CHANGES CONCERNING THE SCOPE OF THE COMPANIES SUBJECT TO INDEPENDENT AUDITING

The Decree of the Council of the Ministers dated 19 December 2012 and numbered 2012/4213 (“Decree”) (adopted as per Article 397 of the Turkish Commercial Code numbered 6102) concerning the determination of the companies that are subject to independent auditing came into effect after being published in the Official Gazette dated 23 January 2013 and numbered 28537.

The said Decree was amended three times subsequently with three other Decrees of the Council of the Ministers;

a) The Decree of the Council of the Ministers, published in the Official Gazette dated 14 March 2014 and numbered 28941;

b) The Decree of the Council of the Ministers, published in the Official Gazette dated 1 January 2015 and numbered 29254; and lastly and recently

c) The Decree of the Council of the Ministers, published in the Official Gazette dated 19 March 2016 and numbered 29658.

These amendments are mainly concerning the figures/ numbers that shall be taken into consideration, i.e. total assets, annual net sales revenue and number of the employees whilst determining the companies that are subject to independent auditing.

As per the latest amending decree mentioned in above item (c), the companies meeting, alone or with their affiliates and subsidiaries, at least two (2) of the three (3) following criteria during at least two consecutive years or the companies targeted in the list numbered (I) of the Decree (listed companies, banks, insurance and individual retirement companies, TV channel operators etc.) must appoint during the following ordinary general assembly an independent controller duly empowered in this respect:

a) The total assets equal to or higher than TRY 40,000,000.- (it was TRY 50,000,000.- according to the previous amending decree);

b) The annual net sales revenue equal to or higher than TRY 80,000,000.- (it was TRY 100,000,000.- according to the previous amending decree);

c) The number of employees equal to or higher than 200 (it was 200 employees according to the previous amending decree).

We can observe that the requirement of independent auditing for Turkish companies is expanding. The initial aim of the lawmaker in 2011, when drafting the Turkish Commercial Code, was to cover all the companies, irrespective of their sizes. In consideration of strong oppositions from the chambers of commerce and industry, the legislator decided to temporize.

The latest amending decree mentioned in above item (c) foresees also some other conditions with respect to the Turkish Companies carrying out specific activities or that have specific capital structure.

Our Law Firm remains at your disposal for any queries you may have in respect of this amending decree and the criteria set forth therein.