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The Regulation on Principles and Procedures to be applied in
Factoring Operations
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Att. Ozgur Kocabasoglu
Introduction
The Regulation on Principles and Procedures to be applied in
Factoring Operations (“Regulation”) was published by the Banking
Regulation and Supervision Agency (“BRSA”) in the Official Gazette
dated 04.02.2015 and numbered 29257. Notably, the Regulation
entered into force prevailing as of 01.01.2015. The Regulation envis-
ages the principles and procedures to be applied in factoring operations
to be conducted by factoring companies and banks; the novelties intro-
duced by such Regulation are examined below.
Avoidance of Duplicate Invoices and Cancellation of Invoices
The second section of the Regulation entitled “Avoidance of
Duplicate Invoices and Cancellation of Invoices”, stipulates certain
obligations, and envisages various procedures for banks and factoring
companies that are established in Turkey. Firstly, Art. 4 of the
Regulation imposes a prohibition that aims to avoid operations, which
are not based on an invoice. In this sense, the Regulation sets forth that
financing shall only be provided to clients in return for invoices that are
issued for their goods or services. Furthermore, the Regulation sets
forth that the total amount of such financing, and income (such as
commission or interest) generated therefrom shall not exceed the
amount noted on the invoice, subject to the factoring transaction. In the
event that the factor pays 100% of the invoice amount, an additional
sum for commission and interest can be recovered, separately. The
clients shall not be exposed to minor differences arising out of the
rounding up of the invoice amount, and the sum stipulated on the bill
COMMERCIAL LAW
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Article of October 2015