The Constitutional Court decided to annul the Provision Prohibiting the Dividend Distribution During COVID-19

The Constitutional Court’s decision dated 01.06.2023 and numbered 2020/56 E., 2023/108 K. (Decision) is published in the Official Gazette dated 01.08.2023 and numbered 32266. The Constitutional Court decided to annul certain provisions of the provisional Article 13 of the Turkish Commercial Code No. 6102 (TCC).

• With the Decision, the provision in the first sentence of the first paragraph of the Provisional Article 13 of the TCC, which reads as follows: “Until 30/9/2020, equity companies may decide to distribute only up to twenty-five percent of the net profit of 2019, retained earnings and voluntary reserves cannot be subject to distribution, and the general assembly cannot authorize the board of directors to distribute advance dividends.” is annulled on the grounds that it introduces an unproportionate interference with the right to property.
• The Decision stated that there are other legal limitations in order to protect the existing equity structures of equity companies and to prevent the need for additional financing.
• In addition, the provision in the same article, stating that the Ministry of Trade is authorized to determine the equity companies exempted from the scope of Provisional Article 13 of the TCC was annulled.