Can advance dividends be distributed before the end of the year?
Yes. Within the year, dividends can be distributed as advances, provided that the conditions in the third section of the following Dividend Communiqué are met.
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DIVIDEND COMMUNIQUE
(II-19.1)
PART ONE
Purpose, Scope, Basis and Definitions
Purpose and scope
ARTICLE 1 – (1) The purpose of this Communiqué is to regulate the procedures and principles to be followed by partnerships in the distribution of dividends and dividend advances, in the protection of dividends and in the determination of the dividend distribution policy.
Base
ARTICLE 2 – (1) This Communiqué has been prepared based on Articles 19 and 20 of the Capital Markets Law No. 6362 dated 6/12/2012.
Definitions
ARTICLE 3 – (1) The terms used in this Communiqué;
a) Interim financial statement: Financial statements prepared as of the end of 3, 6 and 9 months,
b) Stock Exchange: Stock exchange defined in subparagraph (ç) of the first paragraph of Article 3 of the Law,
c) Accounting period: Twelve-month period determined as normal or special accounting period,
ç) Privileged share: Shares with dividend privileges,
d) Law: Law No. 6362,
e) Dividend: The amount decided by the general assembly to be distributed to partners and other persons participating in the profit from the net profit of the accounting period and other sources that may be subject to dividend distribution within the framework of the policy determined by the general assembly,
f) Dividend advance: The amount calculated according to the provisions of this Communiqué from the profits formed according to the interim financial statements to be offset from the dividend to be distributed from the annual financial statements,
g) Board: Capital Markets Board,
ğ) Partnership: Joint-stock companies whose shares are offered to the public or deemed to be offered to the public shall,
h) TTK: Refers to the Turkish Commercial Code No. 6102 dated 13/1/2011.
### SECOND SECTION
**Principles on Dividend Distribution Policy and Dividends**
**Dividend Distribution Policy**
**ARTICLE 4 –**
(1) Companies distribute their profits in accordance with the profit distribution policies determined by their general assemblies and in compliance with the relevant legislation. The Capital Markets Board (CMB) may establish different principles for similar companies regarding their profit distribution policies.
(2) Companies’ profit distribution policies must at least include the following:
a) Whether a dividend will be distributed or not, and if distributed, the determined dividend distribution ratio for shareholders and other profit participants.
b) The method of dividend payment.
c) The timing of the dividend payment, provided that the payment process starts no later than the end of the fiscal period in which the general assembly meeting that decided the distribution took place.
ç) Whether an advance dividend will be distributed or not, and the principles related to it if it will be distributed.
(3) In case of a change in the profit distribution policy, the decision of the board of directors regarding this change and its rationale must be publicly disclosed in accordance with the CMB’s regulations on the disclosure of special circumstances.
**Dividend Distribution Principles**
**ARTICLE 5 –**
(1) In companies, dividends are distributed equally to all existing shares as of the distribution date, regardless of their issuance and acquisition dates. Rights related to privileged shares are reserved.
(2) Dividends may be paid in equal or different installments, provided that it is decided in the general assembly meeting where the distribution was decided. The following principles apply to the payment of dividends in installments:
a) The number of installments is determined by the general assembly or by the board of directors if explicitly authorized by the general assembly.
b) In cases where the general assembly has not determined the payment dates for the installments, the payment dates determined by the board of directors must be publicly announced by the company within fifteen days following the general assembly, in accordance with the CMB’s regulations on the disclosure of special circumstances.
c) Installment payments are distributed equally to all existing shares as of the payment date, regardless of their issuance and acquisition dates.
ç) The amount of dividends decided to be distributed to persons other than shareholders by the general assembly must be paid proportionally to the installment payments to be made to shareholders and in accordance with the same principles.
(3) Until the reserves that are required to be set aside according to the Turkish Commercial Code (TCC) and the dividends determined for shareholders in the articles of association or profit distribution policy are set aside, no other reserves can be set aside, no profits can be transferred to the following year, and no dividends can be distributed to holders of usufruct certificates, members of the board of directors, employees of the company, and persons other than shareholders. Also, until the dividends determined for shareholders are paid in cash, no dividends can be distributed to these persons. The provisions of the second paragraph of this article and the first and third paragraphs of Article 348 of the TCC are reserved.
(4) For privileged shareholders, holders of usufruct certificates, members of the board of directors, employees of the company, and persons other than shareholders to receive dividends, there must be a provision in the company’s articles of association. If there is a provision for dividend distribution to these persons in the articles of association but no specific ratio is determined, the amount of dividends distributed to these persons cannot exceed one-fourth of the dividends distributed to shareholders, except for those arising from privileges.
(5) The rights to dividends for holders of participation usufruct certificates and the distribution of profits to bonds are subject to the regulations of the CMB.
**Donations**
**ARTICLE 6 –**
(1) Companies may make donations only if there is a provision in their articles of association. The limit of the donation is determined by the general assembly if not specified in the articles of association. The CMB is authorized to set an upper limit on the amount of donations. Donations made by companies during the relevant fiscal period are added to the distributable profit base.
(2) Donations and payments made in accordance with this article must be publicly disclosed in accordance with the CMB’s regulations on the disclosure of special circumstances and presented to the shareholders at the ordinary general assembly.
(3) The CMB’s regulations on the prohibition of hidden profit transfer and mandatory corporate governance principles are reserved.
**Special Provisions for Companies Whose Shares Are Not Traded on the Stock Exchange**
**ARTICLE 7 –**
(1) For companies whose shares are not traded on the stock exchange, the dividend distribution ratio cannot be less than twenty percent of the net distributable profit calculated according to this Communiqué, including donations.
(2) Companies whose shares are not traded on the stock exchange must distribute dividends in full and in cash. Dividend payments are made upon the presentation of the dividend coupon to the company. These companies cannot benefit from the installment dividend distribution practice regulated in the second paragraph of Article 5 of this Communiqué.
(3) Companies whose shares are not traded on the stock exchange may decide not to distribute dividends for the relevant fiscal period if the dividend amount calculated according to the first paragraph of this article is less than five percent of the capital or if the net distributable profit according to the financial statements to be submitted to the general assembly is less than 100,000 TL. This situation must be publicly disclosed, along with the reason for not distributing dividends, in accordance with the CMB’s regulations on the disclosure of special circumstances.
(4) Undistributed dividends according to the third paragraph of this article are considered as a dividend item in subsequent calculations.
**Public Disclosure**
**ARTICLE 8 –**
(1) The board of directors’ proposal for dividend distribution or the decision to distribute advance dividends for companies whose shares are traded on the stock exchange must be publicly disclosed together with the dividend distribution table or advance dividend distribution table, the format, and content of which are determined by the CMB, in accordance with the CMB’s regulations on the disclosure of special circumstances. The dividend distribution table must be publicly disclosed no later than the date the agenda of the ordinary general assembly is announced.
(2) The board of directors’ proposal for dividend distribution for companies whose shares are not traded on the stock exchange must be publicly disclosed together with the dividend distribution table, the format, and content of which are determined by the CMB, no later than the date the agenda of the ordinary general assembly is announced, in accordance with the CMB’s regulations on the disclosure of special circumstances. It must also be announced in at least one newspaper published in the locality or country where the company’s headquarters is located and, if available, on the company’s website. The dividend distribution table must also be kept available for shareholders’ inspection at the company’s headquarters.
### THIRD SECTION
**General Principles on Advance Dividend Distribution**
**Principles and Responsibilities for Advance Dividend Distribution**
**ARTICLE 9 –**
(1) Companies whose shares are traded on the stock exchange can distribute cash advance dividends based on the profits in their interim financial statements. An advance dividend related to a specific interim period cannot be distributed in installments.
(2) For a company to distribute advance dividends, there must be a provision in its articles of association, and the general assembly must authorize the board of directors to decide on the distribution of advance dividends limited to the relevant fiscal period. In the same general assembly meeting, it must also be decided that if there is insufficient profit or a loss at the end of the relevant fiscal period, the advance dividend will be offset against the resources available for dividend distribution as shown in the annual financial statement of that period.
(3) Once the board of directors is authorized by the general assembly to distribute advance dividends, the board must make a decision on whether to distribute or not and publicly announce this decision by the date the interim financial statements are disclosed to the public, in accordance with the Capital Markets Board (CMB) regulations on public disclosure of special circumstances.
(4) In companies, advance dividends are distributed equally to all existing shares as of the distribution date, regardless of their issuance and acquisition dates. Advance dividends cannot be distributed to persons other than shareholders. Advance dividends are paid to preferred shares without considering the privilege.
(5) The calculation and distribution of advance dividends are subject to the responsibilities of the board members and, if applicable, the independent auditors, according to Article 20 of the Law.
**Calculation of the Advance Dividend to be Distributed**
**ARTICLE 10 –**
(1) The amount of advance dividend to be distributed cannot exceed half of the remaining amount after deducting the reserves required by the Turkish Commercial Code (TCC) and the losses from previous years from the net interim profit as shown in the interim financial statements.
(2) The total amount of advance dividends distributed within a fiscal period cannot exceed the lower of the following:
a) Half of the net profit for the previous year.
b) Other resources available for dividend distribution, excluding the net interim profit shown in the interim financial statements.
(3) If more than one advance dividend payment is made within the same fiscal period, the amount of advance dividends to be paid in subsequent interim periods is calculated by deducting the advance dividends paid in previous interim periods from the amount calculated according to the second paragraph of this article.
(4) No additional advance dividend can be given, nor can dividends be distributed in subsequent fiscal periods without offsetting the advance dividends paid in previous fiscal periods.
### FOURTH SECTION
**Miscellaneous and Final Provisions**
**Losses from Previous Years**
**ARTICLE 11 –**
(1) Losses from previous years that exceed the total of past profits, including premiums related to shares, general statutory reserves, and amounts arising from the adjustment of equity items, excluding capital, according to inflation accounting, are considered a deduction in the calculation of the net distributable profit.
**Statute of Limitations for Unclaimed Dividend Payments**
**ARTICLE 12 –**
(1) Dividends unclaimed by shareholders and other profit participants become time-barred five years from the distribution date, according to the Law No. 2308 on the Transfer of Coupon Bonds and Share Certificates to the Treasury Due to Statute of Limitations, dated 12/6/1933.
**Dividend Distribution Guide**
**ARTICLE 13 –**
(1) The CMB prepares and publicly announces a guide on resources available for dividend distribution and the distribution of dividends and advance dividends by companies. This guide may be updated as needed.
**Multiplier**
**ARTICLE 14 –**
(1) The amounts specified in this Communiqué may be revised annually by the CMB considering the revaluation coefficient announced by the Ministry of Finance.
**CMB Fee Exemption**
**ARTICLE 15 –**
(1) If companies decide to distribute at least 25% of the net distributable profit in cash, the CMB fees for share issuances within one year from the date of the general assembly decision are calculated based on 75% of the rates regulated in Article 26 of the Communiqué on Shares, published in the Official Gazette No. 28685 on 22/6/2013.
**Reserved Provisions**
**ARTICLE 16 –**
(1) The CMB’s relevant regulations are reserved for the application of this Communiqué concerning investment companies.
**Repealed Communiqué**
**ARTICLE 17 –**
(1) The Communiqué on Principles to be Followed by Publicly Traded Companies in the Distribution of Dividends and Advance Dividends (Series: IV, No: 27), published in the Official Gazette No. 24582 on 13/11/2001, is repealed.
(2) References to the Communiqué on Principles to be Followed by Publicly Traded Companies in the Distribution of Dividends and Advance Dividends (Series: IV, No: 27) in other CMB regulations are deemed to have been made to this Communiqué.
**Entry into Force**
**ARTICLE 18 –**
(1) This Communiqué enters into force on 1/2/2014.
**Execution**
**ARTICLE 19 –**
(1) The provisions of this Communiqué are executed by the CMB.
Source: Mevzuat.gov.tr
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