NEWSLETTER-2020-metin

301 TAX LAW by a decision taken by the general assembly. The validity period of the general assembly resolution on this matter is limited for five years as per the TCC. However, as per Article 381 of the TCC, companies are allowed to buy back their shares without the decision of the general assembly, in cases where it is necessary to prevent an imminent and serious loss provided that other conditions are met. In addition, it is required to have a certain financial ability in order to buy back its own shares. This financial ability requirement is expressed as the net assets of the company remaining after deducting the prices of the shares to be bought back, not less than the total of the reserves that are not allowed to be distributed with the capital. Joint stock companies may buy back their shares up to 10 percent provided that the above-mentioned & summarized conditions are met. In some exceptional cases stipulated under the TCC (Article 382), it is possible for the company to buy back its own shares without seeking any of the conditions such as a limitation of 10 percent, the decision of the general assembly, the payment of all share prices: (i) The company buy backs its own shares in order to destroy it for capital decrease, (ii) share buybacks as a requirement of complete succession, (iii) share buybacks based on the purchase obligation arising from a law provi- sion, (iv) share buybacks by force or for the purpose of collecting the company receivables from the shareholder, and (v) if the company is a securities company. New Taxation Rules Regulated Through the Law No. 7256 As per to the amendment made in Article 94 of the ITC, with- holding tax at the rate of 15% is envisaged regarding share buyback transactions to be conducted by full liable equity companies for the below mentioned conditions: • If the acquired shares were redeemed via capital decrease, withholding tax will be applied over the difference between the purchase price and the nominal value of the shares (to be withheld on the registration date of the capital decrease )