A new provision is regulated in Article 358 of the new Turkish Commercial Code No. 6102 (the “TCC”) (the effective date of which is 1 July 2012, subject to certain exceptions), which provides that shareholders may not become indebted to the company with the exception of debts arising from subscription.

The main purpose of such provision is to prevent shareholders from using the company’s case arbitrarily for work and transactions or for personal expenses and to prevent withdrawal of money from the company.  

Whoever acts in violation of this provision shall be punished by imprisonment of not less than three hundred days (Art. 562/5(c) of the TCC). Board of Directors members who are actively or passively involved in such actions are in violation of the Code under Article 553.

Indeed, companies are also compelled to consider this point in other regulations. For instance, if the company lends money to its shareholders:

-    A corporate tax penalty may be applied as the lending may be considered to be a distribution of disguised profit through transfer pricing;
-    The money which was lent may be subject to withholding tax at 15% as it may be considered to be a distribution of dividends to shareholders;
-    If half of the dividend exceeds TRY23,000, it should be officially declared; and
-    VAT of 18% may be applied.