Turkey: Corporate Governance Rules


The Capital Markets Board of Turkey ("CMB") issued the Communiqué on the Principles Regarding the Determination and Practice of Corporate Governance Rules, Serial: IV, No: 541, however, this communiqué caused an extensive argument in the public. Then, the CMB issued a draft Corporate Governance Rules and submitted it to the public for discussions and suggestions. CMB issued the Communiqué on the Principles Regarding the Determination and Practice of Corporate Governance Rules, Serial: IV, No: 562 ("Communiqué") by obtaining suggestions from the public, which is published on the Official Gazette numbered 28158, dated 30.12.2011.

Corporate Governance Rules

The Communiqué is applicable to the listed companies. Listed companies are defined as the public companies traded in Istanbul Stock Exchange.

According to the Communiqué, the listed companies are subject to articles 1.3.1; 1.3.2; 1.3.7; 1.3.10; 4.3.1; 4.3.2; 4.3.3; 4.3.4; 4.3.5; 4.3.6; 4.3.7; 4.3.8; 4.3.9; 4.4.7; 4.5.1; 4.5.2; 4.5.3; 4.5.4; 4.6.2; 4.6.4 of the Rules. The listed companies shall explain in the report with regard to the application of the Rules, whether or not they apply the other provisions of the Rules. As per the Communiqué, listed companies are distinguished in 3 groups. There are certain Rules that are not applicable for the 3rd Group. As a brief summary of the Rules;

All shareholders shall be treated equally. All shareholders shall have information and examination right and such right cannot be limited or cancelled.

Request of special audit is a part of the information right. A right for the shareholders to request a special audit from the general assembly in order to examine specific issues even though this request is not stated in the agenda of the general assembly provided that the right to obtain information and examination has been formerly used, can be inserted to the articles of association.

The announcement of the general assembly meeting shall be made at least 3 weeks prior to the meeting, to reach all shareholders and via any possible communication equipment including electronic communication; the provisions of the relevant legislation shall be reserved.

General assembly meetings shall be convened by causing the high participation of the shareholders at the minimum expense and shall not result in any inequality. Therefore, the general assembly shall be convened at the place where the majority of the shareholders reside provided that such provision is in the articles of association.

The general assembly should consent on whether, the shareholders holding the management control, board members, managers and their spouses or persons with blood or affinity relationship (to the second degree) may compete with the company or its affiliates or perform a transaction with them which may have a conflict of interest.

The affirmative vote of majority of the independent board members for certain 'important transactions' to be resolved in the board, is required provided that the decision does not require a general assembly decision with respect to the applicable legislation. Important transactions are defined as follows: transferring all or substantial part of assets, creating encumbrance over them or leasing them, purchasing substantial assets or leasing them, granting privileges or changing the scope of the privileges, or delisting.

The decision shall be submitted to the general assembly in case the affirmative vote of majority of the independent board members is not met or such transaction is desired to be performed besides the opposition of the independent board members. The opposition of the independent board members shall be disclosed to the public, notified to CMB and such opposition shall be notified to the shareholders at the general assembly. For the purposes of this provision the meeting quorum for the general assembly is not required and the decision shall be made with a simple majority. This provision shall be reflected in the articles of association.

For the purposes of determining the criteria of 'importance'; any of the following shall be taken into consideration:

  1. 20% of the total assets disclosed in the last financial tables to the public,
  2. 40% of the relevant account group disclosed in the last financial tables to the public,
  3. 25% of the equity disclosed in the last financial tables to the public,
  4. 20% of the gross sales revenue disclosed in the last financial tables to the public.

General assembly meetings may be opened to the beneficiaries and media having no right for them to comment therein. Such provision may be inserted to the articles of association.

Applications that complicate the usage of the voting rights and privileges in the voting rights shall be refrained. In case of privileges in the voting rights, the privileges that prevent the public shares to be represented in the management should be cancelled.

Minority rights may be granted to the persons who hold less than 1/20 of the share capital by a provision in the articles of association, and the capacity of the minority rights may be extended in the articles of association.

The company shall have a profit distribution policy. Such policy shall be submitted to the consent of the shareholders at the general assembly, stated in the annual report and disclosed to the public via website of the company.

Applications limiting or complicating the free transfer of the shares traded in the stock exchange shall be refrained from.

The website of the company shall be actively used for public disclosure and any and all information shall be updated therein.

The following information shall be stated in the website of the company (alongside with the required disclosure as per applicable law): information on the trade registry, current shareholding and management structure, details regarding the privileged shares, current articles of association together with the trade registry gazettes where any changes were announced, disclosures, financial reports, annual reports, prospectus and offering circular, agendas of the general assembly meetings, attendant list, meeting notes, power of attorney forms, information forms on the collection of shares and power of attorney for mandatory call, policy for purchasing its own shares, profit distribution mechanism, information policy, information on the transaction with related persons, ethical rules, questions, notices and information requests and their responses under frequently asked questions.

Beneficiaries are the employees and entities (i.e. clients, creditors, suppliers) related in achieving the objectives or business of the Company. The rights of beneficiaries shall be secured.

The board shall consist of at least 5 members. The board shall have at least one female director. The board shall consist of non-executive and executive members. The non-executive members shall include independent board members.

A clear distribution of duties between the chairman of the board and the executive chairman/general manager shall be made in the articles of association. The shareholders shall be informed in the general assembly meeting if the chairman of the board and the executive chairman/general manager are decided to be the same person and shall be explained in the annual report.

At least 1/3 of the members of board shall be independent board members. The fractions shall be completed to the following number. The number of the independent board members may not be less than 2.

A member who complies with the following criteria shall be deemed as an 'independent board member':

  1. He shall have no employment, capital or commercial relationship, direct or indirect, with the company, a person related with the company or with the legal entities having a management or capital interest by the shareholders holding 5% (direct or indirect) of the share capital and the member or any spouse or persons with blood or affinity relationship (to the third degree) within the last 5 years,
  2. He shall not have been employed in the firms conducting, in whole or in part, the business and organization of the company, especially audit firms or consulting firms, and he shall not have served as a director in such companies within the last 5 years,
  3. He shall not have been employed in the companies who supply significant services or products to the company and he shall not have been a shareholder or have served as an employee or a director in such companies within the last 5 years,
  4. He shall not hold more than 1 % of the share capital and such share shall not be privileged,
  5. He shall have the knowledge, education and experience in order to duly perform its duties in the board,
  6. To the extent possible by applicable law and except for the academics, he shall not be working as a full time basis in the governmental offices, at the time of the nomination and during its office,
  7. He shall be a resident in Turkey in accordance with the Income Tax Law.
  8. He shall have the ethical standards and occupational reputation and experience in order to give positive contribution to the company business and to keep his independency.
  9. He shall give his time to company business in order to duly perform his duties.

The board shall establish committees such as Audit Committee, Corporate Governance Committee, Committee of Early Determination of Risks, Nomination Committee, and Remuneration Committee. The Corporate Governance Committee may perform the duties of Nomination Committee, Committee of Early Determination of Risks, and Remuneration Committee if such committees cannot be established.

The Nomination Committee has important duties with regard to the nomination of the independent board members. It shall evaluate whether the nominees for the independent board member seat have the relevant criteria and provide a report to the board. The independent board member candidate shall submit a representation letter with regard to its independency.

The board shall submit the list of the independent board member candidates to the CMB at least 60 days prior to the general assembly meeting. The CMB shall submit its negative opinion, if any, within 30 days. If the CMB provides a negative opinion with regard to the nominee, such person cannot be nominated as the independent board member at the general assembly.

The affirmative vote of majority of the independent board members is required with regard to any and all related person transactions; and transactions for granting security, pledge and mortgage in favor of third parties. If the majority of the independent board members do not consent on such transactions then this shall be disclosed to the public along with all necessary details of the transaction and shall be submitted to the general assembly. The parties of the transaction and related persons may not vote in the decision of such transaction. The participation of the other shareholders shall be ensured. For the purposes of this article, the meeting quorum for the general assembly is not required and the decision shall be made with a simple majority. Any decisions adopted by the board or the general assembly without respecting this mandatory provision shall be void. Such provision shall be reflected to the articles of association.

Meeting and decision quorum of the board shall be determined in the articles of association.

The remuneration and other benefits given to the board members and the managers shall be disclosed to the public via annual report.


The Communiqué and the Rules provide mandatory provisions or advisory provisions for the listed companies to apply. In any case, the listed companies shall disclose whether the Rules are being applied or not; the reasons of non-application (if any); the conflict of interest which may arise in case of non-application and whether the company is planning to change its corporate governance principles in accordance with the Rules, in their annual report.


1. Published on the duplicated Official Gazette numbered 28081, dated 11.10.2011.

2. Published on the Official Gazette numbered 280158, dated 30.12.2011.

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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