Legal Qualifications Of Factoring Companies.The factoring is used to mean "the provision of financing by acquiring and then collecting the assets which are already appeared or are expected to be appeared on behalf of the assignor ASSIGNOR. One who makes an assignment; one who transfers property to another. 2. In general the assignor can limit the operation of his assignment, and impose whatever condition he may think proper, but when he makes a general assignment in trust for the use of ", deriving from the Latin word, "factor" as including "an action on behalf of another person or activity". In Turkey, the concept of factoring has been entered to the banking terminology with the "Decree decree, in law, decision of a suit in a court of equity. It is the counterpart in equity of the judgment in a court of law, although in those jurisdictions where law and equity have merged, judgment is sometimes used to include both. Law pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to Businesses of Lending Money" in 1983. However, with the development of finance sector in Turkey more detailed provisions were enacted with the "Regulation pertaining to Establishment and Activities of Leasing, Factoring and Financing Companies". The aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. regulation besides its detailed structure, also provides rather strict provisions regarding the establishment of the financing companies including factoring companies. The reason behind this detailed and strict provisions is mainly the crises appeared in banking and financing sector during the last periods of 1990ies due to the corruptive activities covering a big part of the sector. Currently, the factoring companies' establishment and activities are subject to the authority of "Banking Regulation and Supervision Agency" (BRSA BRSA British Rope Skipping Association BRSA Baton Rouge Soccer Association BRSA Banking Regulatory and Supervision Agency (Turkey) BRSA Blue Ridge Soccer Association (Virginia) ). The establishment of a factoring company is subject to the permission of BRSA which is a two step procedure. BRSA during permission process, requires that the factoring companies must be established as a joint stock company with a minimum capital amount of 5.000.000 TL, the shares must be registered and issued in cash remuneration REMUNERATION. Reward; recompense; salary. Dig. 17, 1, 7. and other relevant conditions recited under the Regulation. Additionally, BRSA looks at the fact that the founders should have sufficient financial power to provide the sufficient founds necessary for the subscribed capital subscribed capital n → capital m suscrito . Again, under Turkish law, the factoring companies can only be expended ex·pend tr.v. ex·pend·ed, ex·pend·ing, ex·pends 1. To lay out; spend: expending tax revenues on government operations. See Synonyms at spend. 2. via branches and representative offices; however, establishing agencies is not permitted. There is also a minimum capital amount requirement of 1000.000 TL for the branches and representative offices of factoring companies. As mentioned above, this strict examination process and requirements of BRSA appeared as a reaction against the corruptive activities in banking and finance sector. This strict control of BRSA is also backed up with the provisions providing severe punishments in case of any breach of these regulations. In this respect, the breach of the legislation regarding factoring activities is punished pun·ish v. pun·ished, pun·ish·ing, pun·ish·es v.tr. 1. To subject to a penalty for an offense, sin, or fault. 2. To inflict a penalty for (an offense). 3. with both administrative and judicial pecuniary Monetary; relating to money; financial; consisting of money or that which can be valued in money. pecuniary adj. relating to money, as in "pecuniary loss. punishment and also with imprisonment Imprisonment See also Isolation. Alcatraz Island former federal maximum security penitentiary, near San Francisco; “escapeproof.” [Am. Hist.: Flexner, 218] Altmark, the German prison ship in World War II. [Br. Hist. starting from two years. However, this strict monitoring structure appeared in Turkey, despite being pretty important for preventing the illegal activities, may sometimes push the market players to find ways to "coil around the law". In this respect the most common way used to escape from the monitoring of BRSA, is to carry out factoring activities through a factoring company established in abroad under the impression as if the Turkish entity is a legal branch of such foreign factoring company which received all the necessary permissions required under Turkish law. Another breaching activity is to carrying out financing activities in parallel to the activities of a factoring company. Under this route there exists a factoring company legally established under the permission of BRSA. However, since the activities of this factoring company are monitored by BRSA, the financial activities are run outside of this company. For instance, such financial activities are carried out through the bank accounts of the relatives of the shareholders of the factoring company. BRSA, in order to prevent such illegal activities operated outside of the factoring company, monitors the activities in banking accounts of the close relatives of the shareholders of the factoring company. Under circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or where such parallel financing activities are caught by BRSA, beside the above mentioned punishments, a criminal prosecution on the grounds of usury usury: see interest. usury In law, the crime of charging an unlawfully high rate of interest. In Old English law, the taking of any compensation whatsoever was termed usury. is launched. Also, since monetary activities without any valid commercial cause would also be interpreted as an income by the tax authorities leading to significant tax punishments. Since the results of any financial activity which may be considered in breach of the relevant legislation subject to the authority of BRSA is strictly punished, instead of finding gaps in legal texts or interpreting them to find ways to escape from monitoring, in Turkey, following the route determined by BRSA in establishing a new company to be engaged in factoring activities or instead of establishing a new company, acquiring the shares of a company which already has all necessary permissions seems to be the smoothest way of carrying out factoring activities. The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Mr M. Volkan Dulger Dulger Law Firm Salih Tozan Sok. Polat Apt. No.2 B Blok D:26 Esentepe Sisli Istanbul 34394 TURKEY Fax: 2122177934 Click Here for related articles (c) Mondaq Ltd, 2009 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com |
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