COVID-19: Restrictions on Distribution of Profits

The “Law on the Minimization of the Economical and Social Effects of the Covid-19 Pandemic and the Amendment of Certain Laws” (“the Law”) No. 7244 has been adopted and entered into force on 16 April 2020. Pursuant to the Law, a provisional clause 13 has been added to the Turkish Commercial Code, stipulating the following regulations with regard to corporations:

  • Until 30 September 2020, the distribution of a maximum of 25% of net profit for the year 2019 may be decided upon;
  • Profits from previous years and unattached contingency reserves may not be distributed;
  • The General Assembly may not authorize the Board of Directors to distribute advance dividends;
  • If the General Assembly has already decided upon a distribution of dividends for the year 2019 but if the payments have not been rendered yet or if only a partial payment has been rendered, those payments exceeding 25% of net profit for the year 2019 shall be postponed until 30 September 2020.

Public legal entities and corporations, of which more than 50% of their capital is directly or indirectly owned by public funds (meaning that more than 50% of the fund’s capital is held publicly) are excluded from the regulations stated above. Furthermore, the date stipulated under the Law (30 September 2020) may be prolonged or shortened by three months via Presidential Decision.

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Senem Kathrin Güçlüer Melis Paula Aydın
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