Capital Markets Board of Turkey (the
"CMB") has made another set of revisions
in the Corporate Governance Principles (the
"CGPs") by taking into account the
concerns raised by ISE Listed Public Companies. Although the recent
revision has eased certain requirements envisaged by the
Communiqué Serial: IV, No: 56 and a clarification
announcement with respect to the implementation of the CGPs has
been made on the date of the publication of the Amendment,
discussions, which have been under way since October 2011, do not
seem to come to an end. ISE Listed Public Companies still consider
mandatory implementation of certain CGPs onerous and seek
clarification for certain issues such as the significancy criteria
applicable for determining whether a transaction falls under the
category of Significant Transaction.
Below is a brief highlight of the key aspects of the
Under the revised CGPs, at least half of the independent
directors serving at the BoD of an ISE Listed Public Company shall
either be domiciled in Turkey or shall stay in Turkey for more than
six months in a calendar year. Former version of the principle
envisaged this requirement for all independent directors.
The Amendment makes an addition to the required qualifications
of the independent directors and provides that independent
directors shall be able to deal with the activities of the company
in a manner to follow up the operations of the company and to
fulfill the duties that they assume.
The Amendment repeals the requirement stating that Significant
Transactions (namely transferring or renting out of all or a
significant portion of company assets, establishing right in rem on
all or significant amount of company assets, granting privileges to
third parties or changing the scope and subject of already provided
privileges, acquiring or renting significant amount of assets and
delisting from the ISE) cannot be executed by ISE Listed Public
Companies without the approval of the majority of independent
directors and the subsequent approval of the General Assembly.
According to the revised principles, Significant Transactions can
directly be executed if majority of independent directors provide
their consent. Executions of those transactions are subject to
General Assembly approval only in cases where majority of
independent directors do not approve the transactions and the BoD
insists on the execution despite the negative approach of those
directors. In such a case, reasons behind the dissenting votes
shall be disclosed to the public, notified to the CMB and shall be
presented to the General Assembly convened for the approval of the
The requirement stating that the number of independent
directors shall represent the free float rate of the company has
been abolished. As per the revision it is sufficient to have
independent directors comprising one-third of the BoD.
The strict provision envisaging that independent directors
shall be elected for a period of three years has been softened by
stating that independent directors shall be elected for a period up
to three years.
The revised provisions clarifies the merits of the CMB's
assessment process with regard to independent board member
candidates and concludes that the assessment shall be conducted
within the framework of the independency criteria listed in
The Amendment also makes an addition to the CGPs and states
that ISE Listed Public Companies may appoint at least one woman to
their Boards. Unlike the above principles requiring mandatory
application, the application of this principle is based on
"comply or explain" approach.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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