Can the profit resulting from the inflation adjustment at the end of 2023 be distributed?
2023 Pre-inflation Adjustment Profit: 10 Million TL
2023 Post-inflation Adjustment Profit: 5 Million TL
Distributable profit for 2023: 5 Million TL
***
COMMUNIQUE ON FINANCIAL TABLES TO BE TAKEN AS BASIS IN COMPANIES APPLYING INFLATION ADJUSTMENT PUBLISHED BY THE MINISTRY OF TRADE
SATURDAY, 15 June 2024
Official Gazette No: 32577 NOTIFICATION
From the Ministry of Trade:
COMMUNIQUE ON FINANCIAL TABLES TO BE TAKEN AS BASIS IN COMPANIES APPLYING INFLATION ADJUSTMENT
Purpose and scope
ARTICLE 1-(1) The purpose of this Communiqué is to determine the financial tables to be taken as basis by the general assembly and the management body regarding the inflation adjustment to be applied in the accounting periods of 2023 and thereafter.
(2) This Communiqué covers the commercial companies regulated in the Turkish Commercial Code No. 6102 dated 13/1/2011 whose financial statements are subject to inflation adjustment, without prejudice to the special regulations foreseen for companies subject to the Banking Law No. 5411 dated 19/10/2005, the Insurance Law No. 5684 dated 3/6/2007, the Financial Leasing, Factoring, Financing and Savings Finance Companies Law No. 6361 dated 21/11/2012, the Capital Markets Law No. 6362 dated 6/12/2012 and the Law on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions No. 6493 dated 20/6/2013.
Base
ARTICLE 2- (1) This Communiqué; Prepared based on the first paragraph of Article 210 of the Turkish Commercial Code No. 6102 dated 13/1/2011.
Definitions
ARTICLE 3- (1) In this Communiqué;
a) General assembly: The general assembly in joint stock, limited and limited partnerships divided into shares and cooperatives, the board of partners in sole proprietorships and all partners when necessary,
b) Law: The Turkish Commercial Code No. 6102 dated 13/1/2011,
c) Dividend: The amount decided by the general assembly to be distributed to the partners and other persons participating in the profit from the net profit or free reserve funds,
ç) Free reserve funds: The portion of the legal reserve funds exceeding half of the capital or issued capital and the reserve funds decided to be set aside by the general assembly other than those set aside pursuant to law and contract,
d) Company: Commercial companies regulated in Law No. 6102,
e) Management body: The board of directors in joint stock companies and cooperatives, the manager or managers in limited companies, the manager in sole proprietorships and limited partnerships divided into shares,
Financial statements to be taken as basis
ARTICLE 4- (1) Inflation-adjusted financial statements prepared in accordance with Article 88 of the Law by companies that are required to prepare their financial statements in accordance with the accounting standards determined by the Public Oversight, Accounting and Auditing Standards Authority shall be taken as basis.
(2) In companies outside the scope of the first paragraph, financial statements with inflation adjustment applied and financial statements without inflation adjustment applied pursuant to the provisions of the temporary Article 33 of the Tax Procedure Law No. 213 dated 4/1/1961 and the Tax Procedure Law General Communiqué (Sequence No: 555) published in the Official Gazette No. 32415 dated 30/12/2023 regarding the accounting period of 2023 shall be taken into consideration together. In this context;
a) Inflation-adjusted financial statements shall be taken as basis in determining the distribution of profit shares from the remaining values after the deduction of losses from free reserve funds and other distributable resources, capital increases and decreases, mergers, divisions, type changes, and capital loss and insolvency situations,
b) Subject to the provisions of the third paragraph, in the distribution of profit and profit share shares, in the allocation of reserve funds, in the payment of dividend certificate holders and in the calculations regarding the dividend advances distributed during the period, in which the net profit period is taken as basis according to the Law or the company agreement,
and in the calculations regarding the profit and profit share distributions, in the allocation of reserve funds, in the calculations regarding the payment to the redeemed share holders and in the profit share advances distributed during the period.
(3) In companies outside the scope of the first paragraph, inflation-adjusted financial statements shall be taken as basis in the accounting periods after the 2023 accounting period, in accordance with the provisions of the temporary article 33 of Law No. 213 and the Tax Procedure Law General Communiqué (Sequence No: 555).
(4) In companies within the scope of this article, the amount of dividends planned to be distributed cannot exceed the total of the resources subject to profit distribution in the financial statements to which inflation adjustment has been applied in accordance with the provisions of Law No. 213.
Capital
ARTICLE 5- (1) In the evaluations to be made regarding the company’s capital, the capital amount registered in the trade registry shall be taken as basis.
(2) The positive differences of the capital adjustment arising from inflation adjustment, the positive differences related to other equity items and the portion of the internal resources other than these exceeding the losses and negative differences, including losses arising from inflation adjustment, may be added to the capital within the scope of Article 462 of the Law.
(3) Negative capital adjustment differences arising from inflation adjustment and other negative differences arising from inflation adjustment may be offset by capital reduction or with positive differences or other internal resources, based on a decision to be taken at the general assembly.
(4) In capital increases to be made in companies within the scope of the first paragraph of Article 4, the financial statements prepared in accordance with Article 88 of the Law to which inflation adjustment has been applied shall be taken as basis, however, the amount of internal resources to be added to the capital cannot exceed the total of internal resources that can be added to the capital in the financial statements to which inflation adjustment has been applied in accordance with the provisions of Law No. 213.
Tax liabilities
ARTICLE 6- (1) In decisions to be taken in accordance with the provisions of this Communiqué, the relevant legislative provisions regarding the tax liabilities of the company and those who will receive a share of the profit are reserved.
Enforcement
ARTICLE 7- (1) This Communiqué shall enter into force on the date of its publication. Execution
ARTICLE 8- (1) The provisions of this Communiqué shall be enforced by the Minister of Trade.
***
DIVIDEND SHARE COMMUNIQUE (II-19.1)
PART ONE
Purpose, Scope, Basis and Definitions
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 statements: 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 the 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 in accordance with 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,
h) TTK: Refers to the Turkish Commercial Code No. 6102 dated 13/1/2011.
CHAPTER TWO
Principles Regarding Profit Distribution Policy and Profit Share
Profit distribution policy
ARTICLE 4 –(1) Partnerships distribute their profits within the framework of profit distribution policies to be determined by their general assemblies and in accordance with the relevant legislation provisions by the decision of the general assembly. Different principles may be determined by the Board for partnerships with similar characteristics regarding the profit distribution policies of partnerships.
(2) The following issues must be included in the profit distribution policies of partnerships as a minimum:
a) Whether or not profit shares will be distributed, and if so, the profit distribution rate determined for the partners and other persons participating in the profit.
b) The method of payment of profit shares.
c) The time of payment of profit shares, provided that the profit distribution procedures are started no later than the end of the accounting period in which the general assembly meeting in which the distribution decision was made was held.
ç) Whether or not the advance profit share will be distributed, and if so, the principles regarding this.
(3) In case of a change in the profit distribution policy, the decision of the board of directors regarding this change and the reason for the change shall be announced to the public within the framework of the regulations of the Board regarding the public disclosure of special situations.
Principles of profit distribution
ARTICLE 5 – (1) In partnerships, profit share shall be distributed equally to all existing shares as of the distribution date, regardless of their issuance and acquisition dates, in proportion to their shares. Rights regarding profit share privileges are reserved.
(2) The profit share may be paid in equal or different installments, provided that it is decided at the general assembly meeting where the distribution is decided. The following points shall be observed in the payment of profit share in installments:
a) The number of installments shall be determined by the general assembly or by the board of directors provided that it is explicitly authorized by the general assembly.
b) In cases where the installment payment times are not determined by a general assembly decision; The payment times to be determined by the board of directors’ decision shall be announced to the public by the partnership within fifteen days following the general assembly, within the framework of the Board’s regulations regarding the public disclosure of special situations.
c) Installment payments shall be distributed equally to all existing shares as of the payment date, regardless of their issuance and acquisition dates, in proportion to their shares.
ç) The amount of profit share decided by the general assembly to be distributed to persons other than shareholders shall be paid in proportion to the installment payments to be made to shareholders and within the framework of the same procedures and principles.
(3) Unless the reserve funds required to be set aside according to the TCC and the profit share determined for shareholders in the articles of association or profit distribution policy are set aside; no other reserve funds can be set aside, profits can be transferred to the following year and profit shares can be distributed to usufruct share holders, board members, partnership employees and persons other than shareholders, and unless the profit share determined for shareholders is paid in cash, no profit shares 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) In order to distribute profit shares to privileged shareholders, dividend certificate holders, board members, partnership employees and persons other than shareholders, a provision must be included in the partnership articles of association. If there is a provision in the articles of association regarding the distribution of profit shares to the said persons, but no ratio is determined regarding the profit share; the amount of profit share to be distributed to these persons cannot exceed one-fourth of the profit share distributed to the shareholders in any case except those arising from privilege.
(5) The Board regulations regarding the distribution of profit shares to the dividend certificate holders and the distribution of profit shares to bonds are reserved.
Donations
ARTICLE 6 –(1) In order for partnerships to make donations, a provision must be included in the articles of association. The limit of the donation to be made is determined by the general assembly in cases not specified in the articles of association. The Board is authorized to impose an upper limit on the donation amount. Donations made by the partnerships within the relevant accounting period shall be added to the distributable profit base.
(2) Donations and payments to be made within the scope of this article shall be publicly announced within the framework of the Board’s regulations regarding public disclosure of special circumstances and shall be presented to the partners at the ordinary general assembly.
(3) The Board’s regulations regarding the prohibition of covert profit transfer and the corporate governance principles that must be complied with are reserved.
Special provisions regarding partnerships whose shares are not traded on the stock exchange
ARTICLE 7 –(1) The dividend distribution rate for partnerships whose shares are not traded on the stock exchange cannot be less than twenty percent of the net distributable profit of the period, to which donations are added, as determined in accordance with the provisions of this Communiqué.
̈(2) Partnerships whose shares are not traded on the stock exchange are required to distribute their dividends in full and in cash. Dividend payments are made upon presentation of the dividend coupon to the partnership. These partnerships cannot benefit from the installment dividend distribution practice regulated in the second paragraph of Article 5 of the Communiqué.
(3) Partnerships whose shares are not traded on the stock exchange may not distribute dividends for the relevant accounting period if the dividend amount calculated in accordance with the first paragraph of this article is less than five percent of the capital according to the last annual financial statements to be submitted to the general assembly or if the net distributable profit for the period is below 100,000 TL according to the said financial statements. This situation, together with the reason for non-distribution, is announced to the public within the framework of the Board’s regulations regarding the public disclosure of special circumstances.
(4) The dividend that is not distributed within the framework of the third paragraph of this article is taken into account as a dividend item in the calculations to be made in the following periods.
Public disclosure
ARTICLE 8 – (1) The board of directors’ proposal regarding the profit distribution of companies whose shares are traded on the stock exchange or the board of directors’ decision regarding the distribution of dividend advances shall be announced to the public, together with the profit distribution table or dividend advance distribution table, the form and content of which are determined by the Board, within the framework of the Board’s regulations regarding public disclosure of special circumstances. The profit distribution table must be announced to the public at the latest on the date the ordinary general assembly agenda is announced.
(2) The board of directors’ proposal regarding the profit distribution of companies whose shares are not traded on the stock exchange shall be announced to the public, together with the profit distribution table, the form and content of which are determined by the Board, within the framework of the Board’s regulations regarding public disclosure of special circumstances, at the latest on the date the ordinary general assembly agenda is announced, and shall be announced in at least one local or nationwide newspaper where the partnership’s headquarters is located and on the partnership’s website, if any. The profit distribution table shall also be kept open to the shareholders’ inspection at the partnership headquarters.
CHAPTER THREE
General Principles Regarding Dividend Advance
Dividend advance distribution principles and liability
ARTICLE 9 – (1) Partnerships whose shares are traded on the stock exchange may distribute cash dividend advances based on their profits included in their interim financial statements. Dividend advances for a specific interim period cannot be distributed in installments.
(2) Partnerships that wish to distribute dividend advances must have a provision in their articles of association and authorize the board of directors to decide on dividend advance distribution limited to the relevant accounting period through a general assembly resolution. In the aforementioned general assembly meeting, it is also necessary to decide that in cases where sufficient profit is not generated at the end of the relevant accounting period or a loss is incurred, the dividend advance to be distributed will be offset from the resources that can be subject to profit distribution in the annual financial position statement for the relevant accounting period.
(3) When the board of directors is authorized by the general assembly to distribute dividend advances; The board of directors must make a decision on whether to distribute or not to distribute dividend advances and this decision must be announced to the public by the partnership within the framework of the Board’s regulations on public disclosure of special circumstances as of the date the interim financial statements are disclosed to the public at the latest.
(4) In partnerships, dividend advances are distributed equally to all existing shares as of the distribution date, in proportion to their shares, regardless of their issuance and acquisition dates. No dividend advances can be distributed to persons other than shareholders. The dividend advances are paid to privileged shares without considering their privileges.
(5) The responsibilities of the board members and, if any, those who perform independent auditing in the calculation and distribution of dividend advances are subject to the provisions of Article 20 of the Law.
Calculation of the amount of dividend advance to be distributed
ARTICLE 10 – (1) The dividend advance to be distributed cannot exceed half of the amount remaining after deducting the reserve funds that must be set aside according to the TCC and the articles of association from the net profit of the interim financial statements and the losses of previous years.
(2) The total dividend advance amount to be given in an accounting period cannot exceed the lower of;
a) Half of the net profit of the previous year,
b) Other sources that can be subject to profit distribution, excluding the net profit of the relevant interim financial statements.
(3) If more than one dividend advance payment is made in the same accounting period; while calculating the dividend advances to be paid in subsequent interim periods, the dividend advances paid in previous interim periods shall be deducted from the amount calculated in accordance with the second paragraph of this article.
(4) Additional dividend advances cannot be given and dividends cannot be distributed in subsequent accounting periods without offsetting dividend advances paid in previous accounting periods.
PART FOUR
Miscellaneous and Final Provisions
ARTICLE 11 – (1) The portion of the partnerships’ losses from previous years exceeding the total of the amounts resulting from the adjustment of previous years’ profits, general legal reserves including premiums related to shares, equity items excluding capital according to inflation accounting shall be taken into account as a discount item in the calculation of net distributable profit for the period.
Statute of Limitations for Uncollected Profit Shares
ARTICLE 12 – (1) Profit share amounts not collected by partners and other persons participating in the profit shall statute of limitations five years from the date of distribution in accordance with the Law No. 2308 on the Transfer of Expired Coupon Bonds and Shares of Companies to the Treasury, dated 12/6/1933.
Profit share guide
ARTICLE 13 – (1) The Board shall prepare a guide regarding the sources that may be subject to profit share distribution and the distribution of profit share and profit share advances of partnerships, announce it to the public and update this guide when necessary.
Coefficient
ARTICLE 14 – (1) The amounts specified in this Communiqué may be redetermined by the Board by taking into account the revaluation coefficient announced by the Ministry of Finance every year.
Board fee exception
ARTICLE 15 – (1) In case the partnerships decide to distribute cash dividends at least twenty-five percent of the net distributable profit for the period; seventy-five percent of the rates regulated in Article 26 of the Share Communiqué numbered VII-128.1 published in the Official Gazette dated 22/6/2013 and numbered 28685 shall be taken as basis for the Board fees to be received from the share issuances to be made within one year from the date of the general assembly decision regarding the distribution.
Reserved provisions
ARTICLE 16 – (1) The relevant regulations of the Board are reserved in the application of this Communiqué in terms of investment partnerships.
Repealed Communiqué
ARTICLE 17 – (1) Publicly Held Joint Stock Companies Subject to the Capital Markets Law published in the Official Gazette dated 13/11/2001 and numbered 24582
̈ The Communiqué on the Principles to be Complied with in the Distribution of Dividends and Dividend Advances by Partnerships (Series: IV, No: 27) has been repealed.
(2) References made to the Communiqué on the Principles to be Complied with in the Distribution of Dividends and Dividend Advances by Public Joint Stock Companies Subject to the Capital Markets Law (Series: IV, No: 27) in other regulations of the Board shall be deemed to have been made to this Communiqué.
Enforcement
ARTICLE 18 – (1) This Communiqué shall enter into force on 1/2/2014.
Execution
ARTICLE 19 – (1) The Board shall execute the provisions of this Communiqué.
Source: Istanbul Chamber of Certified Public Accountants
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.
