Newsletter-21

32 NEWSLETTER 2016 Important Principles regarding Dividends in Joint Stock Companies* Prof. Dr. H. Ercument Erdem Introduction Joint stock companies are established with the purpose of profit- ing and distributing dividends. The dividend right of shareholders is one of the most fundamental rights in joint stock companies. Turkish Commercial Code numbered 6102 1 (“TCC”) governs determination of dividends, body authorized to determine dividends, and payment procedures of dividends. As well, the provisions regarding public joint stock companies should be separately analyzed due to different regu- lations in relation to public companies. This newsletter article examines the provisions on dividends un- der the TCC for joint stock companies and Capital Markets Law num- bered 6362 (“CML”) 2 , together with secondary legislation for public companies. However, this article will not examine the provisions on advance dividends, separately, nor will it make any assessment from a tax law perspective. Determination of Dividends Pursuant to TCC, Art. 508, unless otherwise regulated under the articles of association, dividends and liquidation shares are cal- culated in proportion to the payments made to the company by such shareholder. The amount constituting the basis for the shareholders’ participation in the profit is the net profit for such period, which is * Article of October 2016 1 Official Gazette. 14 February 2011, No. 27846. It has entered into force on July 1, 2012. 2 Official Gazette. 30 December 2012, No. 28513. It has entered into force on pub- lication.