Banking & Finance

Changes to treasury support for SMEs

The Council of Ministers Decree regarding Procedures on Treasury Support to be provided to Credit Insurance Institutions (published in the Official Gazette dated July 15, 2009 and numbered 27289) (the “Decree”) regulates the procedures of the Undersecretariat of the Treasury support to be provided to Credit Insurance Institutions which provide surety to the credits and facilities of small- and medium-sized enterprises and Kredi Garanti Fonu A.S.

Amendment to the Communiqué on Legal Reserves

The Communiqué on Legal Reserves (published in the Official Gazette dated November 16, 2005 and numbered 25995) (the “Communiqué”) has been amended by the Communiqué enacted by the Central Bank of the Republic of Turkey (published in the Official Gazette dated September 12, 2011 and numbered 28052) (“Amendment to the Communiqué”) which abolished the gold reserve accounts among the deductible items enumerated under Article 4.

Independent auditing principles

The Regulation on Principles and Procedures regarding Auditing Principles (published in the Official Gazette dated January 13, 2010 and numbered 27461) (the “Regulation”) envisages the terms and conditions of the auditing principles to be abided by independent auditing institutions. Article 12 of the Regulation has been amended (published in the Official Gazette dated July 26, 2011 and numbered 27270) whereby the authority of Banking Regulation and Supervision Agency to temporarily revoke the authority of the independent auditing institution in case of the repetitive failure to abide by the Regulation has been abolished.

Amendments to external auditing regulation for banks

The Regulation on the Authorisation and Activities of Institutions to perform External Audit in Banks (published in the Official Gazette dated November 11, 2006 and numbered 26333) (the “Regulation on External Auditing”) lays down the principles and procedures governing the authorisation, activities and revoking powers of the external audit institutions that conduct external audits in banks. Such regulation has been amended (published in the Official Gazette dated July 26, 2011 and numbered 27270) whereby certain articles in relation to the (i) principle of independence and cases eliminating independence, (ii) revocation of power, (iii) effectiveness of external audit, (iv) obligations of the authorised audit institution, and (v) submission of external audit reports have been amended.

Capital Markets

Regulation of forex operations

As of 31 August 2011, upon the entry into force of the Communiqué of the CMB Serial No. V/125 on Principles regarding Leveraged Sale and Purchase Transactions and Institutions to Realize these Transactions, the leveraged sale and purchase of foreign exchange, commodities and precious metals are considered to be activities falling under the duty and authority of Capital Markets Board (the “CMB”) and under the scope of the Communiqué, leveraged sale and purchase operations shall only be realized by institutions authorized by the CMB.

Amendments to related party transactions

Communiqué Serial: IV, No: 52 Amending the Communiqué Serial: IV, No: 41 on Principles to be followed by Firms under the Capital Market Law entered into force upon publication in the Official Gazette dated 20 July 2011 and numbered 28000.

The valuation report threshold has been decreased for related party transactions. The Communiqué abolished the distinction between publicly traded companies and other public companies and the CMB can henceforth oblige both types of companies to make a valuation on the related party transactions and to make a public disclosure.

Amendments to the Asset Backed Securities Communiqué

The Communiqué Serial: III No: 46, (published in the Official Gazette dated 20 July 2011 and numbered 28000) amended the Communiqué Serial: III, No: 38 on Principles Regarding Asset Backed Securities. Factoring institutions are thus allowed to issue asset covered securities backed by factoring receivables as collateral. The Investors’ Protection Fund has been granted broader authorisation for the management and liquidation of the cover asset pool in the event an issuer becomes insolvent.

New communiqué for investment companies

The Communiqué Serial: VI, No: 30 on Principles Regarding Investment Companies (published in the Official Gazette dated 5 August 2011 and numbered 28016) abolished the Communiqué Serial: VI and stipulated new provisions regarding the establishment, public offering, internal control and risk management systems and portfolio restrictions of investment companies. The main provisions of the communiqué are (i) minimum issued capital is increased (ii) at least one shareholder of the investment company must be a leading shareholder (iii) a minimum 20% of the distributable profit has to be paid in cash as the first dividend, and (iv) investment companies are henceforth allowed to repurchase their own stocks but they will not be able to issue privileged shares.

Permission to share buybacks for publicly traded companies

In light of the provisions of new Turkish Commercial Code (No.6102), the CMB issued a new principal decision dated 10 August 2011 and numbered 26/767 allowing publicly traded companies to repurchase their own shares. The buyback ratio has been determined as 10% of a company's issued/paid-in capital subject to certain conditions stipulated in the said decision.

Increase of margin for short selling transactions

On August 11, 2011, the CMB announced that Article 25 the Communiqué Regarding Margin Trading, Short Sales and Lending and Borrowing of Securities (Communiqué Serial No. V/65) (published in the Official Gazette dated July 14, 2003, No. 25168) was amended. According to such amendment, the CMB increased the minimum margin ratio that a client of a brokerage firm shall maintain in order to start short selling transactions from 50% to 70%.

Inspection authority to the Minister

Further to an amendment to the Law No. 3046 regarding the Establishment and Functions of Ministries published in the Official Gazette 17 August 2011 and numbered 28016, the relevant Minister has been granted the capacity to inspect all activities and operations of the CMB (among other government institutions with administrative and financial independence such as the Banking Regulation and Supervision Agency, the Energy Market Regulatory Authority and the Competition Board).

Dematerialization of government debt securities

The CMB has resolved on its meeting dated August 25, 2011 and numbered 832, that the domestic government debt securities shall be in dematerialized form, starting from June 30, 2012.

Competition

M&A clearance

The Communiqué Regarding the Amendment to the Communiqué concerning Mergers and Acquisitions Calling for the Authorization of the Competition Board No.2010/4” (Communiqué No. 2011/2) (the “Communiqué”) has been enacted by the Competition Authority and entered into force upon being published in the Official Gazette dated September 30, 2011 No. 28070. Pursuant to the Communiqué, merger and acquisition clearance applications filed before the Competition Board will include one hardcopy and one softcopy of the notification form and the related documents.

Corporate

Organized Industrial Zone Regulation

According to the amendment to the Organized Industrial Zone Regulation (published in the Official Gazette dated August 4, 2011 and numbered 28015), if the time period between the ordinary and extraordinary general assembly meetings is less than six months, only information and documents regarding the agenda will be sent with the invitation to the extraordinary meeting and discharged members of the board of directors and the board of auditors may not be elected in the same general assembly.

Dispute Resolution

Consumer protection

The new Turkish Code of Obligations (which shall come into effect on July 1, 2012, Law No.6098, 2011) has been drafted to give more rights to buyers, in alignment with the Law Regarding the Protection of the Consumer (Law No. 4077, 1995) (the “LPC”), and introduces major changes to the product liability provisions of the current Code of Obligations (Law No. 828).

Tax

Lease certificates & withholding tax

On June 29, 2011 the Council of Ministers passed a decree (dated April 26, 2011 and No. 2011/1854) (published in the Official Gazette dated June 29, 2011 and No. 27979) (the “Decree”) in connection with different tax laws in order to amend the withholding rates imposed on lease certificates issued abroad by asset lease companies resident in Turkey and lease certificates issued by asset lease companies within the scope of the Communiqué on Principles regarding Lease Certificates and Asset Lease Companies (Communiqué Serial No. III/43) (published on the Official Gazette dated April 1, 2010 and No. 27539) (the “Communiqué”) issued by the CMB.

Energy & Climate Change

Environmental Auditing Regulation

According to Article 3 of the amendment to the Environmental Auditing Regulation (published in the Official Gazette dated August 16, 2011 and numbered 28027), all sources of pollution and violations under the Environmental Law (published in the Official Gazette dated August 11, 1983 and numbered 2872) and related legislation that occur in the zones of sovereignty and jurisdiction, including free and restricted economic zones within the boundaries of the Republic of Turkey, are to be subject to supervision.

Pharmaceuticals, Healthcare & Biotechnology

Promotion activities of medicinal products for human use

The Regulation regarding the Promotion Activities of Medicinal Products for Human Use published in the Official Gazette dated August 26, 2011 and numbered 28037) provides for the requirements with respect to promotion activity for the rational use of medicinal products for human use. The promotion activity includes the information provided to doctors, dentists and pharmacists regarding the use of medicinal products and their side effects.

Private Hospitals Regulation

According to the amendment to the Private Hospitals Regulation (published in the Official Gazette dated September 28, 2011 and numbered 29068), the operations of hospitals that employ doctors or staff members that are not doctors who do not have the right to perform their profession or who are obliged to perform a public service, are to be suspended for a temporary period and the Ministry of Health is to be informed.

Transportation, Logistics & Defence

Privatization of Highways & Bridges

According to the Decision of the Privatization Administration (Decision No. 2010/88) (published in the Official Gazette dated October 20, 2010 and numbered 27735) (the “Privatization Decision”) and the Privatization Administration’s Invitation to Investors (published in the Official Gazette dated August 25, 2011 and numbered 28036) (the “Tender Announcement”), the Privatization Administration resolved for the privatization of certain highways and bridges as well as their connection roads and the service facilities, maintenance and operation facilities, toll collection centres and other units of goods and services production and other assets located in such highways and bridges which are under the responsibility of the General Directorate of Highways and the construction, maintenance, reparation and running of which is under the responsibility of the General Directorate (together, the “Privatization”).

Northern Marmara Highway (including the third Bosphorus Bridge)

According to the General Directorate of Highways’ Invitation to Investors (published in the Official Gazette dated March 8, 2011 and No. 27868) (the “Tender Announcement”), the tender regarding the construction, operation and transfer of “Northern Marmara Highway” (including the third Bosphorus Bridge) was scheduled to take place on August 23, 2011 through the sealed tender method. However, according to the latest announcement of the General Directorate of Highways (published in the Official Gazette dated August 15, 2011 and numbered 28026); the bidding period has been extended until January 10, 2012.

 

In this issue:

Banking & Finance

Capital Markets

Competition

Corporate

Dispute Resolution

Tax

Energy & Climate Change

Pharmaceuticals, Healthcare & Biotechnology

Transportation, Logistics & Defence

 

To discuss how these developments affect your business interests please contact:

Fethi Pekin
Managing Partner

fpekin@pekin-pekin.com

This legal newsletter has been prepared for informational purposes only; it has not been prepared for advertising purposes or with the intention of creating an attorney-client relationship. It does not seek to provide information on all legal developments in Turkey with the quarter specified. None of the information contained in this legal newsletter shall constitute legal advice or anything akin thereto. To unsubscribe email the Editor: newsletter@pekin.pekin.com

© PEKIN & PEKIN 2011       www.pekin-pekin.com Q3/2011