We combine our legal expertise with local insight and global perspective.
This Legal Alert seeks to provide information regarding the recent amendments to the “Circular on Capital Movements of the Central Bank of the Republic of Turkey”.
As may have known, the new Circular on Capital Movements of the Central Bank of the Republic of Turkey (“Circular”) promulgated by Central Bank of Turkey, entered into force on 2 May 2018, replacing its original. The new Circular provided a guidance on the rules of Decree amending the Decree No. 32 on Protection of the Value of Turkish Currency in the Official Gazette dated 25 January 2018 and numbered 30312 (“Amendment Decree”) and provided further clarification regarding the implementation of the new foreign-currency denominated loan (“FX Loan”) borrowing regime in Turkey.
In accordance with the letter of Undersecretariat of Treasury dated May 31, 2018, among other amendments made at various dates, a new article has been added under the Circular specifically about the use of FX Loans by Ordinary Partnerships (adi ortaklık) which will hereinafter be referred to as “Partnership”.
With the new Article 53, Partnerships of whose equity is entirely held by legal entities (“Shareholders”) may provide FX Loans and accordingly, new rules have been set regarding the utilization of FX Loans by Partnerships. Pursuant to these rules;
Ordinary Partnerships are regulated under Turkish Code of Obligations numbered 6098 and pursuant thereto, they are not assumed to possess legal entities.
 Turkish Resident Bank, intermediating either for utilization or repayment of loan, is required to notify the FX Loans utilized from Turkey or abroad to the Banks Association of Turkey Risk Center.
 Loan balance refers to the aggregate of the unpaid amount of the cash FX loans utilized from abroad or Turkey.
 Foreign-currency income criteria refers to the following: Legal entities residing in Turkey may borrow FX Loans from Turkey or abroad provided that such entities generate foreign currency income and the aggregate of the new loan to be utilized and the existing loan balance of the relevant entity does not exceed its the foreign currency income for the last three (3) financial years in aggregate, however, if the loan balance of such entity is equal to or above 15 million USD on the utilization date or if such entity meets the other exceptions listed under Article 21 and Article 40 of the Circular, the afore-mentioned foreign-currency income criteria will not be required.