Amendments have been made to the Capital Movements Circular

Pursuant to the letter of the Ministry of Treasury and Finance of the Republic of Türkiye, dated 04/07/2025 and numbered 4080423, significant amendments have been introduced into the Capital Movements Circular (the “Circular”).

Pursuant to Article 6, paragraph 12 of the Circular, with respect to convertible debt agreements entered into between residents of Türkiye and foreign funds or licensed angel investors, if the agreement stipulate that the debt shall be converted into equity under certain conditions, the general rules on foreign currency loans set forth under Article 14 of the Circular shall not apply to the foreign currency transfers relating to such transactions. However, in order for this exemption to apply: (a) the agreement must explicitly provide that the debt amount transferred will be added into the share capital within a maximum period of 12 months from the date of transfer; (b) the agreement must stipulate that, except in cases of dissolution or liquidation of the company, such amounts shall in any event be converted into equity and shall not continue as debt; and (c) the agreement must provide that all of the debt amount transferred will be added into the share capital.

Under the Regulation on the Identification and Certification of Technology and Innovation-Oriented Enterprises, the issuance of a techno-entrepreneurship badge for SMEs had been introduced. With the addition of Article 6, paragraph 13 to the Circular, for residents of Türkiye holding such a techno-entrepreneurship badge, the maximum period stipulated for the incorporation into share capital of the amounts transferred under foreign currency-denominated convertible debt agreements as provided above shall be applied as 36 months.

In addition, an amendment has been introduced regarding the scope of foreign exchange revenues. Revenues derived from commercial activities specified under Article 15 of the Circular and obtained from non-residents are considered as foreign exchange revenues. The scope of such revenues has been expanded to include “revenues generated from the sale by residents of Türkiye to non-residents of carbon credits verified by internationally accredited institutions”.

Finally, within the scope of the Industrial Competency Evaluation and Support Program (EYDEP) of the Presidency of Defense Industries, for companies holding a level (A) or (B) certificate, it has been stipulated that with respect to the utilization of foreign currency loans: In project financing, the total amount of the loan intermediated shall not exceed the project cost, and in the procurement of goods or services, the total amount of the loan intermediated shall not exceed the value of the goods or services to be procured. Within this context, it has been made mandatory to submit supporting documents such as contracts, letters of order, pro forma invoices, invoices, etc. to the intermediary bank.