ccording to Article 35 of the Law on Lawyers, joint-stock companies with a registered capital amounting to five times or more of the minimum capital amount specified in the Turkish Commercial Code and building cooperatives with a membership of one hundred or more are obligated to employ a contractual lawyer. This provision, which is not widely known, has come into the spotlight again recently due to warnings from bar associations and legal proceedings initiated against joint-stock companies that do not comply with the obligation to employ a lawyer.
Reason for the Obligation to Employ a Lawyer
The argument that this regulation violates the freedom of contract and the principle of equality and is therefore unconstitutional has been made, but this request was rejected by the Constitutional Court. In its decision, the Constitutional Court explained the rationale behind this requirement as follows: “…to enable joint-stock companies with a certain capital size to conduct all their transactions from the beginning in a solid legal framework that will not lead to legal disputes later, while maintaining a fair balance among different interests within the corporate structure, and to ensure that these companies operate efficiently in accordance with profitability and modern management principles.”
Furthermore, according to Article 167 of the Constitution, the state may take measures to ensure the healthy and orderly functioning and development of money, credit, capital, goods, and service markets.
Regarding the allegation of violating the principle of equality, it is stated that “joint-stock companies with a capital equal to or above this amount and those with a capital below this amount do not have the same legal status in terms of their functional characteristics that affect the social and economic order of society. Therefore, applying different rules to these companies does not violate the principle of equality.”
Penalty for Non-Compliance
In accordance with Article 35 of the Law on Lawyers, joint-stock companies that do not appoint a contractual lawyer for each month in which they fail to do so are subject to an administrative fine in the amount of two months’ gross minimum wage in force on the date of the offense for each employee over sixteen years of age working in the industrial sector.
Therefore, when calculated based on the minimum wage in 2018, non-compliant joint-stock companies are liable for an administrative fine of approximately 4,000.00 TL per month. This administrative fine is imposed by the Chief Public Prosecutor’s Offices for past years. Although there is an opportunity to appeal the administrative fine in front of the criminal peace courts, considering the clarity of the relevant legal provision, the Constitutional Court’s decision rejecting the annulment request, and the size of the administrative fines that may be imposed, it is important to emphasize once again the importance of complying with this requirement.