With the Council of Ministers’ Decree numbered 2018/11597 with the title “Decree on the Determination of the Companies subject to Independent Audit”, which entered into force by being published at the Official Gazette dated May 26, 2018 and numbered 30432 (“Decree”), the Council of Ministers decree dated 19/12/2012 and numbered 2012/4213 that brought the former “Decree on the Determination of the Companies Subject to Independent Audit” into force (“Former Decree”) has been abolished and the procedures and principles on the companies subject to independent audit as per the article 398 of the Turkish Commercial Code numbered 6102 and dated 13/0/2011 have been determined.

Within this scope;

I) Except for the companies that fall within the scope of Annex (I) and (II) of the Decree, the thresholds regarding subjection of the companies to independent audit have been amended and decreased with the Decree as follows:

Prior to the amendment (as per the Decree with regard to the Amendment of the Decree on the Determination of the Companies Subject to Independent Audit numbered 2016/8549 published at the Official Gazette dated 19.03.2016);

Companies meeting at least two of the below conditions shall be subject to independent audit;

a) Total assets worth TRY 40 million or above

b) Annual net sales revenue of TRY 80 million or above

c) Number of employees being 200 or above

After the amendment;

Companies exceeding at least two of the below conditions for two consecutive accounting periods shall be subject to independent audit;

a) Total assets worth TRY 35 million or above

b) Annual net sales revenue of TRY 70 million or above

c) Number of employees being 175 or above

II) Companies of which capital market instruments are not traded on the stock exchange or other organized markets but are considered as publicly held companies within the scope of Capital Market Law dated 6/12/2012 and numbered 6362, have been set forth under Annex (II) of the Former Decree. However, such companies are excluded from the scope of Annex (II) and regulated separately with the Decree. Such companies shall be subject to independent audit provided that at least two of the following conditions are exceeded for two consecutive accounting periods:

a) Total assets worth TRY 15 million or above

b) Annual net sales revenue of TRY 20 million or above

c) Number of employees being 50 or above

III) In Former Decree, thresholds with respect to subjection to independent audit have been set forth separately for the companies listed under Annex (II), whereas the Decree sets forth that all companies listed under Annex (II) shall be subject to independent audit if such companies exceed the below conditions for two consecutive accounting periods:

a) Total assets worth TRY 30 million or above

b) Annual net sales revenue of TRY 40 million or above

c) Number of employees being 125 or above

  • With the Decree, the companies under Annex (II) are designated as follows:

1. Companies of which at least 25% of the share capital is directly or indirectly owned by public professional organizations, unions, associations, foundations, cooperatives and superior institutions thereof

2. Companies publishing daily newspapers country-wide

3. Except for the call center companies, companies that are subject to regulation and audit of Information Technologies and Communication Authority within the scopes of Electronic Signature Law dated 15/01/2004 and numbered 5070, Electronic Communication Law dated 5/11/2008 and numbered 5809, Postal Services Law dated 9/5/2013 and numbered 6475 and Article 1525 of the Turkish Commercial Code numbered 6102

4. Companies procuring licenses, certificates or authorization certificates from Energy Market Regulation Authority and carry on business under the regulations of such authority

5. Except for the companies listed under Annex (I);

a) Excluding subsidiaries and companies which are inactive or of which the activities are suspended temporarily or cancelled (including the subsidiaries and companies of which the required amendments of articles of association and similar procedure transactions have not been performed yet), subsidiaries of the Saving Deposit Insurance Fund (“TMSF”) and the companies of which the inspection and management are taken over by TMSF within the scope of the abrogated Banking Law numbered 4389 and Banking Law numbered 5411

b) Companies of which at least 50% of the shares are owned by municipalities and public economic enterprises and their subsidiaries operating within the scope of the Statutory Decree regarding Public Economic Enterprises dated 8/6/1984 and numbered 233.

IV) According to the Decree, all companies listed under Annex (I) shall be subject to independent audit without being subject to any thresholds.

  • With the Decree, the companies listed under Annex (I) are designated as follows:

1. The following companies that are subject to regulation and audit of the Capital Markets Board pursuant to Capital Market Law numbered 6362;

a) Investment institutions

b) Collective investment enterprises

c) Portfolio management companies

d) Mortgage finance corporations

e) Asset leasing companies

f) Central exchange institutions

g) Central custody institutions

h) Data storage foundations

i) Rating Institutions

j) Assessment institutions

k) Joint stock companies of which the capital market instruments are traded on the stock exchange or other organized markets or which have offering circular or export document that bear validity period approved by the Capital Markets Board in order to be traded on the stock exchange or other organized markets

l) Joint stock companies of which the capital market instruments are not traded on the stock exchange or other organized markets; however, which issue capital market instruments except for shares without being offered to public (until the end of the accounting period in which the issued capital market instruments are paid off) or which have offering circular that bear the validity period approved by the Capital Markets Board for this purpose.

2. Companies subject to regulation and audit of the Banking Regulation and Supervision Authority pursuant to Banking Law dated 19/10/2005 and numbered 5411;

a) Banks

b) Grading institutions

c) Financial holding companies

d) Financial leasing companies

e) Factoring companies

f) Financing companies

g) Asset management companies

h) Companies owning qualified shares as defined in the Banking Law numbered 5411 over financial holding companies

3. Insurance, reinsurance and pension companies operating within the scope of Insurance Law dated 3/6/2007 and numbered 5684 and the Individual Pension Savings and Investment System Law dated 27/3/ 2001 and numbered 4632.

4. Authorized institutions, precious metals intermediary institutions or companies conducting business in manufacturing or trading precious metals; which are consented to operate in Borsa İstanbul markets.

5. Licensed storehouse enterprises that are established pursuant to provisions of the Agricultural Products Licensed Warehousing Law dated 10/2/2005 and numbered 5300, public warehouses that are established pursuant to the provisions of Public Warehouses Law dated 11/8/1982 and numbered 2699.

6. Media service provider companies holding at least one of the following rights or licenses:

a) Right to make television broadcasting from land

b) Satellite television broadcasting license

c) License for cable television broadcasting to multiple provinces

V) Companies which do not fall within the scope of this Decree are designated similar to the Former Decree as follows:

a) Except for the companies listed under Annex (I), companies that are subject to the Law of Privatization Applications dated 24/11/1994 and numbered 4046

b) Except for the companies listed under Annex (I) and the companies designated under 5(b) of Annex (II) that is specified in this newsletter above, the companies of which at least 50% of the share capital is owned by the state, provincial private administrations, statutory foundations and other public institutions and organizations.

VI) Effective Date of the Decree

According to Article 7 of the Decree, the provisions of the Decree shall enter into force on the date of its publication, which is 26/5/2018, by being valid as of 1/1/2018.