Bearer share certificates issued by joint stock companies constitute valuable papers within the framework of the Turkish Commercial Code (“TCC”). In accordance with the principle of strict attachment, which is a fundamental characteristic of valuable papers, the rights embodied in these certificates can only be asserted and transferred through the presentation and delivery of the certificate. This situation reveals the inseparable link between the physical existence of the certificate and the economic value it represents. Consequently, the unauthorized possession or unusability of bearer share certificates carries significant legal and economic risks for the rights holders, potentially leading to substantial grievances. This article will examine in detail the cancellation procedure for lost bearer share certificates, in light of the TCC provisions and judicial practices.

1. Legal Basis of the Cancellation Procedure and the Concept of "Loss"

The cancellation procedure to be applied in case of loss or unusability of bearer share certificates is specifically regulated in Articles 661 et seq. of the TCC. Although the scope of the term "loss" in the legal text is not explicitly defined, the established judicial precedent and general acceptance in the doctrine is that this concept includes the certificate leaving the possession of the rights holder against their will (such as theft, loss) or becoming unusable even if in the possession of the rights holder (such as burning, tearing, destruction). Therefore, any situation where the physical integrity of the certificate is impaired or the power of disposal over the certificate is eliminated can be considered within the scope of loss. However, the existence of a loss situation must be meticulously evaluated by the court, taking into account the specific circumstances of each concrete case.

3. Evidence to be Submitted and Burden of Proof in the Cancellation Application

The rights holder requesting the cancellation of the certificate is obliged to primarily demonstrate to the court in their petition that they were the possessor of the certificate and that the certificate was lost, with convincing evidence. The TCC does not require absolute proof at this stage but seeks a reasonable and logical explanation of the event and that the submitted evidence creates a strong conviction that the event occurred. In this context, the registration of bearer share certificates with the Central Registry Agency (“CRA”) will provide great convenience in proving the right of ownership. Because CRA records are official documents that verify who the certificate is registered in the name of and therefore the rights holder. If CRA registration has not yet been made, the rights holder must support their claim by submitting any other evidence they possess (e.g., photocopy of the certificate, payment receipts, company records, etc.) to the court.

Especially in cases where the certificates are lost through unlawful means such as theft, immediately filing a complaint with the competent law enforcement authorities (police or public prosecutor's office) will both help to clarify the event and ensure the collection of convincing evidence that can be submitted to the court. In the cancellation application, the rights holder should state the distinguishing features and content of the lost certificate as detailed as possible, such as its serial number, nominal value, and issue date. Court of Cassation precedents also emphasize the importance of submitting this information. Submitting a physical or digital copy of the certificate to the court is also valuable in proving the identity and content of the certificate.

4. Procedures to be Carried Out by the Court and the Announcement Process

If the court finds the evidence and explanations submitted by the rights holder sufficient and convincing, it will invite the person in possession of the lost certificate to present the certificate within a certain period (this period is determined as at least six months in the TCC) and will publish an announcement containing a warning that the certificate will be cancelled otherwise. This announcement is published a total of three times in the Trade Registry Gazette and other appropriate publication channels. The purpose of the announcement is to ensure that persons who are unjustly in possession of the certificate or who have information about the fate of the certificate apply to the court.

If the lost certificate is presented to the court within the specified period, the court will grant the presenting person a reasonable period to file a lawsuit for recovery (lawsuit for the return of the certificate) against the rights holder. As a result of this lawsuit, the true rights holder of the certificate is determined and a decision is made. If the certificate is not presented within the announced period, the court may decide to cancel the lost certificate. After the cancellation decision becomes final, the lost certificate becomes legally invalid.

5. Request for Precautionary Measures

While the cancellation process is ongoing, the rights holder may request a precautionary injunction from the court to prevent the person unjustly holding the lost certificate from exercising the rights arising from the shareholding (e.g., attending the general assembly, voting, receiving dividends) or making any notification to the CRA. According to the generally accepted view in the doctrine, such preventive measures are subject to the precautionary injunction provisions in the Enforcement and Bankruptcy Law, and the applicant may be required to deposit a security to be determined by the court. The request for preventive measures is particularly important in cases such as the theft or loss of share certificates. Because if there is no risk of the rights attached to the certificate being misused by others in bad faith, there may not be a legal interest in requesting such a measure as a matter of principle.

6. Nature of the Cancellation Procedure and the Competent Court

According to the established precedents of the Court of Cassation, the cancellation procedure for bearer share certificates is not considered a lawsuit but a non-contentious judicial matter. Therefore, the process is carried out without an opposing party. The petition containing the cancellation request must be submitted to the Commercial Court of First Instance where the headquarters of the joint stock company is located.

7. Conclusion

In conclusion, in case of loss of bearer share certificates, it is not legally possible to cancel these certificates without a court decision. Therefore, as soon as the loss of share certificates is noticed, it is of great importance to take the measures detailed above immediately and to initiate the cancellation procedure without delay. The relevant joint stock company can issue new share certificates in place of the lost share certificates after the court's cancellation decision becomes final. Without a court decision, issuing new certificates based solely on a board of directors' resolution stating the loss of the certificates will not be legally appropriate. Otherwise, the risk of multiple valid certificates representing the same shares arising will occur, and this situation could lead to serious legal problems for the company and shareholders. In this process, it is important for rights holders to act by obtaining legal advice to prevent loss of rights.