What is capital increase?
A capital increase (sermaye artırımı) is the issuance of new shares by a Turkish corporation, increasing the company’s registered capital and the total shares outstanding. Capital increases are the procedural mechanism through which all VC financing rounds, employee equity grants, M&A share consideration, and dilutive issuances are implemented in Türkiye. Governed by TTK Articles 456–472, capital increase procedures are more formal than U.S.-style stock-issuance mechanics but functionally equivalent: implementing the same economic outcomes within Turkish corporate-law procedural framework.
Turkish A.Ş.s operate under two capital-structure regimes: (i) registered-capital system (esas sermaye sistemi): the default; capital amount fixed in articles, each increase requires articles amendment via general-assembly approval; and (ii) authorized-capital system (kayıtlı sermaye sistemi): available for public companies and elective for closed companies; articles authorize a maximum capital ceiling, board can issue shares up to ceiling without further general-assembly approval (subject to procedural safeguards). Authorized-capital system substantially accelerates capital-increase execution and is increasingly adopted by VC-backed Turkish startups planning multiple financing rounds.
Capital increase types include: cash capital increase (nakdi sermaye artırımı): most common for VC financing, requires actual cash contribution from subscribers, payment at minimum 25% at registration with balance within 24 months; in-kind capital increase (ayni sermaye artırımı): contribution of assets (IP, real estate, receivables, equipment) at appraised value, requires court-appointed expert valuation; conditional capital increase: authorizing future share issuances on triggered conditions (option exercise, convertible-note conversion); bonus capital increase (iç kaynaklardan): capitalization of retained earnings, statutory reserves, or revaluation reserves without new external cash; and capital increase via merger: issuing new shares as merger consideration.
The procedural sequence for cash capital increase in registered-capital system: (i) board resolution proposing increase; (ii) general assembly with qualified quorum (1/2 capital) and qualified majority (2/3 present votes) approving articles amendment; (iii) subscription by participating shareholders (within their pre-emptive rights: rüçhan hakkı, or by waiver/assignment); (iv) payment minimum 25% at subscription; (v) registration with trade registry and publication in Trade Registry Gazette; and (vi) pay defteri update recording new shares issued.
The pre-emptive right (rüçhan hakkı) is a critical concept in Turkish capital increases: existing shareholders have the right to subscribe to new shares pro-rata to their existing ownership, preserving their percentage interest. Capital increases that bypass pre-emptive rights (typical in VC rounds where new investors receive new preferred shares) require either: (i) all shareholders waiving their pre-emptive rights, or (ii) special general-assembly resolution restricting/eliminating pre-emptive rights under TTK Article 461, requiring qualified quorum and qualified majority plus justification for the restriction. Vircon Legal advises Turkish A.Ş.s on capital-increase planning and execution: structural mode selection (registered vs. authorized capital), increase-type design (cash, in-kind, conditional, bonus), pre-emptive-rights management, board and general-assembly resolution drafting, and the procedural coordination of capital increases with broader VC financing-round closing mechanics.
Sources. Turkish Commercial Code No. 6102. Statute links open the official consolidated Turkish texts on mevzuat.gov.tr.