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NEWSLETTER 2011
110
Share Repurchase (Buybacks) or Pledge of Shares
5
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Att. Nilay Çelebi
Preamble
The new Turkish Commercial Code (“New TCC”), which will enter
into force in 01.07.2012 accepts new provision regarding share repurchase
-also known as share buybacks-, which means repurchasing of or pledging
of its own shares by the companies. The Capital Markets Board of Turkey
(“Board”) amended its resolution ‘Principles Regarding the repurchasing
or Accepting as a Pledge of its Own Shares by the Companies Traded in
Istanbul Stock Exchange’ on 11.08.2011 numbered 26/767 (“Resolution”).
Article 379 of the New TCC
According to article 379 of the New TCC, a company cannot
repurchase its own shares as well as accept as a pledge exceeding the 10%
of the outstanding and issued capital. This provision also applies to the
third persons who purchase its own shares as well as accept as a pledge
on behalf of the companies.
Within the limit of the foregoing, the board of directors shall be
authorized by the general assembly for the execution of the transaction
to repurchase or pledge of the shares. This authorization can be valid
for five (5) years. The number of the shares and percentage of share
capital to be purchased or pledged shall be stated, the total nominal
value and the maximum and minimum threshold of the amount to be
paid in consideration for the issued shares shall be determined in the
authorization.
The equity component, after deducting the amount to be paid in
consideration for the shares shall at least equal to the amount paid-in/
issued share capital and reserved funds not to be distributed in accordance
with the law and articles of association of companies.
It should be also noted that, only the fully paid-in shares could be
purchased.
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Article of August 2011