The “Communiqué on the principles regarding the elimination of privileges and the right to vote and representation in the Board of Directors (II-28.1)” has been published in the official gazette dated January 10, 2020, and numbered 31004. With the new regulation;
In the event that the conditions specified in the Communiqué occur, it is stipulated that the privileges and the right to vote and representation in the board of directors will be eliminated by a Board decision and the companies decided to eliminate the privileges are required to make the necessary changes in the articles of association at their first general meeting. The regulation introduced by the Communiqué is for the elimination of privileges regarding voting rights and representation in the board of directors, and not for the appointment of trustees and /or members of the board of directors by the Board in any way.
As stipulated in the Communiqué, companies, which have made losses for five consecutive years, submit their statements regarding the reasonable and compulsory outcomes of their loss-causing activities to the Board. Furthermore, several conditions that can be taken into consideration by the Board regarding the existence of reasonable and compulsory conditions have been regulated.
As a result of the elimination of the privileges with the Board Decision, which have made losses for a period of five consecutive years, it has been accepted that there is no obligation to secure management control and to propose a share purchase since more than fifty percent of the voting rights in the related partnership has been obtained.
For the companies which are publicly-held before the publication date of the Communiqué, the application date of the Communiqué defers depending on their accounting period. While publicly-held companies with a normal accounting period (calendar year) application date of the Communiqué is the annual special account period ending on 31.12.2013; for the publicly-held companies with special accounting periods, it is the annual special accounting period ending in 2014. For companies to go public, it is regulated that the five-year period will start as of the first annual accounting period starting after the year in which the publicly-held partnership status was assumed.
In the event that the independent auditor's opinion regarding the financial statements used in the determination of the period loss is negative or if the opinion is avoided, it is foreseen that the related financial statements will be re-prepared within eight months from the submission of the statements to the board of directors. If new financial statements without a negative opinion is not prepared within eight months, for the evaluation to determine the period loss, the financial statements which were avoided to be given negative opinion or any opinion in that manner, will be taken into consideration by the Board ex officio as a financial statement resulted in the period loss.
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