The new Corporate Governance Communiqué (II-17.1) came into effect on January 3rd, 2014 after being launched by the Capital Markets Board of Turkey (CMB). The Corporate Governance Principles are revised with this new Communiqué as a part of an ongoing process which was launched on December 30, 2012 by the introduction of the CMB Law no.6362.

Series IV no:56 “The Communiqué regarding the Identification and the Application of Corporate Governance Principles” and Series IV no:41 “The Communiqué regarding the Principles for Joint Stock Companies” are repealed and no longer in effect. The new Corporate Governance Communiqué (II-17.1) reformulates some main Corporate Governance principles concerning the Companies that are planning to go public, related party transactions, the quota for women on Boards, investor relations departments and so on.

With the kind assistance of Naipoglu Law Firm, we have translated a section which could be of interest to investors from the new Communiqué. You may find below the English translation of the following articles; Shareholders: 1.3.5, Disclosure: 2.1.3 and Board: 4.3.6, 4.3.8 and 4.3.9.

CMB Communiqué (II-17.1)

Corporate Governance Principles

Shareholders:

1.3.5. At the general meeting, the chairman should be attentive to the issue of transferring the issues on the agenda detailedly and impartially with a clear and understandable method. The opportunities to ask questions and express their opinions under the same conditions should be given to the shareholders. The chairman should provide that each question which does not fall in the scope of business secret and asked by the shareholders at the general meeting be answered directly at the general meeting. In case the raised question is not related to the agenda or as comprehensive as that can not be answered immediately, the question should be answered in written form by the Investor Relations Department within 15 days. All the questions asked and the answers given to these questions during the general meeting, should be declared to the public on the Company’s website by the Investor Relations Department, within 30 days after the date of the general meeting at the latest.

Disclosure:

2.1.3.The financial table statements except for the special cases and foot notes, should be disclosed to the public according to capital market legislation and should be explained in English as well as Turkish simultaneously in Public Disclosure Platform. English statements should be prepared as a summary in consistent with the statements in Turkish and in an accurate, complete, direct, understandable, sufficient way to help the related person in deciding.

Board of Directors:

4.3.6. he member of the board of director is regarded as the “independent member” who is carrying the entire criteria below.

a) Between the company, the companies which the company has management control or significant authority and the partners who has the management control of the company or significant authority at the company and the legal persons which that partners have their management control and himself/herself, his/her spouse and relatives by blood and marriage until second degree, in last five years, absence of employment relationship at the position of director who undertakes the important tasks and responsibilities, not to be owned the capital or voting rights or more than 5% of the privileged shares either together or alone or important level of the commercial relationship has not been established.

b) In the last five years, not to be a partner (5% and more), a member of the board of directors or employee who undertakes the important tasks and responsibilities at the companies which significant services or products are purchased or sold pursuant to the agreements made, during the periods services or products purchased or sold, particularly the company’s auditing (including the tax auditing, legal auditing, internal auditing), grading and counselling.

c) Having the vocational education, knowledge and experience to fulfill the duties undertaken properly by reason of being an independent member of board of directors.

ç) Provided that they are in line with the relevant regulations, after being elected as a member not to be working full time at the state institutions and organizations, excluding university lecturer.

d) Being considered as resident in Turkey in accordance with the Income Tax Law (ITL) No. 193 Dated 31/12/1960.

e) Having the professional experience and prestige and strong ethical standards to decide freely taking into account the rights of the stakeholders, to protect neutrality in conflicts of interest between the company and the shareholders, to contribute positively to the company’s operations.

f) Being able to get around for company’s businesses fulfilling the requirements of the tasks undertaken properly and monitoring the functioning of the company’s operations.

g) Not being a member of the company’s board of directors more than six years within the past ten years.

ğ) For the same person, not being an independent member of the board of directors more than three of the companies which is owned by the company or the shareholders who holds management control of the both of the companies and totally more than five of the publicly-traded companies.

h) Not being registered and announced on behalf of the legal person elected as a member of the board of directors.

4.3.8.In case a situation occurs which eliminates the independence, this situation should be notified immediately to the board of directors by the independent member with its reasons to be announced in Public Disclosure Platform. The member in question should notify this situation and its reasons to the Board (Capital Markets Board) in written simultaneously. In that case, the member of the board of directors who lost his/her independence should resign as a principle. In order to restore the minimum number of independent members of the board of directors, the Nominating Committee should carry out an evaluation for the election of the independent members to the vacant memberships until the first general meeting to be held and declare the evaluation result to the board of directors in written. The board of directors should elect the independent member among the candidates determined in accordance with the report of the Nominating Committee

The provisions stated in this Article, are also valid in the cases of resignation of the independent member of the board of directors or such independent directors being unable to fulfill his/her tasks.

4.3.9. The company, should determine a target rate (should not be less than 25%) and a target date for the rate of female members on the board of directors and create the policies to reach these goals. The board of directors should evaluate the progress achieved in reaching these goals annually.

For the entire text of the Communiqué, please go to this link.