A BRIEF EVALUATION OF ARTICLE 12 OF THE LAW ON MITIGATING EFFECTS OF THE NEW CORONAVIRUS OUTBREAK (COVID-19) ON ECONOMIC AND SOCIAL LIFE AND AMENDMENTS ON SOME LAWS
“The Law on Mitigating the Effects of the New Coronavirus (Covid-19) Outbreak on Economic and Social Life and Amendments on Some Laws” has been published on the Official Gazette as of 17/4/2020. The article 12 of the Law is in the same direction as the Announcement published by the Ministry of Commerce on 31.03.2020.
Thus, in the Announcement of Mministry of Commerce dated 31.03.2020 and sent to Turkish Union of Chambers and Commodity Exchanges (TOBB) it was stated that: “the previous year’s profits should not be subject to distribution, the distribution amount should not exceed 25% of the net profit of 2019 and the board of directors should not be authorized to distribute the profit share advances in the distribution of the cash profit shares decisions to be included in the agenda of the general assembly meetings to be held this year in relation to the fiscal periods of 2019 of the capital companies except for publicly-owned ones”.
It is observed that the deadline and dividend payments issue not included in the Ministry Announcement are here indicated in Article 12 of the Law by eliminating the question marks: in all stock companies, distribution of only twenty-five percent of the net profit for 2019 can be decided until 30/09/2020, retained earnings and legal reserves cannot be subject to distribution, and the general assembly cannot authorize the board of directors to distribute advance dividends. The provision of this paragraph shall not apply to the state, special provincial administration, municipal village and other public legal entities and companies in which more than fifty percent of the capital is hold directly or indirectly by public funds. The President is authorized to extend and shorten the periods specified in this paragraph for three months. In the second paragraph, if the General Assembly has decided to distribute profit for the 2019 fiscal year, but the shareholders have not yet been paid or partial payments have been made, the payments for the part exceeding twenty-five percent of the net profit for 2019 will be postponed until the end of the period specified in the first paragraph.
- Companies within the scope of this Article:
All companies except publicly owned ones
- Until 30.09.2020, regarding the fiscal year 2019, in the general meetings to be held this year (2020) following aspects shall be considered:
- Previous years (ie 2018 and earlier) profits and legal reserves shall not be distributed;
- More than 25% of the net profit for the period of 2019 shall not be distributed;
- The board of directors shall not be given the right to distribute dividend advances
- About dividend payment:
If the decision to distribute dividends for the fiscal year 2019 has been taken, but the shareholders have not yet been paid or partial payments have been made, payments for the portion exceeding twenty-five percent of the net profit for 2019 will be postponed until 30.09.2020.
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