COVID-19 Measures Adopted Under the Provisional Article 13 of the Turkish Commercial Code for the Protection of the Equity of Stock Corporations

ABSTRACT

Several legal amendments regarding the economic life in Turkey have been made to prevent the negative impacts of the coronavirus disease 2019 (COVID-19). The Provisional Article 13 of the Turkish Commercial Code (TCC) has been adopted due to the precautionary principle. This regulation aims to keep the equity of stock corporations within the company during this epidemic. The provision aims to ensure the continuity of the stock corporations in our country by overcoming the COVID-19 pandemic with minimum damage. According to the provision, for a certain period of time, the corporations can only distribute their net profits for the fiscal year of 2019 up to 25%, cannot subject the previous years' dividends and distributable reserves to distribution, and cannot give authority to their governing bodies to distribute advance dividend. The enforcement date of the provision has initiated new discussions in Turkish law about the validity and execution of general assembly resolutions. This study examines the principle of capital maintenance and possible problems regarding the outcome of the general assembly resolution about distribution after determining the basic concepts, scope, and execution area of the TCC's Provisional Article 13.