Recent Developments
The Decree Amending the Decree No. 32 (the “Decree No. 32“) on the Protection of the Value of the Turkish Currency (the “Amending Decree“) was published in the Official Gazette dated 15 March 2025 and numbered 32842.
What Does Amending Decree Offer?
The material amendments made with the Amending Decree can be summarized as follows:
- Prior to the Amending Decree, cash exceeding 25,000 Turkish liras could be taken out of the country only after filling in a cash declaration form. The Amendment Decree updated this amount to 185,000 Turkish liras.
- The Amending Decree ends the debate as to whether derivatives transactions require the intermediation of Turkish dealer-brokers. Accordingly:
- Turkish residents, while trading derivatives abroad, must transact through banks or intermediary institutions authorized by the Capital Markets Board of Türkiye (the “CMB”).
- However, this requirement will not apply to derivatives transactions carried out with financial institutions abroad by Turkish residents upon their own initiatives provided that such financial institutions have not engaged in any marketing, promotion or solicitation targeting persons resident in Türkiye (i.e. on an unsolicited basis). Nevertheless, transfers of consideration for these transactions will have to be made through Turkish banks.
- The requirement to conduct leveraged transactions and derivatives transactions subject to the same legal regime as derivatives transactions through intermediary institutions authorized by the CMB is retained and it is specifically prohibited to make any fund transfer abroad in connection with these transactions.
- The direct shareholders or group companies of the Turkish resident borrowers of foreign currency loans will be able to issue foreign currency denominated guarantees and sureties to Turkish resident banks and financial institutions, as security for these loans. In its letters dated 27 December 2019 and 22 February 2021 to the Banks Association of Türkiye, the Ministry of Treasury and Finance (the “Ministry“) stated that Turkish residents cannot issue foreign currency denominated guarantees and sureties in favor of Turkish residents and that Turkish banks must not accept such guarantees and sureties. It is understood a contrario from the new regulation that Turkish resident persons will not be able to issue guarantees and sureties in favor of other Turkish resident persons if such guarantees and sureties do not fall within the exception above.
- In the event that the foreign currency denominated guarantees and sureties provided by the direct shareholders or group companies of Turkish resident borrowers of foreign currency loans from Turkish resident banks and financial institutions are converted into foreign currency cash loans for collection purposes, the eligibility of the providers of such guarantees and sureties to use foreign currency cash loans will also be one of the issues to be investigated.
Conclusion
The Amendment Decree is expected to end the debate on one of the two issues that have long caused controversy in practice, and to spark a new debate on the other. The Amending Decree clarifies the legal regime applicable to derivatives transactions conducted abroad. On the other hand, with the Amending Decree, the interpretation of the Ministry in the above-mentioned letters has become part of the legislation. The Ministry’s view that guarantees and sureties by Turkish resident persons could not be provided in foreign currency was based on Article 50 of the Capital Movements Circular. This provision essentially deals with non-cash loans provided by banks and financial institutions resident in Türkiye. However, such assurances provided by persons other than banks and financial institutions do not qualify as non-cash loans, but as sureties and undertakings of third parties under the Turkish Code of Obligations No. 6098. Therefore, these assurances provided by these persons do not fall within the scope of the Capital Movements Circular and covering them in the Decree No. 32 will light the blue touchpaper of another technical legal debate.
