Dündar Sır Quarterly 2021/1

The Quarterly is prepared every quarter of a year in order to point out significant legislative amendments under Turkish law and the developments in case-law.
The Quarterly is prepared every quarter in order to point out significant legislative amendments under Turkish law and substantial case laws.

1. A Free Trade Agreement between Turkey and the United Kingdom has entered into force as of January 01, 2021.
The purpose of the Agreement is to ensure that tariff-free trade between Turkey and the United Kingdom will continue without any interruption.

As is known, the United Kingdom officially left the European Union on January 31, 2020, and a transition period was set forth until the end of 2020. On December 24, a week before the end of transition period, the United Kingdom and the European Union (“EU”) reached a deal.

Since the United Kingdom would no longer be a party to the Customs Union to which Turkey is also party through the Customs Union Agreement dated 1995, BREXIT would result in loss of or decrease in trade volume between Turkey and the United Kingdom. In order to secure the continuity of the existing trading terms between two countries, the United Kingdom and Turkey signed a Free Trade Agreement (“Agreement”) on December 29, 2020.

You can refer to below for important provisions set out under the Agreement:
  • The Agreement is applicable as from January 1, 2021 to ensure the continuity of trade without any interruption.
  • The Agreement covers all industrial and agricultural products.
  • The Agreement removes tariffs on industrial products, and scales and reflects existing concessions with the EU on agricultural products.
  • As per the Agreement the parties shall review the scope of the Agreement within 2 (two) years.

2. The procedural obligation authorized company representatives and real person merchants to issue a signature statement before the trade registry is removed.
The purpose of the amendment is to reduce the bureaucracy because according to the previous mandatory rule, an authorized company representative was required to be present before either trade registry or notary public to issue a signature statement. This obligation was creating difficulties for companies and their representatives.

On 20.02.2021, it was accepted that signatures of companies’ authorized signatories and real person merchants will be obtained from signature data in databases held electronically by the public institutions and organizations by registering such signature data in Central Trade Registry System. For those whose signatures are not in the relevant database, a signature statement will be issued by making a written statement before trade registry or a notary public.

3. Foreign exchange loans obtained from a bank located abroad by those real persons or legal entities who are residents in Turkey can only be sent to the bank account of the borrower of such loan as of 25.01.2021.
The purpose of the amendment is to clarify the ambiguity regarding where (to which/whose account) loans in a foreign currency can be transferred.

The Central Bank of the Republic of Turkey (“CBRT”) amended the Capital Movements Circular on 25.01.2021 in line with the direction of the Ministry of Treasury and Finance dated 25.01.2021. According to the amendment, the foreign exchange loans obtained from a bank located abroad and by a Turkish resident borrower can only be transferred to the borrower’s bank account.

4. Banking Regulatory and Supervisory Authority gave its approval to the banks to distribute dividends up to 10% of its net profit made in 2020.
The purpose of the amendment is to enable the banks to distribute dividend with the expectation of a recovery in the economy in 2021 because the Banking Regulatory and Supervisory Authority had not allowed the banks to distribute dividends made in 2018 and 2019, by considering the possible risks that may be experienced due to the developments in Turkey, global markets and the pandemic.

This year, banks will be able to distribute dividends up to 10% of the net profit in made 2020. While deciding on distributing profit and its ratio, each bank needs to take its special circumstances, the scope of the precautionary principle, and especially the capital adequacy ratio into consideration.

5. System of Instant and Continuous Transfer of Funds ("FAST") is at service as of January 8, 2021.
The purpose of the amendment is to enable customers to transfer funds between different banks (EFT) within seconds at any time of a day since EFT was not possible after 5.30 pm in Turkey.

However, for a temporary period, the money transfer through FAST is possible up to TRY 1.000.

6. The upper limit of utilization fees and prepayment fees that a bank can charge to their commercial clients are increased.

7. State support prices in renewable energy will no longer be in USD but TRY.
The purpose of the amendment is to eliminate FX risk because the Turkish government, for a long period of time, had given “purchase guarantees” determined in US-dollar/cent-kWh basis to the companies investing in renewable energy sector in order to both eliminate the energy deficit and increase renewable energy production. However, such guarantees have been creating an increasing burden on the budget after TRY experiencing considerable losses in value against the US dollar throughout the last three years.

Through the Presidential Decision dated January 30, 2021, state guarantee purchase prices to be applied for electricity generation plants based on renewable energy resources with RER certificate that will be put into operation from 1.7.2021 to 31.12.2025, are determined in TRY/kWh basis instead of US-dollar.

8. VERBIS registration deadline is postponed.
Due to ongoing negative effects of Covid-19, the Personal Data Protection Board (“Board”) postponed the deadline for real persons and legal entities processing personal data and meeting certain criteria to register with Data Controllers’ Registry (tr. VERBIS) until 31.12.2021. Failing to fulfill their VERBIS registration obligation can cause an administrative fine up to TRY 2.000.000.

9. The Board has approved letter of undertakings allowing the transfer of personal data to third countries for the first time.
Applications made by TEB Arval, a fleet management company, and Amazon Turkey for transferring personal data to third countries were approved by the Board. By this means, the letters of undertaking were evaluated by the Board for the first time and approval was given for data transfer to third countries. Therefore, we are of the opinion that these approvals are an encouraging sign for the future.

10. The Board published new decisions on its website on the dates 11.02.2021 and 02.03.2021. The summary of certain significant decisions are as follows:
(i) Decision No. 2020/212, Dated 02.03.2020 Regarding Sound Data: The Board has decided that data controller's use of a security camera with sound recording feature in the workplace is against the principle of proportionality in Article 4-ç of the Law entitled “General Principles”.
(ii) Decision No. 2020/915, Dated 01.12.2020 Regarding Biometric Data: The Board has ruled that the establishment of a fingerprint reading system to control clock-in and clock-out hours is contrary to the principle of proportionality in Article 4-ç of the Law entitled “General Principles”.
(iii) Decision No. 2020/915, Dated 08.12.2020 Regarding Right to be Forgotten: Within the scope of the right to be forgotten, the Board has determined the criteria to be considered in evaluating request for removal of the contents associated with the name and surname of the data subject in the search engine as follows: if data subject plays an important role in the society, accuracy of the information, if the information on the data subject has insulting, dishonorable, or slanderous nature , information being sensitive personal data, up-to-dateness of information, information causing prejudice on the data subject, publication of the information due to legal obligation, information related to a criminal offense.

11. The 2021 Rules of Arbitration of ICC entered into force as of January 1, 2021.
The 2021 Rules aim to ensure a more efficient, flexible and transparent arbitration process before ICC.

The 2021 Rules have become applicable since January 1, 2021, which superseded the 2017 Rules of Arbitration. The 2021 Rules have brought significant changes as below:
  • Expansion of scope of joinder and consolidation in the complex disputes,
  • Presenting tailor-made provisions for the first time for investment treaty-based arbitration (investor-state disputes),
  • Increasing threshold to USD 3 million from USD 2 million for Expedited Procedure, which is automatically applied,
  • Giving additional awards for neglected claims.

12. Durations of COVID-19 measures are extended.
(i) Short-term working allowance implementation period has been extended for the last time.
The implementation period of short-term working allowance has been extended for the last time until 31.03.2021, for those employers who applied for the short-term working allowance until 31.01.2021.

(ii) The period of prohibition on termination of employment has been again extended.
The period of prohibition on termination of employment contracts by the employer has been prolonged for 2 (two) months as from 17.03.2021.

(iii) Unpaid-leave period has been again extended.
The period of the right for employers to send their employees completely or partially on unpaid leave is prolonged for 2 (two) months as from 17.03.2021.

13. Regulation on the Remote Working (“Regulation”) entered into force as of 10.03.2021.
Remote working has become much more common all around the world with Covid-19 pandemic. Through the Regulation, details of remote working procedures and principles are prescribed.

As per the Regulation, a remote working contract can be executed directly, or an existing employment contract can be turned into a remote working contract upon the agreement of the parties. If an employee requests to work remotely in writing, such request is evaluated by the employer in terms of the nature of the business and employee, and other criteria to be determined by the employer. Employer shall notify employee of its decision within 30 days. Besides, if remote working is applied due to compelling reasons (e.g.: COVID-19), employee’s request or approval is not required for remote working.

14. Maximum coverage amounts for compulsory earthquake insurance is updated.
The maximum coverage amount for a building is increased to TRY 268.000 from TRY 240.000, regardless of type of building as per the Communiqué on the Amendment of the Compulsory Earthquake Insurance Tariff and Instruction Communiqué.

15. Withholding Tax applied to those who are engaged in years-long construction and restoration works are increased.
Withholding tax rates applied for construction and restoration works lasting several years are increased to 5% from 3% for payment amounts and down payments. New rates are applicable as of March 1, 2021.

16. Liquidity for upcoming IPOs is increased by Borsa Istanbul.
On February 12, 2021, Borsa Istanbul made certain changes its Listing Directive and increased minimum market cap of shares to be offered to the public. The purpose of the change is to take measures to prevent market manipulation that would result in losses for investors due to potential lack of liquidity of the shares to be offered to the public, considering the recent popularity of IPOs and also the increasing number of companies to be offered to the public.

i. 4th Civil Chamber of Court of Cassation, File No: 2020/1187, Decision Dated 09.12.2020: Whereas Notification Law No. 7201 (“Law”) provides that electronic notification is deemed to be served at the end of the fifth day as of the date arrival at addressee’s electronic notification address, the court ruled that date of opening and reading of the electronic notification is deemed as the date of service and legal period starts as of such day. Accordingly, the court rejected the request for appeal based on it was not filed in due time.

ii. Constitutional Court, File No: 2018/31036, Decision Dated 05.02.2021: The Constitutional Court published a decision on the rights of personal data protection and the freedom of communication regulated under the right of privacy.

The Constitutional Court considered that examination of a bank employee’s corporate e-mail correspondence and termination of the employment contract on the ground that he was working another job, did not violate his right to request the protection of the personal data and the freedom of communication.

The Constitutional Court stated that if the employee is informed explicitly, the employer cannot be expected to obtain the employee’s consent before examining the corporate e-mails. The Constitutional Court underlined that it is set forth in the applicant’s employment contract that corporate e-mail would only be used for business purposes and could be audited by the bank management without notice, and that the employee would not have any right for objection to this matter. To this extend, the Constitutional Court emphasized that the employee gave his consent to this supervisory authority by signing the employment contract.

iii. Constitutional Court, File No: 2020/13412, Decision Dated 12.01.2021: The detention measure imposed due to some posts shared on social media violates the right to freedom and security of an individual on the grounds that it could not be proven how the social media posts cause a concrete danger for public order.

Please do not hesitate to contact us if you have any queries regarding the above matters.
Best Regards.

Selim DÜNDAR, Attorney-at-Law