Significant Amendments Have Been Made in the Regulation on Shopping Malls

8/22/2022
Significant amendments have been made in the Regulation on Shopping Malls (“Regulation”) with the Regulation on Amending the Regulation on the Regulation on Shopping Malls, published in the Official Gazette dated August 18, 2022 and numbered 31927.
1. Definitions of “common income, common expense and management expense” have been included in the Regulation. The following definitions have been included in Article 3/1 of the Regulation:

“i) Common income: income from temporary leasing, advertising, marketing, cultural and artistic activities, phone base station, ATMs and other common use areas, and all kinds of income from advances collected within the scope of the third paragraph of Article 11.

j) Common expense: Common use area expenses that are related to common use areas (but not related to property of shopping mall) such as electricity, water, natural gas, non-renewal maintenance and repair, security, cleaning and health expenses and management expense,

k) Management expense: Expenses related to the duty of the payroll management personnel working in a shopping mall.

2. Expenses such as advertising, marketing and consultancy expenses, which do not fall within the scope of common expense and undocumented expenses cannot be requested from the enterprises.

Before the amendment, shopping mall managements could request a contribution fee other than common expenses, from enterprises for services regarding the common benefit, such as marketing and management, provided that it was stipulated under the agreements between the parties. From now on, even if it is set forth in the agreements, expenses do not fall within the scope of common expense cannot be demanded from the enterprises.

However, the agreement executed before 18 August 18, 2022, and having a provision to request contribution fee such as advertising, marketing and consultancy shall be valid throughout the term of the agreement. In case the agreement is renewed or its term is deemed to be extended, the said contribution fee cannot be collected.

Additionally, any expenses that are within the scope of common expense but not documented can no longer be requested from the enterprises.

3. Management expenses are included in the scope of common expenses.

With the amendment, management expenses, which were not within common expenses’ scope, are included in common expenses. However, as stated under the definitions, management expenses are limited to expenses related to the duties of the payroll management personnel working in a shopping mall.

4. Common expenses shall be distributed according to ratio of the sales areas of the retail enterprises in the shopping mall to total sales area of the shopping mall.

With this amendment, possibility of determining unanimously a different distribution method of expenses by the retail enterprises in the shopping mall and the management of shopping mall has been revoked. As of August 2022, common expenses shall be distributed according to the ratio of sales areas to the sales area of the shopping mall in all shopping malls.

5. Significant amendments have been made in the principles for the preparation of a common income and expense reports. These reports shall be audited by the independent audit firm and reported.

The management of shopping mall shall send common income and expense reports of the previous year to enterprises by the end of April each year. A copy of each of the income and expense documents and service agreements, which are the basis for the preparation of the report shall be submitted to retail enterprises within 15 (fifteen) days upon request.

The minimum requirements to be included in the report are detailed under Article 11/6 of the Regulation.

These reporting transactions and other transactions regarding the distribution of common expenses of the shopping mall management shall be audited and reported by the independent audit firm authorized by the Public Oversight Accounting and Auditing Standards Authority. This report shall be sent to enterprises by the end of July each year.

The independent audit firm that shall carry out the audit can be determined by the owner or management of a shopping mall. Independent audit expense shall not be collected from enterprises in the shopping mall.

6. Common incomes shall be used to cover common expenses of the year when collected. If the collection of common income in a calendar year is higher than total of common expenses, the portion exceeding the total of common expenses shall be used to cover the common expenses of next year.

It is stipulated that the common incomes shall be used for the common expenses of the year they are collected, and the exceeding common incomes (if any) shall be used to cover the next year’s common expenses.

7. Provided that an advance is received for common expenses, the deduction shall be made until the end of February following the year when the advance belongs.

Prior to the amendment, the advance received was deducted until the end of the year when it belongs, after the amendment, this deduction can be made until the end of February following the year when the advance belongs.