The Decree on Extending the Duration Introduced with the Provisional Article 13 of the Turkish Commercial Code (the “TCC”) (the “Decree”) has been published on the Official Gazette dated 18 September 2020 and numbered 31248. The Decree has entered into force as of its publication date.
Distribution of profits in companies has been restricted by the Provisional Article added to the TCC within the scope of the “Law on Reducing the Effects of New Coronavirus Outbreak on Economic and Social Life and Amending Certain Laws no. 7244” by taking into consideration the serious threat posed by Covid-19 against the public health and financial life, the necessity of implementing some various measures in order to prevent such effects and the precautionary policy.
Pursuant to the Decree, validity of the restriction is extended for 3 months, from
30 September 2020 to 30 December 2020.
In this regard;
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The amount of the cash profit that capital companies could distribute shall not exceed the 25% of net income of the period of 2019 and the board of directors shall not be authorized by the general assembly with distribution of profit, until the date of 30 December 2020.
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Prior year’s profits and voluntary reserves shall not be involved in distribution.
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Moreover, in case that a resolution regarding the distribution of profits of 2019 financial period was resolved, however, either a payment has not been carried out or partial payment has been done, the payments corresponding to the exceeding part of 25% of net income of the period of 2019 are to be postponed until the date of 30 December 2020.
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State, provincial special administration, municipality, village and the companies whose capital is more than 50% are owned either directly or indirectly by the public legal entities and funds, where 50% of the capital belongs to the public are excluded from this regulation.
The Decree does not have a readily available English version. However, you may access the Turkish version of the Decree from here.
Nur Duygu Bozkurt, Associate
Burak Batı, Trainee Lawyer