Innovations and amendments introduced by Law No. 7244

I. Provisions Concerning the Deferral, Non-Collection or Restructuring of Certain Receivables

1. Matters in respect of which the relevant administrations are authorised to grant a deferral of 3 months without requiring an application:

1) Amounts payable under a contract in relation to Treasury immovable property.

2) Occupancy fees (ecrimisil) to be collected in respect of the 3-month period commencing on 1/4/2020.

3) Those portions, to be collected in respect of the 3-month period commencing on 19/3/2020, of the amounts or sums arising from sales, occupancy fees and leases effected pursuant to the relevant legislation in relation to immovable property owned or held by metropolitan municipalities, municipalities, special provincial administrations and their affiliated entities, as well as by the local government associations of which they are members.

4) Receivables of metropolitan municipalities, municipalities and their affiliated entities arising from water consumption in respect of residences and of workplaces whose activities have been suspended or which are unable to operate. (Limited to those to be collected in respect of the 3-month period commencing on 17 April 2020.)

5) The licence, permit and route rental fees corresponding to the determined period, owed to metropolitan municipalities and municipalities by natural and legal persons operating by obtaining a permit or licence from them or by leasing a route (to whom they may make income support payments, limited to a period of 3 months commencing on 17 April 2020).

Those receivables in respect of which deferral authority has been granted shall be collected, at the end of the deferral period, in equal monthly instalments over a period equal to the deferral period, without the application of any late payment surcharge or interest.

2. Payments deferred for 3 months without requiring an application:

1) Permits granted, pursuant to the Forestry Law, in respect of state forests in favour of natural persons and private law legal persons, save for permits granted for tourism facility purposes, together with those granted by the General Directorate of Forestry pursuant to the State Procurement

2) Law, the amounts to be collected in respect of the 3-month period commencing on 1/4/2020 from recreation areas and immovable property leased out. (In addition, delivery of the site may be effected against a bank letter of guarantee obtained in respect of the first-year amounts accruing within the deferral period for the permits granted.)

3) The amounts to be collected in respect of the 3-month period commencing on 1/4/2020 from leases effected, in places subject to the National Parks Law, in accordance with the provisions of the State Procurement Law.

4) Those amounts, to be collected in respect of the 3-month period commencing on the date of entry into force of this article, out of the income tax withholding declaration and payment periods of metropolitan municipalities, municipalities and their affiliated entities, all social insurance premium payments, and the annual instalment payments made by them to the General Directorate of State Hydraulic Works pursuant to Article 4 of the Law on the Supply of Drinking, Utility and Industrial Water to Settlements Having a Municipal Organisation. (During the deferral period, the periods of limitation for assessment and for the imposition of penalties set out in the Tax Procedure Law No. 213 dated 4/1/1961 shall not run and shall be extended by a period equal to the period during which the limitation period does not run.)

5) Loan debts falling within the scope of Article 16 of the Law on Higher Education Credit and Hostels Services. (Limited to those to be collected in respect of the 3-month period commencing on 17 April 2020. The Domestic Producer Price Index (Yİ-ÜFE) shall not be applied to the deferred instalment amounts during the deferral period.)

Such deferred receivables shall be collected, at the end of the deferral period, in equal monthly instalments over a period equal to the deferral period, without the application of any late payment surcharge or interest.

3. Receivables that may not be demanded or collected by the administration:

1) The rental amounts arising from leases effected pursuant to the relevant legislation in relation to immovable property owned or held by metropolitan municipalities, municipalities, special provincial administrations and their affiliated entities, as well as by the local government associations of which they are members, being the rental amounts relating to the period during which undertakings whose activities have been suspended or which are unable to operate did not carry on business.

2) That portion of the annual advertisement and announcement taxes and annual environmental cleaning taxes of undertakings whose activities have been suspended or which are unable to operate corresponding to the periods during which their activities were suspended or they were unable to operate.

3) The annual membership fee for the year 2020 regulated under Article 35 of the Law on Travel Agencies and the Association of Travel Agencies.

In addition to the provisions set out above, Law No. 7244 deferred, without interest, to the year 2021 the instalment payment due for the year 2020 in respect of the loan debts of agricultural sales cooperative unions arising from the Support and Price Stabilisation Fund (DFİF), which had been restructured and are paid in one instalment per year, and likewise deferred, without interest, by one year each the instalment amounts payable in subsequent years, including the year 2021; and the receivables of the Turkish Electricity Distribution Corporation (TEDAŞ) arising from electricity consumption (receivables transferred to TEDAŞ during privatisation transfer transactions) were restructured in the manner set out in subparagraph (i) of Article 1 of the Law.

II. Provisions Concerning Time Extensions, Postponement of Meetings and Remote Working

1. Extended periods:

1) The validity period of licences issued under the Law on Licensed Warehousing of Agricultural Products whose validity is due to expire during the year 2020 has been extended by one year.

2) The validity of seaworthiness certificates issued for merchant vessels under the Law on the Protection of Life and Property at Sea which have expired or will expire between 11/3/2020 and 31/7/2020 shall be extended until 1/8/2020.

3) The periods relating to the issuance of competence determinations, the conclusion of collective labour agreements, the resolution of collective labour disputes and to strikes and lockouts under the Law on Trade Unions and Collective Labour Agreements have been extended by three months commencing on 17 April 2020.

2. Postponed matters, transactions and meetings:

1) The conditions which merchant vessels must satisfy, pursuant to the applicable regulation, in respect of the hull, machinery, boiler, general equipment, life-saving, fire protection and fire-fighting and other equipment and accessories according to the work to which they are assigned and the voyages they will undertake, within the scope of Article 3 of the Law on the Protection of Life and Property at Sea, and underwater inspections, are postponed until 1/8/2020.

2) With effect from 10/3/2020;

>> The notifications and declarations to be submitted by associations pursuant to the Law on Associations and the Turkish Civil Code, together with general assembly meetings of associations, are postponed until 31/7/2020. (Postponed general assembly meetings shall be held within 30 days from the date on which the postponement comes to an end. The duties, powers and responsibilities of the existing organs shall continue until the first general assembly to be held after the end of the postponement period.)

>> General assembly meetings falling within the scope of the Cooperatives Law are postponed until 31/7/2020. (Postponed general assembly meetings shall be held within three months from the date on which the postponement comes to an end. The duties, powers and responsibilities of the existing organs shall continue until the first general assembly to be held after the end of the postponement period.)

>> General assembly meetings falling within the scope of the Law on Veterinary Services, Plant Health, Food and Feed and the Law on Agricultural Producer Unions are postponed until 31/7/2020. (Postponed general assembly meetings shall be held within three months from the date on which the postponement comes to an end. The duties, powers and responsibilities of the existing organs shall continue until the first general assembly to be held after the end of the postponement period.)

3) The General Assembly of the Union which, pursuant to Article 61 of the Law on the Union of Chambers and Commodity Exchanges of Turkey and on Chambers and Commodity Exchanges, was to be held during the month of May 2020, shall be held together with the General Assembly of the following year.

4) The elections which were to be held pursuant to Article 33 of Law No. 2972 on the Election of Local Administrations, Neighbourhood Headmen and Councils of Elders dated 18/1/1984 shall not be held in the year 2020.

5) The determination provided for in subparagraph (a) of the second paragraph of Article 30 of the Law on Public Servants’ Trade Unions and Collective Agreements shall, for the year 2020, be carried out on the basis of the date of 15 July 2020 and shall be sent to the Ministry of Family, Labour and Social Services by 31 July 2020 at the latest. The determination to be made pursuant to subparagraph (b) of the same paragraph shall be made on the basis of the date of 15 July 2020 and shall be published in the Official Gazette during the first week of September.

3. Provisions concerning remote working

1) With effect from 10/3/2020, the Minister of Industry and Technology may grant permission, limited to a period of 4 months commencing on 11/3/2020, for activities carried out in R&D and design centres within the scope of the Law on Supporting Research, Development and Design Activities to be carried out outside such R&D and design centres, and for activities carried out within the boundaries of a Zone within the scope of the Technology Development Zones Law to be carried out outside the Zone as well. (Where such permission is granted, the benefit of the deductions, exemptions, supports and incentives provided under Law No. 5746 and Law No. 4691 shall continue, provided that the Ministry of Industry and Technology is informed.)

2) The tenders for the sale, lease, exchange, construction in return for land or flats and the establishment of limited rights in rem in respect of immovable property in the private ownership of the Treasury, as well as the tenders for the lease of and the granting of permits to use places under the sovereignty and disposition of the State, may be conducted electronically until 31/7/2020, against payment of a service fee, by using the technical infrastructure belonging to the affiliated and related institutions of the Ministry of Environment and Urbanisation and to their subsidiaries.

III. Provisions Concerning Employment Law

1) Irrespective of whether it falls within the scope of the Labour Law, no employment/service contract of any kind may be terminated by the employer for a period of three months commencing on 17 April 2020, other than on grounds of conduct contrary to the rules of morality and good faith and similar grounds set out in subparagraph (II) of the first paragraph of Article 25 of the Labour Law and in the relevant provisions of other laws. (An employer or employer’s representative who terminates an employment contract in breach of this provision shall be subject to an administrative fine in the amount of the monthly gross minimum wage as at the date of the act, for each employee whose contract is terminated.)

2) The employer may place the employee wholly or partly on unpaid leave, for a period not exceeding three months commencing on 17 April 2020. In such case, being placed on unpaid leave does not entitle the employee to terminate the contract on just cause.

3) In respect of applications for short-time working made by employers on the ground of force majeure by reason of the coronavirus (Covid-19), short-time working allowance shall be paid in accordance with the employer’s declaration, without awaiting the completion of the eligibility assessment. (Excess and undue payments made as a result of the employer’s provision of incorrect information and documents shall be recovered from the employer together with statutory interest. This provision shall apply with effect from 29/2/2020.)

4) Employees who had an employment contract in place on 17 April 2020 but who have been placed on unpaid leave by the employer pursuant to the Labour Law “for a period not exceeding three months commencing on 17 April 2020” and who are unable to benefit from short-time working allowance, as well as employees whose employment contracts have been terminated after 15/3/2020 within the scope of Article 51 of the Unemployment Insurance Law and who are unable to benefit from unemployment allowance under the other provisions of the Unemployment Insurance Law, shall, provided that they do not receive an old-age pension from any social security institution, be granted cash wage support of 39.24 Turkish liras per day from the Unemployment Insurance Fund, for a period not exceeding the 3-month period during which termination may not be effected as regulated under the Labour Law, and for as long as they remain on unpaid leave or unemployed within that period. (Where it is established that an employee who has been placed on unpaid leave and who benefits from cash wage support has in fact been made to work, an administrative fine in the amount of the gross minimum wage as at the date of the act shall be imposed on the employer by the provincial directorates of the labour and employment agency, separately for each employee so employed and for each month of such employment, and the cash wage support paid shall be recovered from the employer together with statutory interest accruing from the date of payment.)

5) Those benefiting from cash wage support within the scope described above who do not fall within the category of general health insurance holders or of persons for whom a general health insurance holder is responsible under the Social Insurance and General Health Insurance Law shall be deemed general health insurance holders within the scope of subparagraph 60/1/(g) of the Social Insurance and General Health Insurance Law, and their general health insurance premiums shall be met by the Unemployment Insurance Fund.

IV. Provisions Concerning Commercial Law

1) In capital companies, it may be resolved, until 30/9/2020, to distribute no more than twenty-five per cent of the net profit for the 2019 financial year; retained earnings from previous years and free reserves may not be made the subject of distribution; and the general assembly may not authorise the board of directors to distribute advance dividends. (This provision shall not apply to companies in which the State, special provincial administrations, municipalities, villages and other public legal persons, and funds more than fifty per cent of whose capital is publicly owned, hold, directly or indirectly, more than fifty per cent of the capital.)

2) Where the general assembly has resolved upon a dividend distribution in respect of the 2019 accounting period but no payment has yet been made to the shareholders, or only a partial payment has been made, the payments relating to the portion exceeding twenty-five per cent of the net profit for the 2019 financial year shall be deferred until 30/09/2020.

3) No excessive increase may be made by producers, suppliers and retail undertakings in the sale price of any good or service. (Those acting in breach of this prohibition shall be subject to an administrative fine of between ten thousand Turkish liras and one hundred thousand Turkish liras.) Producers, suppliers and retail undertakings may not engage in activities creating scarcity in the market, disrupting market equilibrium and free competition, or preventing consumers from obtaining access to goods. (Those acting in breach of this prohibition shall be subject to a fine of between fifty thousand Turkish liras and five hundred thousand Turkish liras.)

V. Provisions Concerning Turkey Wealth Fund Management Joint Stock Company (the Company)

1) The audited annual financial statements of Turkey Wealth Fund Management Joint Stock Company and of the other companies to be established by the Fund, of the Turkey Wealth Fund and of the sub-funds to be established within the Turkey Wealth Fund, together with the report to be prepared following the audit of their activities within the framework of independent auditing standards, shall be submitted to the President by the end of the month of August each year (prior to the amendment, this was the month of June).

2) In transactions of the Turkey Wealth Fund, the Company, the sub-funds and the companies established by the Company which confer control over other companies, whether together with third parties or alone, there shall not be applied, in relation to the parties to such transactions, their direct and indirect shareholders, affiliates and subsidiaries, as well as to the companies over which control is acquired, and limited to such transactions;

>> Article 23 of the Capital Markets Law, which provides that “Fundamental transactions relating to the structure of a company which will lead to a change in investors’ investment decisions, such as a publicly held company being a party to merger or division transactions, changing its type, providing for privileges or altering the scope or subject matter of existing privileges, shall be deemed material transactions for the purposes of the application of this Law. The Board is empowered to determine, according to the nature of publicly held companies, material transactions, including the materiality threshold, and the procedures and principles that must be complied with in order for such transactions to be carried out or for such resolutions to be adopted. (2) The Board may impose an administrative fine where, within thirty days from the date of notification of the Board’s decision aimed at annulling transactions carried out without compliance with the obligations regulated under the first paragraph, the pre-transaction position is not restored in its entirety, and may bring an action for the annulment of such transactions within the framework of the provisions of Law No. 6102 concerning the annulment of general assembly resolutions.”;

>> Article 27 of the Capital Markets Law, which provides that “Where, as a result of a tender offer or otherwise, including by acting in concert, the shares held reach or exceed the ratio determined by the Board of the voting rights of a publicly held company, the persons holding such shares acquire the right to squeeze out the minority shareholders from the company. Such persons may, within the period determined by the Board, request from the company the cancellation of the shares of the minority shareholders and the sale to them of the new shares to be issued in exchange therefor. The sale price shall be determined within the framework of Article 24. (2) In cases where the squeeze-out right arises within the framework of the conditions set out in the first paragraph, a sell-out right arises for the minority shareholders. Such shareholders may, within the period determined by the Board, request that their shares be purchased for a fair price by the natural or legal persons holding the ratio of voting rights determined by the Board or more, and by those acting in concert with them. (3) Article 208 of Law No. 6102 shall not apply to publicly held companies. (4) The procedures and principles concerning the application of this article shall be determined by the Board.”;

>> The relevant secondary legislation put into force within the scope of the Law on the Establishment of Turkey Wealth Fund Management Joint Stock Company and on Amendments to Certain Laws,

shall not apply.

3) The provision of Article 202 of the Turkish Commercial Code, which provides that “(1) a) The controlling company may not exercise its control in a manner causing loss to the controlled company. In particular, it may not induce the controlled company to enter into legal transactions such as the transfer of business, assets, funds, personnel, receivables and debts; to reduce or transfer its profits; to restrict its assets by rights of a real or personal nature; to assume liabilities such as the giving of suretyship, guarantees and avals; to make payments; to adopt decisions or measures adversely affecting its productivity or activity, such as failing without just cause to renew its facilities, restricting or halting its investments; or to refrain from taking measures that would ensure its development; unless the loss is actually compensated within that financial year, or a claim right of equivalent value is granted to the controlled company by the end of that financial year at the latest, specifying how and when the loss will be compensated. b) Where the compensation is not actually effected within the financial year or an equivalent claim right is not granted within the applicable period, each shareholder of the controlled company may request the controlling company and those of its board members who caused the loss to indemnify the company’s loss. The court may, upon request or of its own motion, where this would be equitable in the specific case, decide, in lieu of damages, in accordance with the provisions of the second paragraph of this article, that the shares of the claimant shareholders be purchased by the controlling company, or upon another appropriate and acceptable remedy. c) Creditors may likewise, pursuant to subparagraph (b), request that the company’s loss be paid to the company, even if the company has not become insolvent. d) No damages may be awarded where it is proved that the transaction causing the loss could also have been carried out, or refrained from, under the same or similar conditions by the board members of an independent company acting with the diligence of a prudent manager observing the company’s interests in accordance with the rule of good faith. e) Articles 553, 555 to 557, 560 and 561 shall apply by analogy to actions to be brought by shareholders and creditors. Where the registered office of the controlling undertaking is situated abroad, the action for damages shall be brought before the commercial court of first instance of the place where the registered office of the controlled company is situated. 11026 (2) In transactions carried out through the exercise of control and lacking a clearly comprehensible just cause from the standpoint of the controlled company, such as mergers, divisions, changes of type, dissolution, the issuance of securities and material amendments to the articles of association, shareholders who cast a dissenting vote against the general assembly resolution and have it recorded in the minutes, or who object in writing to resolutions of the board of directors on these and similar matters, may request from the court that the controlling undertaking indemnify their losses or purchase their shares at least at their stock exchange value, if any, or, if no such value exists or the stock exchange value is not equitable, at their true value or at a value to be determined in accordance with a generally accepted method. In determining the value, the data of the date closest to the court’s decision shall be taken as the basis. An action for damages or for the purchase of shares shall become time-barred two years from the date on which the general assembly resolution was adopted or the board resolution was announced. (3) Upon the bringing of the action provided for in the second paragraph, it shall be ordered that an amount of money covering the claimants’ probable losses or the purchase value of the shares be deposited, by way of security, with a bank to be determined by the court in the name of the court. So long as the security is not deposited, no transaction may be carried out in relation to the general assembly or board of directors resolution. Where the actions provided for in the first and second paragraphs of this article are brought in bad faith, the defendant may request from the claimants joint and several compensation of the loss suffered and the deposit of security with the court. (4) Other rights granted to shareholders and partners in mergers, divisions and changes of type are reserved. (5) The managers of the controlled company may request the controlling undertaking to assume, by way of a contract, all the legal consequences of the liabilities that may arise towards shareholders and creditors by reason of the provisions of this article.”, shall not apply to the Turkey Wealth Fund, the Company, the sub-funds and the other companies established by the Company, to the companies over which control is established in their favour, directly or indirectly, alone or together with third parties, or — limited to the transactions relating to the establishment of such control — to the parties to such transactions, their direct or indirect shareholders, affiliates and subsidiaries.

VI. Amendments and Provisions Made in Other Laws

1) The third paragraph of Article 4 of the Law on Travel Agencies and the Association of Travel Agencies has been amended to read as follows: “An operating licence shall be issued to legal persons and shall be specific to a single undertaking. Subject to obtaining the permission of the Ministry, an operating licence may be transferred to another legal person independently of the agency’s trade name, and the transfer shall take effect on the date on which it is recorded in the Ministry’s register. The agency trade name appearing in the transferred operating licence, or any trade name liable to cause confusion therewith, shall not be made available for use by any travel agency for a period of ten years. No new operating licence shall be issued within three years to the legal person transferring the operating licence. The procedures and principles concerning the transfer of licences shall be determined by the Ministry.”

2) By the addition of an article to the Public Financial Management and Control Law, it has been provided that, in cases of force majeure, no sanctions such as default interest, late payment surcharges or penalties shall be applied to the persons concerned by reason of delays that may occur in transactions carried out through the information systems of the Ministry of Treasury and Finance.

3) A provisional article has been added to the Anti-Smuggling Law reading as follows: “(1) Until 30/9/2020, medical devices and materials, test materials, plasma, ethyl alcohol, isopropyl alcohol, glycerol, masks, gloves, overalls, shoe covers, cologne, disinfectants, disinfection devices, respiratory devices, intensive care materials, medicines, vaccines, first-aid equipment and supplies, and the devices and materials used in their production, which are directly connected with the fight against an infectious epidemic disease and which have been seized within the scope of this Law, may, where there is no need to retain them as evidence, after a sufficient sample has been taken and, where this is not possible, after all distinguishing features have been determined, be requested to be allocated by the seizing administration or the relevant public institution from the judge during the investigation phase or from the court during the prosecution phase. Decisions rendered upon such request may be appealed against. Where the goods whose allocation has been approved by the judge or the court are ordered to be returned at the conclusion of the investigation or prosecution, the amount remaining from the current market value of the goods after deduction of customs duties and fines, if any, shall be paid to the owner of the goods by the institution to which the allocation was made. (2) The President is empowered to extend the period set out in the first paragraph by up to 3 months.”

SOMS LEGAL LAW OFFICE

Musa Kurtulmuş

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