Pursuant to Banking Regulation and Supervision Agency Board Decree (“Decree”) dated 24.06.2022 and numbered 10250, there has been a limit determined by BRSA during supporting companies with utilizing credit limits by reasonable interests and conditions in order to ensure financial stability and provide manufacture, employment, investment for the companies.
In case a company is i) subject to independent audit if the ii) foreign currency cash assets (including gold, effective exchange rate, and foreign currency deposits in banks) in Turkish Liras are equivalent to more than 15 million Turkish Liras and if iii) the last 1 year’s net sales revenue or total assets equivalent Turkish Liras exceeds 10% (whichever is higher); the restriction shall be implied regarding the commercial loans as of 24.06.2022 and even in case the company has the loan limit, it is not allowed to utilize a cash credit in any kinds. In other words, companies that foreign currency assets do not exceed 15 million Turkish liras will not increase their foreign currency assets above 15 million Turkish Liras in case of loan usage; companies with foreign currency assets of more than 15 million Turkish Liras will not be able to use new cash Turkish Lira commercial loans in the event that such asset exceeds 10% of its actives/assets or sales revenue.
Companies which do not satisfy such 3 conditions simultaneously will not be considered within the scope of the Decree.
Pursuant to the Decree Numbered 32 on the Protection of the Value of Turkish Currency, in the event that companies satisfying all 3 above mentioned conditions but that are not able to use foreign currency loans can have the independent audit firm determine that there are foreign currency net position gaps within 3 months from the loan application date, they will be able to use cash commercial loans in Turkish Lira by presenting this to the bank.
In line with such a Decree, monetary assets such as securities issued in foreign currency by companies’ foreign residences, stock certificates, reverse repo carried out with foreign residences are included within the scope of 15 million Turkish Liras foreign currency cash assets of the companies. Within the framework of the Decree, the information and documents in order to use to determine the revenues or total assets of the companies will be approved and documented by the independent auditing firm. Concerning companies that are obliged to prepare conglomerate financial statements such determination will be carried out on the consolidated balance sheet.
Although the criterion in order to determine whether a company is subject to independent audit is Decree-Law numbered 660, the Decree of the Council of Ministers Numbered 2018/11597 issued pursuant to the Turkish Commercial Code Numbered 6102 banks also have the authority to determine this. Accordingly, banks can determine whether a company is subject to independent audit while extending cash commercial loans in Turkish Lira pursuant to the “Regulation on Loan Transactions” Pursuant to Article 9 titled “Documents to be regarded as account balance”. The exchange rate to be used in calculation while determining the foreign currency cash assets of the companies is buying rate of exchange of the Central Bank of the Turkish Republic, which will be taken as a basis for the calculation date.
In terms of all kinds of cash TL commercial loans; even if the limit is determined before the date of the Decree, the calculation of the balance increase to be made at the end of each month through loan transactions such as revolving, overdraft accounts or corporate credit cards will be considered as a new loan. Accordingly, i) in case of an increase in the balance compared to the previous month in the calculation to be made at the end of each month or ii) in case of a risk amount in the calculation to be made at the end of each month in overnight loans the company will submit the document confirming its status by the independent auditing firm to the bank.
Non-cash loans are not included in the Decree unless they are converted into cash loans such as Direct Debiting System. Restructurings to be made after 24.06.2022, Banks and financial institutions, real persons and real person shareholders of companies are not within the scope of the Decree.
Companies whose foreign currency cash assets in Turkish Lira equivalent value do not exceed 15 Million Turkish Liras will not be included in the loan restriction within the scope of the Decree. However, as of the loan application date of these Companies, in case they i) have an independent audit firm determining the current foreign currency cash assets and the total assets with net sales revenue of the last 1 year according to the most up-to-date financial statements, ii) declare and undertake that the Turkish Lira equivalent of their foreign currency cash assets will not exceed 15 million Turkish Liras during the term of the loan they will use, or that even there is an exceed, the higher instrument whether the total assets or the net sales revenue of the last 1 year will not exceed ten percent of the equivalent foreign currency, and iii) in order to ensure that the above mentioned declaration and undertaking are controlled by the bank, between the first 10 business days of each month, according to the previous month-end balance sheet, the foreign currency cash assets of the companies, the current value of the total assets and the net sales revenue of the last 12 months as of the end of the previous month should be given to the bank.
In the scope of this restriction the banks should update their loan agreements and receive undertakings that the compenies “shall submit all kinds of information and documents to the bank, upon request, for the determination and follow-up of the utilization of the loan in accordance with its utilization purpose” in order to determine that the loan is allocated in line with its purpose.
Hilal Şimşek, Attorney At Law