Real estate, matured receivables, and transferable economic rights in a trademark or software may be contributed as capital in kind to a joint-stock or limited company once they meet the statutory requirements. Having economic value is not enough on its own. Who holds the right, whether it can be transferred, the restrictions attached to it, the valuation by an expert appointed by the court, and the relevant registry entries must all be completed together. Even if the net value of a mortgaged property is high, deducting the mortgage amount does not automatically make it acceptable as capital.
This article examines contributions in kind at the formation of joint-stock and limited companies or at a capital increase. The regime for contributions to an ordinary partnership (adi ortaklık) is not the same as the rules for capital companies. Additional requirements of regulated sectors and special statutes may also apply.
Under what conditions is a contribution in kind accepted?
Article 127 of the Turkish Commercial Code (TTK) lists in general terms the values that may be contributed as capital to commercial companies. TTK Article 342 for joint-stock companies and TTK Article 581 for limited companies impose stricter conditions. The element to be contributed must be capable of being valued in money and transferred; there must be no limited real right, attachment, or injunction on it. Performance of services, personal labor, commercial reputation, and receivables that have not yet matured cannot be contributed as capital to these companies.
For this reason, the shareholders saying "the value of this asset is sufficient" does not replace the statutory suitability review. The commercial potential of a piece of software does not prove the shareholder's title to it. Income expected from the company's future sales is likewise not an existing, matured receivable. Listing certain values in the general provision does not lift the special prohibition that applies to joint-stock or limited companies.
| Subject of the contribution | Basic requirement | Main evidentiary document | Common mistake |
|---|---|---|---|
| Ownership of real estate | Transferability; no limited real right, attachment, or injunction | Current land registry record, encumbrances, court valuation | Deducting the mortgage amount and treating the remaining value as sufficient |
| Receivable from a third party | Existing, valid, matured, transferable, and collectible | Contract, performance and account documents, records showing the debtor's financial condition | Treating the invoice amount directly as the capital value |
| Trademark or patent right | Title, transferability, and absence of obstacles | Registry record, scope of protection, assignment and license documents | Mistaking the company's use of the trademark for a transfer of ownership |
| Economic rights in software | Identification of specific, transferable rights in an existing program | Rights acquisition contracts, source code and version inventory | Treating delivery of the source code as a transfer of all rights |
| Future work or consulting | Cannot be capital in a joint-stock or limited company | Contract showing the actual content of the performance | Calling a service obligation "technology capital" |
Suitability check for contribution in kind. The title, transferability, and economic value of the proposed asset are determined. Limited real rights, attachments, and injunctions are checked. The receivable must have matured; services or personal labor cannot count as capital. A suitable asset moves on to the court valuation and the transfer steps.
Collecting these documents before the court valuation reduces the registration obstacles that could arise after valuation costs have been incurred. Presenting an asset that the company already owns as if it were newly contributed capital in kind is a different problem; a capital increase from internal sources is assessed under its own conditions.
Contributing real estate to a company as capital in kind
How are the land registry record and encumbrances assessed?
The block, parcel, independent unit, and share details of the property; the ownership of the person contributing; the current encumbrances; and special provisions restricting transfer are examined. Relying only on an old title deed is not enough. While zoning and use status affect value, a mortgage, attachment, or injunction can directly affect suitability for contribution in kind.
Not every land registry entry has the same legal consequence. For example, an annotation relating to a personal right must be distinguished from a limited real right. For a property located in an organized industrial zone, special conditions such as a transfer permit are also investigated. A general statement such as "there is an annotation in the registry, so it can never be capital" is as inadequate as the approach "its value will be deducted and the transaction will be completed."
In its decision dated January 23, 2019, E. 2017/3176, K. 2019/661, the 11th Civil Chamber of the Court of Cassation (Yargıtay) discussed contributing a mortgaged property as capital at its value remaining after deduction of the mortgage amount. The dismissal of the action brought against the trade registry's refusal was upheld. This decision shows that finding a net value in the expert report does not remove the statutory obstacle to capital.
In the literature, the scope of the restriction is criticized. Mehmet Bahtiyar discusses, in particular, situations in which a more flexible assessment could be made based on the effect of the concrete burden and the remaining economic value. However, this academic approach does not mean that a property can be contributed as capital while preserving the existing mortgage in every case. The transaction plan should not rest on the assumption that the registry will necessarily accept the contested view.
Are valuation, the capital annotation, and land registry registration the same step?
No. Under TTK Article 128, no separate official form specific to a sale of real estate is required for the validity of a real estate capital commitment in the articles of association; the form requirements of the articles of association themselves remain in force. The property must be shown in the articles of association at the value determined by the expert, and the capital entries must be made in the land registry. The company's ability to dispose of the property depends on its registration in the land registry.
Circular No. 2022/5 of the General Directorate of Land Registry and Cadastre (TKGM) separates the stages of the process. The capital commitment is entered on the owner's request and on the basis of the court valuation report. When notice of the registration of the formation or capital increase arrives from the trade registry, that notice alone does not mean that ownership is registered in the company's name. After the entries in the circular, registration in the company's name is completed on the request of the company's authorized representative.
For this reason, one should not assume that the land registry file is complete because the trade registry file has closed. The land registry record issued in the company's name should be checked at the end of the process. TTK Article 128/6 also protects the company's right to request registration unilaterally; faced with a delay in notices between the registries, the company does not have to remain entirely inactive.
Separating trade registry and land registry steps for real estate. After the valuation and the commitment, the capital entry in the land registry, the trade registry registration, and the notice between the registries are followed. The notice alone is not registration of ownership in the company's name; registration is completed through the steps in Circular 2022/5 and on the request of the authorized representative.
Contributing a receivable as capital in kind
Why are maturity and collectibility separate requirements?
A receivable having matured means that it has become claimable; it does not guarantee the debtor's ability to pay. TTK Article 343 requires the expert to examine the receivable's existence, validity, suitability as capital, and collectibility. For this reason, a balance sheet entry or an invoice may not be a sufficient basis for valuation on its own.
The contract from which the receivable arose, performance of the goods or services, payment documents, the debtor's objections, any set-off defense, limitation risk, and ongoing disputes must be assessed. The debtor's acknowledgment of the receivable is useful evidence, but if the debtor is financially insufficient, it does not by itself prove collectibility. The existence of security is also considered together with the likelihood of collection and the conditions for realizing it.
For example, the book value of a matured sales receivable may be one million lira. If the debtor claims that delivery was incomplete or is in serious payment difficulty, this entry does not automatically lead to the conclusion that the capital value is one million lira. The valuation cannot be done by ignoring the legal dispute; nor can the expert report alone conclusively resolve a contested question of title.
Under TTK Article 130, a shareholder who contributes a receivable as capital is not released from the obligation to contribute capital unless the company collects the receivable. Where it is partially collected, the uncollected portion remains significant. Thus, the assignment of the receivable and the full performance of the capital obligation are kept separate.
Can a loan of money given by a shareholder to the company be added to capital?
The shareholder's receivable from the company that will increase its capital must be distinguished from the shareholder's receivable from a third party. In the Istanbul Chamber of Commerce's current explanation on capital increases, where the shareholder's receivable arises from cash borrowing, it is envisaged that this be clearly established by the report of a sworn-in certified public accountant (YMM), an independent certified public accountant (SMMM), or, where relevant, an auditor. For receivables other than cash borrowing, valuation by an expert appointed by the court is required.
This practice does not mean that every shareholder current account balance can be converted into capital by the same procedure. Money actually given to the company must be verified through bank movements, accounting records, and the basis of the debt. A shareholder's receivable arising from the sale of goods does not acquire the character of cash borrowing merely because it is tracked in the same account in the accounting. The route to be used is determined by the source of the receivable, not by its name.
Can trademark, software, and license rights be capital?
Which right is transferred in the case of a trademark or patent?
The economic value of the trademark or patent and the scope of the transferred right must be explained in the same file. The right holder, term of protection, relevant country, trademark classes, existing licenses, attachments or pledges, and invalidity disputes affect the valuation. Submitting only the registration certificate does not complete this review.
Article 148 of the Industrial Property Code No. 6769 (SMK) contains provisions on the form and registry effect of legal transactions concerning the rights it covers. The notarial approval envisaged for the assignment contract and the capital and inter-registry procedure in TTK Article 128 must be assessed together. It should not be assumed that signing the articles of association automatically completes every kind of trademark assignment; the required documents and special registry steps must be identified.
Geographical indications and traditional product names, on the other hand, cannot be treated like trademarks because of the prohibition on assignment and licensing in SMK Article 148. Also, the where applicable, registration in the special registry requirement in TTK Article 128 cannot be broadened to mean that all intellectual property rights can be capital only if they are registered. A different assessment is needed for software protected by copyright.
The difference between delivering software and transferring economic rights
Transferable economic rights in an existing computer program and a commitment to develop a program in the future are not the same thing. In the second case, the performance sought to be made the subject of capital may be personal work or services, which fall within the prohibition. By contrast, rights in an existing program may, together with the other conditions, be the subject of a review for contribution in kind.
Under Article 52 of the Law on Intellectual and Artistic Works (FSEK), contracts and dispositions concerning economic rights must be in writing and the rights must be shown separately. Which powers of adaptation, reproduction, distribution, or communication to the public are transferred to the company must be determined in a way that suits the specific software. Transferring the source code to a repository or handing over a user password does not by itself show that all rights have been transferred.
The software file should contain, in particular, the following elements:
• The name, version, and modules of the program and the documentation included in the scope of the transfer.
• Through what legal relationship the rights were acquired from an employee, an independent developer, or another company.
• Third-party components, open-source licenses, and their distribution or use conditions.
• The economic rights to be transferred to the company, any territorial and time limits, and delivery obligations.
• Records verifying the revenue history, existing customer contracts, and valuation assumptions.
These documents support the expert's technical work. A forecast of future sales does not turn a sales receivable that has not yet arisen into capital; it may be an assumption used in determining the economic value of the existing software right.
Is a user license equivalent to ownership of the right?
No. A person who receives a license often has only the right of use defined in the contract. The transfer of this right to a third party or to the company may be prohibited or made subject to the licensor's approval. Whether it is exclusive, its term, territory, termination conditions, and sublicensing authority affect the value.
For this reason, "I have a license, so I can contribute the software to the company as capital" is not an automatic conclusion. First, which right is being transferred and whether the transfer is possible must be determined. Whether the intellectual property right to be contributed has previously been exclusively licensed to a third party must also be examined separately; in the literature, the effect of this on suitability for capital is debated. Sefer Oğuz's 2025 study shows the importance of these distinctions with respect to unregistered rights, license burdens, and the form of transfer.
Which right in the software is being contributed as capital? The economic rights in existing software may be capital if the conditions are met. In a user license, transferability and permissions are examined separately. A future software development service cannot be capital in a joint-stock or limited company.
Court valuation and objection to the expert report
Which court is applied to, and which documents are submitted?
Under TTK Article 343, the valuation is made by experts appointed by the commercial court of first instance (asliye ticaret mahkemesi) at the place where the company's head office will be located. In the formation of a limited company, the link to TTK Article 578 is taken into account; in a capital increase, the link to the relevant special provisions. A report by a private valuation firm may help in preparation, but it does not replace the court appointment that the law requires.
The application is accompanied by the company or formation details, a detailed list of the assets to be contributed as capital, title documents, current registry records, documents on restrictions, and the financial data on which the valuation is based. Expertise suited to the nature of the asset should be sought: a zoning and market review of real estate and a technical and intellectual property review of software do not call for the same expertise.
This process is, as a rule, a non-contentious proceeding (çekişmesiz yargı). In its decision dated January 16, 2023, E. 2021/6736, K. 2023/231, the 11th Civil Chamber of the Court of Cassation upheld a procedural dismissal given because a request to value shares in another company for their contribution as capital to a company to be formed had been filed as an adversarial case. The decision shows that a valuation application should not be confused with a contentious action over title.
Is it enough for the report to contain only figures?
No. The report must explain why the method chosen suits the specific asset, the data it relies on, the collectibility of the receivable, and the number of shares to be issued for each asset together with its value in Turkish lira. It should not be content with naming a comparable-sales comparison, an income approach, or a cost review; the link between the data and the result must be established.
Founders and interested parties may object to the report. Instead of leaving the objection as "the value is too low," it should point to missing comparables, an incorrect surface area, an outdated financial statement, an overlooked license restriction, or a faulty collection assumption. If necessary, a supplementary report or a fresh review is requested. Because TTK Article 343 does not specify a particular time limit for objection, action should be taken before the report is approved, taking into account the general procedural provisions and the period stated in the court's notification.
Are the approval of the report and the registry's refusal decision subject to the same route?
TTK Article 343 treats the expert decision approved by the court as final. The decision of the 11th Civil Chamber of the Court of Cassation dated December 2, 2015, E. 2015/5889, K. 2015/12842 concerns the dismissal of the appeal request of the bank concerned against the approved real estate valuation. The assumption that, after approval, a fresh valuation can necessarily be obtained from a higher court is therefore wrong.
It cannot be said that a legal remedy is open in every case against refusal or procedural decisions either. In its decision dated September 26, 2022, E. 2022/5530, K. 2022/6247, the 11th Civil Chamber of the Court of Cassation dismissed the appeal request within the scope of Code of Civil Procedure (HMK) Article 362/1-ç because of the matter's character as a non-contentious proceeding. The content of the decision and the legal remedy applied for must be reviewed separately.
A refusal by the trade registry directorate of a registration request is, however, a different act. Under TTK Article 34, interested persons may object to the commercial court of first instance at the place of the registry within eight days from notification of the refusal decision. The time limit and subject matter of an objection in the valuation file should not be confused with those of an objection to a registry decision.
Report objection, approval, and registry refusal are different routes. On notification of the expert report, the procedural time limit is checked and a reasoned objection is made before approval. The approved expert decision is final under TTK Article 343. A refusal decision of the trade registry is different: under TTK Article 34, objection is made within eight days of notification. The nature of the legal remedy against other refusal decisions is examined separately.
What happens if the transfer is not completed or the value is set contrary to the truth?
A contribution-in-kind commitment in the articles of association does not remove the committing party's liability to perform. The company may demand performance of the capital obligation and bring an action under TTK Article 128. For compensation of loss arising from delay, the formal notice requirement provided in the same article is taken into account. An asset that appears to have been delivered despite a defect in title or an obstacle to transfer does not resolve these problems automatically.
TTK Article 551 regulates liability connected with valuing a contribution in kind higher than comparable assets, misrepresenting the nature or condition of the asset, and other irregularities. For limited companies, the link to TTK Article 644 is also important. Not every valuation estimate that later fails to materialize gives rise to liability; misrepresentation, unlawfulness, fault, and the other conditions of the relevant provision are examined according to the specific case. The court's approval of the report does not give a general exemption from liability to the person who gave information contrary to the truth.
The founders may request an interim injunction under TTK Article 128/8 to protect the capital commitment. The right to be protected, the danger, and the injunction sought must be explained; it should not be assumed that the injunction will be granted automatically. A contribution-in-kind valuation application is not subject to mandatory mediation merely because it is commercial in nature. By contrast, in a later action for a monetary claim or damages, the scope of TTK Article 5/A is checked separately.
How are time, costs, and the foreign element planned?
There is no single completion period for preparing the valuation report, dealing with objections, and the transactions in the different registries. A missing title document, a mortgage on the real estate, or a transfer prohibition in a software license may lengthen the process. The registration periods for company formation or a capital increase must also be tracked separately; one should not think that all periods are suspended because a valuation application has been filed.
In the cost calculation, allowance is made for court fees and expenses, expert and on-site inspection expenses, trade registry and announcement transactions, special registry services, and required notary or translation costs. The exemption in Article 123/3 of the Fees Law (Harçlar Kanunu) for the formation and capital increases of joint-stock and limited companies does not cover judicial fees. The revolving fund fee for the land registry transaction is also assessed separately. A fee exemption does not mean that the transaction is tax-free for income, corporate, or value-added tax purposes in every case.
The presence of a foreign shareholder does not close the contribution-in-kind route from the outset. However, the usability in Türkiye of the decision of the competent body of a company abroad, the representation documents, and the title records is examined, along with authentication and translation requirements where necessary. For the transfer of real estate in a foreign country or a trademark right protected in a foreign country, the registry and transfer rules of the relevant country are also decisive. A valuation by a Turkish court does not replace the transfer step required in the foreign country. For real estate in Türkiye, the different regimes that the Land Registry Law (Tapu Kanunu) provides for foreigners and foreign-capital companies are taken into account.
Conclusion
The reliability of a contribution in kind runs from the existence of a valuable asset through to the company's acquisition of the necessary rights in that asset. For real estate, the current encumbrances and land registry registration; for receivables, maturity, validity, and collectibility; for software and trademarks, title, the scope of the transfer, and special registry steps are decisive. The expert valuation is an important link in this chain; it is not an approval that substitutes for other legal deficiencies.
Related articles: Change of Company Type: Conversion from a Limited Company to a Joint-Stock Company; Capital Reduction in Companies and Creditor Protection; Unauthorized or Irregular Transfer of Company Property; A Company Acquiring Its Own Shares; Loss of Capital and Over-Indebtedness: TTK 376 Measures.
Frequently Asked Questions
Can a mortgaged property be contributed as capital at its value remaining after deducting the debt?
This method does not automatically remove the statutory obstacle. The Court of Cassation decision reviewed under TTK Articles 342 and 581 requires the mortgage on the property to be assessed separately. A positive net value is not sufficient for registration on its own.
Is a private appraisal report sufficient for a contribution in kind?
As a rule, no. The valuation under TTK Article 343 is made by experts appointed by the court. The registry practice on adding to capital a receivable arising from a cash loan the shareholder gave to the company is subject to separate conditions.
Can a receivable that has not matured be contributed as capital to a limited company?
No. TTK Article 581 expressly excludes this. For joint-stock companies as well, TTK Article 342 contains the same prohibition. The likelihood that the receivable will be paid does not remove the maturity requirement.
Can unregistered software be a contribution in kind?
Lack of registration is not an obstacle on its own. The transferable economic rights in the existing software, the title, the value, and the other requirements for capital must be established. A future software development service is different.
Does the company's use of a trademark count as performance of the capital obligation?
Permission to use is not the same as an assignment of the trademark right. If the committed right is ownership, merely providing use may not be sufficient. The form of the assignment, the scope of the contract, and the registry steps must be completed together.
Does the land registry transaction end once registration is made in the trade registry?
No. The notice from the trade registry and the land registry registration in the company's name are separate stages. The steps in Circular No. 2022/5 and the registration request of the company's authorized representative must be followed.
When should an objection to the expert report be made?
Without waiting for the court's approval, the objection period and procedure should be checked upon notification of the report. TTK Article 343 provides that the approved expert decision is final. The eight-day objection period against the registry's refusal decision should not be confused with this.
What can be demanded from a shareholder who does not perform the contribution-in-kind commitment?
The company may demand performance of the capital obligation. For compensation of loss caused by delay, the formal notice requirement in TTK Article 128 and the other conditions of liability are examined. Where there is a concrete danger, interim legal protection may also come into play.
Sources
- Turkish Commercial Code No. 6102 (6102 sayılı Türk Ticaret Kanunu): in particular Articles 5/A, 34, 127–130, 342–343, 551, 578, 581, 590, and 644.
- Code of Civil Procedure No. 6100 (6100 sayılı Hukuk Muhakemeleri Kanunu): provisions on the expert report, non-contentious proceedings, and legal remedies.
- Industrial Property Code No. 6769 (6769 sayılı Sınai Mülkiyet Kanunu), Grand National Assembly (TBMM) statute text: in particular Article 148.
- Law on Intellectual and Artistic Works No. 5846 (5846 sayılı Fikir ve Sanat Eserleri Kanunu), Ministry of Culture and Tourism: in particular Articles 2 and 52.
- General Directorate of Land Registry and Cadastre (Tapu ve Kadastro Genel Müdürlüğü, TKGM), Circular No. 2022/5 dated September 23, 2022, full text via Lexpera: contribution in kind and land registry transactions.
- Istanbul Chamber of Commerce (İstanbul Ticaret Odası), Registration Procedures for Joint-Stock Companies: contribution-in-kind documents and adding shareholder receivables to capital.
- Fees Law No. 492 (492 sayılı Harçlar Kanunu): Article 123/3.
- Law No. 5718 on Private International Law and International Civil Procedure (5718 sayılı Milletlerarası Özel Hukuk ve Usul Hukuku Hakkında Kanun): Articles 21 and 23.
- Court of Cassation (Yargıtay), 11th Civil Chamber, January 23, 2019, E. 2017/3176, K. 2019/661.
- Court of Cassation (Yargıtay), 11th Civil Chamber, January 16, 2023, E. 2021/6736, K. 2023/231.
- Court of Cassation (Yargıtay), 11th Civil Chamber, December 2, 2015, E. 2015/5889, K. 2015/12842.
- Court of Cassation (Yargıtay), 11th Civil Chamber, September 26, 2022, E. 2022/5530, K. 2022/6247.
- Mehmet Bahtiyar, "Some Evaluations on the Requirement That the Elements of Contribution in Kind to Joint-Stock and Limited Companies Be Free of Limited Real Rights" ("Anonim ve Limited Şirketlere Konulacak Ayni Sermaye Unsurları Üzerinde Sınırlı Ayni Hak Bulunmaması Şartına İlişkin Bazı Değerlendirmeler"), YÜHFD, XVIII/2, 2021, pp. 515–528.
- Sefer Oğuz, "Contribution of Intellectual Property Rights to a Joint-Stock Company as Capital" ("Anonim Şirkete Fikri Mülkiyet Haklarının Sermaye Olarak Konulması"), ÇÜHAD, 2025/8, pp. 506–541.