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The Central Bank of Turkey amended the Capital Movements
Circular ("Amendment"). The Amendment
entered into force on 4 November 2019.
What's new?
The Amendment foresees that any proceeds a foreign shareholder
provides to a Turkish company for a future capital increase must be
converted into capital within three months.
According to Articles 345 and 459 of the Turkish Commercial Code
regarding capital contribution payments for capital subscriptions
in cash, if a capital increase in cash is not completed within
three months, the bank must refund the capital contribution payment
in cash to the shareholder. Since all references made to capital
advance were removed from the Circular No. 2013/YB-7 of the Central
Bank of the Turkish Republic, a capital contribution deposited to
bank and not converted into capital within three months would be
considered a shareholder loan.
Conclusion
The Amendment clarifies that these requirement relating to
capital injection will also apply to payments in foreign
currencies.
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.
