Extension of the Period Under the Communiqué on Article 376 of the TCC and Key Considerations
The Communiqué Amending the Communiqué on the Procedures and Principles Regarding the Implementation of Article 376 of the Turkish Commercial Code No. 6102 (the “Communiqué”), published in the Official Gazette dated October 10, 2026, and numbered 33396, further extends the period during which the temporary relief measures concerning the calculation of technical insolvency and bankruptcy may be applied.
Accordingly, (i) all foreign exchange losses arising from the foreign currency obligation and (ii) half of the total expenses arising from rents, amortizations, and expenses of employees accrued by 2020 and 2021 may be disregarded during the calculations made for the determination of technical insolvency and/or bankruptcy situations until January 1st, 2028. The former application period was until January 1st, 2027.
In light of this amendment, we would like to highlight the following key considerations regarding the implementation of Article 376 of the TCC and the temporary relief measures provided under the Communiqué:
- The provisions allowing certain losses and expenses to be disregarded in the calculation of technical insolvency and bankruptcy are intended solely for the purpose of determining the company's financial status under Article 376 of the TCC.
- In any subsequent capital transactions, such as capital increases, capital reductions, or simultaneous capital reductions and increases, the company's financial statements reflecting its actual financial position must also be taken into consideration. In other words, the temporary relief measures introduced by the Communiqué do not amend or eliminate the company's obligations under Article 376 of the TCC.
- In corporate restructuring transactions, including mergers, demergers, and conversions of legal form, the planning and implementation of the contemplated transactions must also take into account the company's actual financial position, independently of the temporary relief measures provided under the Communiqué.
- The extension should also be considered in conjunction with the deadline of December 31, 2026, for compliance with the minimum capital requirements applicable to joint stock companies and limited liability companies. As is known, Presidential Decree No. 7887, published in the Official Gazette dated November 25, 2023, and numbered 32380, increased the minimum capital requirements applicable to joint stock companies and limited liability companies, effective as of January 1, 2024. Accordingly, the minimum capital requirement was increased from TRY 50,000 to TRY 250,000 for joint stock companies and from TRY 10,000 to TRY 50,000 for limited liability companies. Furthermore, the minimum initial capital requirement for non-public joint stock companies adopting the registered capital system was increased to TRY 500,000. However, it should be borne in mind that, depending on the company's financial position and the application of Article 376 of the TCC, compliance with these minimum capital requirements may not, in itself, be sufficient. Accordingly, the obligation to increase capital to meet the statutory minimum requirements and the obligations arising under Article 376 of the TCC are not entirely independent of one another.
- In addition, any steps contemplated as part of such capital increases, including capital increases from internal resources, should be assessed together with their potential tax implications, taking into consideration the company's future plans, such as a potential M&A transaction or an initial public offering (IPO).
- Furthermore, the implications of Article 376 of the TCC and the statutory minimum capital requirements should be assessed not only by companies whose existing capital falls below the applicable minimum thresholds, but also by companies contemplating corporate restructuring transactions involving capital movements, such as simultaneous capital reductions and increases arising from demergers.
The Communiqué enters into force on the date of its publication.
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