“The Communique regarding Application of Article 376 of the Turkish Commercial Code (“TCC”) numbered 6102, entered into force by  publication in the Official Gazette dated, numbered 30536.  

Article 376 of the TCC and the Communique set forth two different levels of capital inadequacy and regulates the corporate remedies specifically for each level. The first level involves  50% loss of the sum of capital and legal reserves or loss of the sum of capital and legal reserves by two thirds which expressed as “Capital Loss”. The second level is the financial distress.  


Pursuant to the Communique, the board of directors (the “Board”) should regularly check financial situations. In the event of evident in the most recent annual balance sheet of the Company: (i) half of the sum of its capital and legal reserves have remained uncovered due to deficit; or (ii) two thirds of the sum of its capital and legal reserves have remained uncovered due to deficit. Both of these situations indicate that the financial stability of the Company is under risk.

  • If the Board determines that the previous year's annual balance sheet is half of the sum of its capital and legal reserves has remained uncovered due to deficit then the Board must call the shareholders general assembly ("GA") immediately for an extraordinary meeting and to prepare a proposal for strengthening the company's financial status, to be submitted to the GA's approval. There is no legal requirement for the GA to comply with the Board suggestions or to take any other specific actions.  
  • If the Board determines that two thirds of the sum of its capital and legal reserves have remained uncovered due to deficit, the Board must immediately call for an extraordinary meeting of the GA and submit a proposal regarding remedial measures for  the company's share capital status. At the related meeting, the GA must resolve:
    • To Complete the uncovered portion of the share capital through a cash injection, in order to replenish the share capital to its original level; or
    • To proceed with the amount equal to 1/3 of the share capital; or
    • To increase the capital. 

If the GA fails to adopt any of the above-mentioned resolutions at the meeting, the company will be automatically terminates.    


In the case where there are significant signs which create the impression that the company is in financial distress; the Board should prepare an interim balance sheets based over the current market value of the company assets. If it is seen that the assets are not enough to cover the debts, then the Board shall notify this situation to the Commercial Court and request declaration of the bankruptcy of the company. Unless; 

  • The creditors of the debts accept in writing prior to the bankruptcy decision that their debts may be deferred after all other creditors are satisfied; and
  • The accuracy and validity of such statement are verified by the experts appointed by the court where the bankruptcy request will be submitted,

the application submitted to the court for expert review shall be deemed as a bankruptcy notice.”  

It must be underlined that the most important article of the Communique is the provisional Article 1 since the mentioned article  enables disregard of foreign exchange losses originated from the outstanding obligations settled over the foreign exchange rate while evaluation of technical bankruptcy or insolvency situations until 01.01.2023.