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Corporate Governance Principles
The Capital Markets Board's (the Board) Serial: IV, No: 56 "Communiqué on the Determination and Implementation of Corporate Governance Principles" (Communiqué) entered into force upon its publication in the Official Gazette on 30 December 2011. With the Communiqué, the scope of the Communiqué, which was previously determined for public joint stock companies listed in the BIST-30 Index, except for banks, has been expanded to include public joint stock companies whose shares are traded on Borsa Istanbul, except for those traded in the Emerging Companies Market and the Detention Market.
Companies traded on Borsa Istanbul are divided into three groups according to their market capitalisation and market capitalisation of shares in actual circulation. Different levels of obligations have been introduced for each group in terms of compliance with corporate governance principles. Group I companies are composed of companies with an average market capitalisation above TL 3 billion and an average market capitalisation of shares in actual circulation above TL 750 million; Group II companies are composed of companies outside Group I with an average market capitalisation above TL 1 billion and an average market capitalisation of shares in actual circulation above TL 250 million. Except for the companies traded in the Emerging Companies Market and the Detention Market and the companies included in the first and second groups, all other companies constitute the Third Group companies.
The amendments to the articles of association and the restructuring of the board of directors required to be made in order to comply with the Communiqué must be completed by the first general assembly meeting to be held no later than 30.06.2012. However, the Communiqué states that the Communiqué will enter into force one year after the date of publication for banks whose shares are traded on Borsa Istanbul and on the date of publication for other listed companies.
In the presence of justified grounds, with the approval of the Board, those who do not fulfil one or more of the independence criteria may be elected as independent board members by the general assembly for a temporary period up to a maximum of one year.
The Capital Markets Board's (the Board) Communiqué Serial: IV No: 56 "Communiqué on Determination and Implementation of Corporate Governance Principles", which entered into force upon its publication in the Official Gazette dated 30/12/2011 and numbered 2815/2011, in order to eliminate the problems and hesitations that may arise in practice, taking into account the opinions and suggestions submitted to the Board after its publication. For this purpose, Serial: IV, No: 57 "Communiqué Amending the Communiqué on Determination and Implementation of Corporate Governance Principles" was published in the Official Gazette dated 11.02.2012 and numbered 28201 and entered into force. In this framework, 3 principles were added to the published principles and 4 principles were amended.
Information on the regulations introduced with the new Communiqué is given below;
The provision of Article 1.3.10 of the Principles regarding the matters that are deemed as material transactions in terms of the implementation of the Corporate Governance Principles that the transactions cannot be executed without the approval of the majority of the independent board members has been removed. In the event that the majority of the independent board members do not approve the material transactions and the Company intends to execute such transactions despite the opposition of the majority of the independent board members, the transaction must be submitted to the general shareholders' meeting for approval. In this case, the reasons for the opposition of the independent board members must be immediately disclosed to the public, notified to the Board and read at the general shareholders' meeting.
Article 4.3.4 of the Principles stipulates that "The number of independent members in the board of directors should not be less than one third of the total number of members and should be at least enough to represent the ratio of shares in actual circulation. However, the ratio of independent members in the board of directors may be limited to 50% by the general assembly of the company." has been amended and it has been deemed sufficient that the number of independent members in the board of directors should not be less than one third of the total number of members.
Article 4.3.5 of the previous Communiqué has been amended and the expression "the term of office of the independent board members shall be up to three years" has been included in order to ensure that the term of office of the independent board members shall be maximum three years.
In Article 4.3.7 of the previous Communiqué, the criterion of "being deemed to be resident in Turkey according to the Income Tax Law", which was listed among the criteria to be fulfilled by independent board members, has been preserved as it is, but a new paragraph has been added to the criteria and it has been stated that it is sufficient for at least half of the independent members to fulfil the criterion of being resident in Turkey.
Article 4.3.7, which lists the criteria for becoming an independent board member. The clause "Being able to allocate time for company affairs to the extent that he/she can follow the functioning of the company's activities and fully fulfil the requirements of the duties he/she undertakes" has been added to the article.
It is aimed to clarify the scope of the independent member candidate list review process to be carried out by the Board as stated in Article 4.3.8 of the Principles. In this framework, it has been stated with the amendment that the examination will be made within the framework of the independence criteria stated in Article 4.3.7 of the Principles.
The principle "4.3.10. There shall be at least one female member on the board of directors" has been added to the Principles. This principle has not been accepted as a mandatory principle, but as a recommendatory principle in accordance with the principle of "apply, if not, explain".