The Law No. 7244 on the Mitigation of the Impacts of the Novel Coronavirus (COVID-19) Outbreak on Economic and Social Life and on the Amendment of Certain Laws ("Law") entered into force through publication in the Official Gazette dated 17.04.2020 and numbered 31102.
With Article 12 of the Law, Provisional Article 13 has been added to the Turkish Commercial Code No. 6102. In this context, capital companies are entitled to decide to distribute only up to twenty-five percent of the annual net profit of the year 2019 until 30.09.2020. Profits of the previous years and free legal reserves cannot be made subject to distribution. In addition, general assembly cannot authorize the board of directors to distribute advance dividend. The President is authorized to extend and shorten this period by three months.
Companies of which more than fifty percent of the share capital is directly or indirectly owned by the state, special provincial administration, municipality, village and other public legal entities as well as funds of which more than fifty percent of the share capital is owned by the state are out of the scope of this paragraph.
If the general assembly has already decided to distribute dividends for the fiscal year of 2019, but the shareholders have not yet been fully paid or have been partially paid, payments for the portion exceeding twenty-five percent of the annual net profit of the year 2019 shall be postponed until 30.09.2020.
The Ministry of Trade is authorized to determine, upon obtaining the opinion of the Ministry of Treasury and Finance, the exceptions regarding the capital companies which fall under the scope of this Article and the procedures and principles of implementation of the Article.
You may find the Turkish version of the Law here.
Originally published by Erdem&Erdem, April 2020
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