Conmmunique On The Implementation Of Restrictions Upon Dividend Distribution, As Part Of The Covid-19 Financial Precautions

In an attempt to clarify and to ease the monetary control provisions imposed on April 17, 2020 as part of the Covd-19 Financial Precautions Legislation (Interim Article 13, appended to Law No. 6102 through Law No. 7244, OG April 17, 2020, No. 31102), the Ministry of Commerce issued a “Communiqué on the Implementation of Interim Article 13″ (OG May 17, 2020, No. 31130, the ” Communiqué”).

Said Interim Article 13 brought a number of restrictions upon dividend distribution for the year 2019, including a 25% cap, a ban on distributing prior years’ profits, a ban on distributing legal reserves, and a restriction to authorize advance distributions (“Restrictions”). The Restrictions are currently in place until September 30, 2020, subject to a discretionary three-month extension or reduction by the President for another three months.

The new Communiqué provides some exceptions to the Restrictions, and also carves out capital increases that are carried out using internal corporate funds. The exceptions require prior approval by the Ministry of Commerce on a case by case basis, and include the following:

• dividend distributions up to TL120,000 (approximately US$17,200), provided that there are no outstanding obligations under certain Covid-19 stimulus packages
• dividend distributions, more than half of which are to be used to pay outstanding capital obligations into a subsidiary
• dividend distribution, which are to be used to service current payables under project finance documents or loan agreements