Exchange rate loss will not be calculated in insolvency assessments until 2025

The Ministry of Trade has amended the section regarding exchange rate losses in the communiqué on the implementation of Article 376 of the Turkish Commercial Code, which regulates insolvency conditions. Accordingly, the period during which losses arising from exchange rate differences are not taken into account in insolvency assessments has been extended from January 1, 2024, to January 1, 2025. This regulation aims to prevent companies from being considered insolvent or bankrupt on their balance sheets due to inflation and exchange rate differences.

WHAT IS INSOLVENCY?

Article 376 of the Turkish Commercial Code stipulates that if it is understood from the latest annual balance sheet that half of the total of the capital and legal reserves remains uncovered due to losses, the board of directors shall immediately call the general assembly to a meeting and submit the remedial measures it deems appropriate to this general assembly.

According to the article, if it is understood from the latest annual balance sheet that two-thirds of the total of the capital and legal reserves remains uncovered due to losses, the general assembly shall be called to a meeting immediately, and the company shall be dissolved automatically if it does not decide to continue with one-third of the capital or to complete the capital.

In accordance with the communiqué, until January 1, 2025, all exchange rate losses arising from foreign currency-denominated obligations that have not yet been performed will not be taken into account in calculations regarding capital loss or insolvency within the scope of Article 376 of the Law. Half of the total expenses arising from leases, depreciation, and personnel expenses accrued in 2020 and 2021 may also be excluded from these calculations.

News Source: 12punto