Client Alert:

Most Recent Amendments to the Turkish Commercial Code (11 April 2013)

The Law Numbered 6455 Regarding Amendments to the Customs Law and Other Laws and Statutory Decrees (“Law No 6455”) entered into force on 11 April 2013 amending some provisions under the Turkish Commercial Code numbered 6102 (“TCC”). As detailed below, there have been various changes on audit, bookkeeping and election of public legal entities and their representatives as board members.

Article 64 of the TCC has been amended by Article 78 of the Law No 6455 which provides that all companies shall have the closing entries for their journals notarized by a Turkish Notary Public until the end of the sixth month of the following financial year of the company. Additionally, corporations shall have the closing entries for their board of directors’ resolution book notarized by a Turkish Notary Public by the end of the first month of the following financial year.

Also, pursuant to Article 79 of the Law No 6455, an additional 5th clause has been added to Article 359 of the TCC. Accordingly, where special provincial administrations, municipalities, villages or other public legal entities are shareholders of a corporation, the listed entities or their real person representatives can now be elected as board members. Moreover, more than one real person can now be elected as board members to represent the public legal entity given that the board of directors of the corporation consists of more than two members and all of the board members are not the representatives of the same public legal entity.

Another amendment is to Article 397 of the TCC, pursuant to Article 80 of the Law No 6455. By way of background information, the old Turkish Commercial Code numbered 6762 considered the statutory auditors as an organ of all corporations. However, this notion was abandoned with entry into force of the TCC on July 1, 2012. TCC no longer requires the statutory auditors as an organ of corporations meaning that the corporations are no longer mandated to have a statutory auditor. Article 397 Clause 4 of the TCC clearly states that the companies which shall be subject to independent audit will be determined by a decision of the Council of Ministers.

Pursuant to the decision of the Council of Ministers (“Decision”) effective as of January 1, 2013, companies listed under Annex 1 of the Decision and companies which fulfill at least two out of the following three criteria shall be subject to independent audit:

• Companies with a total asset value equal to or over TRY 150,000,000;

• Companies with an annual sales revenue equal to or over TRY 200,000,000;

• Companies which have 500 or more employees.

As of today there are approximately 100,000 registered corporations in Turkey. The abovementioned criteria set forth by the Ministry only covers approximately 2,500 corporations so that the remaining 97,500 joint stock companies shall not be subject to any audit.

Consequently, Article 397 of the TCC has been amended to address this issue. In this respect, two new clauses have been added to this Article as 5th and 6th clauses.

Clause 5 of the amended Article 397 of the TCC provides that, the corporations which are not covered as per the abovementioned Decision shall be audited as per the provisions under this clause, which refers to a yet to be issued regulation by the Council of Ministers which is to be drafted by the Ministry of Customs and Commerce. This regulation will also regulate the procedures and principles of such audit, qualities of the auditors, the ethic principles which the auditors shall abide by, their duties and authorities, the election, dismissal or resignation thereof, contents of the audit and the audit report and matters related to presentation of the audit reports before the general assembly. Additionally, pursuant to the 6th Clause of Article 397, if such companies have not been audited, their financial statements and annual activity reports shall be deemed not to have been prepared.

Another change was made pursuant to Article 81 of the Law No 6455, amending Clause 2 of the Article 400 of the TCC. The first sentence of the said article provides that an auditor which has audited a company for a total of seven years within a ten year period may not be re-elected as an auditor for a period of succeeding three years.

In this respect, Public Oversight Accounting and Auditing Standards Authority shall be authorized to determine the procedures and principles in relation to enforcement of Article 400 Clause 2 and also to decrease the durations mentioned under the aforesaid clause.

Finally, Article 635 of the TCC has been amended pursuant to Article 82 of the Law No 6455. According to the amendment made to Article 635, provisions regarding audit of corporations under Article 397 Clauses 1, 2 and 3 shall also apply to the limited liability companies. In other words, limited liability companies shall be subject to independent audit given that they meet the criteria set forth under the abovementioned Decision of the Council of Ministers.

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corporate, energy, finance, e-commerce, petroleum, railway, national markers, arbitration, istanbul, foreign awards, regulation, letter of guarantee, advance dividends, natural resources, interim dividends

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