Corona Outbreak: Limitations on Dividend Distribution

As part of measures, Ministry of Commerce (“the Ministry”) of Turkey has recently announced highlighting importance of the protection of equity capital of companies and the limitation of profit distribution due to Covid-19 in all companies that in resolutions regarding the dividend distribution to be on the agenda of the general assembly meetings for the 2019 accounting year, shareholders should consider

(i)Not to distribute previous year profits,

(ii)Distribution of maximum 25% of net profit for the period of 2019,

(iii)Not to authorize the board of directors to distribute advance dividends for 2020.

Pursuant to Article 13/5 of the “Regulation on the Procedures and Principles of General Assembly Meetings of Joint Stock Companies and the Representatives of the Ministry of Customs and Trade Present in Such Meetings” published in the Official Gazette dated November 28, 2012 No. 28481; companies have to put the restriction request of the Ministry on the agenda of the general assembly meeting to be held in 2020. However, there is no obligation to comply with the restriction of the profit distribution included in the general assembly meeting, meaning that the companies can resolve contrary to the limitation.