The Period for Not Considering Lease, Depreciation, and Personnel Expenses, as well as Foreign Exchange Losses, in Capital Loss or Technical Insolvency Calculations Has Been Extended

GENERAL FRAMEWORK OF TCC ARTICLE 376

Article 376 of the Turkish Commercial Code (TCC), titled “Loss of capital, technical insolvency,” imposes significant responsibilities on company managers:

1. If HALF of the total of the capital and legal reserves is lost due to damages, the board of directors must immediately call the general assembly to a meeting and present remedial measures.

2. If TWO-THIRDS of the total of the capital and legal reserves are lost due to damages; unless the general assembly, which convenes immediately, decides to suffice with one-third of the capital or to replenish the capital, the company automatically dissolves.

3. If there are signs that the company is technically insolvent (assets are not sufficient to cover the creditors’ receivables), the board of directors must prepare an interim balance sheet and notify the court (file for bankruptcy).

EXCEPTION OF NOT CONSIDERING FOREIGN EXCHANGE DIFFERENCES AND CERTAIN EXPENSES (PROVISIONAL ARTICLE 1)

With Provisional Article 1, which was later added to the original communique published on 15.09.2018, certain flexibilities were introduced in TCC Article 376 calculations when evaluating the financial status of companies.

Latest Amendment (Extension to January 1, 2028):

With the latest amendment, the date “1/1/2027” in Provisional Article 1 of the Communique has been updated to “1/1/2028”.

Accordingly, until January 1, 2028, in the calculations made regarding the capital loss or technical insolvency situation within the scope of Article 376 of the Law (and made over the financial statements prepared according to Article 88 of the Law);

– The ENTIRETY of the foreign exchange losses arising from unfulfilled foreign currency obligations, and

– HALF of the total of expenses arising from leases, depreciation, and personnel expenses accrued in 2020 and 2021

may not be taken into account.

Principles of Application:

Calculations must be made in a way that avoids duplication in determining these amounts.

No accounting entry will be made in the financial statements regarding the calculations to be made within the scope of this exemption; this situation will only be shown in the footnotes of the financial statements for information purposes.

The Communique entered into force as of its publication date, October 10, 2026.