Capital increase

A capital increase is the raising of the share capital stated in a Turkish company's articles of association. As an amendment to the articles, it becomes effective through a resolution of the competent organ and registration with the trade registry.

The increase may be funded externally through subscription of new shares or internally by converting reserves into capital. Existing shareholders hold pre-emptive rights allowing them to acquire new shares in proportion to their holdings; these rights may be restricted only for just cause and with a qualified majority.

In practice capital increases finance growth, remedy balance-sheet insolvency or bring in new investors. Failure to offer pre-emptive rights properly is a typical source of disputes with minority shareholders.