The Temporary Regulation Under Article 376 of the Turkish Commercial Code Extended Until 2028

The Communique Amending the Communique on the Procedures and Principles Regarding the Implementation of Article 376 of the Turkish Commercial Code No. 6102 ("Amending Communique") was published in the Official Gazette dated October 10, 2026 and numbered 33396, and entered into force on the date of its publication.

The amendment concerns a single expression. The expression "January 1, 2027" set out in provisional article 1 of the Communique published in the Official Gazette dated September 15, 2018 and numbered 30536 ("Communique") has been changed to "January 1, 2028." In this article, we assess what that provisional article means and the practical consequences of the extension for companies.

The Obligations Imposed by Article 376 of the Law

Article 376 of the Turkish Commercial Code No. 6102 ("Law") imposes graduated obligations on companies in cases of capital loss and balance sheet insolvency.

Where it is established, according to the latest annual balance sheet, that half of the total of the capital and the legal reserves has been left unmet by loss, the management body is obliged to call the general assembly to a meeting immediately and to submit to it the remedial measures it deems appropriate.

Where it is established that two thirds of the total of the capital and the legal reserves has been left unmet by loss, the general assembly must resolve either to be satisfied with one third of the capital and to reduce the capital, to complete the capital, or to increase the capital. Where none of these resolutions is adopted, the company is dissolved automatically.

Where there are indications giving rise to a suspicion that the company is in a state of balance sheet insolvency, the management body must have an interim balance sheet drawn up and, where insolvency is established, must notify the court of the situation. As all three thresholds are calculated on the basis of the balance sheet, which items are to be included in the calculation is directly decisive.

The Exemption under Provisional Article 1 of the Communique

Provisional article 1 of the Communique allows two items to be disregarded in these calculations.

• The first is the entirety of the exchange rate losses arising from foreign currency liabilities that have not yet been performed.
• The second is half of the total of the expenses arising from leases, depreciation and personnel expenses accrued in 2020 and 2021.

These two items may be left outside the capital loss and balance sheet insolvency calculation, and the company may thereby remain below the thresholds set out in Article 376 even though a loss appears in its balance sheet.

The part that is operative in practice is the one concerning exchange rate losses. As the second item is a fixed amount tied to two past years, its effect diminishes over time. Exchange rate losses, by contrast, arise afresh in each period for companies holding foreign currency liabilities.

The Arrangement Introduced by the Amending Communique

The Amending Communique moves the date in the provisional article forward by one year. The scope of the exemption, the items to be disregarded, the ratios and the limit relating to 2020 and 2021 have not changed.

Accordingly, those items may be left outside the capital loss and balance sheet insolvency calculations in the balance sheets to be drawn up until January 1, 2028. Within this scope, the year-end balance sheets for 2026 and 2027 may also benefit from the arrangement.

The fact that the arrangement has been extended annually in this manner may be assessed as meaning that the relief introduced by the provisional article has in practice turned into a permanent application. Nevertheless, it should be taken into account that the arrangement retains its character as a provisional article and that each extension is made through a separate amending communique.

Principles Governing the Application of the Arrangement

The arrangement is "optional". The provision of the Communique states that the items in question may be disregarded. Accordingly, the company is under no obligation to apply the exemption and may also carry out the calculation without applying it.

Where the exemption is applied, this must be disclosed in the footnotes to the balance sheet. In this respect, the arrangement is not an instrument that conceals the company's actual financial position. By means of the explanation given in the footnotes, the actual position remains visible to the auditor, the shareholders and third parties.

Furthermore, the exemption concerns the calculation method alone. It has no effect improving the company's equity structure or cash flow. For this reason, the fact that no obligation arises under Article 376 does not mean that the company is financially sound.

Assessment for Companies

The arrangement principally benefits companies holding foreign currency loans, intra-group debts or import payables. Exchange rate losses relating to liabilities that have not yet been performed and that arise as a result of increases in exchange rates may reach significant amounts in the balance sheets of such companies.

With the extension of the period, those companies may not face the obligations of calling a general assembly, completing the capital or notifying bankruptcy in their year-end balance sheets for 2026 and 2027 either.

Nevertheless, it may be assessed that the arrangement produces a deferral effect on account of its limited duration. When the period expires on January 1, 2028, the exchange rate losses kept outside the calculation until that date will be included in it. For this reason, it is important for companies to establish now which threshold they would fall below in a calculation carried out without applying the exemption, and to plan the necessary capital restructuring steps.

Conclusion

The Amending Communique extends the period of an existing relief by one year and does not introduce a new obligation. In this respect it is of a technical nature.

Nevertheless, it may be assessed that the practical effect of the arrangement is not limited. For many companies with high foreign currency liabilities, whether the obligations under Article 376 arise depends directly on this provisional article.

Companies should therefore ask the following fundamental control question: "In a calculation carried out without applying the exemption, what proportion of the total of the capital and the legal reserves has been left unmet by loss, and which obligations will that result give rise to as from January 1, 2028?"

If the answer to this question is not known, the calculation should be carried out under both methods and the result should be submitted to the management body.

You can access the details on this matter in the "Communiqué Amending the Communiqué on the Procedures and Principles Regarding the Implementation of Article 376 of the Turkish Commercial Code No. 6102" published in the Official Gazette. (In Turkish)