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Loss of Capital and Insolvency (TTK Article 376): Obligations of the Management and Foreign Exchange Difference Exemption Extended to 2028. Half and two-thirds of the capital remaining unrequited, methods of capital completion and reduction, declaration of bankruptcy in case of insolvency, and the effect of the amendment to the Communiqué dated 10.10.2026 have been updated as of 2026.
According to the company's last annual balance sheet, if half of the total capital and legal reserves remain unrequited due to loss, the management must immediately call the general assembly for a meeting and propose remedial measures. If the loss reaches two-thirds, the company will automatically terminate unless the general assembly decides to complete, reduce or increase the capital. If the company is in debt, the management is obliged to request bankruptcy by notifying the court. Failure to fulfill these obligations may result in directors' personal liability. With the amendment published in the Official Gazette dated 10.10.2026, the Ministry of Commerce extended the period in which foreign exchange losses arising from unpaid foreign currency debts may not be taken into account in the calculation until January 1, 2028.
1. What does TCC Article 376 regulate?
In capital companies, the main security of creditors is the capital of the company. For this reason, the law connects the loss of capital as a result of losses to an early warning system. Although the provision is written for joint stock companies, the implementation communiqué of the Ministry of Commerce also covers limited companies and limited liability companies whose capital is divided into shares.
The procedures and principles of the application are determined by the Communiqué on the Procedures and Principles Regarding the Implementation of Article 376 of the Turkish Commercial Code No. 6102, published in the Official Gazette No. 30536 dated 14.09.2018. The Communiqué was last amended in the Official Gazette dated 10.10.2026 and numbered 33396.
Half the loss At least half of the sum of capital and legal reserves is unrequited due to loss. To call the general assembly to a meeting immediately and present remedial measures (Art. 376/1) The general assembly adopts measures, changes them or takes other measures
two-thirds loss At least two thirds of the same total is unrequited To call the general assembly to a meeting immediately (Art. 376/2) If the capital is not completed, reduced or increased, the company automatically terminates.
being in debt Assets are not sufficient to meet the receivables of the company's creditors To prepare an interim balance sheet and to request bankruptcy by notifying the court (Art. 376/3) Avoiding bankruptcy by declaring bankruptcy or transferring creditors to the next row
When this situation is understood from the last annual balance sheet, the management body immediately calls the general assembly to a meeting and clearly states the capital loss on the agenda. Even if the meeting is called with a different agenda, this issue is discussed in the general assembly (Communiqué article 5).
Management; It explains the financial situation of the company in a way that every partner can understand, and presents alternative and comparative remedial measures such as capital completion, capital increase, closure or downsizing of some units, and sale of subsidiaries (Communiqué art. 6). The general assembly may accept these measures as they are or with modifications, or may decide on another measure.
At this stage, the law predicts a much harsher outcome. If the general assembly, which is immediately called to a meeting, does not decide on one of the following ways, the company will automatically dissolve and enter into liquidation (TTK art. 376/2; Communiqué art. 7 and art. 11):
Capital reduction: Being satisfied with the remaining capital; The capital can be reduced to the minimum amount, provided that at least half of the total capital and legal reserves are preserved in equity. In this scope of reduction, the management may refrain from calling creditors (Communiqué art. 8).
Completion of capital: It is the closing of the balance sheet deficit by the partners without compensation. The payment made is not a capital contribution or loan, it cannot be requested back and is monitored in the capital completion fund (Communiqué art. 9).
Capital increase: The Communiqué regulates the options of simultaneous increase by reducing the loss, increase without reduction, and first increase and then decrease at the same meeting. In any case, at least half of the total capital to be registered and legal reserves must be protected within equity (Communiqué art. 10).
It is controversial in judicial decisions whether a direct capital increase can be made without reducing the loss. In its decision dated 23.06.2025 and numbered E.2024/5934, K.2025/4434, the 11th Civil Chamber of the Supreme Court of Appeals did not find the capital increase decision taken in a joint stock company that had lost all of its capital and became insolvent, contrary to the law and the rule of honesty, despite the contrary assessment of the regional court of justice, and overturned the annulment decision. On the other hand, in some previous files, increase decisions were canceled on the grounds that the capital should be reduced first. For increases that carry the risk of diluting the minority partner's share, the structure and justification of the decision should therefore be carefully established.
If there are signs that raise suspicion that the company is in debt, the management body prepares an interim balance sheet by valuing the assets both on the basis of going concern and on the basis of possible sales prices. If it is understood from this balance sheet that the assets are not sufficient to cover the company's receivables, the management reports the situation to the commercial court of first instance at the company headquarters and requests the bankruptcy of the company (TTK article 376/3).
The legal way to avoid bankruptcy is for creditors who have enough money to cover the company's deficit to agree in writing that their receivables will be placed next to all other creditors. The appropriateness, truth and validity of this statement must be verified by court-appointed experts. In practice, this method is frequently used for loans made by partners to the company. Notification of insolvency is among the non-delegable duties of the board of directors (TTK article 375/1-g).
According to the provisional article 1 of the Communiqué, in calculations of capital loss or insolvency, all exchange rate losses arising from foreign currency liabilities that have not yet been fulfilled and half of the total of rent expenses, depreciation and personnel expenses accrued in 2020 and 2021 may not be taken into account. The duration of this opportunity was extended until January 1, 2028 with the amendment dated 10.10.2026. The exception is not recorded in the financial statements; are shown in footnotes for informational purposes.
The exception is intended to prevent companies with high foreign currency debt from facing the risk of dissolution or bankruptcy due to losses that appear on paper and have not yet been realized. However, the exception relates only to the calculation method; It does not change the actual financial position of the company and does not cover incurred losses.
The obligations in TCC Article 376 are duties arising from the law. Members of the board of directors and managers who culpably violate these duties are responsible for the damage they cause to the company, its shareholders and the company's creditors (TCC Article 553). In particular, continuing to operate without notification despite being in debt and incurring new debts during this period is the most common reason for creditors to file a compensation lawsuit against managers. Not calling the general assembly meeting despite the balance sheet showing capital loss poses the same risk.
A limited company with a capital of 1,000,000 TL and no legal reserves will show a loss of 720,000 TL in its 2025 balance sheet. 450,000 TL of the loss arises from the exchange rate difference of the bank loan in euros that has not yet matured. Considering that the situation was temporary, the manager did not convene the general assembly and the company continued its activities.
The loss exceeds two-thirds of the capital; At first glance, the general assembly should convene immediately and take one of the decisions of completion, reduction or increase. However, in accordance with the provisional article 1 of the Communiqué, exchange rate difference losses arising from foreign currency debts that have not yet been fulfilled may not be taken into account in the calculation. In this case, the loss to be taken into account decreases to 270,000 TL and remains below half of the capital. However, the application of the exception must be indicated in the footnotes and the calculation must be documented. It is not right for the manager to wait without making any evaluation; If the exchange rate difference was not separated, the company would face the risk of automatic termination.
Does TCC Article 376 also apply to limited companies?
Yes. The Implementation Communiqué covers joint stock and limited companies and limited liability companies whose capital is divided into shares. In a limited company, the responsibilities belong to the manager or the board of managers.
Can the money invested by the partners for capital completion be taken back?
No. Payment for completion is gratuitous; It does not constitute an investment of capital or a loan to the company and is not considered an advance for future capital increases.
What happens if the general assembly does not make any decisions?
If the loss reaches two-thirds, the company automatically dissolves and the liquidation process begins. This result does not occur with a half-rate loss; however, managers remain obliged to provide action.
Can joint receivables be used to prevent insolvency?
If a written declaration is made for the partners' receivables from the company to come after all other creditors and this is verified by experts, this method can be used instead of requesting bankruptcy.
Is the exchange rate difference exception automatically applied to every company?
Exception is a possibility; may not be taken into account in the calculation. Whether it is applied or not and its amount should be shown in the financial statement footnotes.
Reading the balance sheet only from a tax perspective: The capital loss rate must be calculated separately at the end of each year.
Postponing the convening of the general assembly: The law stipulates an immediate meeting in case of a loss of half, and an immediate meeting in case of a loss of two-thirds.
Applying the exchange rate difference exception without documentation: If the calculation and footnote explanation are not made, the exception may not be used as a defense later.
Continuing to operate without notification when in debt: Debts arising in this period constitute a strong basis for the personal liability of managers.
Capital increase that excludes the minority: Unjustified or dilutive increase decisions carry the risk of an annulment lawsuit.
Loss of capital and insolvency are thresholds that simultaneously affect the existence of the company and the personal assets of the managers. If the steps required by law are not taken in a timely manner, the company may end up on its own or the managers may become personally liable to creditors. Küheylan Law Firm, together with financial advisors, makes the legal evaluation of the capital loss rate and exchange rate difference exemption; It ensures that general assembly decisions, capital completion and increase transactions, and, when necessary, follow-up agreements with creditors are constructed in accordance with the law. For file evaluation, an appointment can be requested via info@kuheylanhukuk.com.
Important Legal Notice: The legal explanations contained in this guide have been prepared by Küheylan Law Firm for general information purposes and do not constitute legal advice. In company law, the provisions of the articles of association, partnership structure and periods have different results in each file; It is recommended to get support from a lawyer before taking any action. © 2026 Küheylan Law Firm. All rights reserved.
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