With the amendments in the Communiqué No. 32 on the Protection of the Value of Turkish Currency on April 19, 2022, it has become compulsory to fulfill and accept the contract payment obligations in Turkish currency, even if the contract value and other payment obligations arising out of the contract has been determined in foreign currency for the movable sales contracts executed between Turkish residents exclusive of vehicle sale contracts. Therefore, even though the share transfer prices can be determined in foreign currency, from now on, share transfer prices of the share transfers that will occur between companies based in Turkey will have to be paid in Turkish currency. 
When Decree No. 32 on Protecting the Value of Turkish Currency was issued 33 years ago in 1989, it was considered as an important step in the free-market movement that allowed the use of foreign currencies in the domestic market.

In 2018, as a result of the excessive pressure on the value of the Turkish Lira, it was decided to reduce the demand for foreign currencies in the domestic market and to limit the number of transactions that can be concluded using foreign currencies within Turkey. In this regard, it was restricted to determine (i) immovable sales contracts, lease contracts (ii) financial lease contracts (iii) movable sales contracts, lease contracts (iv) service contracts, (v) employment contracts and (vi) contracts for work and labor in foreign currency or foreign indexed currency and it was decided to be determined in Turkish Lira, with some exceptions. Movable sales contracts excluding from vehicle sales contracts to be executed between Turkish residents was one of these exceptions. 

The amendment covers “persons residing in Turkey”

Since “Turkish residents” are subject to these regulated restrictions, the term “Turkish resident” is of importance. Within the scope of Decree no. 32, Turkish residents are defined as real and legal persons who have a legal place of residence in Turkey, including Turkish citizens who are workers, self-employed and private business owners abroad. Accordingly, contracts executed with foreign real and legal persons who are resident abroad are outside the scope of restrictions.  With the amendments in the Communiqué No. 32 on the Protection of the Value of Turkish Currency on April 19, 2022, it has become compulsory to fulfill and accept the contract payment obligations in Turkish currency, even if the contract value and other payment obligations arising out of the contract has been determined in foreign currency for the movable sales contracts executed between Turkish residents exclusive of vehicle sale contracts. Therefore, even though the share transfer prices can be determined in foreign currency, from now on, share transfer prices of the share transfers that will occur between companies based in Turkey will have to be paid in Turkish currency. 

Besides, in addition to the determination of the contract value or the payment obligations arising out of these contracts in foreign currency or foreign indexed currency, it has been allowed to fulfill the contract value and other payment obligations in foreign currency or foreign indexed currency with the amendment, except from the immovable sale and immovable lease agreements which the public institutions and Turkish Armed Forces are a party to.

In this context, The Ministry of Treasury and Finance has published a press release on this subject on its website, in order to avoid question marks in practice within the framework of the amendments.

As per the Ministry statement, persons residing in Turkey;
i.    Within the scope of the performance of the movable sales contracts concluded between themselves before April 19, 2022, they can fulfill and accept their payment obligations in foreign currency within the scope of foreign currency denominated securities entered into circulation before April 19, 2022, 
ii.    Will be able to fulfill and accept payment obligations in foreign currency within the scope of invoices issued before April 19, 2022,
iii.    Will be able to fulfill and accept the precious metals and precious stones trading transactions carried out in foreign currency and the payment obligations within the scope of the clearing of these transactions in the Borsa İstanbul A.S. Precious Metals and Precious Stones Market in foreign currency.

Checks etc. issued in foreign currency as of the date of April 19, 2022, when the amendment entered into force and after this date, will not be possible to use the payment instruments for the fulfillment of the payment obligations subject to the securities sales contracts concluded/to be executed among the residents of Turkey.
Lastly, within the framework of the Capital Market Law No. 6362 and the regulations made based on this Law, the creation, issuance, trading and the determination of the liabilities regarding the transactions made in foreign currency (including foreign capital market instruments and depository receipts and foreign investment fund shares) will continue to be possible, the new change will not affect the liabilities related to these transactions.