On 15.03.2018 Amendments to Enforcement and Bankruptcy Law has been introduced by Law No. 7101 and published in the Official Gazette. The most significant changes are as follows:
The Ministry of Trade introduced the Communiquéon the Implementation of Article 376 of the Turkish Commercial Code Numbered 6102 ("Communiqué") detailing the measures to be implemented in companies subject to technical bankruptcy.
What's New?
The Communique provides helpful guidance about how companies and their shareholders and management must address a company's financial distress.
The Ministry of Commerce issued a Communiqué on 15 September 2018 ("Communiqué") setting out the principles and procedures pertaining to the application of Article 376 of the Turkish Commercial Code ("TCC"). In brief, Article 376 regulates the measures to be adopted by joint stock companies and limited liability companies (for the purposes of this article, each a "company") in cases of loss of capital or insolvency.
The Financial Restructuring Framework Agreement (“Framework Agreement”) drafted by the Banks Association of Turkey (“BAT”) pursuant to Article 5 of the Regulation on Restructuring of Debts to Financial Sector published in the Official Gazette dated 15 August 2018 and No. 30510 (“Regulation”) has been approved by Banking Regulation and Supervision Agency (“BRSA”) and has entered into force.
The recent volatility experienced in Turkish financial markets and in particular the devaluation of Turkish lira have brought many borrowers to the brink of default. This has prompted the Turkish authorities to take action. Accordingly, the Banking Regulatory and Supervision Authority in Turkey (the “BRSA”) has published a new set of restructuring rules, the Regulation on the Restructuring of Debts Owed to the Financial Sector (the “Restructuring Regulation”), which came into force on 15 August 2018.
The Communique on the Procedures and Principles regarding the Application of Article 376 of the Commercial Code (6102) was published in the Official Gazette on 15 September 2018 and entered into force on the same date. It determines the procedures and principles that will apply to certain companies (ie, joint stock companies, limited liability companies and limited partnerships whose capital is divided into shares) in cases of capital loss and insolvency.
Introduction
Turkey has, for the first time, introduced mediation as an alternative dispute resolution system in 2012. The Law on Mediation for Civil Disputes (“Law”) which was published in the Turkish Official Gazette on 22.06.2012 and came into force on 22.06.2013 mainly regulates the principles and procedures applicable in resolving civil disputes by mediation.
Introduction
Execution and Bankruptcy Law (“EBL”) enables a company in financial difficulty to propose a composition to its creditors to restructure its debts. However, EBL only provides formal proceedings and does not provide out of court workouts. As a result, courts do not have the authority to order a creditor to cooperate with an informal composition. Therefore there is a lack of safeguards in favour of debtors with regards to any informal composition proceedings under the current legislation.
Turkey has restructured methods for settelement with Finance Revenue Administration (“Administration”) for related party transcations. The developments widen and clarify the scope of advance pricing agreement methods, as well as introduce time limits for the Administration to consider taxpayer requests.
The Communiqué Amending the General Communiqué of Hidden Profit Distribution through Transfer Pricing (“Amendment Communiqué”) was published in Official Gazette number 30263 on 7 December 2017.