The new Turkish Commercial Code which entered into force on 1 July 2012 introduced obligatory independent auditing requirements for some limited and joint stock companies as determined by the Turkish Council of Ministers. However, following harsh criticism of the criteria which determined which companies were subject to audits, the criteria have now been amended.

According to the previous decree of the Council of Ministers, joint stock and / or limited companies which met at least two of the following three criteria on their own or together with their subsidiaries and affiliates were defined by the Council of Ministers as being subject to an independent audit. These criteria were:

1. Total assets in the amount of TL 150 million or more;
2. Annual net sales revenue of TL 200 million or more;
3. 500 employees or more.

According to these criteria set by the decree of the Council of Ministers at the time, it was expected that approximately 2,500 companies would be subject to an audit. However, since 2,500 represented only a small fraction of all Turkish companies, these criteria were widely criticised.

On 14 March 2014, the criteria were therefore amended by way of new decree and accordingly, the number of the companies which are obliged to fulfil independent auditing requirements has now increased.

The new criteria are as follows:

1. Total assets in the amount of TL 75 million or more, i.e. a lower threshold than the previous 150 million figure;
2. Annual net sales revenue of TL 150 million or more, i.e. a reduction of the threshold by 50 million;
3. 250 employees or more, i.e. half of what was previously required.

Additionally, joint stock companies which are subject to regulation and audit by the Turkish Capital Markets Board which issues capital markets instruments were also added by the Turkish Council of Ministers to the list of companies subject to independent auditing regardless of whether they fulfill the new criteria or not.

Moreover, precious metal sales intermediary firms and joint stock companies involved in precious metal production and commerce which have been authorised to operate on the stock exchange have now also become subject to independent auditing as per the amendment.

Dr Gökçe Uzar Schüller, Avukat (Turkey)