Regarding the Provisional Article 13 added to the Turkish Commercial Code No. 6102 (“TCC”) on the date April 16, 2020, it is decided that only twenty-five percent of the net profit can be distributed for 2019, last year profits and free reserve stipends could not be distributed, and that the general assembly would not be able to authorize the distribution of dividend advance stake to the board of directors, until September 30, 2020.
Another remarkable regulation of the article is that payments for a portion exceeding twenty-five percent of the net profit for the 2019 period will be deferred until the end of the period specified in the article, if the General Assembly has decided to distribute dividends for the 2019 reporting period, but payments have not yet been made to shareholders or partial payments have been made.
The article also states capital companies that do not fall within the scope of application of this provision. These are state, provincial private administration, municipality, village and other public legal entities and public funds with more than fifty percent of their capital, companies with more than fifty percent of their capital, directly or indirectly.
With the Presidential decree No.2948 published in the Official Gazette dated 18/09/2020 and numbered 31248, it has been decided to extend periods specified in the above mentioned paragraphs of the Provisional Article 13 for 3 months as of September 18, 2020 in accordance with the first paragraph of the article.
As a result of this extension, the end date was set as December 30, 2020 in terms of limitation of profit distribution in capital companies.
The full text of the Presidential Decree can be accessed here.
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Damla KIZIL (Apprentice Attorney)
Uçar Law & Consultancy Office
