Insights

As it is known, loss of capital and bankruptcy are regulated under Article 376 of the Turkish Commercial Code No. 6102. Through the Communiqué on the Procedures and Principles Regarding the Application of Article 376 of the Turkish Commercial Code No. 6102 (“The Communiqué on the Article 376 of the TCC”) which was published in the Official Gazette dated 15.09.2018 and numbered 30536, the procedures and principles to be applied for the capital loss and bankruptcy has been regulated. This time, through the Communiqué on the Amendment Regarding the Communiqué on the Procedures and Principles Regarding the Application of Article 376 of the Turkish Commercial Code No. 6102 (“Communiqué”), significant amendments have been made in the Communiqué on Article 376 of the TCC.

Essential amendments introduced through the Communiqué may be summarized as follows:

• The loss of at least half of the sum of capital and legal reserves is defined as the loss being equal to or more than half of the total of capital and legal reserves and less than two thirds.
• The loss of at least two-thirds of the sum of capital and legal reserves is defined as being equal to or more than two-thirds of the sum of capital and legal reserves.
• Regarding the calculations to be made within the scope of Article 376, in addition to the all foreign exchange losses arising from the foreign currency obligations, it has been regulated that the half of the total of (i) expenses arising from rents, (ii) amortizations and, (iii) expenses of employees accrued by 2020 and 2021 may not be taken into account.
• Contrary to the previous practice of trade registry, in order to compensate the capital loss, it is allowed to increase the capital as and then decrease in the same general assembly provided that capital undertakings are paid in full. As a result of such transactions, it is obligatory to maintain at least half of the total of the registered capital and legal reserves within the equity.
• A lower limit has been established for the capital decrease due to unpaid capital. Accordingly, following the capital decrease, at least half of the total of capital and legal reserves must be preserved within the equity.
• In case it is decided to increase the capital without conducting a capital decrease at the amount of the capital loss, it is obligatory to pay the amount that will ensure that at least half of the total of capital and legal reserves to be registered are preserved within the equity before the capital increase is registered.
• It is regulated that the capital replenishment fund can only be deducted from the losses.

You may find the full text of the Communiqué here.