After a five-year struggle to create a new legal framework for local companies, the Turkish Commercial Code (TCC), aimed at improving transparency and access for foreign investors, will be put into effect from July 1, 2012. According to the new corporate governance rules, minority shareholders in Turkish companies will benefit from increased protection of their rights and will have the option to call for special audits and general board meetings. What is more, such meetings will also be available to access online, enabling wider involvement of investors based overseas.

The transparency of companies based in Turkey will be increased by a rule pertaining to the creation of web pages, which requires companies to show information such as financial statements, audit reports, shareholder decisions and salaries of the top management at the local entities on a website. Under the new rules, companies are also required to introduce book-keeping in accordance with International Financial Reporting Standards – a legal framework on financial statements currently practiced by 113 countries around the world.


Foreign investors can also expect to enter the Turkish market more easily through mergers and acquisitions, since the M&A codes have been clarified. Significantly, the new Turkish trade law, which is obligatory to all local companies, is more inclusive than the equivalent laws adopted by EU membership countries, where certain exemptions exist, especially in the case of smaller companies.

The introduction of the new trade laws has been praised by experts as a significant step in opening up Turkey for foreign capital. The Turkish branch of PricewaterhouseCoopers, a global consultancy which was involved in preparation of the TCC, said in its report New Turkish Commercial Code – A Blueprint for the Future: “The new law redefines the rules governing commercial life in Turkey”, and significantly increase the levels of stability of doing business in the country.

Hayrullah Dogan, partner at local law firm Denetim Turkey, agrees that the TCC will lead to a tectonic shift of the business climate in the country. “With the new law, book-keeping has shifted from just calculating taxes to promoting transparency in all Turkish companies. It constitutes the final link needed to secure crossborder investment to the country,” he said.

According to Mr Dogan, with the new commercial code in place, Turkey should see an increase in international joint ventures, along with more initial public offerings and higher capital gains. Yet, concerns are being raised that the much-welcomed law still needs minor improvements, especially in the realm of over-regulation, given that TCC consists of more than 1500 articles. Nevertheless, the fact that Turkey has opened its doors so widely for foreign investors should provide a sharp increase in capital flows, especially from crisis-ridden western Europe.