New Turkish Commercial Code Has Become Effective
The Parliament passed the Turkish Commercial Code Bill ("the New Code”) on 13 January 2011 which sets new and enhanced standards for all Turkish company boards and management.
The New Code will be effective gradually. It took effect on 1 July 2012 except for IFRS conversion and internet related requirements which will be enacted on 1 January 2013 and 1 July 2013, respectively.
The New Code has been prepared as a reaction to a number of major changes in the local and global business environment as well as technological and legal developments such as:
- Globalization and its impact on the commercial, financial and capital markets,
- Fierce competition and Turkey's ambition to be a major player in the international markets,
- Developments in technology, particularly penetration of internet all over the world and impact on trading activities,
- Recognition of corporate governance principles as a good management practice all over the world and its impact on laws,
- Generally accepted standards (such as International Financial Reporting Standards, International Standards on Auditing, OECD Corporate Governance Principles) and their integration into laws,
- Recognition of Turkey as a candidate for full membership and harmonization of Turkey's legal system with the EU legislation during the continuing negotiations process.
The New Code aims to respond all aforementioned changes and developments. In other words, the New Code is providing a good ground for institutionalization and sustainability of Turkish companies and implementation of corporate governance principles (transparency, accountability, fairness and responsibility) and building public trust.
The New Code will bring many new mechanisms and systems for all capital companies (Anonim Sirket and Limited Sirket). The focal point of the New Code is the corporate governance system. Particularly transparency concept has significant impact on many items of the New Code. The main changes can be summarized as follows:
- Non-delegable duties and powers of Board of Directors
- Delegation of duties and powers to management
- Composition of Board of Directors
- Incorporation of capital companies
- Risk management
- Internal controls system and internal audit mechanism
- Financial planning system
- Financial statements in accordance with International Financial Reporting Standards (IFRS) and annual reports
- Independent audit companies in accordance with International Standards on Auditing
- Group companies
- Electronic Board of Directors meeting and General Assembly
Taking into account the aforementioned changes, it is clear that the New Code will have significant impact on companies from many perspectives. Therefore, understanding the substance of the law and its impact on your company will be the main challenge of board of directors and management in the coming period.
Cerebra has put significant effort in understanding the impact of New Turkish Commercial Code during the draft status. In the coming transition period, Cerebra will continue to monitor developments closely and share with you its opinions and recommendations that will help you understand the impact of changes in your company and take timely action for smooth transition.
Click for further information on New Turkish Commercial Code Compliance Services.
