Financial Assistance Becoming More Cumbersome Under Turkish Law

Frequently foreign and local lenders and investors inquire whether financial assistance is valid and enforceable under Turkish law. Another layer of complication is added, when the entity providing financial assistance is a publicly held company, i.e., a Turkish company, whose shares are listed on the Istanbul Stock Exchange.

How to Respond to the Question on Financial Assistance?

The answer to this question depends on the changes that are being introduced by the new Turkish Commercial Code No. 6011 that will replace the existing commercial code upon its effective date of 1 July 2012 (the "New Code"). The very recent amendment introduced to the applicable capital markets legislation on 30 December 2011 further imposes on publicly held companies that are providing financial assistance the requirement to obtain proper corporate authorization in order for the security to be valid and binding.