the representatives involved in the General Assembly of the association. It is compulsory that all the members to be elected to the Board of Directors are not the representatives of the same cooperative.
3- Supervision and training
Article-75: The central unions of cooperatives shall supervise and audit the associations and cooperatives affiliated therewith and provide training and education possibilities thereto. Where the establishment of the central union is not complete, the unions shall audit cooperatives directly affiliated therewith. The results of the audit performed by the superior bodies shall be notified to the related Ministry.
The cooperatives and its superior authorities shall share the expenditures incurred in relation to the auditing and the training services provided for themselves, being subject to the principles to be laid down by the superior authority.
B) CENTRAL UNIONS OF COOPERATIVES
Article-76: The cooperative unions may establish central unions, among themselves, in the form of cooperatives.
The General Assemblies of the central unions of cooperatives shall be constituted by the representatives to be elected by the General Assemblies of the cooperative unions involved in such central union.
The members of the Board of Directors of the cooperative unions may be elected as the members of the General Assemblies of the central unions of cooperatives.
The cooperative unions having a similar field of operation may not establish more than one central union of cooperatives.
C) TURKISH NATIONAL COOPERATIVES UNION
Article-77: The unions or the central unions of cooperatives may establish a Turkish National Cooperatives Union in the form of a cooperative.
The conditions of participation shall be laid down in the Memorandum of Incorporation of the Turkish National Cooperatives Union.
The representatives to be elected by the General Assemblies of the unions and central unions of cooperatives shall constitute the General Assembly of the Turkish National Cooperatives Union. The fact that this assembly is constituted by the Board of Directors of the cooperatives, unions and central unions of cooperatives may be provided for in the Memorandum of Incorporation.
D) DESIGNATION OF REPRESENTATIVES
Article-78: The number of the representatives of the cooperatives, unions, and central unions of cooperatives to constitute the general assemblies of the same shall be designated in the Memorandum of Incorporation of the unions, central unions of cooperatives and the Turkish National Cooperatives Union, provided such number does not exceed 5 depending on the number of members.
Article-79: The unions, the Central Unions of Cooperatives and the Turkish National Cooperatives Union shall furnish their Memorandum of Incorporation in accordance with the provisions of this Law.
E) ADVISORY BOARD
Article-80: The “Advisory Board of Turkish Cooperatives” shall be established with the participation of one representative from each of the General Board of Directors of the Turkish National Cooperatives Union and State Planning Organization, the Ministry of Industry and Commerce, Ministry of Agriculture Forestry and Rural Affairs, Ministry of Finance and Customs, Ministry of Public Works and Reconstruction, Ministry of National Education Youth and Sports, the banks financing cooperatives and the Turkish Authority for Cooperatives.
The duties and powers as well as the form and working conditions of this board shall be laid down under a regulation to be issued by the related Ministry.
CHAPTER SEVEN
Dissolution of the Cooperatives
A) Reasons for dissolution
Article-81: A cooperative shall be dissolved or liquidated:
1- pursuant to the Memorandum of Incorporation,
2- by a decision of the General Assembly,
3- by filing an action for bankruptcy,
4- upon a judgment to be provided by the related Ministry from a court, in case of other circumstances provided for by law,
5- due to merger with or absorption into another cooperative,
6- where the ordinary General Assembly meeting has not been held for three consecutive years,
7- by a ruling from a court upon the establishment by the related Ministry that no possibility exists to achieve its corporate purpose and objects.
The construction cooperatives shall be assumed to have attained their objective and liquidated upon the completion of the works specified in their Memorandum of Incorporation and following the registry of the buildings in the name of the members after proceeding with the individual proprietorship. However, the liquidation provisions shall not apply if and when the purpose and objects of the cooperative are duly changed by an amendment of the Memorandum of Incorporation within 6 months from the date of registration.
As for the construction cooperatives, the individual relations of the members in accordance with the Condominium Act shall be finalized within no later than one year following the obtaining of a permission of use of building.
Where no liquidators are elected by the court or by the General Assembly, the Board of Directors shall carry out the liquidation operations. The members of the liquidation board shall be paid a fee to be fixed by the authority having appointed such members.
Where no specific quorum is specified in the Memorandum of Incorporation, no quorum shall be required at the General Assembly meetings of the cooperatives in case of liquidation. The decisions shall be taken by a majority of votes.
The tasks and duties of the Board of Liquidation shall be set out in the Memorandum of Incorporation. The members of the Board of Liquidation are obliged to endeavor in order to complete the liquidation operations as soon as possible.
The provisions laid down in subparagraph 3 of Paragraph 1, Article 56, and 62 shall also apply to the members of the Board of Liquidation.
B) NOTICE TO THE TRADE REGISTRY OFFICE
Article-82: The dissolution of the cooperative for reasons other than bankruptcy shall be registered and announced by the authorized organs of the cooperative with the Trade Registry Office. Such authorized organs shall be indicated in the Memorandum of Incorporation.
C) SHARING OF THE LIQUIDATED PROPERTY
Article-83: The properties remaining after the payment of all debts of the cooperative entering into a state of liquidation and after the return of the member share amounts shall be shared among the members, only if such sharing is provided for in the Memorandum of Incorporation.
Unless another method of solution is provided in the Memorandum of Incorporation, the division shall be made equally between the registered members or their legal successors at the date of dissolution.
Where the Memorandum of Incorporation does not provide for a sharing among the members, then the amount remaining after liquidation shall be transferred to the Turkish National Cooperatives Union for being used in accordance with the objectives of the cooperative-business.
If such a union has not been established, this amount shall be deposited in the fund under the control of the related Ministry, in order to be donated to the institutions aiming to achieve the objectives prescribed in Article 94 hereof.
D) DISSOLUTION THROUGH MERGER
Article-84: Where any cooperative is dissolved by being absorbed into another cooperative with all its assets and liabilities, the following provisions shall apply:
1- The Board of Directors of the absorbing cooperative shall invite the dissolving cooperative to notify its receivables in accordance with the provisions regarding liquidation.
2- The property of the dissolved cooperative shall be administered separately, until its debts are arranged subject to payments or guarantees. The administration shall be taken over by the Board of Directors of the absorbing cooperative.
3- The Board of Directors of the absorbing cooperative shall be severally and successively responsible to the creditors for the separate execution of the administration.
4- Within the period of such separate administration of the property, the cases to be filed against the dissolved cooperative shall be prosecuted by the court which has been already authorized in this matter before liquidation.
5- As for the relations between the creditors of the dissolved cooperative and the absorbing cooperative and creditors thereof, the properties taken over shall be considered to belong to the dissolved cooperative within the same period. In case of bankruptcy of the absorbing cooperative, however, these properties shall account for a different item, which, where necessary, shall be used only to pay the debts of the dissolved cooperative.
6- The property of both cooperatives can only be amalgamated from the time when it is possible to make disposition of the properties of the dissolved cooperative.
7- The registration of dissolution of the cooperative shall be requested from the Trade Registry Office. Following the settlement or taking under guarantee of the debts, the entry of the cooperative shall be deleted.
8- Upon the registration of the dissolution of the cooperative, the members shall also join the absorbing cooperative, along with all their rights and liabilities.
9- Insofar as its property is administered separately, the members of the dissolved cooperative may only be pursued for the debts of the dissolved cooperative and subject to principles regarding their responsibilities until then.
10- To the extent that the burden of responsibilities or the additional payment obligations of the members of the dissolved cooperative is mitigated as a result of the merger within the same period, this mitigation may not be put forward against the creditors of the dissolved cooperative.
11- If, as a result of the merger, personal responsibilities or additional payment burden arise or exacerbate for the members of the dissolved cooperative, the decision for merger may only be made by the consent of three-fourth majority of all members. The provisions imposing responsibility and the additional payment burden shall not apply to the members with a dissenting opinion against the decision for merger and in addition to those who have notified their withdrawal from the cooperative within three months as of the date of notice of the decision.
E) COOPERATIVE TO BE ABSORBED BY A PUBLIC LEGAL ENTITY
Article-85: The assets of a cooperative may also be taken over by a municipality, a State economic enterprise, a public enterprise, or societies or associations working for the good of the public, in which case it is necessary for the decision to be taken by the General Assembly to be registered and announced in accordance with the provisions regarding liquidation.
Where the assets of such a cooperative are taken over by a municipality, a State economic enterprise, a public enterprise, or societies or associations, the General Assembly may make a decision not to apply liquidation.
The assets and liabilities of the cooperative shall have been transferred to the possession of the absorbing entity as of the notification of the decision for transfer. The name of the dissolved cooperative shall be removed from the trade registry, which shall also be announced separately.
Each of the creditors of the merging establishment and the cooperative may raise an objection to such merger by resorting to a competent court within three months as of the date of relevant notice. The merger shall not be in effect unless and until the right of objection is given up or a decision made by the court refusing the objection becomes conclusive or the guarantee to be appreciated by the court is submitted by the establishment or the cooperative.
CHAPTER EIGHT
Duties and Powers of the Related Ministry
A) GENERAL DUTIES AND POWERS OF THE MINISTRY
Article-86: The major duties and powers of the related Ministry with respect to the cooperatives are:
1- to guide the cooperatives, cooperative unions, central unions of cooperatives, and the Turkish National Cooperatives Union in their establishment and organization and to assist them in administrative issues and activities,
2- to supervise, inspect and cause to be supervised and inspected the cooperative unions, central unions of cooperatives and the Turkish National Cooperatives Union,
3- to notify the court of the reasons necessitating the dissolving of the cooperatives, cooperative unions, central unions cooperatives and the Turkish National Cooperatives Union,
4- to make necessary attempts before the related Ministries and the institutions for the foundation, crediting with priority and activating to the good of the country of the cooperatives, primarily those related to production, and to act as a coordinator,
5- to make regulatory dispositions in the field of public and social security funds in order to support the application of current regulations with respect to cooperatives and the cooperatives and superior authorities thereof.
The related Ministry may ask for intervening in the public actions filed on account of the offenses committed by the members and officers of the board of directors and auditors of the cooperatives and superior authorities in connection with their positions.
B) REPRESENTATIVES OF THE RELATED MINISTRY AND VALIDITY OF THE DECISIONS
Article-87: The related Ministry shall assign a representative to be present at the General Assembly meetings of the cooperatives, cooperative unions, central unions of cooperatives and the Turkish National Cooperatives Union.
The General Assembly meetings shall be opened and continued in the presence of a representative from the Ministry.
The administration shall ensure the presence of a representative on the day notified.
The representatives shall be in charge of supervising and ensuring the execution of the meeting in compliance with the laws, Memorandum of Incorporation, and agenda. A compensation to be designated by the related Ministry at an amount not to exceed twice the local daily allowance of the senior first degree officials shall be paid to each of such representatives. This fee shall be deposited in the treasury of the financial office by the cooperatives and superior authorities thereof prior to the General Assembly meeting in order to be delivered to the assigned representative.
The representatives shall sign the minutes including the decisions of the General Assembly and the list of those attending the meeting. Any representative shall be required in the General Assembly to state, in the minutes, his/her opinion on the decisions conflicting with the law and the Memorandum of Incorporation.
The qualifications and duties of the representatives shall be specified under the Statutes.
However, in case the representative fails to attend the meeting though an application is duly filed, the local top administrative officer shall be notified of this situation for ensuring the execution of the meeting. If the representative still fails to attend the meeting, the meeting shall be initiated after an hour.
C) PREPARATION OF SPECIMEN MEMORANDUM OF INCORPORATION
Article-88: The related Ministry shall prepare specimen Memorandum of Incorporation for the cooperatives, cooperative unions, central unions of cooperatives and the Turkish National Cooperatives Union, in consultation with the said establishments.
D) ACCOUNTING METHOD AND BOOKS
Article-89: The method of keeping the accounts of the cooperatives, cooperative unions, central unions of cooperatives and the Turkish National Cooperatives Union and the books they are obliged to keep may be established by the related Ministry.
The provisions of the Tax Procedure Law related to the foregoing matters shall be reserved.
E) CONTROL AND INSPECTION
Article-90: The related Ministry may cause the transactions, accounts and assets of the cooperatives, cooperative unions, central unions of cooperatives and the Turkish National Cooperatives Union to be inspected by inspectors or cooperative controllers.
The procedure for election and operation as well as the duties and powers of the controllers shall be established under the Statutes.
These organizations are obliged to conform to the instructions to be delivered by the related Ministry according to the result of the inspection. The members of the board of auditors of the cooperatives or the superior authorities violating this paragraph shall be sentenced to imprisonment from 1 up to 6 months and a heavy fine of TL 50,000 up to TL 500,000, depending on the type and degree of the act.
The state institutions, foundations, municipalities, and the related Ministries providing the cooperatives and their superior authorities with loans may inspect whether or not the supplied loans are being used in accordance with the intended objectives, the conformity with the plans and projects and from the viewpoint of technical features and quality.
Those assigned at the cooperatives and their superior authorities are obliged to make available the properties, money, securities, and the books and documents related to these, even if confidential, to the inspectors, cooperative controllers and the auditing officials of the credit institutions, if required, to assist in the counting and examining processes, to deliver the requested information in a proper and complete manner and to make correct statements. The officers and members of the Board of Directors of the cooperatives or the superior authorities violating this paragraph shall be sentenced to imprisonment from 3 months up to 2 years and a heavy fine of TL 100,000 up to TL 1,000,000, depending on the type and degree of the act.
F) CHARGING WITH CONTROL AND INSPECTION ACTIVITIES
Article-91: The related Ministry may charge the relevant bodies of the cooperative superior authorities and independent inspection institutions with the inspection works.
The principles regarding the foregoing shall be set out in the Statutes to be prepared pursuant to Article 90.
CHAPTER NINE
Miscellaneous
A) PROHIBITION FROM POLITICAL ACTIVITIES
Article-92: The cooperatives and their superior authorities may not engaged in activities that are for political purpose and toward the disturbance of the general security, public security and order, and neither the cooperatives nor their superior authorities are allowed to be involved in activities for such purposes.
The cooperatives and their superior authorities may not, under any circumstances, accept any kind of financial assistance from the political parties and organizations or from the persons and organizations which perform the activities referred to in paragraph 1, nor can they provide them with financial assistance. The Boards of Directors and Auditors of the cooperatives and their superior authorities, as the representatives of these institutions, are not allowed to participate in any meetings to be held by political parties.
The founders of the cooperatives, the chairman and members of the Board of Directors, and if this action takes place at a General Assembly meeting, the chairman of the General Assembly meeting who has tolerated such action, shall be sentenced to imprisonment from 3 months up to 1 year.
B) EXEMPTIONS
Article-93:
1- The cooperatives, cooperative unions, central unions of cooperatives and the Turkish National Cooperatives Union are exempted from:
a) the interests and commissions they have taken from each other and the money they have taken from their members for bailing purposes and from the bank and Insurance Procedures Tax.
b) the certifying of all kinds of books and Memorandum of Incorporation and the sealing of pages at the opening certifications and all kind of charges and Stamp Duty.
c) all kind of taxes to be imposed on the immovable properties they possess, insofar as they are not rented out or not allocated for profit gaining purposes.
d) all kind of taxes and duties related to the immovable properties the rights of which are to be transferred by the members.
e) Furthermore, the statement to be lodged in accordance with Article 13 hereof shall not be subject to stamp duty or other charges and levies.
2- In case the servitude of the immovable properties and the obligation of the immovable properties are subscribed as capital to the cooperatives, cooperative unions, central unions of cooperatives and the Turkish National Cooperatives Union, they shall benefit from:
– the reduced rates referred to in Article 9 of the Property Purchasing Tax Act, and
– the Corporations Tax subject to the provisions laid down in paragraph 16 of Article 7 of Corporations Tax Act No 5422 as amended by Law No 199.
3- Where the cooperatives, cooperative unions, central unions of cooperatives are not involved in the superior authorities which have taken actions, they shall be ineligible to benefit from the exemptions referred to in this Article, except for those referred to in paragraph 1(b) and paragraph 2 of this Article.
C) FUND FOR PROMOTION AND TRAINING SERVICES
Article-94: 1% of the positive income-expenditure difference accrued according to the annual balance sheets of the cooperatives shall be deposited in a fund under the control of the related Ministry for provision of services such as guidance related to the promotion, training and organization of cooperative-business and assisting the cooperatives with recommendations in administration and activities.
D) DISPUTES, ARBITRATION COMMITTEES
Article-95: The disputes to arise between the organs of the cooperatives and the cooperatives themselves, and the cooperatives and the cooperative unions they are affiliated with, and the central unions of cooperatives and the Turkish National Cooperatives Union on account of the matters falling within their fields of operation may be settled by arbitration committees as set forth in the respective Memorandum of Incorporation, without prejudice to the general provisions.
E) RESERVED PROVISIONS
Article-96: The provisions of Law No 2834 on Agricultural Sales Cooperatives and Unions and Law No 2836 on Agricultural Credit Cooperatives and the provisions of Law No 7116 concerning the Construction Cooperatives shall be reserved. However, in case of silence of the aforesaid laws, the provisions of this law shall apply.
Article-97: The cooperatives and cooperative unions established under laws no 2834 and 2836 may organize in the form of central unions of cooperatives or join the Turkish National Cooperatives Union.
F) REFERENCE TO THE PROVISIONS OF INCORPORATED COMPANIES
Article-98: Except as provided to the contrary hereunder, the provisions of the Turkish Commercial Code concerning the Incorporated Companies shall apply.
G) LAWSUITS AND PROSECUTION PROCEDURE
Article-99: The lawsuits arising out of or in connection with the matters set out under this Law shall be considered as commercial cases, regardless of whether or not the parties are merchants.
The simple prosecution procedure shall be implemented in such cases.
H) ABOLISHED PROVISIONS
Article-100: Articles 458 – 502 constituting the sixth chapter of the Turkish Commercial Code concerning the cooperatives are hereby abolished.
TRANSITIONAL PROVISION
Transitional Article 1- The cooperatives already established and existing at present are required to align their Memorandum of Incorporation according to the provisions of this Law within two years. The cooperatives acting in breach of this requirement shall be considered to have dissolved. In case the persons in charge of liquidation by law do not or fail to initiate liquidation process within two months from dissolution, the related Ministry or the Treasury shall be entitled to ask from the court for the appointment of a liquidator.
The general assembly meetings to be held by the cooperatives in order to align their Memorandum of Incorporation according to this Law shall convene and take decisions based on the procedure and quorum requirements of the ordinary general assembly meetings.
I) EFFECTIVE DATE
Article-101: This Law shall take effect 3 months following the date of its publication.
J) EXECUTING AUTHORITY
Article-102: The provisions of this Law shall be executed by the Council of Ministers.
LAW NO 3476- ADDITIONAL ARTICLE 1-
The names of the Ministries referred to in this Law have been replaced with the term ‘Related Ministry’.
The term ‘Related Ministry’ should imply and be understood as the Ministry of Agriculture Forestry and Rural Affairs for those cooperatives and their superior authorities with agrarian fields of activity, and the Ministry of Industry and Commerce for the other cooperatives and their superior authorities.
LAW NO 3476- ADDITIONAL ARTICLE 2-
The penalties restricting the freedom as provided for in article 92 hereof shall not be converted into fine and this provision shall become effective on 25/4/1989. The related Ministry may ask for intervening in the public actions filed on account of the offenses committed by the members and officers of the board of directors and auditors of the cooperatives and superior authorities in connection with their positions.
LAW NO 3476- TRANSITIONAL ARTICLE 1-
The cooperatives and their superior authorities the names of which do not comply with the stipulations of Article 1 are obliged to adapt and register their names in accordance with this Law through the amendment of their Memorandum of Incorporation within no later than six months.
According to the paragraph 1 (2) of Article 56 which has been amended by Article 14 of this Law, those who are members of more than one Board of Directors of cooperatives with a similar field of operation shall choose one of the said memberships and give others up within three months following the entering into force of this Law.
LAW NO 3476- TRANSITIONAL ARTICLE 2-
The superior authorities of the cooperatives which have gained legal identity prior to the effective date of this Law shall be considered to have been established under the provisions of this Law.
LAW NO 3476- TRANSITIONAL ARTICLE 3-
The cooperatives already established and existing at present are required to align their Memorandum of Incorporation according to the provisions of this Law within two years. The cooperatives acting in breach of this requirement shall be considered to have dissolved. In case the persons in charge of liquidation by law do not or fail to initiate liquidation process within two months from dissolution, the related Ministry or the Treasury shall be entitled to ask from the court for the appointment of a liquidator.
The general assembly meetings to be held by the cooperatives in order to align their Memorandum of Incorporation according to this Law shall convene and take decisions based on the procedure and quorum requirements of the ordinary general assembly meetings.
The Law No 3476 shall enter into force on 25/10/1988, without prejudice to the exception provided for in paragraph 1 of ADDITIONAL ARTICLE 2.
The provisions of this Law shall be executed by the Council of Ministers.
