ARTICLE
21 November 2019

Foreign Investors' Capital Injection Into Turkish Companies

EA
Esin Attorney Partnership

Contributor

Esin Attorney Partnership, a member firm of Baker & McKenzie International, has long been a leading provider of legal services in the Turkish market. We have a total of nearly 140 staff, including over 90 lawyers, serving some of the largest Turkish and multinational corporations. Our clients benefit from on-the-ground assistance that reflects a deep understanding of the country's legal, regulatory and commercial practices, while also having access to the full-service, international and foreign law advice of the world's leading global law firm. We help our clients capture and optimize opportunities in Turkey's dynamic market, including the key growth areas of mergers and acquisitions, infrastructure development, private equity and real estate. In addition, we are one of the few firms that can offer services in areas such as compliance, tax, employment, and competition law — vital for companies doing business in Turkey.
The Central Bank of Turkey amended the Capital Movements Circular ("Amendment"). The Amendment entered into force on 4 November 2019.
Turkey Corporate/Commercial Law

Recent Development

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.

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