Turkey: Legal Structure Of The Public Economic Enterprises In Turkey

Last Updated: 22 August 2018
Article by Mehmet Taş and Püren Berik

Legal Grounds

The Decree Law No. 233 published in the Official Gazette no. 18435 dated June 18th, 1984 deals with public institutions, which are established by decisions of Council of Ministers. The decree classifies Public Economic Enterprises (''PEEs") into two groups: State Economic Enterprises (''SEEs") and State Economic Institutions (''SEIs''). Total capital of an enterprise in either group is owned by the State and the main difference between these institutions is that SEIs hold an exclusive monopoly in the production and marketing of basic goods and services, while SEEs operate within commercial and economic fields, in accordance with free market principles.

The transactions of PEEs, established by decision of Council of Ministers and had their special budgets; are principally subject to civil law due to their establishment as Joint-Stock Companies, unless regulations otherwise exist in the Decree Law 233. These are founded by the government and their capital is owned in full by the government. These institutions engage in commercial activities and endeavours to make profit and they pay their debts arising from their relations with the third persons from their own budget just like normal private companies.

PEEs are free to set prices for the goods and services they provide however; these prices can also be determined by the Council of Ministers upon request by the relevant Ministry which the Undersecretariat of Treasury is affiliated with.

As regulated in Decree Law No. 233, SEEs whose capital is owned by the State (in other words Treasury) and which are established by decision of the Council of Ministers. They are incorporated, and their liabilities limited with its capital. They are not subject to General Accounting Law and Public Procurement Law. They are not audited by Court of Accounts and they are performing commercial activity in economic field according to commercial rules and also being subject to private law provisions except conditions reserved in Decree Law No. 233.

The Enterprise is not subject to the General Accounting Law and Public Procurement Law and the Supervision of the Court of Auditors.

1. Plans, Schedules and Budgets of PEEs

According to article 29 of Decree Law No. 23, PEEs perform their investment and business operations in compliance with their plans, schedules and budgets. The way how to construct investment and financing schedule is determined by the Ministry where Undersecretariat of Treasury and Foreign Trade affiliated with and then it is submitted to the High Planning Council by obtaining the opinions of Ministry of Development and Turkish Court of Accounts.

Annual investment and financing Schedule of the PEE is decided by the Council of Ministers at least 75 days before the beginning of the calendar year.1 Budget of the PEE is prepared on the basis of annual target in the investment and financing schedule and it is approved by board of directors. If needed, related Ministry may request preparation of long term budget. In case of amendment in investment and financing schedule of PEE, the necessary arrangements shall be made in budget pursuant to the amendments.

2. Preparation of PEE's Investment Projects

As specified by Article 30 of Decree Law No. 233, PEEs are under the obligation to prepare the investment projects by making economic, financial and technical study of their investments in accordance with development plan.

The following factors are pursued regarding the preparation of PEEs Investment Projects:

  • State Investment Banks supports the PEEs in preparation of investment projects.
  • Prepared Projects are submitted to related Ministry and Ministry of Development 7 months before the beginning of calendar year.
  • Related Ministry investigates the projects then it dispatches the projects to the Ministry, where Ministry of Development and Undersecretariat of Treasury and Foreign Trade affiliated with, until end of the June of the same year for including the project in investment and financing program.

The Project is a condition for initiating the investment. If investment tasks are assigned to the PEEs that they cannot afford, then the part, which should be paid from equity capital, will be met by the Government Budget.

3. Investment and Financing Schedule of PEEs

Investment opportunities and investment capacities of PEEs are considered when preparing the long term and annual investment and financing schedules of PEEs as per Article 32 of Decree Law No. 233.

Long term investment and financing schedules of PEEs are sent to Ministry of Development and Undersecretariat of Treasury and Foreign Trade after they were investigated by the related Ministry.

Annual Investment and Financing Schedule is prepared by Ministry of Development with taking the opinion of Undersecretariat of Treasury and Foreign Trade.

4. Balance Sheets, Nominal Account and Activity Report of PEEs

Article 34 of Decree Law No.233 indicates that balance sheets and nominal accounts are prepared until end of the 3rd month of the following year. Balance sheets and nominal accounts should be prepared in accordance with the models determined by PEEs Uniform Accounting Regime.

Balance sheets and nominal accounts shall be published on the Official Gazette after they were audited and approved by the Turkish Grand National Assembly.

5. Pricing Policy and Duty Losses Practice of PEEs

PEEs may freely determine the prices of goods and services which are generated in their own operation, in conformity with Article 35 of Decree Law No. 233.

Upon request of the Minister which Undersecretariat of Treasury is affiliated with, the Council of Ministers may determine the goods and service prices and it may assign a duty to PEEs regarding their field of activity.

In the event that Council of Ministers determines the goods and service prices below the market price or it assigns a duty to PEEs regarding their field of activity. These "Duty Losses" shall be paid from the funds created within the budget of Undersecretariat of Treasury.

Issues regarding the duty losses and the calculation method of the duty losses shall be stated clearly in the decision of Council of Ministers.

Procedures and principles regarding each duty losses shall be determined by Undersecretariat of Treasury with obtaining the opinion of the related Ministry. Cost of duty losses shall be determined by Undersecretariat of Treasury considering the Accounting Records of PEEs.2


1. The Decision numbered 2017/10925 and approved on 11.10.2017 for the year of 2018 (http://www.resmigazete.gov.tr/eskiler/2017/10/20171031-1.pdf).

2. Unless otherwise noted, copyrights for this article is held by the Aksan Law Firm. The compilation as a whole is Copyright © by Aksan Law Firm, all rights reserved. Items published by Aksan Law Firm may be freely shared among individuals, but they may NOT be republished in any medium without express written consent from the author(s) and advance notification of the Aksan Law Firm.

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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