Turkey: Management, Sale And Liquidation Of Entities Under The State Of Emergency Provisions

Last Updated: 7 April 2017
Article by Bezen & Partners

Following the decision of the Council of Ministers dated 20 July 2016 on the state of emergency, certain laws, decree laws and communiqués were enacted for the purpose of maintaining national security. Accordingly, many institutions, organisations and companies were either closed down or put into administration. As of the beginning of 2017 there are more than 650 companies closed on these grounds.

With the decree law numbered 6671, certain institutions, establishments, private radio and televisions, newspapers, magazines, publishers and distribution channels were transferred to either the General Directorate of Foundations or the Treasury. The General Directorate of Foundations and the Ministry of Finance were authorised to operate, represent and manage these aforementioned entities2.

The rules as to the management of the entities which do not fit into this group (the "Entities") were regulated by a separate regime. Administrators were assigned to the Entities. Following the assignment, with the Law numbered 67583, the Saving Deposit Insurance Fund (the "Fund") was set to replace these administrators. The Fund was also given the authority to decide upon the maintainability of the Entities and its assets4 and carry out the sale or liquidation process if necessary until a recent decree law was enacted.

By way of the communiqué published in the Official Gazette dated 17 January 2017 (the "Comminuqué"), the procedures and principles have been set as to the decision of sale and liquidation of these Entities in the context of the Law numbered 6758. The Communiqué sets out that the managing body of the Entity in question will prepare or assign an independent auditor or a certified public accountant to prepare a financial report about the respective Entity to be submitted to the Minister. As to the procedures to be followed in the sale and liquidation of the Entities, Article 20 of the Law numbered 6758 sets out that the provisions of the Banking Law5 will be applicable by analogy. The relevant Article 132 of the Banking Law which regulates the authorities and procedures for the following up and collection of the receivables makes reference to the Law on Collection Procedures of Assets6.

The most recent decree law numbered 6877 sets out that the Fund will have authority in the event confiscation is decided upon. The Fund will execute the confiscation by sale and liquidation of such Entities, their shares and their assets. The yield from such sale or liquidation will be recorded as revenue of the Treasury.

The Decree Law numbered 6838 sets out that the Fund and those joint-venture companies that have direct or indirect public shareholders may collect their domestic foreign currency receivables in Turkish Liras. Upon the request of the debtor, such receivables may be paid until the end of 2017 and in Turkish Liras at the buying exchange rate determined by the Central Bank of the Republic of Turkey on 2 February 2017.

As the number of entities closed is increasing on a daily basis, further changes to the relevant legislation remain to be seen.

Footnotes

1. Published in the Official Gazette dated 23 July 2016 and numbered 29779.

2. Paragraph 5 of the decree law dated 17 August 2016 and numbered 670.

3. Dated 10 November 2016 and published in the Official Gazette dated 24 November 2016 and numbered 29898.

4. Assets as designated in Article 13 of the decree law dated 15 August 2016 and numbered 674.

5. Dated 19 October 2005 and numbered 5411, published in the Official Gazette dated 19 October 2005 and numbered 25983.

6. Dated 21 July 1953 and numbered 6183.

7. Published in the Official Gazette dated 9 February 2017 and numbered 29974.

8. Published in the Official Gazette dated 23 January 2017 and numbered 29957.

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.

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