Dividends in Turkish Listed Companies: Profit Distribution Policy, Communiqué II-19.1 and Minority Shareholder Remedies

For a long-term institutional investor, dividends are where a company’s results reach its shareholders. In Turkish listed companies, the general meeting distributes profit under a dividend policy it has adopted, and the law sets the order: legal reserves and the dividend set for shareholders in the articles or the policy must come first, and only after shareholders are paid in cash may the company carry profit forward, set aside other reserves or give profit shares to board members, employees or other persons (Capital Markets Law Art. 19(1)–(2); Communiqué II-19.1 Art. 5(3)). Dividends are paid equally on all existing shares regardless of when they were issued or acquired (Art. 19(3)). Payments to persons other than shareholders need a provision in the articles and, if no rate is set, are capped at one quarter of the dividend paid to shareholders (Communiqué Art. 5(4)). Listed companies have no fixed minimum payout, so a minority shareholder’s protection lies in the general meeting vote, the rules on extra reserves (Commercial Code Art. 523(2)), the annulment action and the rules against concealed profit transfer. This guide explains these rules, dividend advances, donations, scrip dividends and the remedies available. It reflects the legislation in force as at 25 October 2026.

Why dividend rules matter in a crisis

Controlling shareholders can benefit from a company’s profits in ways other than dividends: through management fees, transactions with group companies, board profit shares, donations to affiliated foundations or simply by keeping cash in the company where they control its use. Minority shareholders benefit only through dividends and the share price. When the share price has fallen sharply, as it did for many companies during the 2026 fund and market manipulation crisis, dividends become the main way a long-term holder receives a return, and decisions to retain profit or to route it elsewhere deserve close scrutiny.

Turkish law does not require listed companies to distribute a set percentage of profit. It does, however, require a published policy, a fixed order of priority, equal treatment and transparency, and it limits payments to persons other than shareholders. The overview of the 2026 cases and the full series of guides is in the legal guide to Turkey’s 2026 fund and market manipulation crisis.

The legal framework

Public companies distribute profit under dividend policies set by their general meetings and in accordance with the legislation, and SPK may set different principles for similar companies (Capital Markets Law Art. 19(1)). The Law also sets the order of priority (Art. 19(2)), equal distribution (Art. 19(3)), the allocation of bonus shares (Art. 19(4)), donations (Art. 19(5)) and dividend advances (Art. 20). The detailed rules are in the Dividend Communiqué No. II-19.1 (Official Gazette 23 January 2014, No. 28891), in force since 1 February 2014 (Art. 18). The Commercial Code supplies the general company law rules on dividends and reserves (Arts. 507–523).

The dividend policy

Every public company must have a dividend policy adopted by its general meeting (Communiqué II-19.1 Art. 4(1)). The policy must state at least (Art. 4(2)):

1. 1. whether dividends will be paid and, if so, the distribution rate set for shareholders and other persons participating in profit;
2. 2. the method of payment;
3. 3. the timing of payment, on condition that distribution starts at the latest by the end of the financial year in which the general meeting deciding on the distribution is held;
4. 4. whether dividend advances will be paid and, if so, on what basis.

If the company wants to change its policy, the board decision and the reasons for the change must be disclosed under the special situations rules (Art. 4(3)). A policy that promises a payout which the board then repeatedly proposes to withhold, or a policy changed shortly before a meeting without convincing reasons, is a point to raise at the general meeting and, where appropriate, in an annulment action.

The general meeting decision and the distribution table

Profit is distributed by general meeting resolution (Communiqué II-19.1 Art. 4(1)). For listed companies, the board’s proposal on profit distribution must be disclosed together with a profit distribution table in the form set by SPK, at the latest on the date the ordinary general meeting agenda is announced (Art. 8(1)). The financial statements, the board’s annual report and the board’s profit distribution proposal must also be available for shareholders’ inspection at least fifteen days before the meeting (Commercial Code Art. 437(1)).

The profit distribution table is the key document. It shows the profit for the period under capital markets accounting and in the statutory books, the reserves set aside, prior losses, donations added back, the first dividend to shareholders, any payments to other persons and the amount retained. Comparing it with the dividend policy and the articles shows whether the proposal follows the required order and limits.

Under the corporate governance principles, the meeting information must also be published at least three weeks before the meeting, and questions asked at the meeting must be answered or, if complex, answered in writing within fifteen days. These rules are explained in the guide to corporate governance in Turkish listed companies.

What can be distributed

Dividends may be paid only out of net profit for the period and free reserves; no interest may be paid on capital (Commercial Code Art. 509). Before any dividend is determined, the legal reserves and any optional reserves required by the articles must be set aside (Art. 523(1)). The main legal reserve rule is that 5 per cent of annual profit is set aside until the general legal reserve reaches 20 per cent of paid-in capital; after that, among other additions, one-tenth of the total to be distributed to persons sharing in profit after a 5 per cent dividend to shareholders is added to it (Art. 519(1)–(2)).

The Dividend Communiqué adds capital markets rules on the calculation:

• ▸ Prior losses. Prior years’ losses, to the extent they exceed the sum of prior years’ profits, the general legal reserve including share premiums and the inflation adjustments to equity items other than capital, are deducted in calculating net distributable profit (Communiqué II-19.1 Art. 11).
• ▸ Donations added back. Donations made during the financial year are added to the distributable profit base (Art. 6(1); Capital Markets Law Art. 19(5)).
• ▸ SPK guide. SPK publishes and updates a guide on the resources available for distribution and on dividend and advance calculations (Art. 13).

Because profit is measured both under capital markets accounting and in the statutory books, the distributable amount depends on both. Where the two differ significantly, the reasons should be explained in the distribution table and can be asked about at the meeting.

Shareholders first

The Capital Markets Law fixes the order. Unless the legal reserves and the dividend set for shareholders in the articles have been set aside, no other reserves may be set aside, no profit may be carried forward, and no profit shares may be given to holders of usufruct certificates, board members or employees; and until the dividend set for shareholders has been paid, no profit may be paid to these persons (Capital Markets Law Art. 19(2)). The Communiqué extends this to the dividend set in the dividend policy and to persons other than shareholders generally, and requires the shareholders’ dividend to be paid in cash before others receive anything (Communiqué II-19.1 Art. 5(3)).

Payments to others are further limited. Profit shares may be given to privileged shareholders, holders of usufruct certificates, board members, employees and persons other than shareholders only if the articles provide for it. If the articles allow such payments but do not set a rate, the amount paid to these persons may not exceed one quarter of the dividend paid to shareholders, excluding amounts arising from privileges (Art. 5(4)). Board members’ profit shares may be paid only from net profit, after the legal reserve has been set aside and a dividend of 5 per cent of paid-in capital, or a higher rate set in the articles, has been distributed to shareholders (Commercial Code Art. 511(1)).

Equal treatment and instalments

Dividends are distributed equally on all shares existing at the distribution date, in proportion to holdings and regardless of when the shares were issued or acquired; rights arising from dividend privileges are reserved (Capital Markets Law Art. 19(3); Communiqué II-19.1 Art. 5(1)).

Dividends may be paid in equal or different instalments if the general meeting so decides when approving the distribution (Art. 5(2)):

• ▸ The number of instalments is set by the general meeting, or by the board if expressly authorised.
• ▸ If the meeting does not set the payment dates, the dates set by the board must be disclosed within fifteen days after the meeting.
• ▸ Each instalment is paid equally on all shares existing at the payment date.
• ▸ Amounts payable to persons other than shareholders are paid in proportion to, and on the same terms as, the shareholders’ instalments.

In an inflationary environment, the timing of payment matters. A dividend paid in late instalments loses real value, and the policy’s statement on timing, together with the requirement that distribution start at the latest by the end of the financial year of the meeting, are the reference points (Art. 4(2)(c)).

Retention and extra reserves

Listed companies are not required by the Dividend Communiqué to distribute a minimum percentage of profit. The minimum distribution rule in the Communiqué, 20 per cent of net distributable profit with donations added back, applies only to public companies whose shares are not traded on the exchange, which must also pay in full and in cash (Communiqué II-19.1 Art. 7(1)–(2)).

The decision to retain profit is nevertheless limited by company law. Beyond the reserves required by law and the articles, the general meeting may set aside further reserves only if this is necessary to replace assets, or if it is justified, having regard to the interests of all shareholders, by the company’s continued development and by the aim of distributing dividends as steadily as possible (Commercial Code Art. 523(2)). Retention also remains subject to the order of priority described above, so profit cannot be carried forward until the dividend set for shareholders in the articles or the policy has been set aside (Capital Markets Law Art. 19(2)).

Repeated retention of profit, in a company that is at the same time making substantial payments to related parties, is the pattern that raises the strongest questions under Art. 523(2) and under the principle of good faith that governs general meeting resolutions (Commercial Code Art. 445).

Dividend advances

Listed companies may pay cash dividend advances out of profits in their interim financial statements (Communiqué II-19.1 Art. 9(1)). The conditions are:

1. 1. Authority. The articles must allow advances and the general meeting must authorise the board for the financial year concerned, deciding at the same time that, if profit at year-end is insufficient or a loss arises, the advance will be offset against resources available for distribution in that year’s annual balance sheet (Art. 9(2)).
2. 2. Decision and disclosure. If authorised, the board must decide whether or not to pay an advance and disclose the decision at the latest when the interim financial statements are disclosed (Art. 9(3)).
3. 3. Equal payment. Advances are paid equally on all shares existing at the distribution date, are not paid to persons other than shareholders, and are paid to privileged shares without regard to the privilege (Art. 9(4)). An advance for a given interim period cannot be paid in instalments (Art. 9(1)).
4. 4. Limits. The advance may not exceed half of the interim net profit after deducting the reserves required by law and the articles and prior losses (Art. 10(1)). Total advances in a financial year may not exceed the lower of half of the previous year’s net profit and the other distributable resources in the interim statements excluding the period’s profit (Art. 10(2); Capital Markets Law Art. 20(1)).
5. 5. Offsetting. Advances paid in earlier periods must be offset before further advances or dividends are paid (Art. 10(4); Capital Markets Law Art. 20(1)).

Board members, and auditors to the extent of their reports, are liable, according to their fault and the circumstances, to the company, shareholders, creditors and directly to persons who acquired shares in the financial year in which the advance was decided or paid, for losses arising because the interim financial statements did not fairly present the position or were not prepared in accordance with the rules, making the advance incorrect. Where civil liability arises, shareholders and board members may bring an annulment action within thirty days of the announcement of the decision (Capital Markets Law Art. 20(2); Communiqué Art. 9(5)).

Donations

A public company may make donations only if its articles provide for it. Where the articles do not set the limit, the general meeting sets it, and SPK may impose an upper limit. Donations made during the financial year are added to the distributable profit base (Capital Markets Law Art. 19(5); Communiqué II-19.1 Art. 6(1)). Donations and payments under this article must be disclosed under the special situations rules and presented to shareholders at the ordinary general meeting (Art. 6(2)). The prohibition of concealed profit transfer and the mandatory corporate governance principles remain applicable (Art. 6(3)).

Adding donations back to the distributable base means that a company cannot reduce the dividend calculation by making donations. Donations to foundations, associations or other bodies linked to the controlling group are nonetheless a recognised route for moving value, and the concealed profit transfer rules are explained in the guide to concealed profit transfer.

Dividends paid in shares

A company may decide to distribute dividends in the form of bonus shares instead of cash. In public companies, bonus shares are distributed to the shares existing at the date of the increase (Capital Markets Law Art. 19(4)). The Share Communiqué sets deadlines: for companies in the registered capital system, the general meeting resolution to distribute dividends in shares must have been taken and the application made to SPK by the last business day of the fifth month after the financial year; for other companies, the application for SPK’s favourable opinion on the amendment must be made by the last business day of the fourth month, and the general meeting must be held within one month of the opinion (Share Communiqué VII-128.1 Art. 16(6)).

A scrip dividend gives shareholders no cash. Where the dividend policy promises cash and the board proposes shares instead, or where scrip dividends are combined with payments in cash to persons other than shareholders, the order of priority and the policy should be checked. Capital increases from internal resources are explained in the guide to capital increases and dilution.

Unclaimed dividends

Dividends not collected by shareholders and other persons entitled to profit are time-barred five years after the distribution date, under Law No. 2308 on the transfer to the Treasury of time-barred coupons, bonds and share amounts (Communiqué II-19.1 Art. 12). For listed shares held in dematerialised form through MKK, payments are normally credited through the custody chain; a foreign institution should nevertheless reconcile entitlements and receipts, particularly after corporate actions or changes of custodian.

Warning signs of profit diversion

The following patterns call for closer examination of a company’s distribution decisions:

• ▸ Low payout, high related-party flows. Profit is retained year after year while management fees, purchases, loans or guarantees benefit group companies.
• ▸ Payments to others without a shareholder dividend. Board profit shares or employee profit shares paid while shareholders receive nothing or receive their dividend later (Capital Markets Law Art. 19(2)).
• ▸ Payments above the quarter cap. Payments to non-shareholders exceeding one quarter of the shareholders’ dividend where the articles set no rate (Communiqué II-19.1 Art. 5(4)).
• ▸ Large donations to bodies linked to the controlling group.
• ▸ Policy changes before the meeting without convincing reasons (Art. 4(3)).
• ▸ Advances based on doubtful interim figures, followed by losses at year-end.
• ▸ Profit-sharing arrangements with related parties. The company forgoes activities a prudent and honest merchant would undertake to protect or increase its profits, so that related persons’ profits increase. The Law provides an administrative fine on the company in this case, not less than twice the benefit obtained (Capital Markets Law Art. 103(6)).

Remedies for minority shareholders

1. 1. Use the meeting. Inspect the documents fifteen days before the meeting (Commercial Code Art. 437(1)), ask the board for information at the meeting (Art. 437(2)), vote against a distribution proposal that breaches the policy, the priority rules or Art. 523(2), and have the dissent recorded.
2. 2. Add agenda items. Shareholders holding one-twentieth of a public company’s capital may require the board to call a meeting or add items to the agenda, for example on the dividend policy (Commercial Code Art. 411(1)).
3. 3. Annulment action. A resolution contrary to the law, the articles or in particular the principle of good faith may be annulled on an action brought within three months of the resolution; plaintiffs include shareholders who attended, voted against and had their dissent recorded (Commercial Code Arts. 445 and 446). The guide to shareholder rights in Turkish listed companies explains the procedure.
4. 4. Recover unlawful payments. Shareholders who received dividends unjustly and in bad faith must repay them, as must board members who received profit shares; the claim is time-barred five years after receipt (Commercial Code Art. 512).
5. 5. Dividend advances. Where a dividend advance gives rise to civil liability, shareholders may bring an annulment action within thirty days of the announcement of the board decision, and directors and auditors are liable for incorrect advances (Capital Markets Law Art. 20(2)).
6. 6. Directors’ liability. Directors who caused loss by breaching their duties are liable; shareholders may sue for compensation to the company (Commercial Code Arts. 553 and 555). See the guide to directors’ and auditors’ liability.
7. 7. Complaint to SPK. Breaches of the Dividend Communiqué, concealed profit transfer and the conduct described in Art. 103(6) can be reported to SPK for administrative action.

Points for institutional investors

• ▸ Read the policy and the articles. Note the stated payout, the timing, any provision for payments to board members, employees or others, and any rate set for them.
• ▸ Check the distribution table. Confirm the order of priority and the quarter cap, and compare the proposal with the policy.
• ▸ Compare retention with related-party flows. Read the distribution table alongside the recurring related-party transaction report and the donations disclosure.
• ▸ Vote and record dissent where the proposal is unjustified; this preserves the annulment action.
• ▸ Coordinate. Holders together owning one-twentieth of the capital can place the dividend policy on the agenda.
• ▸ Watch advance decisions. Advances are decided by the board on interim figures; the thirty-day annulment period runs from the announcement.
• ▸ Reconcile receipts. Track entitlements through the custody chain; unclaimed dividends are time-barred after five years.

Action plan

1. 1. Gather the documents. The dividend policy, the articles, the profit distribution table, the financial statements and the related-party disclosures.
2. 2. Test the proposal. Check the distributable amount, the reserves, the order of priority, payments to others and the quarter cap.
3. 3. Test retention. Where profit is retained, ask whether Art. 523(2) is satisfied and how retention fits with related-party payments.
4. 4. Engage before the meeting. Send written questions to the investor relations department and, with other holders, consider an agenda request.
5. 5. Vote and record. Attend, vote and have dissent recorded where appropriate.
6. 6. Act within time. File an annulment action within three months of the resolution, or within thirty days for a dividend advance decision.
7. 7. Escalate. Complain to SPK about breaches and concealed profit transfer, and assess claims against directors.

Time limits

Frequently asked questions

Must Turkish listed companies pay a minimum dividend?

No fixed minimum applies to listed companies; they distribute under the policy adopted by their general meeting. The 20 per cent minimum in the Dividend Communiqué applies to public companies whose shares are not traded on the exchange (Communiqué II-19.1 Arts. 4 and 7).

What must a dividend policy contain?

Whether dividends will be paid and at what rate, the method and timing of payment, and whether advances will be paid (Communiqué II-19.1 Art. 4(2)).

Can a company pay its directors before paying shareholders?

No. Until the dividend set for shareholders in the articles or policy is paid in cash, no profit share may be paid to directors, employees or others (Capital Markets Law Art. 19(2); Communiqué Art. 5(3)).

How much can be paid to persons other than shareholders?

Only what the articles provide; if no rate is set, at most one quarter of the dividend paid to shareholders, excluding privilege-based amounts (Communiqué Art. 5(4)).

Do all shares receive the same dividend?

Yes, equally on all shares existing at the distribution date regardless of issue or acquisition date, subject to dividend privileges (Capital Markets Law Art. 19(3)).

Can the general meeting keep all the profit in reserves?

Beyond legal and articles-based reserves, only where necessary to replace assets or justified by the company’s development and steady dividends, considering all shareholders’ interests (Commercial Code Art. 523(2)), and subject to the order of priority.

From what can dividends be paid?

Only from net profit for the period and free reserves (Commercial Code Art. 509(2)), after legal reserves and deduction of prior losses as set out in Communiqué II-19.1 Art. 11.

Can dividends be paid in instalments?

Yes, if the general meeting decides so; each instalment is paid equally on shares existing at the payment date (Communiqué Art. 5(2)).

Can a listed company pay a dividend advance?

Yes, from interim profits, if the articles allow it and the general meeting authorises the board for the year, within the limits of Communiqué Arts. 9–10 and Capital Markets Law Art. 20.

Who is liable for an incorrect dividend advance?

Board members, and auditors to the extent of their reports, according to their fault (Capital Markets Law Art. 20(2)).

Do donations reduce the dividend?

Donations made in the year are added back to the distributable profit base (Capital Markets Law Art. 19(5); Communiqué Art. 6(1)).

How long can I claim an unpaid dividend?

Uncollected dividends are time-barred five years after the distribution date (Communiqué Art. 12).

How do I challenge a decision not to pay a dividend?

By an annulment action within three months of the resolution, after voting against and recording dissent, on grounds such as breach of the priority rules, Art. 523(2) or good faith (Commercial Code Arts. 445 and 446).

Can shareholders put the dividend policy on the agenda?

Shareholders holding one-twentieth of a public company’s capital can require items to be added to the agenda (Commercial Code Art. 411(1)).

Is diverting profits to related companies sanctioned?

Yes. Concealed profit transfer is prohibited (Capital Markets Law Art. 21), and forgoing profitable activities to benefit related persons can lead to a fine of not less than twice the benefit (Art. 103(6)).

Related guides

• Turkey’s 2026 Fund and Market Manipulation Crisis: Legal Guide for Foreign Institutional Investors — the entry point to this series
• Turkish Investment Fund Rules: Communiqués III-52.1, III-55.1 and III-56.1
• Market-Disrupting Acts in Turkey: Article 104 and Communiqué VI-104.1
• Financial Reporting Fraud and Audit Failures in Turkish Listed Companies
• Shareholder Rights in Turkish Listed Companies
• Concealed Profit Transfer in Turkey
• Corporate Governance in Turkish Listed Companies
• Directors’ and Auditors’ Liability in Turkish Listed Companies
• Capital Increases and Dilution in Turkish Listed Companies
• Share Buy-Backs in Turkey
• Mergers, Asset Sales and Exit Rights in Turkish Listed Companies
• Mandatory Tender Offers in Turkey
• Limitation Periods for Investor Claims in Turkey