Newsletter-21

36 NEWSLETTER 2016 preamble of the TCC 5 specifies that the change was made due to the difficulty in interpretation of the wording of the former TCC, but the opinion forming the basis of the Article remains unchanged. The dom- inant opinion in the doctrine defends that the Article imposes an obli- gation to pay a 5% dividend to shareholders through TCC, Art. 519 6 ; however, there are opposing opinions on the matter. 7 Given that joint stock companies exist to profit and distribute such profit, distribution of the primary reserves are in line with the fundamental philosophy of joint stock companies. Otherwise, the majority may deprive the minority from this minimum dividend amount, which contradicts the basic benefit (receiving dividend) anticipated by the shareholders in becoming a shareholder of a joint stock company. Provisions Regarding Dividend Distribution in Public Joint Stock Companies Distribution Procedures The principles regarding dividend distribution under public joint stock companies are regulated under CML, Art. 19-20 and Dividend Communiqué 8 (II-19.1). Public joint stock companies distribute their profits in accordance with the profit distribution policies determined by their general assemblies and pursuant to the relevant legislation (CML, Art. 19/1). The Capital Markets Board (“CMB”) may intervene in such policies. The provisions under the CML are different from the former Cap- ital Markets Law numbered 2499 (“former CML”). For instance, the CML abolished the obligation to demonstrate a primary reserve. As 5 Preamble of Article 519 of the TCC. 6 Tekinalp/Çamoğlu , Açıklamalı, Notlu ve Karşılaştırmalı 6102 sayılı Yeni Türk Ticaret Kanunu ve Ticari Mevzuat ( Annotated and Comparative new Turkish Commercial Code numbered 6102 and Commercial Legislation ), Updated 14 th Edition, İstanbul 2012, p. 249. 7 Veliye Yanlı , Anonim Şirketlerde Kâr Dağıtımı ( Dividend Distribution in Public Companies ) , Banka ve Ticaret Hukuku Dergisi, March 2014, p. 20. 8 Official Gazette 23 January 2014, No. 28891. It has entered into force on 1 Febru- ary 2014.