The Ministry of Trade has pointed out in its letter dated 31.03.2020 the importance for companies to preserve their equities due to the Covid-19 pandemic and recommended that “during the general assembly meetings of the companies, except for the state-owned ones, to be held this year for the financial year of 2019, regarding the agenda item on the distribution of profits, it shall not be decided to distribute the profits from previous years, the amount to be distributed shall not exceed 25% of the net profit pf 2019 financial year and the board of directors shall not be authorized to distribute advance profits…”. You may read more about this in our previous article: https://denizeray.com/en/coronavirus-covid-19-regarding-distribution-of-profits-by-companies/
With the publication of the Law on Reducing the Effects of the Coronavirus (Covid-19) Pandemic on Economic and Social Life and the Law on the Amendment of Certain Laws No. 7244 in the Official Gazette on 17 April 2020, the said restriction has been legislated by inserting a new temporary article (Temporary Article 13) into the Turkish Commercial Law No.6102. The restriction on the distribution of profits is to be applied initially until 30 September 2020 but the President of the Republic is entitled to extend it for another three months.
The Temporary Article 13 stipulates that (i) companies can decide to distribute dividends up to 25% of their profit in the financial year of 2019, (ii) profits from previous years and free reserve funds cannot be distributed, and (iii) general assemblies of companies cannot authorize their board of directors to distribute advance dividends until 30 September 2020.
If the general assembly of a company has already resolved on the distribution of profits of the financial year of 2019 but there has not been yet any payment made to the shareholders, payments which exceed 25% of the profit must be postponed until 30 September 2020.