LLC

• According to Article 593 of TCC,basic capital share certificates have been issued as burden of proof or written to a specified name by a limited liability company.

• Share certificates which have been issued by LLC represent property rights and are not securities, share certificates which have been issued by JSC are considered securities.

JSC- COMMON STOCKCommon stock is the basic stock in the financial structure of a corporation. The principal rights, generally conferred on the holder of common stock, are the right to participate in the distribution of dividends, the right to share in the distribution of assets on dissolution of the corporation, and the right to vote at stockholders’ meetings.

Kinds of share certificates

• The first classification is based on transferability:

- To the bearer shares: They can be transferred by delivery. Unlike the transfer of to the name shares, the tarnsfer of to the bearer shares cannot be restricted by the articles of association.

- To the name shares: They are transferred by endorsement and delivery.

• Another classification is based on the rights granted by the share certificate:

- Common shares: Shares grant equal rights to all shareholders.

- Preferred shares: Shares grant additional rights compared to the rights granted by ordinary share certificates are referred to as preferred share certificates.

Issuance of preferred share certificates may be agreed by articles of association or decided by a resolution of general assembly.

Common preferences are;

- the right to receive larger dividend distributions,

- the right to suggest nominee for the membership of Board of Directors

• The third classification is based on voting rights;

- Shares that grant voting rights: All shares must grant the shareholder the right to at least one vote.

- Non-voting stock (Capital Markets Law): These are particularly true for shareholders who are actually investors in large corporations with thousands of shareholders.

These shareholders sometimes are not interested in the management of the corporation. They are merely interested in the return they will receive in the form of a dividend distribution at the end of the year.

REDEEMABLE SHARE CERTIFICATES

• RSC (intifa senetleri) do not entitle the owner to any right of ownership in the corporation, unlike the share certificate. Persons or entities who are not shareholders but who are in some manner related to or affiliated with a stock corporation could request certain rights regarding participation in profit distribution or in liquidation proceeds.

• RSC are commercial (valuable) paper.

VALUABLE PAPER LAW

Valuable paper are such documents that the rights embodied therein can neither be transferred nor claimed independently of the document.

In other words, a valuable paper is a kind of document to which a right is attached in such a way that it is impossible to transfer this right to another person without transfer of possession of the paper.

Characteristics of the valuable paper taking into consideration

the right that they represent• The right included in the paper should be a

transferable right. A non-transferable right, such as human rights or right of usufruct cannot be attached to the valuable paper.

• The right attached to a valuable paper should have an objective monetary value.

• The right is firmly attached to the paper.Once the valuable paper is created, the right cannot be separated from the paper and transferred independently of it. In some cases, the right may exist before the creation of the valuable paper. These are declarative valuable paper such as share certificates. In some other cases, the right arises with the creation of the valuable paper (Constitutive valuable paper). Such as commercial documents.

• Types of valuable paper are enumerated by the law.

• Validity of valuable paper is subject to respect of form requirements described by law.

• Valuable paper has an abstract character.

Kinds of valuable paper taking into consideration the types of rights embodied in the paper

• Monetary papers• Share certificates• Certificates of title to goods

(commodities)

MONETARY PAPERS

• COMMERCIAL PAPERS (Draft/Bill of exchange, promissory note, check)

• BONDS

CERTIFICATES OF TITLE TO GOODS

• CERTIFICATE OF TITLE• CERTIFICATE OF PLEDGE

Bıll of Lading (B/L)

CARRIER SHIPPER

The Characteristics of Valuable Paper in Regard to Type of

Transfer• Valuable paper to a specific name• Valuable paper to order• Valuable paper to the bearer

DEFENSES OF THE DEBTOR

• Defenses based on invalidity of the paper

• Defenses arising from the text of the paper

• Personal defenses

Defenses based on invalidity of the paper

Violation of a form requirement

Defenses arising from the text of the paper

These defenses may be inferred from the text of the paper. For example, the holder requests from the debtor payment of the amount indicated on the paper before the maturity date. Likewise, declaration of a time limitation by the debtor is a definite defense resulting from the text of the instrument.

Personal defenses

Personal defenses of the debtor are those between the debtor and creditor, and which are not based on relations emanating from the paper. In other words, personal defenses are those which the debtor has against the person who’s claiming the paper (creditor). In the case of valuable paper issued payable to order, a debtor is not entitled to set up defenses based on direct relations with the drawer or a previous holder, unless the holder, in acquiring the paper, has knowingly acted to the detriment of the debtor. This is the main difference of enforcement from assignment.

In the case of endorsement of a paper payable to order, the endorser transfers his right which is embodies in the paper, whereas in assignment, the assignor transfers a right that he himself possesses. Therefore, in the case of successive endorsement, the debtor can only plead defenses arising from the paper, but he cannot plead personal defenses arising from direct relations between himself and the drawer or prior holders. Therefore, it is said that a paper payable to order is an instrument which can be negotiated free of personel defenses of the debtor.

VALUABLE PAPER TO THE BEARER

A SECURITY IS DEEMED TO THE BEARER WHERE ITS CONTENT OR FORM SHOW THAT THE HOLDER, FOR THE TIME THEREOF, IS DEEMED LEGALLY ENTITLED AS THE OWNER OF THE RIGHT.

AN INSTRUMENT IS PAYABLE TO BEARER WHEN IT IS TERMED “PAYABLE TO BEARER” OR “TO THE ORDER OF THE BEARER”, WHICH DOES NOT DESIGNATE A SPECIFIC PERSON AS PAYEE.

AMONG THE COMMERCIAL PAPERS, ONLY CHECKS MAY BE ISSUED TO THE BEARER, WHEREAS DRAFTS AND PROMISSORY NOTES CANNOT BE DRAWN TO THE BEARER.

COMMERCIAL PAPERS

• Promissory note• Bill of exchange• Check

PROMISSORY NOTE

A promissory note is a promise to pay money.

The parties to a promissory note are;

1- The maker,

2- The payee.

MAKER

The maker must sign the instrument and make the unconditional promise to pay a sum certain in money to the order of a named payee, on demand or at a fixed or determinable future date.

Payee

The payee is the recipient of the maker’s promise.

Bıll of exchange

A bill of exchange or draft is an order to pay money.

The parties to a bill of exchange are

(1) the drawer

(2) the drawee, and

(3) the payee.

Drawer

The drawer is the party who draws the instrument, and the instrument must be signed by him.

DRAWEE

The drawee is the party to whom the instrument is addressed. He is ordered to pay the money.

PAYEE

The payee is the party to whom themoney is to be paid. If the bill of exchange is drawn payable to bearer, a payee need not be named –the holder is the payee.

CHECK

The check is an order to a bank to pay money.

THE PARTIES

• The drawer• The drawee• The payee

THE DRAWER

The drawer draws and signs the instrument.

THE DRAWEE

The drawee is the party to whom the instrument is addressed and must be a bank.

THE PAYEE

The payee is the party who receives the money. If the check is a bearer check, no payee need be named –the holder is payee.