Dividend Policy

There is no privilege on dividend distribution of the Company in accordance with Articles of Association.

Board of Directors of Turcas Petrol A.Ş. takes into consideration the Company’s Articles of Association, related legislation, law and market conditions while deciding on dividend distribution. In dividend distribution, the Company’s  equity rate, sustainable growth rate, market value and cash flows are taken into account by paying utmost attention to preservation of balance between investments required for the growth of the Company and financing of such investments. Within this framework, the Company has a principle of distributing dividend at a rate, which shall not adversely affect the Company’s market value and shall meet the expectations of the shareholders at the highest level. Payment timing and method of dividends to be allocated from net profit and other percentages shall be decided by the General Assembly upon proposal of the Board of Directors within the framework of Capital Markets Law and related Communiques. Dividends distributed in compliance with Articles of Association can not be taken back.

The “Dividend Distribution Policy” is hereby determined via considering the Turkish Commercial Code, Capital Markets Law, tax laws and other related regulations as well as the Company’s Articles of Association:

Determination of Net Income and Dividend Distribution Procedure

Net income of our Company disclosed on annual financial statements is the amount remaining after deducting general expenses and amounts required to be paid or reserved by the Company such as various depreciation expenses and taxes that are obligatory to be paid by legal personality from revenues generated during the annual period. After deducting previous years’ losses (if they exist), from the current period’s net income, net income shall be allocated as follows:

a. 5% of the net income is allocated as legal reserve,

b. From the remaining amount, in other words distributable net income for the period, first dividend shall be allocated after addition of donations made within the year if any, in accordance with Turkish Commercial Code and Capital Markets Legislation. First dividend amount of the Company cannot be less than 20% of the remaining distributable profit after deducting previous years’losses, if any, and legal reserves, taxes, funds and financial payments that are necessary to be allocated from net period profit in accordance with related legislation.  This rate may vary upon the Capital Markets Board’s decision of change. Upon recommendation of the Board of Directors, the General Assembly may decide on first dividends to be distributed in cash and/or in the form of shares or on non-distribution and retention of the amount within the Company.

Out of the amount remained after allocations in subparagraphs (a) and (b), upon the proposal of the Board of Directors and approval of the General Assembly:

(i)                   Dividend may be distributed to Board Members, personnel or personnel funds unless the dividend amount exceeds 2% of annual net profit,

(ii)                 Second dividend may be distributed to shareholders. Out of the amount resolved to be distributed to the shareholders as the second dividend and distributed to the participants of the net income; 10% is set aside and transferred to the legal reserves as per paragraph 2 of Article 519 of the Turkish Commercial Code.

(iii)                Clauses (i) and (ii) may be waived partially or completely and remaining net income may be transferred to extraordinary reserves or it may be registered in a provisional account and not distributing it for a certain or uncertain period.

 

Unless the legal reserves mandatory to be allocated as per the provisions of the Turkish Commercial Code and the Capital Markets Law and the first dividend determined for the shareholders in the Articles of Association are set aside, it shall not be resolved to allocate any other legal reserves, to transfer net income to the next year and to distribute dividends to the Members of the Board of Directors, employees, servants and workers.

Board of Directors may distribute advance dividends provided that it is directed by General Assembly and it complies with regulations of the Capital Markets Board’s legislation. Authority to distribute advance dividends granted to the Board of Directors is limited to the year in which this authority is given. Unless advance dividends  of the previous year are set off completely, it cannot be decided to give supplementary advance dividends and/or distribute dividends.

Other Provisions

· In application of the dividend distribution policy, a balanced policy is followed via taking care of both the interests of the shareholders and the interests of the Company.

· The General Assembly shall resolve when the dividend is to be distributed to the shareholders upon the proposal of the Board of Directors. However, if the entire dividend amount is to be distributed in cash, best effort is made to ensure that the same shall be paid latest until the end of the 5th month. In case of other distribution methods, the related laws, regulations, communiqués and arrangements of the Capital Markets Board shall be applicable.

· The dividend pro rata to the shares is distributed to the existing shares, regardless of the issuance and acquisitions dates thereof, as of the end of the fiscal period without application of principle of per diem deduction.

· If calculated “net distributable period income” is below 5% of issued capital, dividend distribution may not be made.

· In case of non-distribution of dividends, the Board of Directors submits to the information of the shareholders at the General Meeting why the dividend is not distributed and where the retained profit is used.