Introduction
As is known, pursuant to Articles 397 et seq. of the Turkish Commercial Code ("TCC") No. 6012, an independent audit obligation has been established for certain companies in order to ensure the transparency of the investment ecosystem, the ability of company shareholders to make sound decisions regarding their investments and the reliable functioning of commercial life. Pursuant to Paragraph 4 of Article 398 of the TCC, the President is authorised to determine the companies that will be subject to independent audit and currently, the Council of Ministers Decision No. 2018/11597 published in the Official Gazette dated 26.05.2018 and numbered 30432 is being implemented. This regulation was amended by the the Presidential Decree on the Determination of Companies Subject to Independent Audit ("Decree") published in the Official Gazette dated 30.11.2022 and numbered 32029, and the Decision will be implemented as of 01.01.2023.
Companies Subject to Independent Audit Regardless of any Criteria
Pursuant to Subparagraph (a) of Paragraph 1 of Article 3 of the Decree, the companies listed in Annex (I) of the Decree are subject to independent audit without any other criteria. Article 2 of this list shows the companies subject to the regulation and supervision of the Banking Supervision and Regulation Agency ("BRSA") in accordance with the Banking Law No. 5411:
- Banks,
- Rating agencies,
- Financial holding companies,
- Financial leasing companies,
- Factoring companies,
- Financing companies,
- Asset management companies,
- Companies holding qualified shares in financial holding companies as defined in Banking Law No. 5411.
In addition to these institutions, the Decree has included companies holding qualified shares in banks and savings financing companies among the companies subject to independent audit.
Companies Whose Capital Market Instruments are not Traded on a Stock Exchange or Other Organised Markets but are Deemed to be Offered to Public
Pursuant to subparagraph 1/b-1 of Article 3 of the Decree, the thresholds for the companies whose capital market instruments are not traded on a stock exchange or other organised markets but that are deemed to be offered to public according to the Capital Markets Law No. 6362, to be subject to independent audit has been adjusted as shown below:
- The total assets threshold has been increased from TRY15.000.000 to TRY30.000.000,
- The annual net sales revenue threshold has been increased from TRY20.000.000 to TRY40.000.000.
Companies that exceed the thresholds of at least two of these three criteria in two consecutive accounting periods are subject to independent audit.
Companies Specified in Annex (II)
Pursuant to subparagraph 1/b-2 of Article 3 of the Decree, the thresholds for which companies listed in Annex (II) of the Decree to be subject to independent audit has been adjusted as shown below:
- The total assets threshold has been increased from TRY30.000.000 to TRY60.000.000,
- The annual net sales revenue threshold has been increased from TRY40.000.000 to TRY80.000.000,
- the threshold for the number of employees has been increased from 125 to 100.
Companies that exceed the thresholds of at least two of these three criteria in two consecutive accounting periods are subject to independent audit.
Furthermore, the scope of the list numbered (II) has been expanded, and in addition to the companies that have obtained a licence, certificate or authorisation certificate from the Energy Market Regulatory Authority and operate subject to the regulations of this authority, companies that are not exempted from independent audit pursuant to the said regulations will also be subject to independent audit if they meet the thresholds specified in subparagraph 1/b-2 of Article 3 of the Decree.
General Audit Criteria
The thresholds for the companies other than those regulated in subparagraph 1/b-1 and 1/b-2 of Article 3 of the Decree to be subject to independent audit has been adjusted as shown below:
- The total assets threshold has been increased from TRY35.000.000 to TRY75.000.000,
- The annual net sales revenue threshold has been increased from TRY70.000.000 to TRY150.000.000,
- the threshold for the number of employees has been increased from 175 to 150.
Companies Excluded from the Scope of the Decision
The companies specified in Article 4 of the Decree are excluded from the scope of application of the Decree. Accordingly, savings financing companies, which are decided to be liquidated by the BRSA within the scope of Paragraph 4 of the Provisional Article 7 of the Law dated 21/11/2012 and numbered 6361, and whose liquidation process is carried out by the liquidation commissions appointed by the Savings Deposit Insurance Fund, are also included among the companies exempted from independent audit.
Conclusion
The Decree will enter into force on 01.01.2023, and in this context, it is important to determine whether the companies included in the scope above are subject to independent audit by re-evaluating according to the criteria in the Decree.
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