3 April 2020 – The Turkish government has taken several measures recently to reduce the negative economic impact of the COVID-19 pandemic. Kinstellar’s COVID-19 Task Force in Istanbul summarises below the main measures impacting economic undertakings in Turkey.
1. Dividend distribution in joint stock companies
The Ministry of Commerce sent a letter on 31 March 2020 to the Chambers of Industry and Trade and to the commodity exchanges via the Union of Chambers and Commodity Exchanges of Turkey announcing that the following matters should be added to the agendas of the General Assembly meetings for 2019 for the protection of shareholder capital, which may be affected by COVID-19:
(i) no dividend distribution shall be made over 25% of 2019’s net dividend,
(ii) no dividend of previous years shall be distributed, and
(iii) the Board of Directors shall not be granted the authority to distribute advance dividends.
Pursuant to the Regulation on the Procedures and Principles of General Assembly Meetings of Joint Stock Companies and the Representatives of the Ministry of Customs and Commerce Who Will Attend Such Meetings, companies shall consider these agenda items at their General Assembly meetings of 2019 even if, contrary to what is recommended, they do not vote in favour of these items.
2. Extension of Social Security premium payments
As per the notification of the Social Security Institution dated 2 April 2020, the following social security premium payments (including Bağ-Kur premium payments) of employers that are accepted to be in force majeure between 1 April 2020 and 30 June 2020 are extended:
Default penalty and interest will not apply to these extensions.
The following employers will benefit from the extensions:
– retail, including shopping malls,
– health services,
– furniture production,
– iron, steel and metal industry,
– mining and quarrying,
– construction services,
– industrial kitchen manufacturing,
– automotive production and trade, OEM manufacturing for automotive industry,
– car rental,
– logistics, including warehousing activities and transportation,
– artistic services such as cinemas and theatres,
– publishing activities of books, newspapers, magazines and similar printed products including printing activities,
– accommodation activities including tour operators and travel agents,
– food and beverage services such as restaurants and coffee houses,
– textile and outfitting production and trade activities,
– event and organisation services, including human resources,
– taxpayers whose principal fields of business are temporarily suspended by the measures of the Ministry of Internal Affairs,
– taxpayers who are obliged to pay real or small income tax due to their commercial or self-employment earnings,
– taxpayers who are exempt from income tax and registered with the registry of merchants and craftsmen,
– taxpayers engaged in agricultural activities,
– shareholders of joint stock companies who are also board members, active partners of limited partnerships, all shareholders of other companies and associations of ship owners whose legal entities are listed above and accepted to be in force majeure as to their main fields of business,
Additionally, social security premium payments (including Bağ-Kur, excluding voluntary insurance) of employers who are above the age of 65 and who have chronic diseases are extended to the 15th day following the end date of the mandatory lockdown.
3. Continuation of salary confiscation payments
As per the notification of the Ministry of Justice dated 2 April 2020, salary confiscation deductions will continue during the outbreak.
4. Force majeure conditions for public tender contracts
The Circular of the Presidency dated 2 April 2020 provides that an application should be made to the contracting Administration documenting the impossibility of a contractual performance, if the performance is not possible due to COVID-19, temporarily or permanently, in part or in whole. As per Article 10 of the Public Tender Contracts Law, the contractor should apply to the Administration in writing within 20 days following the occurrence of the force majeure event.
The Administration will decide after assessing whether the following conditions coexist:
Following the assessment, if the application constitutes force majeure, the Administration will decide on (i) extension of the contract term or (ii) termination of the contract. The Administration will refer to the assessment of the Treasury and the Ministry of Finance before making its decision.
For any questions, please contact COVID_IST_CoreTeam@gentemizerozer.com.