In short
A pledge of shares in a joint-stock company secures a claim. Ownership of the share stays with the holder of the share if the contract does not also assign it. The pledge creditor does not become a partner of the company at the moment the pledge is created. In a share written in a name, the pledge becomes visible as against the company and third persons with the written contract and with the entry in the share register. The transfer of the share is a separate transaction.
A pledge is security, not a transfer
A pledge is created in order to look for priority on the share if the claim is not paid. The partner leaves the share, but who the rights such as the vote and the profit stay with is read from the contract. If there is no provision in the contract, these rights are not treated as having passed to the creditor by themselves. In many contracts the vote stays with the holder of the share, and the dividend is directed to the pledge creditor. This preference is in the parties' text. It is not said, with a memorised sentence, that the pledgee votes.
The creditor's interest is the turning of the share into money if the debt is not paid. Turning it into money does not happen by itself on the same day as the signature that created the pledge. The enforcement, or the path agreed in the contract, depends on the claim in the file becoming due. An amount, interest and a due date are not invented. The contract and the account summary are the basis.
The register entry in a share written in a name
In a share written in a name, a pledge as a rule asks for a written contract. The contract shows which share was pledged, for which claim, and on which conditions. The number of shares, the nominal value of the share and, if there is one, the group or the privilege are written too. An uncertain sentence of "my shares in the company" leaves it debatable later which share stayed in the security.
A pledge entered in the share register is visible as against the company. A pledge that is not entered in the register may stay weak in the face of the company and of a third person in good faith. The entry is not an entry of transfer. Writing "pledge" in the register does not mean the holder of the share changed. An entry in the share register recounts the keeping of the register. This article does not repeat how that register is opened.
After seeing the register entry, the company reads from the contract whom it will pay the dividend to. If the contract left the profit to the pledge creditor, this direction should have been notified to the company. A payment made when there is no notice gives rise to a debate on who will be counted as the creditor. The receipt and the writing of notice are kept.
A bearer share and the instrument
In a bearer share certificate, possession is read too. A pledge created without delivering the instrument may stay weak as against a third person. Delivery does not mean ownership passed. The instrument may stand with the creditor, or with a third person who was agreed, as security. Whom it stands with is understood from the minute of delivery.
The instrument standing in the company's safe as a "deposit" does not by itself mean a pledge was created. A deposit and a pledge are separate records. Which transaction was wanted is read from the heading of the contract and from its provisions.
The vote, the profit and the general meeting
The call of the general meeting goes to the holder of the share. Whether the pledge creditor will attend the meeting is in the contract. If the contract is silent, the pledge entry does not by itself change the address for the call. A decision taken without the vote being used does not fall by itself later because the pledgee was not informed. Annulment is discussed separately and in time. The time is not fixed in this article.
A decision to distribute profit is also the right of the holder of the share. Whether the profit is included in the pledge is written in the contract. If it is not written, the profit is debated as the fruit of the share. The amount is read from the distribution table in the general-meeting decision. When there is no table, it is not said that the whole of the profit passed to the creditor.
If a transfer and a pledge come together in the same signature
A transfer changes the holder of the share. A pledge leaves the holder and secures the claim. The two transactions may take place on the same paper. Then each is written with a separate provision. A sentence that on default the share passes to the creditor mixes the pledge and the transfer. If there is such a provision, whether this is a pledge or a transfer subject to a condition is sorted out from the text. A transfer of shares recounts the conditions of the passing. Those conditions are not listed here.
Provisions of the articles that limit transfer may be reflected in the pledge too. If the company's approval is looked for for a transfer in a share written in a name that is restricted, turning it into money after the pledge may also meet the same limit. Whether approval is needed is read from the articles. This article does not say there is no approval in every joint-stock company.
What is looked at in a pledge of shares
In a file whose share belongs to a joint-stock company established in Ankara, the register, the share register and the contract are read together. If the company's seat is in another province, the register is at that seat. An office in Çankaya does not change the place where the register stands. Counsel in Ankara first establishes the company's seat and whether the share is written in a name or to bearer.
These gaps are looked for in the pledge contract. Is the share that is the subject of the pledge specific? Is the claim specific? Is there a notice to the company for it to be entered in the register? With whom were the vote and the profit left? If there is an instrument, is there a minute of delivery? If one of these questions is empty, it is not passed over in a single sentence that the pledge was created. A missing entry carries a risk that the security cannot be raised against a third person.
If the creditor is a bank or a supplier, it thinks of the security as the counterpart of the credit or of the price of the goods. The amount is read by comparing the credit contract or the invoice with the upper limit in the pledge contract. If an upper limit is not written, the debate on which claim is in the security enters the file.
After the pledge is created, a division of the share, an increase of capital or a merger asks separately which new share the security will be tied to. If the contract is silent, it is not said that the new share entered the pledge by itself. The list of shares before the step and the list of shares after the step are asked for from the company. It is not said that the pledge is standing on the same share before the two lists are placed side by side. If the creditor sees the difference in the lists, they write whether the security in the contract covers the new share. If there is no writing, the gap is the subject of the file.
Conclusion
A pledge of shares does not pass ownership. In a share written in a name, visibility is in the written contract and in the entry in the share register. In a bearer share, possession of the instrument is read too. A transfer is a separate transaction. The frame is on the commercial law page. The basis is the text of Turkish Commercial Code No. 6102.