We combine our legal expertise with local insight and global perspective.
This legal alert aims to introduce the recent amendments on Decree No. 32 and Communiqué regarding Decree No. 32 adopted by the Council of Ministers and Undersecretariat of Treasury of Republic of Turkey.
In the Official Gazette dated 25 January 2018 and numbered 30312, amendments to two regulations on protection of the value of Turkish currency have been published: (i) Decree Amending Decree No. 32 on Protection of the Value of Turkish Currency (“Amendment Decree”) and (ii) Communiqué No. 2018-32/46 Amending the Communiqué No. 2008-32/34 regarding the Decree No. 32 on Protection of the Value of Turkish Currency (“Amendment Communiqué”). The enforcement of these two amended regulations is postponed to 2 May 2018, save for the provision under Section B.I of this Alert, which entered into force on the publication date.
A. New set of rules introduced with the Amendment Decree are as stated below:
I. Turkish residents, save for Turkish real persons, may borrow foreign currency loans either from abroad or Turkey, provided that such residents shall generate foreign currency income. However, the condition regarding generation of foreign currency income will not be applicable for Turkish residents borrowing foreign currency loans either from abroad or Turkey only in the following circumstances.
In addition to the above, in the following circumstances, the condition regarding generation of foreign currency income will not be applicable to Turkish residents borrowing foreign currency loans from Turkey.
II. In respect of foreign-currency borrowing, financial leasing, factoring and financing companies resident in Turkey, are also included within the scope of Decree No. 32.
III. In accordance with the Amendment Decree, the significant principles to be noted governing the extension of loans to Turkish residents, either from abroad or Turkey, unless such Turkish resident falls within the circumstances listed under Section I (i) above, are as follows:
IV. Turkish residents (real persons and legal entities) are prohibited from borrowing foreign currency index loans, either from abroad or Turkey.
V. Turkish real persons are prohibited from borrowing foreign currency loans, either from abroad or Turkey.
VI. Banks, financial leasing, factoring and financing companies resident in Turkey may borrow loans from abroad and lend loans to each other, either directly or through participation to an international syndication, without any maturity limitation.
VII. Banks, financial leasing, factoring and financing companies resident in Turkey may lend foreign currency or Turkish Lira loans to persons residing abroad.
VIII. Financial leasing companies resident in Turkey may execute their financial lease transactions with legal entities resident in Turkey or residents on abroad, in foreign currency. However, the financial lease amounts in foreign currency will be included within credit balance calculation.
B. New set of rules introduced with the Amendment Communiqué, further to the rules brought by Amendment Decree, are as stated below:
I. Turkish residents may engage in brokerage activities of leveraged transactions and derivatives only through investment institutions authorized by Capital Markets Board of Turkey.
II. Turkish residents shall authenticate their foreign currency income with documents approved by financial advisors.
 Leveraged transaction refers to purchase and sale transactions of foreign currencies, precious metals and other assets to be determined by Capital Markets Board of Turkey, with a leverage ratio for the deposited margin amount, through electronic platforms.