11November2014

Bill Omnibus no. 6552: Cancellation of Administrative Fines for SSI Declarations for JS and LLC Shareholders

The Law Amending Certain Labour Laws and Regulations and Restructuring Tax Debts, numbered 6552, published in the Official Gazette on 11/09/2014 makes a number of important changes in sundry laws and regulations. One of these changes concerns the administrative fine provisions in the Social Security and Public Health Insurance law, numbered 5510. The new bill has enacted the provisional article 57 allowing for cancellation of public debts subject to certain conditions. The following consists of a brief explanation on this procedure.

The insurance period for the shareholder board members of a Joint Stock company begins on the day of their election to the board and their SSI declaration must be duly made within 15 days.

The insurance period for the new shareholders of limited liability companies (LLC) and comandite companies taking over the shares of previous shareholders begins on the day of the resolution of the shareholder's assembly for the transfer of shares. SSI declaration for the new shareholders as well as the previous shareholders transfering their shares must be made within 10 days from the day of the aforementioned resolution.

The notarized contract concerning the transfer of shares and the share ledger must be submitted along with the declaration. If the transfer of shares has been processed at the Trade Registry, a copy of the Trade Registry Gazette announcement will suffice.

The SSI declaration for JC shareholders ceasing to be board members and LLC and comandite company shareholders who exit the company by way of disposing their shares must be made within 10 days.

Unless such declarations are done on time, company may face administrative fines amounting to monthly gross minimum wage for each mandatory declaration.

The Bill Omnibus, numbered 6552 allows a cancellation of debts procedure for those companies who have not made their declaration on time. Accordingly, as long as the SSI entry and leave declarations are done by 11.12.2014 (inclusive), administrative fines will not incur; if incurred previously, they will not be imposed or made subject for a seizure.

Example:

X, shareholder of a JS company, is elected as a board member on 02.03.2014 and Y, another shareholder of the same JS company has quit his or her post as a board member. Under normal circumstances, the paper-based SSI entry declaration for X must be done within 15 days and the exit declaration for Y, in 10 days. If the declarations are not made on time, the company will face administrative fines amounting to two monthly salaries based on minimum wage.

In order to avoid such a fine, the bill allows the companies to submit their belated declarations by 11.12.2014.

The SSI declarations must be paper-based and made at the SSI center closest to the registered company address.

The fines which have already been paid by companies will not be subject to a refund.

Note that SSI declaration is an obligation on the part of the company and material facts such as the retirement status of the newly elected board member or having shares in another company do not affect this procedure.

Written by Zeynep Uçar Tagney, Posted in Social Security Law and Regulations, Turkish Commercial Code

About the Author

Zeynep Uçar Tagney

Zeynep Uçar Tagney
Boss Governance, Lawyer.
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