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Relation between Profit Share and Reserve Funds
Article 523 of the New TCC has adopted limitations with regards
to reserving funds other than specified by legal provisions and articles
of association. Pursuant to the second paragraph of the said article, the
GA may resolve on reserving funds other than specified by legal pro-
visions and articles of association if necessary for providing assets and
if it may be deemed suitable with regards to permanent development
and stable profit distribution, taking into account the benefits of all
shareholders. While this article aims to protect shareholders with
regards to profit share, certain problems encountered with the TCC
could not be eliminated. It is in the discretion of the GA to reserve
funds other than those specified by legal provisions or the articles of
association, and the only right the shareholders have against the GA
resolution is requesting its annulment.
Miscellaneous Provisions
Article 524 of the New TCC regulates a new provision with
regards to the publication of financial statements. Pursuant to this arti-
cle, the financial statements of the company and the group of compa-
nies and the annual activity report, the GA resolution pertaining to
profit distribution and the GA resolution with regards to decision of the
auditor shall be published in the Trade Registry Gazette and in the
website of the company within six months following balance sheet
date. In case of failure to comply with this obligation, penal sanctions
regulated under the Article 562/6 of the New TCC shall be applicable.
Article 526 of the New TCC regulates summary financial state-
ments. Pursuant to this article, small scaled joint stock companies and
Turkish branches of companies with a head office abroad may publish
summary financial statements.
Pursuant to Article 527, which regulates the confidentiality oblig-
ation, those who examine commercial ledgers and documents of a joint
stock company are under the obligation of confidentiality and privacy.
Persons failing to comply with this obligation shall compensate the
material and moral damages of the company. The second paragraph of
this article reserves the articles of criminal legislation pertaining to
denunciation of crimes.
COMMERCIAL LAW
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