As our readers might recall, we had previously announced that a temporary article 13 was inserted into the Turkish Commercial Code, setting out restrictions on companies’ distribution of their net profits in 2019. We had also shared that the government published exceptions to these restrictions.
The Presidential Decree numbered 2948 published in the Official Gazette dated 18 September 2020 extended the term for the restrictions on the distribution of dividends from 30 September 2020 to 31 December 2020. Accordingly, unless the exceptions apply, companies cannot (1) distribute dividends exceeding 25% of their net profits belonging to 2019, (2) distribute any profits or free reserves accrued from previous years, and (3) authorize their boards of directors to distribute advance dividends until 31 December September 2020.
Temporary article 13 does not permit any further extensions on the restrictions as it clearly provides that the President can only extend the restrictions for three months. However, if the article is amended by the parliament in the upcoming months, further extensions might be possible.
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