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ARTICLE · 22 MARCH 2019

Intragroup Loans

Within this scope, under the TCO, in both commercial and regular loans, interest is allowed.

TurkeyCorporate/Commercial Law

Under Article 241 of Turkish Criminal Law No. 5237 ("TCL"), lending for the sake to gain profit is forbidden. However, in practice, for the purpose of financing affiliated companies, intragroup loans are a frequently employed method.

The intention is to eliminate such prohibition as foreseen under the TCL, through an amendment to be introduced to Additional Article 1 of Law on Financial Leasing, Factoring and Financing Companies No. 6361 ("Law on Financing Companies"), through the Legislative Proposal on Amendments on Certain Law and Decree Laws dated 30.11.2018 and numbered 2/1369 ("Legislative Proposal").

Under this Article, the current legal status of intragroup loans, and the status to be construed through the Legislative Proposal, are evaluated.

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