Regulation affecting companies published in the Official Gazette: That date has changed

A change has been made to the date regarding balance sheet evaluations for companies that are loss-making and facing capital loss or insolvency.

With the regulation published in the Official Gazette, the decision to exclude foreign exchange losses arising from unfulfilled foreign currency obligations from the calculations of capital loss or insolvency, applied under Article 376 of the Turkish Commercial Code, has been extended until January 1, 2027.

WHAT DOES ARTICLE 376 OF THE TCC COVER?

Article 376 of the Turkish Commercial Code regulates the heading "Loss of capital, state of insolvency" in companies. While the article includes call and notification obligations, the relevant section contains the following statements:

"If it is understood from the last annual balance sheet that half of the total of the capital and legal reserves has become uncovered due to losses, the board of directors shall immediately call the general assembly to a meeting and present the remedial measures it deems appropriate to this general assembly.

If it is understood from the last annual balance sheet that two-thirds of the total of the capital and legal reserves has become uncovered due to losses, the general assembly, which is immediately called to a meeting, shall result in the company being dissolved automatically unless it decides to continue with one-third of the capital or to complete the capital.

(Amended: 26/6/2012-6335/16 art.) If there are signs that raise suspicion that the company is in a state of insolvency, the board of directors shall prepare an interim balance sheet based on both the going concern principle and the probable sale prices of the assets. If it is understood from this balance sheet that the assets are insufficient to cover the claims of the company's creditors, the board of directors shall report this situation to the commercial court of first instance where the company's headquarters is located and request the bankruptcy of the company. Unless, before the bankruptcy decision is rendered, the creditors of the company's debts in an amount that will cover the company's deficit and eliminate the state of insolvency have accepted in writing that their claims be placed in a rank after all other creditors, and the appropriateness, reality, and validity of this declaration or contract have been verified by experts appointed by the court to which the board of directors will report the bankruptcy request. Otherwise, the application made to the court for expert examination shall be accepted as a bankruptcy notification."

News Source: 12punto