LATEST REGULATORY DEVELOPMENTS IN TURKEY

Transcription

1 LATEST REGULATORY DEVELOPMENTS IN TURKEY How New Developments Affect Companies in Turkey 27 September 2018

2 Agenda 1 Technical Bankruptcy 3 2 FX Payment Ban 8 3 Export Proceeds 11 4 Financial Restructuring 13

3 1 Technical Bankruptcy 3

4 Technical Bankruptcy Article 376 of Turkish Commercial Code («TCC») 376/1 Capital Loss: Half of the sum of the share capital and the statutory reserves is uncovered due to losses 376/2 Technical Bankruptcy: Two-thirds of the sum of the share capital and the statutory reserves is uncovered due to losses 376/3 Negative Equity: Sum of the share capital and the statutory reserves is uncovered due to losses 4

5 Technical Bankruptcy Regime Required actions 376/1 - Capital Loss Board of directors to convene general assembly and explain the company s financial situation in line with the last balance sheet Board of directors to present remedial measures (e.g., sale of subsidiaries, closure of certain production units) to the general assembly General assembly to decide whether to approve or amend these measures 376/2 Technical Bankruptcy General assembly to decide whether to: i. be contented with one-third of the capital and perform a capital decrease; ii. iii. complete capital; or increase capital. Completion of capital is made without consideration and not considered a capital or a loan, and cannot be deemed an advance payment for capital increases to be made in the future. General assembly must decide unanimously to complete the capital. 5

6 Technical Bankruptcy Regime Required actions 376/2 Technical Bankruptcy Capital increase: o o Increase simultaneously after reduction. Increase without reduction. 376/3 Negative Equity Board of directors to issue an interim balance sheet based on the principles on continuity of the business value and the potential value of the assets. Board of directors to notify the court about the company s bankruptcy if the assets are insufficient to cover the receivables of the company s creditors and any other measure, such as a capital increase, will not be taken. 6

7 Technical Bankruptcy Regime The necessary financial statements to decide whether the company is suffering from capital loss or negative equity must be prepared in accordance with Article 88 of TCC; however, the company may decide to prepare its financial statements in line with Turkish Accounting Standards. Companies are now entitled to disregard exchange difference expenses arising from foreign currency obligations until 1 January

8 2 FX Payment Ban 8

9 FX Payment Ban on Certain Inter-resident Transactions Amendment to Decree No. 32 on Protection of the Value of the Turkish Currency No longer legally possible to denominate the contract price and other payment obligations in any foreign currency or indexed to foreign currency for the: Sale and purchase of real estate Sale and purchase of movable properties Leasing of real estate and movable properties (including financial leasing of vehicles) Work contracts: 1. Employment agreements 2. Service contracts 3. Independent constructor agreements 9

10 FX Payment Ban on Certain Inter-resident Transactions Agreements executed prior to the amendment must be modified to comply with the restrictions within 30 days as of September 13, Ministry of Treasury and Finance to provide exemptions without interrupting economic activity. 10

11 3 Export Proceeds 11

12 Export Proceeds The Ministry of Treasury and Finance published the Communiqué No /48 on the Decree No. 32 on the Protection of the Value of Turkish Currency ("Communiqué"), introducing an obligation for Turkish resident exporters to bring export proceeds into Turkey. This obligation is valid for 6 months. The actual export transaction Max. 180 days Intermediary banks notify the tax office of any export accounts that are not closed by the stipulated deadline in written form. Max. 90 days Exporters are responsible for bringing the export proceeds into Turkey, selling them to banks and closing the export accounts by the stipulated deadline! (180 days) 5 days Proceeds from this transaction must be brought or transferred to an intermediary bank. At least 80% of the proceeds must be converted into TRY. 10 days The tax office sends the relevant persons a warning letter requesting the closure of the account within 90 days. Accounts must be closed or the account owners must provide and prove the existence of force majeure events or other justifiable reasons. Otherwise, the account owners will be subject to legal sanctions. 12

13 4 Financial Restructuring 13

14 Legal Framework Regulation on Restructuring of the Debts Owed to Financial Institutions (BRSA, Official Gazette August 15, 2018) («Regulation») Framework Restructuring Agreement (Turkish Banks Association to be submitted for the BRSA s blessing) («Framework Agreement») Draft Law on Restructuring of the Debts Owed to Financial Institutions (BRSA, submitted to the review of financial institutions) («Draft Law») 14

15 Highlights Who will benefit from the Framework Agreement? Principally, Turkish banks and financial institutions (i.e. financial leasing companies, factoring companies and finance companies) Can others benefit from the Framework Agreement? Those who have not signed the Framework Agreement, non-turkish financial institutions and non-fi creditors can become parties to a Framework Agreement if the consortium of banks accept their inclusion through (i) the affirmative vote of the banks owning at least 75% of the claims and (ii) representing at least 30% of all banks parties to the Framework Agreement. 15

16 Highlights How will others be affected? Framework Agreement & Regulation: Only binding on those who are parties to the Framework Agreement. Others not affected. Draft Law: Not crystal clear, implying that others will not be able to enforce claims against the borrower once the Restructuring Agreement is signed. Standstill Period Framework Agreement & Regulation: Starting from the borrower s application to the banks for restructuring Draft Law: Starting from the execution of the Restructuring Agreement 16