Category: Turkiye

Former Senior Associate ​​Engin Sahin has been promoted to Partner at the Postacioglu Law Firm.

Sahin has been with the firm since 2016, having joined the team as a Senior Associate. Before that, he was an Associate with Elig Gurkaynak Attorneys-at-Law, from 2015 to 2016, and with Taboglu Attorneys at Law, from 2012 to 2015. Since 2019, he is also an Advisor to the Board of Foton Yenilenebilir Enerji Ticaret Platformu.

Sahin holds bachelor’s and master’s degrees from University of Paris I: Pantheon-Sorbonne.

The board of the Banking Regulation and Supervision Agency (“the Board”) has announced macro-prudential measures over the course of this weekend, consisting of (i) the Board Decision regarding prohibition of commercial Turkish Lira loans to corporate borrowers subject to independent audit dated June 24, 2022 (“Board Decision”) and (ii) press release determining the scope and implementation of the Board Decision dated June 26, 2022 (“Press Release”). Accordingly, until a new decision to the contrary is introduced by the Board or the Central Bank, corporate borrowers being subject to independent audit and holding foreign currencies above certain thresholds will no longer be allowed to borrow commercial cash loans in Turkish Lira.

The Board stated that the foregoing macro-prudential measures were intended to ensure effective use of the credit systems, to prevent companies from purchasing foreign currency solely to preserve their foreign exchange position and to reduce and stabilize the fluctuations on the foreign exchange rates. That being said, the wide scope and long-winded wording of the Board Decision eventually required concise specification once the financial interpretations were of mixed and contradicting nature. Thus, the Press Release was announced on June 26, 2022, in order to eliminate the practical uncertainties.

Target of the Board Decision

Companies meeting each and all of the below stated criteria will be subject to the restriction and therefore will be prohibited from borrowing commercial Turkish Lira cash loans:

• Being subject to independent financial audit as per the Decree numbered 660 and other applicable regulations,
• Holding foreign exchange assets (including gold, foreign currency cash and foreign exchange deposits) exceeding the amount corresponding to TRY 15,000,000 (approximately $900,000 as of June 28, 2022) and
• Holding foreign exchange assets equivalent of which in TRY currency exceeds, whichever is greater, 10% of their total assets or annual net sales revenue.

Companies within the scope of restriction are not allowed to get commercial cash loans in Turkish Lira as of June 24, 2022 (“Date of the Board Decision”).

Exclusions and Exemptions

Companies that do not to meet either one of the foregoing criteria, real persons and real person shareholders of companies (regardless of the company’s status) are excluded from the restriction therefore are free to borrow cash loans in Turkish Lira.

Non-cash loans such as direct debit systems are deemed outside the scope of the restriction provided that they are not converted into cash loans.

Additionally, the companies that are prohibited from using foreign currency loans, as per the Presidential Decree No.32 on the Protection of the Value of Turkish Currency and other related regulations, may exceptionally borrow commercial cash loans in Turkish Lira limited to the amount of their three (3) months position deficit, although they meet each and all the foregoing criteria. For this, they should submit an independent audit company certifying a foreign exchange position deficit, where debts and liabilities in foreign currency are more than foreign exchange assets, within any three (3) months period following their loan application.

On a separate note, despite the fact that gold, effective foreign exchange and foreign exchange bank deposit should be considered as part of foreign exchange assets of companies; foreign currency denominated securities, debt instruments such as Eurobond and other financial assets issued by Turkish residents are not taken into consideration for calculation of foreign exchange assets. For the avoidance of doubt, instruments and share certificates issued by entities residing abroad or monetary assets such as reverse repo with the ones residing abroad are included in calculation of foreign exchange assets of companies.

Enforcement and Execution of the Restriction

• Necessary Supporting Documentation and Information To Make Assessments by Independent Audit Companies

The status of the companies will be determined based on total foreign exchange assets and figures of the audited “up-to-date financial statements”. For those obligated to prepare consolidated financial statements, such assessment is made through the consolidated financial statements. According to the Press Release, “up-to-date financial statements” refer to the financial statements that have been prepared per requirements of the Public Oversight, Accounting and Auditing Standards Authority.

• Continuous Notification Requirement

Companies that are not subject to the restriction on borrowing commercial cash loans in Turkish Lira in accordance with the restriction criteria and thresholds should (i) have independent audit companies assessed their current foreign exchange assets in cash, total assets as per their up-to-date financial statements and net sales revenue of the last fiscal year, (ii) declare and undertake that their foreign exchange assets in cash are not going to exceed TRY 15,000,000 (approximately $900,000 as of June 28, 2022) during the term of the borrowed loan or in the event that such threshold is exceeded, the foreign exchange assets will not exceed, whichever is greater, 10% of their total assets or annual net sales revenue, and (iii) submit the information and data as to foreign exchange assets in cash, total assets and their net sales revenue of the last 12 (twelve)  months as of the end of the previous month following the previous month-end balance sheet to ensure the efficient monitoring of the creditor financial institution within 10 (ten) business days of each month, as of the date of application to the commercial cash loan in Turkish Lira. In this regard, banks may request all types of documents as they deem necessary from their commercial customers to ensure that financial positions of their customers are not contrary to the restriction. 

As the foregoing requires assessments of independent audit companies, it might be inferred that the continuous notification requirement should be applicable to only the companies which are subject to independent audit but have not exceed the introduced thresholds.

• Types of Commercial Loans Falls Under the Restriction and Status of Current Loan Limits

All types of commercial cash loan disbursements, renewals of the existing loans or granting additional balance in Turkish Lira for the companies meeting the each and all criteria as explained above via various credit transactions such as revolving loans, overdraft accounts or corporate credit cards as explained above, following the Date of the Board Decision will fall under the restriction.

Spot commercial cash loans in Turkish Lira that have yet to be disbursed until the Date of the Board Decision but will be disbursed within the week of June 27, 2022, are exempted from any form of monitoring provided that the loan agreements have already been executed.

Implications of the Restriction and Conclusion

The Board Decision has made tremendous impact in Turkish financial markets as it was not an expected step and measure. On the other hand, the Board gives signals that such position will be maintained for the sake of economic stability and effectiveness. Accordingly, additional measures may be introduced unless the Central Bank and Turkish Government decide to change economic policy of Turkey.

Certain companies falling under the scope of the restriction that are in need of liquidity might opt for alterations on their financial statements in a fraudulent manner. Taking into consideration such tendency, the Board requires banks to warn their customers in advance, to monitor transactions of the customers and keep informed the Banking Regulation and Supervision Agency in case of suspicious and fraudulent transactions. It is also important to note that these conducts may lead to the crime of aggravated fraud per Article 158/(j) of the Turkish Criminal Code No 5237 in terms of the board of directors and other relevant executives of companies. 

In light of the above, all companies being subject to independent audit should scrutinize their financial position, investment plans, existing debts and liabilities as well as short-term and long-term fund needs as the restriction may limit their flexibility and opportunity to reach new loans and monetary resources, and should act as a prudent merchant in line with the applicable regulations.

By Gonenc Gurkaynak, Partner, Nazli Nil Yukaruc, Partner, Selen Ermanli Sakar, Senior Associate, and Beliz Inpinar, Associate, ELIG Gürkaynak Attorneys-at-Law

Former Pekin & Pekin Partner Hasan Yasar has joined Kolcuoglu Demirkan Kocakli as a Partner.

According to his new firm, Yasar specializes in capital markets transactions, electronic money, investment and payment services, insurance products, and crypto markets.

Before joining Kolcuoglu Demirkan Kocakli, Yasar spent over nine years with Pekin & Pekin, joining in 2013 as an Associate and being promoted to Senior Associate, in 2015, and then to Partner and Head of Capital Markets, in 2021. Earlier, he spent almost four years with the Eryurekli Law Office as an Attorney, from 2009 to 2013. Yasar is a graduate of the Ankara University School of Law.

“We welcome Hasan as our firm’s eighth partner and look forward to his continued success in our growing firm,” Kolcuoglu Demirkan Kocakli announced.

Turkish citizenship can be acquired in several ways, including by marriage or employment or living for a certain period of time. Another option is making investment in the country. Accordingly, those who fulfil the requirements set out in the law can easily get the citizenship after filing the required documents.

Although the most popular option for citizenship is to buy at least US$ 400,000 worth real estate, there are several other opportunities introduced by the Turkish Citizenship Law No. 5901. In this respect, the applicable legislation proposes the following investments options to foreigners to qualify for Turkish citizenship:

• Investment of Fixed Capital: Having invested a fixed capital investment at least for an amount of US$ 500,000.00 or its equivalent in any other currency (excluding TRL); and determination of such investment by the Ministry of Industry and Technology.
• Purchase of Real Property: Having purchased a real estate for at least US$ 400,000.00 [the respective value was increased from US$ 250,000.00 to US$ 400,000.00 as of June 13, 2022] or its equivalent in any other currency (excluding TRL), provided that an annotation restricting the sale of the purchased real estate for the next 3 (three) years is made in the title deed registry. Accordingly, any foreign individual applying for Turkish citizenship based on purchase of a real estate must undertake not to sell the relevant real estate for 3 (three) years as of the acquisition.
• Providing Employment: Having generated employment for at least 50 (fifty) employees; and determination of such employment by the Ministry of Family, Labor and Social Services.
• Cash Deposit in Turkish Banks: Having deposited cash at least in the amount of US$ 500,000.00 or its equivalent in any other currency (excluding TRL) to banks validly incorporated and operating in Turkey, provided that deposit will be held with the relevant bank for the following 3 (three) years; and determination of such deposit by the Banking Regulation and Supervision Agency.
• Purchase of Public Debt Instruments: Having purchased public debt instruments with a value of US$ 500,000.00 or its equivalent in any other currency (excluding TRL), provided that the instruments are kept in reserve for the following 3 (three) years; and determination of such purchase by the Ministry of Treasure and Finance.
• Purchase of Real Estate Investment Fund Participation Share or Venture Capital Investment Fund Participation: Having purchased participation shares of real estate investment fund or venture capital fund established in Turkey in exchange of at least US$ 500,000.00 or its equivalent in any other currency (excluding TRL), provided that such participation shares are kept in the relevant fund for the following 3 (three) years; and determination of such purchase by the Capital Markets Board.

It is important to emphasize that Turkish citizenship acquired through one of the above investment categories provides the applicant the same status as Turkish citizens who have acquired citizenship by birth. That is to say, those who obtain Turkish citizenship by investment will have the same citizenship rights as enjoyed by other citizens.

Foreign Currency Requirement

As noted above, applicant must invest in a foreign currency other than Turkish Lira. Previously, the respective thresholds were also accepted in Turkish Liras. However, as per the recent amendments in the legislation, the investment has to be made only in a foreign currency, and the applicant is obliged to exchange invested foreign currency through a bank operating in Turkey. Moreover, relevant bank is required to exchange the foreign currency through the Central Bank of the Republic of Turkey. The investment amount will be kept in Central Bank by way of a Turkish deposit account or Turkish debt instruments for a period of 3 (three) years as mentioned above.  

Who is Eligible to Acquire Turkish Citizenship?

In addition to the foreign applicant, their spouse and their minor/dependent children are also eligible to obtain Turkish citizenship, without the requirement for separate investments by family members. In other words, the citizenship may be granted to the dependent family members of the applicant as well, without each of those members being required to fulfill the respective investment conditions.

Application and Time Frame

The process for acquiring Turkish citizenship by one of the above investment categories consists of three stages. These stages are as follows:

(1)   Fulfilling one of the investment requirements stated above; and obtaining receipt of a conformity certificate from relevant authority;

(2)   Obtaining a short-term residence permit [It is worth noting that foreign individuals meeting the investment thresholds requirements are not required to reside permanently in Turkey for a certain period of time. Contrary to the acquisition of Turkish citizenship based on permanent residency as per Turkish Citizenship Law, the mandatory period of permanent residence (i.e., 5 (five) years) does not constitute a criterion in the acquisition of Turkish citizenship by investment.]; and

(3)   Applying for a Turkish citizenship to the relevant authority.

It should also be noted that authorities may ask for several other documents from applicant depending on the investment option. In this regard, in order to benefit from the ‘purchase of real property’ option, a valuation report evidencing the value of purchased property must be obtained from an immovable valuation institution holding a license issued by the Capital Markets Board. Following the valuation report, the certificate of suitability must be obtained from the General Directorate of Land Registry and Cadaster of Ministry of Environment, Urbanization and Climate Change. Only those who have been granted with a certificate of suitability will be eligible to apply for Turkish citizenship.

Once an application is considered acceptable by the relevant authority, the respective applicant will be able to acquire Turkish citizenship upon decision of the President of the Republic of Turkey. Acquisition of Turkish citizenship by investment would take 3 (three) to 12 (twelve) months in total.

By Zahide Altunbas Sancak, Partner, and Sevinc Jafarova, Associate, Guleryuz & Partners

For the past decade, to boost its long-term economic outlook and service the needs of the growing population, Turkey has used the public-private partnership model extensively in the infrastructure sector.

Whilst the country has, to some extent, cut back on its regionally leading pipeline of mega-projects, there are ongoing plans to commission two new major schemes: Canal Istanbul and the Gebze-Halkali Railroad, along with a part of its investment plan legislation foreseeing municipalities’ water, wastewater, and solid waste facilities being operated by the private sector on a PPP basis.

Currency Crisis, Pandemic, and Everything After – The Perfect Storm

Whereas PPPs significantly contributed to Turkey’s economy and infrastructure, stability was adversely impacted for all parties by wider economic events in recent times. Just a few years after multiple megaprojects’ commencement, based on state volume and demand guarantees, calculated with forex assumptions, the Turkish lira faced a currency crisis, followed by the pandemic, and now the Russia-Ukraine war. The social results of the crises unavoidably impact the future of the projects and financing.

The market has expectations of adopting new regulations to apply to future projects for increased certainty in PPP investments. We will soon see whether the government will work on it or instead let the precedents and contracts manage the terms. In terms of current projects, what we anticipate next are contractual changes to adapt them better to the new economic and social realities. 

Changes in Project Duration

Term extension will be an important tool for existing projects to balance the economics to account for force majeure and other time and cost impacts of COVID-19. Usually, an extension is discussed and determined towards the end of the contract period for any event, to extend the operational period on a mutually beneficial basis but, in terms of project management, determination of such an extension at an earlier stage would be advantageous. There is opportunity for a win-win for both the public and private sectors in this respect.

Volume-Based Changes

On the impact of COVID-19 on end-user demand in live projects, given that many Turkish projects include demand guarantees from the government that sponsors and lenders can benefit from, changes in the level at which the demand guarantee takes effect may become more common. Would such changes be needed short, medium, or long term? For roads, for example, there may be some limited aversion to using public transport for a period and increased long-term home working could impact traffic volumes; for healthcare, the possible impacts of treating long-term consequences of COVID-19 (and other health conditions worsened by having gone untreated during the pandemic) may result in further increased demand in the future.

The recalibration of project economics or employing more radical changes, such as using pure availability and performance rather than demand-based payment going forward, may be among the solutions. That would generate valuable certainty for the market, as a perception emerged during the crisis that purely or primarily availability-based contractual arrangements for energy, transport, and infrastructure assets have proven more robust.

Changes in Scope

On completed projects, design and O&M specifications and even national regulatory standards may need to be changed – to account for social distancing requirements in project delivery or consumer use of project assets – and the increased capacity likely needed would have to be accounted for through a contractual change process on those projects.

Any Change in Services?

These changes are likely to be an issue in healthcare projects, including changes in functionality, capacity, or service specification, and will be a test of how flexibly PPP facilities have been designed to cope with large-scale systemic health problems. But it seems clear that the Turkish health infrastructure – including a massive recent program of project-financed major hospitals – has proven robust and vindicated the focus over many years on those projects.

PPPs, which have played a major role in Turkey for many years, will remain important due to the country’s pressing development needs, but we are likely to see changes in how such projects are delivered. Nevertheless, the Turkish model remains an influential one regionally, with particular benefits to Turkish project developers who honed their approaches in their domestic environment and are now positioned to export those skills regionally.

By Dogan Eymirlioglu, Partner, and Ece Cakirel, Senior Associate, Balcioglu Selcuk Ardiyok Keki Attorney Partnership

This Article was originally published in Issue 9.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Recent developments such as economic crises, pandemics, climate crisis, green transformation and the increasing importance of compliance with strategies such as European Green Deal necessitates a sustainable and innovative finance approach in the world and in our country’s capital markets. Therefore, the need for long-term funds to finance the investments required for the transition to a low-carbon economy and projects that contribute to environmental sustainability increases the importance of capital markets. In order to accelerate the sustainable development of our country, in the 2022 target announcements and draft guidelines of the Turkish Capital Markets Association and the Capital Markets Board; it is seen that innovative capital markets financing products related to environmental and social problems such as climate change are supported.

Within the framework of the 11th Development Plan, the 2021 Economic Reform Package and the Paris Climate Agreement priorities and actions, The Guidelines on Green Debt Instruments, Sustainable Debt Instruments, Green Lease Certificates and Sustainable Lease Certificates (“Guidelines”), which was opened for discussion as a draft in 2021, was accepted and published with the decision dated February 24, 2022. Thus, a concrete action was taken to increase the issuance of green debt instruments and green lease certificates in the capital markets, to increase investor confidence with the anticipated external evaluation obligations, and most importantly, to encourage more investments in sustainable projects.

What Does the Guidelines Regulate?

The Guidelines aims to make sure that green debt instruments, sustainable debt instruments, green lease certificates and sustainable lease certificates are issued in compliance with the best practices and standards in international financial markets. In this direction, this Guidelines is prepared on the basis and targets of the International Capital Markets Association (ICMA) Green Bond Principles and Paris Climate Agreement which are the most widely accepted and global standard regulations in financial markets in the field of green bonds.

The Guidelines sets down and regulates the core elements of and the principles that must be followed for green debt instruments and green lease certificates and the principles that must be followed in the domestic issue of these instruments and also in the foreign issue thereof.  The general bases, principles and obligations specified for green debt instruments within the scope of the Guidelines also apply to sustainable debt instruments, as well as green lease certificates and sustainable lease certificates.

Obligations determined for the issuers in the Guidelines shall be fulfilled by asset leasing company and/or fund user in green/sustainable lease certificate issues. As for the obligations imposed on issuers under the Guidelines, the responsibilities of asset leasing company and/or fund user are required to be determined and listed in the framework document, in course of applications submitted to the Capital Markets Board (“Board”). It is also stated that the capital market instruments covered by this Guidelines are subject to and governed by the related Communiqués of the Board in terms of general principles and issuance processes.

Sample framework documents and summary reports are included in the annex to the Guidelines.

Green Debt Instruments

As per the definitions in the Guidelines, green debt instruments are debt instruments, whose proceeds will be used exclusively for partial or total financing or refinancing of new and/or existing green projects in conformity with the eligible green project definition. Green bonds and lease certificates defined in the Communiqué on Lease Certificates numbered III-61.1 are also included in the scope of the Guidelines, and with the definition of the Board, green bonds are bonds that create resources for the financing of projects that provide positive benefits to the environment or climate. Lease certificates are the securities issued by the asset leasing company in order to finance the asset and right, and which enable their owners to be entitled in proportion to their share of the income obtained from this asset or right. Lease certificates, blue debt instruments, asset and mortgage-backed securities, asset and mortgage-backed securities and project-backed securities are also considered green/sustainable capital market instruments, provided that they meet the qualifications set forth in this Guidelines and that the obligations are fulfilled by the issuers.

Under Which Conditions Does a Debt Instrument Becomes a “Green Debt Instrument”?

The difference between green debt instruments and other debt instruments is that they are used for green projects. The projects that contribute to environmental objectives, such as mitigation of effects of climate change, adaptation to climate change, protection of natural resources, protection of biodiversity and control and prevention of pollution are considered as eligible green projects.

Provided that the below mentioned conditions are met, the issuer will be permitted to use the term ‘green debt instrument’, ‘sustainable debt instrument’, ‘green lease certificate’ or ‘sustainable lease certificate’ for the debt instrument to be issued:

(i)  The issuer shall confirm in the framework document that the issues covered by the framework document will be conducted in accordance with the principles set out in the Guidelines.

(ii)  Proceeds from the issue as specified in the framework document shall be used exclusively to finance or refinance, partially or wholly, new and/or existing green projects that meet the definition of green projects given in the relevant section of this Guidelines.

(iii)  The compliance of the green debt instrument framework document with the Guidelines shall be reviewed and evaluated by a second party opinion.

The framework document and the second party opinion shall be made public in the Public Disclosure Platform (PDP) if the issuer is a member of PDP and issuer’s internet site together with issue document relating to the ceiling of issue or prospectus.

What are the Core Components?

1) Use of Proceeds Obtained from the Issue: Funds obtained from the issue of green debt instruments shall be used for green projects as soon as possible, and the period predicted for use of said funds must be stated in the framework document. Eligible green project types are as listed below, without however being limited thereto:

• Renewable energy (including generation, transmission, devices and products), and
• Energy efficiency (such as new and renovated buildings, energy storage, central heating, smart grids, devices and products), and
• Prevention and control of pollution (including reduction of atmospheric emissions, greenhouse gas control, soil remediation, waste prevention, waste reduction, waste recycling and energy/emission-efficient wastes-to-energy conversion), and
• Environmentally sustainable management of living natural resources and land use (including environmentally sustainable agriculture, environmentally sustainable livestock, climate-related smart farm inputs such as biological plant protection or drip irrigation, environmentally sustainable fisheries and aquaculture, and environmentally sustainable forestry, and conservation or restoration of natural landscapes), and
• Conservation of terrestrial and aquatic biodiversity (including protection of coastal, marine and basin environments), and
• Clean transport (such as electric, hybrid, public, rail, non-motorised, multi-modal transport, infrastructure for clean energy vehicles, and reduction of harmful emissions), and
• Sustainable water and wastewater management (including sustainable infrastructure for clean and/or drinking water, wastewater treatment, sustainable urban drainage systems and river reclamation, and other forms of flood reduction), and
• Climate change adaptation (including information support systems such as climate monitoring and early warning systems, as well as efforts and initiatives aiming to make the infrastructures more resilient against effects of climate change), and
• Eco-efficient products, production technologies and processes and/or products, production technologies and processes adapted to circular economy (such as eco-labels or environmental certification, resource-efficient packaging and distribution, and development and promotion of environmentally sustainable products), and
• Green buildings that meet the requirements of regional, national or internationally recognised standards or certificates.

2) Project Evaluation and Selection Process: The evaluation and selection process should be explained to the investors along with the elements determined in the Guidelines. Of these elements, those that are not advisory but should be included in the framework document are (i) Relations of eligible green project types with such international covenants as United Nations Sustainable Development Goals and Paris Climate Deal; (ii) Information on how the issuer has determined that eligible projects fall within the scope of the green project types defined above, (iii) Description of qualitative and quantitative impact criteria to be used in order to indicate the important contributions made by each of the criteria used in selection of green projects to the related environmental objectives, (iv) Information of the processes implemented to identify and manage potential environmental and social risks associated with different types of green projects. As can be understood from this, the Board attaches great importance to international commitments in the field of sustainability.

3) Management of Proceeds Obtained from the Issue: As long as the green debt instrument is in circulation, net fund balance is managed by allocation to the eligible green projects in the relevant period. The part that should be managed by allocating it exclusively to the relevant project is important. The issuer shall disclose in the framework document how it intends to manage the unused net fund balance until allocation to the relevant green projects ( reinvestment principles in short-term financial instruments and liquid assets). Proceeds obtained from the issue of green debt instruments can be managed on a per-issue basis (i.e. for a single green debt instrument) or be aggregated for more than one green debt instrument (portfolio approach). 

4) Reporting: At least once a year starting from the date of issue and in any case, after allocation of the full amount of proceeds obtained from the issue, the issuers are required to make public the fund allocation report that is covering current information as to use of proceeds, as well as information on material events and developments, if any, at the issuer’s internet site, and if the issuer is a member of PDP, in PDP within the frame of the Board’s regulations pertaining to public disclosure of material events and developments. At least once a year starting from the date of issue and in any case, after allocation of the full amount of proceeds obtained from the issue, the issuers are required to make public by the aforementioned procedure in the form of an impact report covering the estimated and/or actual environmental impacts.

External Review

The external review service that the issuers can receive during the green debt instrument issuance process is offered in four basic groups. Issuers can receive external evaluation services in the form of (i) second-party opinion, (ii) verification, (iii) certification and (iv) green debt instrument scoring/rating, in accordance with the ICMA External Review Guidelines during the issuance process.

Issuers can obtain this service from organizations providing external review services that meet the criteria specified in the Guidelines, in line with the principles of honesty and integrity, objectivity, professional competence, care and confidentiality, as well as the professional standards and industry codes listed in the Guidelines.

Process in International Issuances

In applications filed for issuance of green debt instruments abroad, the framework document, prepared in accordance with the international green bond/green sukuk standards (standards) to which the issue is subject to, and approved by the board of directors, as well as the second-party opinion confirming the compliance of said document with the relied upon foreign standards are required to be submitted to the Board, and to be published, together with the issue document, in the issuer’s internet site, and if the issuer is a member of Public Disclosure Platform (PDP), in PDP.

Post issuance Turkish translation of fund allocation reports complying with the relevant international standards is required to be published in the issuer’s internet site, and/or if the issuer is a member of Public Disclosure Platform (PDP), in PDP, within three months following the date of preparation. Also in the green issuances to be realized abroad under this Guidelines, a separate ceiling of issue is required to be received from the Board.

Recent News in the Market

Türkiye Kalkınma ve Yatırım Bankası Anonim Şirketi has announced that they have provided loans of approximately 11 Billion 697 Million TRY to 476 renewable energy investment projects with an installed capacity of approximately 3,639 MW as of May 31, 2020. According to the PDP statement, it will take part as an issuer in green and sustainable debt issuances. It will be realized abroad, without public offering, through one or more issuances. It is planned to issue green and sustainable bonds, bills and similar debt instruments up to a maximum of 400 million USD or equivalent foreign currency or Turkish lira in total.

Türkiye İş Bankası Anonim Şirketi, with its statement published on the Public Disclosure Platform on 27.05.2022, announced that it will issue green and/or sustainable bonds, bills and debt instruments up to a total of 1.5 billion USD or its equivalent in other currencies, including Turkish Lira, to be issued abroad.

With the publication of the guidelines, it is predicted that these examples and green bond issuances will increase in the coming period.

By Onur Kucuk, Managing Partner, and Tansu Eksi, Associate, KP Law

Significant amendments were introduced into the Bankruptcy and Enforcement Code numbered 2004 [“BEC”] on November 30, 2021. One of these changes was regarding entitling debtors to sell their own seized property by consent.

In this respect, the Regulation on Granting the Debtor Sale Authorization [“Regulation”] [available in Turkish only] entered into force after being published in Official Gazette No. 31849 on May 28, 2022. The Regulation sets forth procedures and principles of Article 111/a of the BEC entitled “Granting Sale Authorisation to The Debtor”.

Debtor Must Apply to Enforcement Office Within 7 Days

According to the Turkish BEC, sequestration officer determines the value of the seized property after seizing it. Registered properties, however, is appraised by experts authorized by the Ministry of Justice.

At this stage, debtor wishing to be authorized for sale must submit their request to the enforcement office within seven days after receiving notice of valuation. Then, bailiff issues a certificate of authorization for debtor’s sale of their seized property. But first, the valuation procedure needs to be finalized.

Debtor Must Sell the Property Within 15 Days

The certificate allowing debtor to sale is valid for 15 days after delivery of the respective document to the debtor. Within this time frame, debtor must provide information on buyer’s identity to enforcement office, and buyer must deposit the agreed price to the bank account provided by the enforcement office.

The sale price must not be less than the total of (i) all costs made during the enforcement proceedings and (ii) higher of 90% of the appraised value or the total amount guaranteed with the property in question and the amount of privileged receivables.

Enforcement Court’s Approval Is Needed for The Sale to Be Finalized

The bailiff decides whether the consensual sale requirements have been met after the sale price has been deposited to the enforcement office. If the bailiffs’ assessment is affirmative, they forward the case to the enforcement court for finalization of the sale, and delivery of the property.

After examining the document, the enforcement court makes a definitive decision within ten days to approve or deny the consensual sale of debtor, without having a hearing. If court decides to accept the sale, buyer becomes the new owner of the property, and enforcement office transfers and delivers the property to the buyer. If court decides to reject the sale, enforcement office returns the sale price to buyer within three days.

Status of Seizures on Property

It should be underlined that the transfer and delivery of the property for sale occur free of any seizures. Accordingly, enforcement office lifts such encumbrances in accordance with the enforcement court’s ruling.

In principle, transfer and delivery costs belong to the buyer. The sum deposited by the buyer is paid to the creditors after the subject of sale is delivered to the buyer or after it is prepared for delivery.

Importance of the Regulation

The reason for motivating debtor to sell their property consensually rather than the property being sold through the enforcement channel is that the property can be sold for a higher price that way. Otherwise, the property could be sold in an auction for even half of their assessed value. By selling the seized property by consent, the debtor will be able to pay off a bigger portion of their debt since the price will be at least 90% of the estimated value. As such, both debtor and creditors will benefit from this new opportunity given that a greater portion of receivables would be paid.

By Tarık Guleryuz, Partner, and M.R. Cafer Koc, Legal Intern, Guleryuz & Partners

In addition to its big impact on our social life, WhatsApp messenger (“WhatsApp”) or any other online messaging platform also is used in business life in order for people to communicate quickly and easily. Nowadays, many people are sending work related messages to their colleagues, discuss work related topics, sharing work related documents or conducting their meetings via WhatsApp or any other online messaging platforms.

In addition to day to day communication between employer and employees over WhatsApp or any other online messaging platforms, employees even terminate their employment relationship with their employers by only sending a “text message” to their employers or even to their WhatsApp group of the company. In this regard, the 9^th Civil Chamber of the High Court of Appeals issued a decision on December 6, 2021 and with file numbers 2021/11924 E. and 2021/16153 K. stating that a resignation intent declared in a WhatsApp group of the company can be considered as proof of resignation event. This article seeks to shed light on the proof value of text messages sent through online messaging platforms including but not limited to WhatsApp in the event of termination of employment agreements by the employees.

Legal procedure for termination of employment agreements by employees

Employees may terminate their employment agreements with a unilateral declaration of intention. Within the framework of the Turkish Labor Law numbered 4857 (“Labor Law”), the employees may terminate their employment agreements with or without providing a notice to their employers based on the conditions of termination event.

According to Article 24 of the Labor Law, the employees may terminate their employment agreements based on a just cause (just causes are specifically listed in the Labor Law) without prior notice and with immediate effect. In case of non-existence of a just cause, the employees may terminate their employment agreements with a notice provided that minimum notification period determined under the Labor Law is observed. As per the Labor Law, the following minimum notification periods must be observed: (i) 2 weeks prior notice if duration of employment is less than 6 months, (ii) 4 weeks prior notice if duration of employment is between 6 and 18 months, (iii) 6 weeks prior notice if duration of employment is between 18 months and 3 years, and (iv) 8 weeks prior notice if duration of employment is more than 3 years. However, it is important to note that the afore-mentioned periods are minimum and may be increased by agreements executed between the parties.

It is important to note that there is no formal requirement for the employees’ declaration of intent for termination to be legally valid. Even though Article 19 of the Labor Law states that the employers are obliged to terminate the employment agreements with written notice, such requirement is not applicable to employees. Declaration of intention with regards to the termination of the employment agreement can be provided by a written letter to the employer or such intention can be verbally declared. In their declaration, the employees may specifically state that they terminate their employment agreements or they resigned. However, even if the employees imply that they terminate their employment agreements – in other words, not specifically indicate terminating the employment agreement – such implication will still be considered as a legally valid declaration of intention for termination.

In addition to the foregoing, as per Article 109 of the Labor Law, all of the notification under the Labor Law shall be made in written form and in exchange of signature of the recipient. However, in terms of termination of the employment agreement, this is not a condition for validity but only a condition for proof. Therefore, in case where the employment agreement is terminated by an employee, such written form requirement stipulated under Article 109 does not affect the validity of the termination. However, written termination letter is always highly recommended for the employees for the purpose of proof.  

The summary of the decision

The decision of 9^th Civil Chamber of the High Court of Appeals dated December 6, 2021, is about a lawsuit filed against the plaintiff’s former employer for demanding severance payment, overtime payment and payment in lieu of notice due to unlawful termination of the employment agreement by the former employer.

In the lawsuit filed before the first instance court, the plaintiff claimed that his employment agreement was unlawfully terminated by his former employer and claimed (i) severance payment, (ii) overtime payment and (iii) payment in lieu of notice. In its defense, the defendant rejected all of the claims of the plaintiff and stated that (i) this lawsuit cannot be filed for unspecified claim amount and (ii) the demand for overtime payment is time barred. The first instance court decided that the employment agreement was terminated by the defendant unlawfully.

The defendant filed an objection against the decision of the first instance court, before the regional court of justice. The appeal court rejected the application of the defendant on the grounds that the decision of the first instance court is in compliant with the information and documents provided to the lawsuit file and with the applicable legislation. Upon the decision of the appeal court, the defendant appealed against the decision before the High Court of Appeal.

In its decision, the High Court of Appeal stated that (i) the plaintiff sent a message to WhatsApp group of the company, declaring that he ended his employment relationship with the company and (ii) code 3 (code for resignation) was used in the statement of cease of employment. Therefore, the High Court of Appeal ruled that the plaintiff did not earn the right to demand the payment for severance and payment in lieu of notice since the employment agreement was terminated by the plaintiff (employee). As a result, 9^th Civil Chamber of the High Court of Appeals considered a resignation intent declared by the employee in the WhatsApp group of the company as a proof of resignation.

The evaluation of the decision from employment law perspective

In making an assessment on whether the employment agreement was terminated by the plaintiff (the employee) or by the defendant (the employer) in the case at hand, WhatsApp message sent by the employee to the WhatsApp group of the company had great importance. As we explained above, under Turkish law, there is no specific form requirement for termination declarations of employees. Therefore, even if an declaration of intention of the employee with regards to the termination of his/her employment agreement is in a written form, or is verbally shared, or is provided via a text message over a WhatsApp group, such declaration will be considered legally valid termination declaration under Turkish law.

As it is also clearly stated in the decision of the High Court of Appeals, the plaintiff (employee) terminated his employment relationship with his former employer on his own free will via text message over WhatsApp group of the company. In line with the text message sent by the plaintiff to WhatsApp group, the employer issued the statement of cease of employment of the plaintiff to submit this statement to Social Security Institution and used the code 3 which is a code for resignation in the preparation of the statement. In other words, the legal procedure that shall be followed in case of resignation is properly followed in the case at hand.

Conclusion

In light of the aforementioned decision of the High Court of Appeals and considering the legal framework concerning the subject matter herein, a text message sent by the employee to the employer or to WhatsApp group (or any text message group) of the company is considered as a valid termination declaration for the employees. Even though Turkish employment law strictly regulates the legal procedure of termination of the employment agreement by the employer (i.e. written form requirement for termination declarations of the employers), there is no form requirement for termination declarations for the employees.

By Gonenc Gurkaynak, Partner, Ceyda Karaoglan, Counsel, Tugba Uluay, Counsel, and Isil Ertekin, Associate, ELIG Gürkaynak Attorneys-at-Law

On June 7, 2022, the Turkish Medicines and Medical Devices Agency (“Agency”) published the Draft Guidelines on Packaging Information and Legibility of Foods for Special Medical Purposes (“Legibility Guidelines”) and the Draft Guidelines on New Health Claim Applications (“Application Guidelines”). 

The Legibility Guidelines is indicated to be based on the Regulation on the Licensing of Foods for Special Medical Purposes, and aims to provide the rules and procedures of services and operations to be carried out regarding packaging information and legibility in food license applications for special medical purposes. It defines foods for special medical purposes as all foods that are specially formulated and obtained by industrial methods to be used under medical supervision in order to regulate patient diets (including infants) who have limited, decreased or impaired capacity to take in, digest, absorb, metabolize and remove nutrients or metabolites from the body and whose dietary management cannot be achieved through a normal diet.

The Legibility Guidelines classifies the common technical documentation format in two main modules, consisting of (i) information on packaging and foods for special medical purposes and (iv) the legibility of the packaging information. In the first section, the Legibility Guidelines provides general information on the replacement and specification of foods for special medical purposes, components, warnings and storage. In the second section the Legibility Guidelines lays out information regarding outer and inner packaging. Accordingly, the packaging information of the product should be in line with the specified articles before notifying the Agency.

The Agency has invited concerned parties to submit their comments for the Legibility Guidelines through the e-mail address tıbbi.beslenme@titck.gov.tr until June 27, 2022.

The Application Guidelines, on the other hand, aims to provide the rules and procedures regarding a new health claim application in accordance with the provisions of the Regulation on the Use of Health Claims which is still in its draft form. It covers natural and legal persons applying for new health claim permits.

Per the Application Guidelines, the application must be conveyed in compliance with the table specified in Annex-1 and submitted to the Agency with the Application Form in Annex-2. In order to fulfill a valid application, the Application Guidelines provides a set of requirements. Accordingly, each application should be made for only one relationship between a single declared effect and a nutrient, other elements, food or food group; to indicate the regulation to which the health claim is related. For scientific data, the applicant must submit a summary of the relevant data, and specify whether it is from an appropriate human study or non-human study. The applicant must disclose the cause and effect relationship between the food and the consumption. It is also required to demonstrate the level of representation of the specific working groups from which the evidence and data is obtained. Finally, the Agency provides information and guidelines to companies and natural persons for a new health claim application and the required information and its legibility for packaging.

The Agency has invited concerned parties to submit their comments for the Application Guidelines through the e-mail address bdud.saglikbeyani@titck.gov.tr until June 24, 2022. 

By Gonenc Gurkaynak, Partner, Ceren Yildiz, Partner, Nazli Gurun, Associate, and Bilgehan Korucuoglu, Associate, ELIG Gürkaynak Attorneys-at-Law

Partners Ozan Karaduman, Merve Karaduman, and Filiz Toprak Esin have announced that the Karaduman Law Firm and Esin Legal have merged in May 2022 and will operate under the Karaduman & Esin Law Firm brand.

Specializing in IT and telecoms, data privacy, and corporate and M&A, Ozan Karaduman was a Partner at the Karaduman Law Firm between 2020 and 2022. Earlier, he spent over 13 years at Gun+Partners, having first joined as an Associate in 2007, and being promoted to Senior Associate, Managing Associate, and Partner in 2012, 2015, and 2018, respectively.

Merve Karaduman has expertise in litigation and dispute resolution and was previously a Partner at ​​the Karaduman Law Firm, from 2014 to 2022. Before joining the firm, she was an Attorney-at-Law at Gun+Partners from 2009 to 2014.

Esin specializes in corporate and M&A, competition law, and anti-corruption and compliance matters and founded Esin Legal in 2021. Earlier, she spent over 15 years at Gun+Partners from 2006 to 2021, having first joined as an Associate and being promoted to Senior Associate, Managing Associate, and Partner in 2013, 2015, and 2020, respectively. In 2010, she also worked for AstraZeneca Turkiye, on secondment, as a Legal Counsel.

“All three partners have the same educational background in Galatasaray University and years of experience working together in one of the largest law firms in Turkey previously, they have the same vision and discipline in working with international clients and are sure of their harmony and ability in providing high-quality services in various practice areas,” the new firm announced.