Turkish companies have to stay up-to-date with legislation changes influencing their operations. Contract law has lately undergone some notable changes with new developments. Whether your company is small or large, recognizing these changes will enable you to make wise judgments and stay out of the actual ground.
This article dissects the main amendments in Turkish contract law and their implications for companies. We shall keep it straightforward, unambiguous, and direct.
Key Highlights
- Contract Hardship: Businesses can change or terminate contracts under Article 138 if conditions change.
- Price Adjustments: Contracts can now contain clauses covering inflation and changes in the value of money.
- Foreign Currency Ban: Unless specifically accepted, most contracts must be in Turkish Lira.
- Force Majeure: Unexpected situations allow a contract to be suspended or terminated.
- Consumer Protection: Stricher guidelines for online contracts and return policies serve to protect consumers.
1. New Minimum Capital Requirements
This is important if you run a company in Turkey. The Turkish government has increased the minimum capital needed for some business forms. As of right now, this looks like:
- Joint-stock companies: 250,000 TRY—previously 50,000 TRY
- Non-public joint-stock companies with a registered capital system: 500,000 TRY (previously 100,000 TRY)
- Limited liability companies: 50,000 TRY (previously 10,000 TRY)
Companies have until December 31, 2026, to satisfy these new criteria. If they neglect this, they could be liquidated. This move affects both startups and established companies that have to modify their finances.
2. Foreign Currency Restrictions in Contracts
The Turkish government has imposed rigorous restrictions on contract usage of foreign currency. This action tries to steady the Turkish Lira. Agreements listed below cannot be made in foreign money anymore:
- Purchasing and marketing moveables or real estate
- Leases and rentals, especially those for vehicles
- Employment terms
- Contracts for services
- Contracts for construction
Unless an exemption exists, your company’s foreign currency contracts must be changed into Turkish Lira. Businesses working with foreign partners must be extremely cautious in their planning to prevent exchange rate problems.
3. Contract Adjustments for Unexpected Situations
Article 138 of the Turkish Code of Obligations lets companies change contracts when unanticipated developments almost make it impossible to satisfy them. Still, there are several restrictions:
- The event has to be unique and beyond what anyone anticipated.
- The party asking for adjustments cannot have brought about the problem.
- The circumstances must make contract fulfilment logically problematic.
- The party has to have not previously fulfilled their half of the deal.
- This shift enables companies to prevent unjustified losses upon unanticipated global or economic crises.
4. New Rules for Board Meetings and Elections
For businesses, specific fundamental governing guidelines have changed. These revisions affect the handling of leadership roles and board meetings:
- Elections for chairman and deputy chairman let one serve for the whole board term instead of being re-elected annually, offering more equilibrium.
- If most board members wish to meet, the chairman must schedule one within 30 days. If they neglect this, members are free to schedule it themselves.
- Nowadays, the board is not the only body with the power to nominate and fire branch managers. Other company executives can also handle this.
These developments enable companies to manage their operations with more efficiency and flexibility.
5. Updated Agency Contract Regulations
Pay heed if your company deals with agents. Agency contracts are clarified by the new Turkish Commercial Code No. 6102:
- An agent’s definition is someone who routinely signs contracts on behalf of a company inside a given region or negotiates on their behalf.
- Agency agreements can be oral, but particular powers—such as contract signing or payment receipt—must be in writing.
- Agents today have more explicit rights regarding commission fees, exclusive territories, and pay for early termination.
These guidelines give companies depending on agents more legal protection and clarity.
6. Consumer Protection and Contract Fairness
The government is ensuring companies treat their customers fairly.
- Businesses cannot include one-sided contracts that mainly benefit them over customers.
- Businesses selling online must be completely transparent, covering consumer rights and refund rules.
- These rules seek to shield consumers from deceptive agreements and force companies to embrace moral behavior.
7. Fast-Track Contracts for Emergency Situations
Turkey adopted interim laws to aid in speedy recovery from the February 6, 2023 earthquake. Public procurement contracts can now be executed outside regular approval times in state-of-emergency zones.
- Government initiatives in disaster areas can cut out some contract requirements.
- This facilitates faster rebuilding for companies and government entities following natural disasters.
What This Means for Businesses?
Changes in contract law present opportunities as well as difficulties. Businesses should act as follows right now:
- Review contracts: Ensure that all agreements follow the new rules, particularly regarding consumer protection and foreign exchange.
- Plan for capital changes: If your business falls short of the new capital requirements, modify your financial situation before 2026.
- Update governance policies: Executives and board members should be familiar with the new guidelines for elections and meetings.
- Adapt to unexpected events: Use Article 138 to rework contracts lawfully should your company find unanticipated difficulties.
Importance of These Legal Updates
Here are some actual figures from recent studies that demonstrate the great relevance of these developments:
- In Turkey, 60% of contract conflicts revolve around inflation-driven pricing adjustments.
- Under past laws, contracts that cannot be changed accounted for 30% of company bankruptcies in 2023.
These figures show why companies must change with the times to guard against legal and financial hazards.
Final Thoughts
Essential changes to Turkish contract law have transformed company operations. From consumer protection to financial needs to price changes, these revisions add fresh legal protections while enforcing rigorous compliance standards.
Businesses must evaluate their contracts, include required clauses, and remain legally compliant immediately. Early adaptation helps companies run more safely in a changing market by preventing legal battles and financial losses. See a legal advisor if you are unclear about how these developments affect your business. Knowing and applying these guidelines will help your company remain legally compliant and operationally sound.
Frequently Asked Questions (FAQs)
Can businesses still sign contracts in foreign currency?
Not unless an exception covers it. Nowadays, most contracts between Turkish citizens have to be in Turkish Lira, which guarantees economic stability and lowers local company currency risk.
When do businesses need to meet the new minimum capital requirements?
By December 31, 2026. Companies that disobey run the danger of liquidation, which means they either have to raise more cash or face possible closing.
What happens if a contract becomes too difficult to fulfil?
Under Article 138, companies may request an adaptation or even termination if unanticipated events—such as supply chain interruptions or inflation spikes—make performance unduly difficult.
How have board meeting rules changed?
Should most board members ask for a meeting, the chairman has thirty days to organize it. Should they fall short, board members can set the meeting date to guarantee seamless decision-making.
Do all agency contracts need to be in writing?
Not exactly. If an agent has capabilities like signing contracts or collecting money, roles must be clearly defined to avoid legal conflict.
What impact do these developments bring about on consumer rights?
The government guarantees openness in distance contracts—like internet sales—and punishes unjust contract conditions.