Turkey: New Rules On Technical Bankruptcy In Turkey

Last Updated: 7 December 2018
Article by Deniz Senvar Pekin and Cemre Güler
Most Popular Article in Turkey, December 2018


Article 376 of Turkish Commercial Code ("TCC") regulates the obligations of companies in the events of loss of capital and insolvency which are also commonly known as "technical bankruptcy". The Communiqué regulating the procedures and principles on the implementation of Article 376 of TCC has been promulgated in Official Gazette dated 15 September 2018 and numbered 30536 and entered into force. Communiqué explains the ways of determining the event of and remedies for the financial difficulty of companies. Article 376 provides that in the event the capital and two-thirds of the sum of a company's share capital and legal reserves are lost due to previous years' loss as per the balance sheet, the board of directors is obliged to call a general assembly for meeting immediately. It seems that the main purpose of the Communiqué is to prevent companies from ignoring the event of capital loss and that companies in the status of capital loss do not continue with their operations, but instead call shareholders to convene meeting and discuss the event of capital loss in the meeting even if the meeting does not have this discussion item in the meeting agenda.

Article 6 of the Communiqué provides examples of remedial actions that the board of directors should take in the event of loss of the company's share capital and legal reserves. The same article also substantiates the methods of what kind of resolutions the general assembly can take on proposed remedial actions.

The Communiqué also sets out the thresholds for a minimum amount to be paid in the event two-thirds of the sum of a company's share capital and legal reserves are lost and general assembly resolves on capital increase. With this regard, in the event the general assembly resolves on a capital decrease by the amount corresponding to incurred loss and a simultaneous capital increase, then at least one-fourth of the increased capital must be deposited prior to registration of general assembly resolution. In the event the general assembly directly resolves on a capital increase rather than first realizing a capital decrease, then at least half of the share capital must be deposited prior to registration of general assembly resolution.

Sub-paragraph 3 of Article 376 provides that in the event it is understood that the company's assets are not sufficient to cover its liabilities as per the interim balance sheet, i.e. in the event of insolvency, board of directors is obliged to make a notification to commercial court seated where the headquarters of the company is located and file for bankruptcy. The Communiqué, on the other hand, provides that the board of directors may file for bankruptcy in the event of insolvency only if one of the remedial actions out of capital decrease, adjustment of capital to recover the losses or capital increase had not been taken. In other words, the new regulation provides a new step to resort rather than directly filing for bankruptcy and provides that the board of directors should file for bankruptcy in the event said remedial actions had not been taken. 

Another significant provision of the Communiqué is provisional article 1 which provides that until 1 January 2023, foreign exchange losses arising from outstanding liabilities denominated in foreign exchange, will not be taken into consideration in the calculation of capital loss and insolvency in the context of Article 376.  We believe the purpose here is to protect companies from facing capital loss and insolvency and bankruptcy situations dues to high volumes of FX debts.

The Communiqué's aim in general looks like to prevent the companies from doing business without strengthening their weak capital structures especially in current negative economic conditions of the domestic market and to prevent them from being further financially damaged due to the fluctuations in exchange rates.

To sum up the main novelties in the new Communique:

  • Board of Directors' role will be more active, in particular, in bringing remedial measures,
  • Certain minimum amounts of capital must be deposited before the official registration of capital increase,
  • Foreign exchange losses will not be taken into account in article 376 calculations until 1 January 2023.

So, on the upcoming days, it will be more important for companies that they take into consideration the provisions of this Communiqué before planning a capital increase, giving special emphasis on determining the presence of events of capital loss and insolvency, and that companies double-check the financial advisory reports with the respective trade registries prior to any kind of capital increase registration.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions