New Thresholds for Independent Audit Requirements for Turkish Companies as of 1 January 2023: Overview of Applicable Criteria

As of January 1, 2023, new criteria have been introduced in Turkey, which will require companies to undergo independent audits. Publicly traded companies, private companies with outstanding securities, and certain regulated entities will always require independent audit. Other companies will be subject to independent audit depending on certain criteria, such as exceeding at least two of three thresholds related to total assets, net sales, and number of employees for two consecutive financial years. However, certain companies that are at least 50% state-owned or in the process of liquidation are exempt from these requirements. If a company triggers the thresholds described under (B) below and becomes subject to independent audit, it can become exempt if it falls below at least two of the three thresholds for two consecutive financial years or falls 20% or more below at least two of the three thresholds for one financial year. The such exemption begins in the following financial year. Certain other exceptions or exemptions may also be applicable depending on the specific company.

(B)Companies Subject to Independent Audit Depending on Certain Criteria 1. Companies that are not traded on an exchange but are deemed to be public companies by statute, if the company exceeds at least two of the following three thresholds for two consecutive financial years:

– Total Assets: TRY 30 million

– Net Sales: TRY 40 million

– Number of Employees: 50