Code Amending Multiple Codes for the Facilitation of Investment

The Code numbered 7099 Amending Multiple Codes for Facilitation of Investment (“Code numbered 7099”) was published in the Official Gazette dated 10 March 2018. While the majority of the Code numbered 7099 came into force by 15 March 2018 , minor changes to the Municipal Code will enter into force on 10 September 2018.

The main purpose of the Code numbered 7099 is to simplify the bureaucratic transactions and to reduce the relevant costs in order to promote efficiency in bureacratic procedures and to facilitate investment by saving both time and money.

Below you may find a brief summary of the substantial changes governed by the Code numbered 7099.

1. Changes to the Land Registry Code No. 2644 and the Code on the Organization and Functions of the General Directorate of Land Registry and Cadaster No. 6083 

   Pursuant to the amendment to the Land Registry Code No.2644, mortgage transactions involving a real estate that has been supplied as collateral in loan agreements and credit agreements with state institutions and organizations, credit agencies, banks, craftsman’s cooperatives and agricultural credit cooperatives are allowed to be registred before the title deed registry upon the request of the parties without the necessity of executing official mortgage deeds by the land registry office. In such a case, this registration will be based on directly to the executed credit or loan agreement. It is clear from the wording of the amendment that it shall be applied to all credit institutions including the banks.Following the amendment on Code on the Organization and Functions of the General Directorate of Land Registry and Cadaster No.6083, registration, cancellation and annotation transactions are now possible to be made electronically by the General Directorate of Land Registry upon the request of the related judicial authority or the competent instutution and organization.

2. Changes to the Code of Tax Procedure No. 213 

   Opening Certifications of commercial books of joint–stock companies and limited liability companies will no longer be required to be made before the Notary Public. As per the amendment made, during the incorporation of the joint-stock companies and limited liability companies, the commercial books shall be certified by the General Directorate of Trade Registry where the company head quarter is located.

3. Changes to the Code of Social Security and General Health Insurance No. 5510 

   As per the amendment made, the declaration of incorporation to be made to the trade registry offices shall be accepted as to have been made to the Social Security Institution. Therefore, in such a case, a declaration of place of business (in Turkish “İşyeri Bildirgesi”) will not be necessary to be issued by the company to be given to the Social Security Institution.

4. Changes to The Customs Code No. 4458 

   As per the amendment made in the Customs Code No.4458 to reduce temporary storage costs in international trade, maximum price limits are to be set by the Ministy for shipment, warehousing, clearance and other similar expenses and in case of not complying with these maximum limits, an irregularity fine in the amount of TRY 5,000 (approximately equal to EUR 1,040) shall be imposed for each violation.

5. Changes to The Turkish Commercial Code No. 6102 (“TCC”) 

   The Code numbered 7099 has fully revoked articles 428, 430, 431 of TCC. Besides, it partly amended some other articles of TCC as well. Accordingly;

   • Under TTC, the companies will no longer be required to have a corporate representative present at their general assembly meetings (such obligation was not applied in practice for the non-listed companies; the listed companies are subject to the specific provisions of the Capital market law).
   • In order to simplify the company incorporation, the authentication of signature declarations and the opening certifications of commercial books of joint-stock companies and limited companies will be made by trade registry officials at the local trade registries instead of notary publics. Also the authentication of signature declarations in every step will be made by trade registry  officials at the local trade registries instead of notary publics. However, in practice, currently the Trade registry of Istanbul accepts the declarations of signatures certified by Notray Public. It is advisable to consult each competent trade registry before application.
   • The signatures of the founders on the articles of association of a limited liability company shall be given before trade registry officials instead of notary public.
   • The requirement of paying 25% of the share capital of a newly formed company prior to registration with the local trade registry has been repealed for limited liability companies; however, it is still in force for joint-stock companies.

6. Changes to The Movable Pledge Code No.6750
   Following to the amendments made,

6. • The scope of movable pledge has been extended. Accordingly, besides the assets specified in the Movable Pledge Code as numerous clauses, all kinds of movables and rights are allowed to be the subject of a pledge.

6. • The de-registration requirement has been softened and the legal periods governed in the relevant articles have been extended. According to the amended Movable Pledge Code, following the cessation of all obligations, a Turkish pledgee (subject to Turkish laws) now has a period of 15 (fifteen) business days to de-register such a pledge and a foreign pledgee (subject to foreign laws) now has a period of 30 (thirty) business days to de- register such a pledge. The administrative fine for non-compliance has remained the same but the relevant registries will only consider cases of non-compliance when there has been a complaint against a pledgee by a pledger or borrower.

6. • In case of having no relevant provision in the Movable Pledge Code, the provisions of the Turkish Civil Code regarding immovable pledges (instead of the provisions regarding movable pledges) shall be applied.
   • If the oblgations arising from the Movable Pledge Code are not fulfilled within the legal periods, besides the creditor’s other rights, the creditor may also commence execution proceedings within the scope of general provisions.

Our Law Firm remains at your disposal for any further clarifications you may need.