Recent Developments
The Law No. 7147 on the Turkish Development and Investment Bank Joint Stock Company (the “Law“) entered into force with its publication in the Official Gazette dated October 24, 2018.
What’s New?
- Established in 1999, the Turkish Development Bank Joint Stock Company will continue its operations as a development and investment bank under the title of the Turkish Development and Investment Bank Joint Stock Company (the “Bank“).
- The Law enables the Bank to conduct all development and investment banking activities, including supporting investments and projects related to sustainable growth; enabling the effective use of capital and fund sources; financing domestic, foreign and international joint investments; and undertaking profit sharing or financial leasing based loan transactions in line with Turkey’s development objectives.
- The Bank can be mandated by law or presidential decree in line with development plan and program and strategic plans. The President will determine the principles and procedures of such assignments.
- The Bank’s personnel will be hired under an employment agreement subject to the Labor Law No. 4857 (the “Labor Law“). Current personnel who are deemed public officers and who do not wish to continue their employment because they would be subject to the Labor Law will be appointed to another public institution if they notify the Bank within 90 days after the first general assembly.
- The Turkish Development Fund (the “Fund“) will be established indefinitely once the Bank prepares and registers the internal regulation. The internal regulation will determine matters such as the Fund’s structure, working principles and procedures, as well as the sub-funds to be established. Further, the Bank will conduct the Fund’s administrative, financial and operational transactions.
- The Fund and sub-funds established thereunder (i) will not be subject to the Capital Markets Law No. 6362 and the related secondary regulations; (ii) will not pay any transactions charges and any stamp tax for the documents prepared in the scope of their operations; and (iii) will be exempt from income and corporate tax.
- The companies and funds the Fund participates in will be audited. The Court of Audit must prepare an audit report for the companies and funds, which must be submitted to the Turkish Grand National Assembly.
- The Bank will not be subject to the principles and procedures regarding loan classification, loan tracking, reserve ratio and deposit payment determined by the Banking Regulatory and Supervisory Authority. Instead, the Bank’s board of directors will determine the Bank’s principles and procedures.
- The bank (i) will not pay any stamp tax, notary or deed registry fees for documents concerning loans they provide; (ii) will be exempt from various taxes for immovable transactions in line with its objectives or concerning the loans it provides; for transactions related to tenders it participates; for transactions related to loans it gets from abroad including bond issuance; and (iii) will not need to provide collaterals for any provisional injunction, provisional attachment or suspension of execution.
Conclusion
Pursuant to the Law, the Bank will continue its operations as a development and investment bank and establish the Fund. These structural changes aim at providing flexibility to the Bank in its operations paving the way for the Bank to play a more effective role for the Turkish economy.
