NEWSLETTER-2017

50 NEWSLETTER 2017 a holding company, permission must be obtained from the Internal Trade General Directorate of the Ministry (“General Directorate”), applying with (i) articles of association, including the signatures of the incorporators approved by the notary public and (ii) assent or permis- sion letter for those companies requiring the assent or permission of the other official institutions for their incorporation. As per the amendment of the articles of association, under Article 5 of the Communique, permission should be obtained from the Gen- eral Directorate applying with (i) notarized board of directors resolu- tion regarding the amendment of articles of association, (ii) amended article(s) of the articles of association, and (iii) assent or permission letter for those companies requiring the assent or permission of other official institutions for their amendment of the articles of association. Also, if the amendment of the articles of association is regarding increase or decrease of the share capital, financial accountant and/or expert reports must also be presented along with the abovementioned required documents. Ministry permission must be obtained prior to the registration process before the trade registry directorate for the establishment of the holding company and before the date of the general assembly. Incor- poration and amendment of articles of association cannot be registered without the Ministry’s permission at the trade registry directorate. There is a special provision regarding the TCC requirements of legal reserve for holding companies. In principle, under Art. 519(1) of the TCC, five percent of the annual profit of joint stock companies is set aside for the general legal reserve until twenty percent of the share capital is reached. Following the attainment of the limit of twenty percent of the share capital by the general legal reserve, under Art. 519(2)(c), after profit, corresponding to five percent, is paid to the shareholders, ten percent of the amount to be distributed to those persons entitled to shares in profit will be added to the general reserve. In addition, under Art. 519(3), provided that the general legal reserve does not exceed one-half of the share capital or the issued share capital, it can only be used for the recovery of losses,