TÜRKIYE Trends and Developments Contributed by: Selim Keki, Çisem Altundemir and Erkin Tuzcular, Balcıoğlu Selçuk Eymirlioğlu Ardıyok Keki Attorney Partnership
The pandemic and the heavy devaluation of the Turkish lira over recent years have led to a situa - tion in which a great number of companies have found themselves in distress. This in turn has prompted significant adjustments to the Com - muniqué regulating the details of the depletion of share capital. Specifically, two critical provisions were introduced by Temporary Article 1 of the Communiqué on the Procedures and Principles Regarding the Implementation of Article 376 of the TCC No 6102. Exclusion of unrealised foreign exchange losses Unrealised foreign exchange losses stemming from foreign currency liabilities were excluded from the calculation of the loss of share capi - tal. This measure aimed to mitigate the adverse impact of the currency devaluation on compa - nies’ financial positions, allowing them to avoid being classified as technically insolvent solely due to exchange rate fluctuations. Partial exclusion of certain expenses Half of the sum of expenses incurred from leases, depreciations and personnel expenses accrued during the years 2020 and 2021 will not be considered in determining whether or not a company was in technical insolvency. This adjustment recognised the extraordinary economic challenges faced by businesses dur - ing this period, particularly exacerbated by the currency devaluation and its associated financial strains. Effect of the temporary provisions These provisions aimed to provide temporary relief to companies affected by the Turkish lira devaluation, enabling them to maintain their operations and financial viability despite facing significant economic headwinds. They proved somewhat successful in that a potential wave
of insolvencies was largely avoided. But, on the downside, this has likely resulted in many finan - cially unhealthy companies still being in busi - ness. Pursuant to the legislative amendment enacted on 25 December 2024, it has been resolved that these two provisions shall remain in force until 1 January 2026. Restrictions on the Use of Foreign Currency The Presidential Decree numbered 32 on the Protection of the Value of Turkish Currency is a fairly old piece of legislation (dating back to 1989) aiming at stabilising the currency and managing the foreign currency environment in Türkiye. It, and its secondary legislation in the form of communiqués, had already undergone several changes over the years. The Turkish lira came under devaluation pressure especially starting from 2018. As a response to that, changes were made to the secondary legis - lation implementing the aforementioned Decree as part of a broader strategy to protect and stabilise the Turkish lira by reducing reliance on foreign currencies in domestic transactions and encouraging the use of the national currency. A catalogue of transactions and contracts were identified which, starting from 2018, must be denominated in Turkish lira. These include ser - vice agreements, rental agreements, loan agree - ments, sales contracts for movable and immov - able properties, and employment contracts. The list is fairly comprehensive and includes exceptions to this rule such as situations where products or services are sourced from suppli - ers abroad or where the debtor is foreign or for - eign-owned. Also, some special consideration is applied to defence contracts or contracts made by the state. On 6 March 2025, Communiqué (Communiqué No: 2025-32/72) amending the Communiqué on
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