(Oct. 7, 2020) A presidential decree published in Turkey’s Official Gazette on September 18, 2020, extended by three months the term of a rule that temporarily limits the amount of profits that companies can pay out to shareholders as dividends. The rule was included in the Turkish Commercial Code (TCC) on April 17, 2020, as provisional article 13 as a part of statutory measures taken to counter the impact of the COVID-19 pandemic on the economy, and was originally projected to phase out by September 30, 2020, absent a presidential extension.
According to the provisional article 13 TCC, corporations are allowed to pay out only up to 25 percent of their 2019 net profits as dividends to shareholders and are not allowed to include in dividends profits of previous years or free reserves.
Public institutions or corporations in which the state is a majority shareholder are exempt from the rule. According to a communiqué issued by the Ministry of Commerce and published on May 17, 2020, regarding the application of the provision, corporations that pay out no more than 120,000 Turkish liras (approx. US$15,860) are also exempted from the dividend limit if they fulfill certain conditions and get permission from the Ministry. The rule also precludes general assemblies of corporations that are subject to the rule from authorizing the boards of directors to pay out advance dividends until the end of the enforcement term.