A range of legislative changes have been made in Turkey following the attempted coup on 15 July 2016, as well as changes to the structures and compositions of government, military and judicial bodies. Notable aspects for companies include bankruptcy suspension requests being deemed invalid during the national three month State of Emergency, as well as increased powers for guardians appointed to companies under investigation.
Bankruptcy postponement requests suspended
According to the Bankruptcy and Enforcement Law No 2004, companies with share capital, as well as cooperative associations, can request bankruptcy if their liabilities exceed their assets. If the company or cooperative's financial status can improve, it can request bankruptcy be suspended by submitting an improvement plan. However, the Law states that postponement applications cannot be made and will be declined by the Courts in any case during the State of Emergency.
There have recent also been drastic changes to the Turkish bankruptcy postponement regime, which will come into effect once the State of Emergency is lifted.
Council of State memberships terminated
Turkey's Council of State is the Superior Court for administrative justice and, as such, is the Court of last instance. It reviews all rulings rendered by Administrative Courts, unless laws specifically refer them to other judicial authorities.
Legislative amendments terminated the memberships of all members of the Council of State, except the President, Deputy President, Chief Prosecutor and Department Head of Council of State. New members of the Council of the State were elected on 25 July 2016.
Powers of guardians assigned to companies are increased
Under the Law of Criminal Procedure, companies can be appointed a guardian if there is a strong suspicion that the crime under investigation was committed by the company. According to the changes, these guardians also now receive powers over:
- Managing bodies.
- Partnership interests.
- Securities.
Compensation claims against guardians will be able to be made from the State. The State will have one year to recoup such compensation from malicious guardians.
Please see these links for the full text of relevant legislation (only available in Turkish).
- Decree Law No 669 on Measures to be taken regarding the State of Emergency and Establishment of the University of National Defence and Amending Some Laws (published in Official Gazette number 29787 on 31 July 2016).
- Amending Law on Council of State Law and other Laws (published in Official Gazette number 29779 on 23 July 2016).
Information first published in the MA | Gazette, a fortnightly legal update newsletter produced by Moroğlu Arseven.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
