NEWS AND INSIGHT

The Law On Amendments To The Banking Law, Some Other Laws And The Decree Law No. 655 Entered Into Force


09 July 2022

The Law On Amendments To The Banking Law, Some Other Laws And The Decree Law No. 655 Entered Into Force

Law No. 7407 on Certain Amendments to Banking Law, Certain Laws and Statutory Decree No. 655 (“Law”), which was approved by the Grand National Assembly of Turkey on May 26, 2022, published in the Official Gazette dated May 28, 2022.

  1. AMENDMENTS TO THE BANKING LAW NO. 5411 ("BANKING LAW")

 

  1. Amendments Regarding the Deposit Insurance Fund ("Fund")

Prior to the new regulation, only deposits and participation funds belonging to real persons which are not subject to commercial transactions were included in scope of insurance; however, with the amendment introduced to Article 63 of the Banking Law, all commercial deposits and participation funds, except those belonging to official institutions, credit institutions and financial institutions, are included within the scope of insurance. The inclusion of commercial deposits in the scope of insurance is also important in terms of compliance with the criteria of the European Union's Deposit Insurance Directive EU/49. 

In addition, the Savings Deposit Insurance Fund Board is authorized to determine the scope and amount of deposits and participation funds to be subject to insurance; The number of deputy presidents of the Fund and the number of service units within the Fund are increased in order to ensure efficient and fast execution of the increasing workload; it is made possible to cover the expenses incurred during the performance of the duties assigned to the Fund from the Fund's budget, provided that they are collected from the relevant parties later, and finally, it is aimed to ensure that the criteria regarding the past period debt in commercial and economic integrity sales made by the Fund are more clear and understandable.

  1. Inclusion of Financial Leasing Contracts in the Scope of Commercial and Economic Integrity (CEI)

With the amendments introduced to Article 134 of the Banking Law, the Law aims to include financial leasing contracts within the scope of priority creditors in commercial and economic integrity sales, to determine the criteria for payments to be made from the sale price, and to harmonize with Article 21 of Law No. 6183 by making arrangements in the articles on the follow-up and collection of the Fund's receivables within the scope of the needs arising over time. In line with this purpose, financial leasing agreements are included within the scope of commercial and economic integrity, it is made possible to pay the amount corresponding to the auction price before the finalization of the ranking list, and the period for filing a lawsuit against the ranking list is set as 15 days following its publication in the Official Gazette.

The Law also stipulates that in the event that there is a liquidation balance remaining after the discharge of all legal liabilities in banks that are bankrupt and whose liquidation is carried out by the Fund, this amount shall not be distributed to those who caused the bankruptcy of the bank, those who have legal disabilities and who have been decided to be punished due to their membership in, association with or connection to structures, formations or groups that are determined to pose a threat to national security or terrorist organizations, and those who have been sentenced to confiscation for this reason. The Law also introduces new regulations regarding the transfer of their shares to the Treasury, keeping the liquidation share of those under investigation or prosecution in the Fund's accounts, and taking action according to the outcome of the investigation or prosecution.

  1. AMENDMENTS TO THE CORPORATE TAX LAW NO. 5520 ("CORPORATE TAX LAW")

 

  1. Adding An Exemption to the Scope of the Exemption from Corporate Tax

With the Law, Provisional Article 14 of the Corporate Tax Law is amended and in case the foreign currencies in the balance sheet dated 31/3/2022 are converted into Turkish lira until the end of 2022, the interest and dividends to be accrued on the deposits to be opened within this scope and other earnings are included within the scope of the exemption from corporate tax, even if they are not included in the balance sheets dated 31/12/2021.

In addition, the President has been authorized to apply the exemption to the conversion of foreign currencies in the balance sheets dated 30/6/2022 or 30/9/2022 into Turkish Liras. With the inclusion of another paragraph, it is aimed to apply the exemption to the renewed accounts in the event that these accounts converted into Turkish Liras and are renewed in accordance with the regulations of the Central Bank at the end of maturity, valid until the end of 2022.

  1. REGULATIONS ON THE TURKEY WEALTH FUND LEGISLATION

 

  1. Paving the way for strategic investments by sector-specific companies of the Turkey Wealth Fund

With the amendment made in Article 8/4 of the Law No. 6741 dated 19/8/2016 on the Establishment of Turkey Wealth Fund Management Company and Amendments in Certain Laws ("Law No. 6741"), the companies acquired by the Turkey Wealth Fund or its subsidiaries and funds by paying the price are exempted from the legislation and restrictions applied to public capital companies in order to ensure that these companies do not lose value and compete fairly in the private sector. This amendment to the Law aims to pave the way for strategic investments by Turkey Wealth Fund's companies dedicated to various sectors such as finance, technology, port investments, etc. and to ensure that these companies can continue to compete in the private sector.

Furthermore, Temporary Article 2 added to Law No. 6741 provides that the exemptions and exceptions granted to the companies and sub-funds to be established by the Turkey Wealth Fund will also apply to companies and funds established before the effective date of the regulation.

Finally, pursuant to the amendment made to Article 8/1 of Law No. 6741, the companies, sub-funds and their subsidiaries, which are made controlling shareholders by Turkey Wealth Fund Management Company or Turkey Wealth Fund by paying the price, are also included in the scope of exemption from Corporate Tax.

  1. REGULATIONS ON SAVINGS DEPOSIT INSURANCE FUND

 

  1. Effective and fast management of the companies and assets of the companies to which the Savings Deposit Insurance Fund has been appointed as the trustee

Pursuant to Article 20 of the Law No. 6758 dated 10/11/2016 on the Amendment and Adoption of the Decree Law on Making Certain Regulations within the Scope of the State of Emergency, the powers of the trustees serving in the companies for which a decision was taken to appoint a trustee due to their affiliation, association or connection to terrorist organizations before the effective date of this article were transferred to the Savings Deposit Insurance Fund by the judge or court, and the duties of the trustees were terminated upon the transfer. However, this situation sometimes caused problems regarding the trusteeship duty assigned to the Savings Deposit Insurance Fund by Law No. 6758. In order to solve these problems, it is aimed to enable the partial or complete sale or dissolution and liquidation of the company, its assets or assets values by the Savings Deposit Insurance Fund due to its financial situation, shareholding structure, market conditions or other problems. Thus, the aim is not only to prevent possible losses of companies that are currently unsustainable, but also to prevent possible losses through the sale or liquidation of companies that need investment or capital to survive due to recent commercial, sectoral or financial conditions.

In addition, the Law regulates the partial or complete sale or dissolution and liquidation of the shares of persons who have shares in the company and/or its assets and against whom the court has issued a fugitive decision, even if there is no trusteeship decision against the person, and the interest and distribution of the amount to be obtained from the sale of commercial and economic integrity and the use of the balance in the company's affairs.