WHAT IS THE SCOPE THAT THE SHAREHOLDERS OF JOINT-STOCK COMPANIES and LIMITED LIABILITY COMPANIES NEED TO BE DECLARED AS INSURED?

Insurance of Shareholders in Joint-stock Companies
 
Pursuant to article 329 of the Turkish Commercial Code No. 6102, a joint-stock company is a company whose capital is specified and divided into shares and which is liable for its debts only with its assets. This complex structure of joint-stock companies arising from the law has also affected insurance status of their shareholders. The fact that the insurance coverage status of the shareholders change depending on whether the shareholders are members of the board of directors or whether they are founding shareholders, has rendered the insurance status of the shareholders of joint-stock companies an issue which should be examined in more detail compared to shareholders of other companies.
 
Pursuant to article 4, paragraph 1, subparagraph (b) of the Social Security and General Health Insurance Law No. 5510, joint-stock companies' shareholders who are members of the board of directors are deemed insured. However, pursuant to article 4, paragraph 1, subparagraph (b), joint-stock companies'  shareholders who are not members of the board of directors shall not be compulsorily deemed insured merely because of this status of theirs. This means that, pursuant to article 4, paragraph 1, subparagraph (a), shareholders who are not members of the board of directors may be deemed insured like employees employed by one or more employers with a service contract.
 
As for commencement of insurance of shareholders of joint-stock companies, pursuant to Article 7, paragraph 1, subparagraph (b) of the Social Security and General Health Insurance Law No. 5510 and pursuant to Article 11 of the Regulation on Social Insurance Procedures, insurance of joint-stock companies' shareholders who are members of the board of directors commences on the date when they are elected for the board of directors. As of such date, it is required that company officers notify their membership in the board of directors to the Social Security Agency within 15 days.
 
Pursuant to Article 9 of the Social Security and General Health Insurance Law No. 5510 and pursuant to Article 14 of the Regulation on Social Insurance Procedures, insurance of joint-stock companies' shareholders who are members of the board of directors terminate as of the end of their duties as board member. Pursuant to Article 9, paragraph 3 of the Social Security and General Health Insurance Law No. 5510 and pursuant to Article 14 of the Regulation on Social Insurance Procedures, the insured or company officials are required to notify the Social Security Agency within 10 days at the latest following the expiry of the terms of office as a board member of joint-stock companies' shareholders who are members of the board of directors, together with the statement of employment termination.
Insurance of Shareholders in Limited Liability Companies
 
Pursuant to article 573 of the Turkish Commercial Code No. 6102, a limited liability company is established by one or more real persons or legal entities under a commercial title; its principal capital is specified and this capital consists of the sum of the principal capital shares. Insurance status of the shareholders of these companies is clearer than that of shareholders in joint-stock companies.

Shareholders of limited liability companies are deemed insured as a requirement of article 4, paragraph 1, subparagraph (b), and subclause (3) of the Social Security and General Health Insurance Law No. 5510.
Different from the insurance status of shareholders in joint-stock companies, the insurance of the shareholders in limited liability companies commences on the date of registration of the company by trade registry offices pursuant to article 7, paragraph 1, subparagraph (b) of the Social Security and General Health Insurance Law No. 5510 and pursuant to article 11 of the Regulation on Social Insurance Procedures. Insurance of new shareholders who acquire shares from the shareholders of limited liability companies, on the other hand, commences on the date of resolution of the shareholders' assembly for the transfer.

On the basis of article 8, paragraph 3 of the Law No. 5510 and article 11 of the Regulation on Social Insurance Procedures, the shareholders insured within this framework are required to be notified to the Agency within 15 days following the registration of the company shareholders by trade registry offices.

Insurance of new shareholders who acquire shares from the shareholders of limited liability companies commences on the date of resolution of the shareholders' assembly for the transfer. While serving this notification, notarial transfer contract concerning the transfer of shares, a copy of the share ledger in which transfer is registered, or the issue of the trade registry gazette if the transfer is registered by the trade registry office, must be submitted to the Agency.

Pursuant to Article 9, paragraph 3 of the Social Security and General Health Insurance Law No. 5510 and pursuant to Article 14 of the Regulation on Social Insurance Procedures, insurance of the shareholders of limited liability companies terminates as of the date of resolution of the shareholders' assembly with the condition that the resolution of the shareholders' assembly concerning the transfer of shares, the notarial transfer contract concerning the transfer of shares, a copy of the page of the share ledger in which the transfer is registered or the issue of the trade registry gazette if the transfer is registered by the trade registry office are submitted to the Agency. Pursuant to Article 9, paragraph 3 of the Social Security and General Health Insurance Law No. 5510 and pursuant to Article 14 of the Regulation on Social Insurance Procedures, notification to the Agency is required together with the statement of employment termination within 10 days at the latest following the date of resolution of the shareholders' assembly.

If the hard copy statements of employment commencement and employment termination specified above are not submitted to the Agency within the periods specified, the company as a legal entity is penalized with an administrative fine in the amount of one month's gross minimum wage.
 
Combination of insurance statuses
 
If the insured falls within the scope of the Law in a way that it will be simultaneously subject to insurance statuses under sub-paragraphs (a) and (b) of paragraph one of the 4th article and the insurance status under sub-paragraph (c) of the same article, he will be deemed insured primarily within the scope of subparagraph (c) of the said article; if he falls within the scope of the Law in a way that it will be subject to insurance statuses under sub-paragraphs (a) and (b), on the other hand, he will be deemed insured within the scope of paragraph 1, subparagraph (a) of the same article. Moreover, the insured who falls under the sub-paragraph (a) of the paragraph 1 of the 4th article due to combination of the insurance statuses, may pay the premiums as per the sub-paragraph (b) of the paragraph 1 of the 4th article upon giving a written claim. The premiums that are paid in such way, shall be considered as insurance under sub-paragraph (b) of the paragraph 1 of the 4th article in terms of occupational accident and professional diseases; and under sub-paragraph (a) of the paragraph 1 of the 4th article in terms of other contributions (illness, motherhood) provided from short term insurance options and contributions provided from long term insurance options.
 
Furthermore, those deemed to be included in the scope of article 4, paragraph 1, subparagraph (b) cannot be declared as insured within the scope of article 4, paragraph 1, subparagraph (a) due to workplaces that are owned by them or in which they are shareholders. However, insurance status of those declared as insured from their workplaces that are owned by them or in which they are shareholders within the scope of article 4, paragraph 1, subparagraph (a) of this Law prior to the date of 10/1/2008, shall continue until its interruption.
 
Att. Nesligül ALTIN