1) MOVABLE PLEDGE

Article 5 of the Law No. 6750 on Movable Pledge in Commercial Transactions ("Movable Pledge Law") has been amended with Article 24 of the Law No. 7263 on Amendment to the Law on Technology Development Zones and Some Other Laws dated 28 January 2021. Accordingly, as of 03 February2021;

  • in case a pledge is established over the entire commercial enterprise or small business, all types of assets allocated to the activities of such enterprise at the time of establishment of the pledge, shall be deemed to have been included within the scope of the pledge, and
  • in case a specific movable asset group of a company is pledged as a whole, then all assets belonging to that specific asset group shall be deemed to have been included within the scope of the pledge. In such case, item (c) of the sixth paragraph of article 4 of the Movable Pledge Law shall not be applied; and thus, information such as the serial number, brand, production year, chassis number, document serial number, GTIP or PRODTR industrial product codes which indicate the distinguishing characteristics of the pledged assets shall not be required to be included in the movable pledge agreement.

2) FOREIGN EXCHANGE

i) Ambiguity regarding accounts to be used for foreign currency loans utilized by Turkish residents from abroad is now clarified with the recent amendments made to the Capital Movements Circular

Pursuant to Article 17 of the Decree No. 32 on Protection of Value of Turkish Lira ("Decree"), Turkish residents are entitled to utilize foreign currency loans from abroad, provided that such loans are transferred to Turkey through Turkish intermediary banks. Before the amendment was made to the Capital Movements Circular ("Circular") with the letter of the Ministry of Treasury and Finance dated 25 January 2021 and numbered 49024, there was an ambiguity regarding to which account the foreign currency loans obtained from abroad by Turkish resident borrowers would be transferred through Turkish intermediary banks. With the amendment made to the Circular, a provision is added to the first paragraph of Article 23 of the Circular, and it is now clarified that the foreign currency loans obtained from abroad can only be transferred to the borrowers' bank accounts opened before the relevant intermediary bank in Turkey.

In addition, with the amendment made to the second paragraph of the same article of the Circular, it is determined that in case the foreign currency loan obtained from abroad is initially paid to the account opened in the name of the Turkish resident borrower at the creditor bank and then sent to such borrower's bank account opened at the Turkish intermediary bank; for the loan to be considered as duly transferred to Turkey with respect to the Decree and the Circular, a letter by the foreign creditor stating that the loan has been transferred to the account opened in the name of the Turkish resident borrower is required to be submitted to the Turkish intermediary bank.

ii) Scope of the exceptions on forex measures is extended with the amendments made to the Capital Movements Circular and the Communiqué on Decree No.32

  • Private public partnership ("PPP") projects

The Ministry of Treasury and Finance amended the Circular on 08 December2020 and 21 December2020 ("Amendments")  and extended the scope of the exemption provided for the utilization of offshore and domestic loans denominated in foreign currencies ("FX Loans") by Turkish residents (i.e. natural and legal persons residing or established in Turkey). In principle, the Circular does not permit Turkish residents to utilize offshore or domestic FX Loans unless they have an FX income save for the instances where they fall under the exemptions provided thereunder ("Exemptions").

Prior to the Amendments, pursuant to the Exemptions , Turkish companies which operate in PPPs ("Project Company") were already permitted to utilize FX Loans regardless of the FX income requirement. However, following the Amendments, the scope of this Exemption is extended to cover Turkish resident shareholders of the Project Companies. Accordingly, Turkish resident shareholders of the Project Companies are now entitled to utilize FX Loans regardless of the FX income requirement, provided that the FX Loan is injected to the capital of the Project Company or is utilized by the borrower shareholder for the financing of the relevant PPP project or is transferred to the Project Company for utilization within the scope of such projects.

In order for the Turkish resident shareholder to utilize an FX Loan as a (i) 'capital injection' to the Project Company or (ii) 'financing for the PPP project', the below documents are required to be submitted to the Turkish lender or intermediary bank:

  • a copy of the Trade Registry Gazette certifying the incorporation of the Project Company,
  • an original or notarized copy of the relevant pages of the PPP implementation agreement ("Implementation Agreement") specifying the parties, subject, amount, date and signatures,
  • an approval letter to be obtained from a relevant public institution including the consideration of the Implementation Agreement,
  • (i) a resolution on the capital increase of the Project Company or a written declaration of the Turkish resident shareholder undertaking the injection of the FX Loan amount to the capital of the Project Company or (ii) a written declaration of the Turkish resident shareholder undertaking that the total amount of the FX Loan is or will be utilized or transferred to the Project Company for financing within the scope of the PPP project.

The amount of the FX Loan provided for 'capital injection' will be transferred to the borrower shareholder following the submission of the letter of the Trade Registry evidencing the capital increase to the lender or intermediary bank. In addition, with respect to the FX Loan provided from abroad, the Turkish intermediary bank will keep the loan amount in a blocked account until the abovementioned letter of the Trade Registry is submitted.

In case the FX Loan is provided for 'the financing of the PPP project', then the FX Loan can be utilized following the submission of the written declaration to the lender or the intermediary bank. In addition to this written declaration;

  • if the loan amount is to be utilized by the borrower shareholder or transferred to the Project Company for its utilization within the scope of the PPP project after the drawdown of the loan, the documents evidencing this (e.g. such as swift messages, bank receipts, official correspondence with the Project Company etc.) are required to be delivered to the lender or intermediary bank until the termination of the construction term determined under the Implementation Agreement;
  • if the loan amount is to be set off against the amounts which are already used or transferred to the Project Company for utilization within the scope of the PPP project before the drawdown of the loan, documents evidencing this (e.g. such as swift messages, bank receipts, official correspondence with the Project Company etc.) are required to be delivered to the lender or intermediary bank until the termination of the construction term determined under the Implementation Agreement. Such documents must be related to the transfers or payments made at most within the past 1 (one) year.

If the abovementioned documents are not delivered to the lender or intermediary bank until the construction term determined under the Implementation Agreement, the relevant bank will be obliged to notify the Ministry of Treasury and Finance accordingly.

In any case, the total amount of the FX Loan cannot exceed the amount of the capital increase determined under the resolution or the written declaration, or the amount determined in the Implementation Agreement.

  • Service Contracts

Communiqué No: 2008-32/34 has been amended with the Communiqué No: 2021-32 / 59 published in the Official Gazette numbered 30380 and dated 30 January.2021 ("Communiqué No: 2021-32 / 59") in order to extend the scope of the exceptions provided for the ban on determining the contract price of service contracts to be executed between Turkish residents in foreign currency. Accordingly, with the addition made to Article 8 (Contracts in Foreign Currency and Indexed to Foreign Currency) of the Communiqué No: 2008-32/34, as of 30 January2021, the contract prices and other payment obligations arising under the accommodation service contracts executed between Turkish residents can be determined in foreign currency or indexed to a foreign currency, provided that;

  • The service contracts are executed by and between the accommodation facility certified by the Ministry of Culture and Tourism and the persons residing in Turkey, and
  • The contract is qualified as an "Accommodation Service Contract".

3) CAPITAL MARKETS

CMB has recently issued a new decision regarding extension of sale periods foreseen for initial public offerings.

In order to minimize the adverse effects of COVID-19 pandemic in the financial markets of Turkey, and to facilitate initial public offerings, and prevent congestions in the initial public offerings to be performed between February – May 2021, CMB has extended the sale periods foreseen under Article 11 of the Communiqué on Prospectus and Issue Document (II-5.1) ("Communiqué") with its decision dated 04/02/2021 ("Decision"). Accordingly, the sale periods in relation to the financial statements to be included in the prospectus and subject to independent audit shall be applied as follows as of 04/02/2021:

Sales Period Financial Statements to be Included in Prospectus and Subject to Independent Audit
1 1 January – 1 March Yearly financial statements for the last three years or for the three years prior to the current year and Q3 financial statements
2 2 March  – 31 May Yearly financial statements for the last three years


In addition, following the sale period of 1 January – 1 March, the grace period of 15 days where the Q1 financials can be annexed to the Prospectus prepared with the yearly financials is extended to 30 days.

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.