Companies Subject to Independent Audit in 2023

Companies Subject to Independent Audit in 2023

The "Decision on the Determination of Companies Subject to Independent Audit (Decision No. 6434)" was published in Official Gazette No. 32029 of 30 November 2022.

As will be recalled, the criteria for which companies are subject to independent audit were first set by Decision No. 2012/4213, published in the Official Gazette of 23 January 2013, and were redetermined in 2014, 2015, 2016 and 2018.

With this Decision, the criteria have been redetermined once again as follows, effective from 1.1.2023.

1) General criteria for being subject to independent audit

Companies other than those listed later in this circular that exceed the thresholds for at least two of the following three criteria in two consecutive financial periods are subject to independent audit.

• Total assets of TRY 75 million. (TRY 35 million or more under the previous Decision)

• Annual net sales of TRY 150 million. (TRY 70 million or more under the previous Decision)

• 150 employees. (175 or more under the previous Decision)

2) Companies subject to independent audit regardless of any criteria

The companies specified in List (I) annexed to this Decision, set out below, are subject to independent audit regardless of any criteria.

3) Companies whose capital market instruments are not traded on an exchange or other organised market but which are deemed publicly held under capital markets legislation

Companies whose capital market instruments are not traded on an exchange or other organised market but which are deemed publicly held under capital markets legislation, and which exceed the thresholds for at least two of the following three criteria in two consecutive financial periods, are subject to independent audit.

• Total assets of TRY 30 million. (TRY 15 million under the previous Decision)

• Annual net sales of TRY 40 million. (TRY 20 million under the previous Decision)

• 50 employees. (50 employees under the previous Decision)

4) Companies specified in the annexed List (II)

Of the companies specified in List (II) annexed to this Decision, set out below, those exceeding the thresholds for at least two of the following three criteria in two consecutive financial periods are subject to independent audit.

• Total assets of TRY 60 million. (TRY 30 million under the previous Decision)

• Annual net sales of TRY 80 million. (TRY 40 million under the previous Decision)

• 100 employees. (125 employees under the previous Decision)

5) Companies outside the scope of independent audit

The following companies are outside the scope of this Decision:

a) Companies subject to Law No. 4046 on Privatisation Practices dated 24/11/1994, except those within the scope of the annexed List (I).

b) Companies at least 50 percent of whose capital belongs to the State, special provincial administrations, foundations established by law and other public institutions and organisations, except those specified in the annexed List (I) and in item 5(b) of the annexed List (II).

c) Savings finance companies whose liquidation was decided by the Banking Regulation and Supervision Board under the fourth paragraph of Provisional Article 7 of Law No. 6361 on Financial Leasing, Factoring, Financing and Savings Finance Companies dated 21/11/2012, and whose liquidation is carried out by liquidation committees appointed by the Savings Deposit Insurance Fund (TMSF).

6) Other matters

A company subject to independent audit because it exceeded the thresholds falls outside the scope of independent audit from the following financial period if it remains below the thresholds for at least two of the three criteria in two consecutive financial periods, or falls twenty percent or more below the thresholds for at least two of these criteria in one financial period.

In determining whether the thresholds are exceeded, the financial statements for the last two years prepared under the legislation applicable to the company are used for total assets and annual net sales, and the average number of employees for the last two years is used for the number of employees.

In determining whether the thresholds are exceeded, companies are considered together with their subsidiaries and associates. For companies with subsidiaries and associates, the sum of the items in the financial statements of the parent and the subsidiary (with intra-group transactions eliminated, if any) is taken into account for total assets and annual net sales, and the sum of the average numbers of employees of the parent and the subsidiary for the last two years is taken into account for the number of employees. For associates, the relevant items of the associate are taken into account in proportion to the company's interest in the associate.

7) Annexes

Lists (I) and (II) annexed to this Decision are set out below.

LIST (I)

1. Of the companies subject to the regulation and supervision of the Capital Markets Board under Law No. 6362:

a) Investment firms,

b) Collective investment undertakings,

c) Portfolio management companies,

d) Mortgage finance institutions,

e) Asset leasing companies,

f) Central clearing institutions,

g) Central securities depositories,

h) Trade repositories,

i) Credit rating agencies,

j) Valuation firms,

k) Joint stock companies whose capital market instruments are traded on an exchange or other organised market, or which have a valid prospectus or issue document approved by the Capital Markets Board for that purpose,

l) Joint stock companies that, although not traded on an exchange or other organised market, issue capital market instruments other than shares without a public offering (until the end of the financial period in which the capital market instruments they issued are redeemed), or that have a valid issue document approved by the Capital Markets Board for that purpose.

2. Of the companies subject to the regulation and supervision of the Banking Regulation and Supervision Agency under Banking Law No. 5411 dated 19/10/2005:

a) Banks,

b) Credit rating agencies,

c) Financial holding companies,

d) Financial leasing companies,

e) Factoring companies,

f) Financing companies,

g) Asset management companies,

h) Companies holding qualifying shares, as defined in Law No. 5411, in financial holding companies and banks,

i) Savings finance companies.

3. Insurance, reinsurance and pension companies operating under Insurance Law No. 5684 dated 3/6/2007 and Private Pension Savings and Investment System Law No. 4632 dated 28/3/2001.

4. Authorised institutions, precious metals intermediaries and companies engaged in the production or trade of precious metals that are permitted to operate in Borsa İstanbul markets.

5. Licensed warehouse operators established under Agricultural Products Licensed Warehousing Law No. 5300 dated 10/2/2005 and general warehouses established under General Warehouses Law No. 2699 dated 11/8/1982.

6. Media service providers holding at least one of the following rights or licences:

a) The right to broadcast national television terrestrially.

b) A satellite television broadcasting licence.

c) A cable television broadcasting licence covering more than one province.

LIST (II)

1. Companies at least 25% of whose capital belongs directly or indirectly to professional organisations with public institution status, trade unions, associations, foundations, cooperatives and their umbrella organisations.

2. Companies publishing daily newspapers nationwide.

3. Companies, other than call centre companies, subject to the regulation and supervision of the Information and Communication Technologies Authority under Electronic Signature Law No. 5070 dated 15/1/2004, Electronic Communications Law No. 5809 dated 5/11/2008, Postal Services Law No. 6475 dated 9/5/2013 and Article 1525 of Law No. 6102.

4. Companies operating under a licence, certificate or authorisation from the Energy Market Regulatory Authority, subject to its regulations and not exempted from independent audit under those regulations.

5. Excluding those within the scope of List (I):

a) Affiliates of the TMSF and companies whose supervision and management have been taken over by the TMSF under the repealed Banks Law No. 4389 and Law No. 5411, excluding affiliates and companies that are inactive or whose activities have been temporarily suspended or cancelled (including those for which the necessary amendments to the articles of association and similar procedures have not yet been completed).

b) State economic enterprises and their subsidiaries operating under Decree-Law No. 233 dated 8/6/1984 on State Economic Enterprises, and companies at least 50% of whose capital belongs to municipalities.