Technical Bankruptcy Under The Turkish Commercial Code

I. Introduction

The deterioration of a company’s (namely joint stock companies, limited liability companies and partnerships limited by shares are subject to this provision) financial standing and its legal consequences are governed by Article 376 of the Turkish Commercial Code numbered 6102 (published in the Official Gazette dated February 14, 2011 and numbered 27846 (“TCC”) and the Communiqué on the Procedures and Principles regarding the Implementation of Article 376 of the TCC published in the Official Gazette dated September 15, 2018 and numbered 30536 (“Communiqué”). When a company incurs losses that impair its capital and legal reserves (if any), or becomes insolvent (a condition commonly referred to as “technical bankruptcy”) the board of directors (“BoD”) and the general assembly of shareholders are legally obligated to take remedial measures to restore the company’s equity in accordance with Article 376 of TCC.