What is the right to a dividend in a joint-stock company?
The difference between the shareholder’s right to participate in profit and the right to a claim
A dividend is the amount falling to a shareholder out of the net profit for the period or the free reserves that the company has resolved to distribute in accordance with the law and its articles of association. TTK Art. 507 guarantees that every shareholder participates in the net profit for the period that has been resolved to be distributed in proportion to his or her share. Valid privileges granted by the articles of association and provisions specific to capital markets legislation are reserved.
This provision lays the foundation of a proprietary interest that is attached to shareholding and cannot be removed. However, where the general assembly has not yet made a distribution resolution, the balance sheet profit alone does not show that a personal claim has fallen due. The first stage is the right to participate in profit; the second stage is the concrete claim that depends on the distribution resolution and the payment date. This distinction is decisive in choosing the correct type of action.
Is profit distribution the purpose of the company, and is it mandatory every year?
That the company’s economic activity generates profit and that shareholders participate in it is the basis of the joint-stock company model. Nevertheless, because of the financing of activities, past losses, statutory provisions and necessary investments, it is not mandatory to distribute profit every year. The general assembly may resolve not to distribute; but this choice cannot be turned into an unreasoned, disproportionate, selective means of systematically depriving minority shareholders.
Company managers and controlling shareholders must be able to explain the reason for not distributing in terms of the company’s financial statements, cash flow, indebtedness, investment programme and equality among shareholders. If, despite profit being declared, payment is not made to all shareholders while resources are in fact transferred to controlling shareholders through related companies, the dispute is examined not only as a dividend matter but also in terms of equal treatment, management liability, related-party transactions and true and fair financial reporting.
How is a dividend distinguished from interest, wages, the board members’ share of profit and the liquidation share?
A dividend is a distribution of company profit; it is not of the same legal nature as interest arising from a loan given to the company, rent, an employee’s wage or a board member’s attendance fee. Under TTK Art. 509/1, interest cannot be paid on capital. Article 510 of the Law contains a separate interest institution specific to the preparatory period only under certain conditions. TTK Art. 511 sets preconditions for the profit share to be given to board members: net profit, the distinction of reserves and a minimum distribution to shareholders. The liquidation share, in turn, is a right distinct from the dividend, relating to the dissolution of the company and the liquidation balance.
How are commercial profit, tax profit, net profit for the period and distributable profit distinguished?
Commercial profit and the tax base are not the same
Commercial profit is the result shown in the company’s financial statements prepared under accounting and financial reporting rules. Tax profit is a concept relating to the corporate tax base, calculated by taking into account elements such as adjustments, deductions, exemptions and expenses not accepted by law for taxation. That the two figures differ does not by itself indicate an irregularity. However, treating the base in the tax return directly as “profit distributable to shareholders” in the distribution calculation is a serious error.
The accounting period examined, the accounting standards to be applied, the independent audit obligation, prior-year losses, the reliability of the financial statements and the existing equity items must be considered together. When planning a distribution for 2026, the inflation adjustment applicable to the relevant accounting period and the special rules concerning tax records must also be checked separately. The final dividend cannot be calculated from the corporate tax return alone.
The difference between net profit for the period and free reserves
Under TTK Art. 509/2, a dividend can be distributed only out of net profit for the period and free reserves. Net profit for the period is the legally relevant result remaining after taxes and other necessary expenses of the relevant accounting period. Free reserves are equity items whose distribution is not prohibited by law or the articles of association and whose use is permitted.
Not every reserve is free. In particular, the general statutory reserve cannot be distributed to shareholders without regard to the limits imposed on its use by TTK Art. 519/3. The distribution of extraordinary reserves is also determined by examining the legal nature of the item and the general assembly resolution.
How is distributable profit calculated?
The amount that can be distributed is not simply “the profit figure.” On the basis of the annual financial statements and, where necessary, the independent audit report, prior-year losses, taxes and financial obligations, statutory and articles-of-association reserves, and the provisions on the protection of capital that may prevent distribution are assessed first. Then whether suitable free reserves are to be used and the privileges are taken into account. The general assembly resolves on the distribution of a specific amount; in the final calculation, distinctions tied to the amount distributed, such as the second reserve, are also observed.
Example: In a joint-stock company with paid-in capital of TL 10 million, if the general statutory reserve is TL 1.5 million, then, subject to the other conditions concerning the statutory ceiling, 5% of annual profit must be allocated to the general statutory reserve. When annual net profit is TL 2 million, this first allocation arises in the calculation as TL 100,000. However, the result “TL 1.9 million is automatically distributed” is wrong; prior losses, the articles of association, other reserves tied to distribution, liquidity and the general assembly resolution are examined separately. This example explains only the logic of the statutory reserve allocation.
The powers of the general assembly and the board of directors in profit distribution
The non-transferable decision-making power of the general assembly
Under TTK Art. 408/2-d, approving the financial statements, deciding on the disposal of annual profit, determining dividends and profit shares, and deciding on reserves are among the non-transferable powers of the general assembly. The board of directors prepares a proposal; the general assembly may accept this proposal, amend it within the necessary conditions, or resolve not to distribute. That one person is at the same time chair of the board and majority shareholder does not remove the requirement of a general assembly resolution.
The board of directors’ profit distribution proposal and the financial statements
The board of directors must prepare reliable annual financial statements, the annual activity report, the necessary audit documents and the profit distribution proposal. For shareholders, the examination and information obligations in TTK Art. 437 apply. The proposal must show numerically which profit, which reserve and which investment need it is based on; inconsistencies with previous years must be explained. A board proposal alone does not create the shareholder’s claim.
What must a profit distribution resolution contain?
The resolution must clearly contain the accounting period on which it is based, the approved source of distribution, which part of the profit is to be distributed, the statutory and articles-of-association allocations, the privileges if any, the total gross amount, the method of calculating the per-share amount, the payment date or schedule, and the procedure by which payment will be made. In publicly held companies, the profit distribution tables, public disclosure and policy obligations under the relevant SPK regulations also apply.
The position in joint-stock companies with a sole shareholder
Even if a joint-stock company has a sole shareholder, the company and the shareholder are legally separate persons. Under TTK Art. 408/3, decisions taken by the sole shareholder in the capacity of the general assembly must be in writing to be valid. Freely withdrawing money from the company account does not take the place of a profit distribution resolution; it may give rise to tax and managerial liability.
Statutory, articles-of-association and extraordinary reserves
General statutory reserve: TTK Art. 519
Under TTK Art. 519/1, 5% of annual profit is allocated to the general statutory reserve until it reaches 20% of paid-in capital. In addition, Article 519/2 involves second allocations related to the issue premium, the surplus from forfeiture, and amounts distributed to persons entitled to a share in profit after a 5% dividend has been paid to shareholders. In the second allocation, the 10% rate provided by the law and the relevant exceptions are assessed according to the nature of the distribution plan.
What amount of the general statutory reserve may be used and for what purpose must be examined independently of the paid-in capital threshold. Some special provisions in TTK Art. 519 are reserved for companies subject to special legislation and for holding companies. Adding “5% + 10%” on a calculator as a whole does not replace the statutory distribution table.
Reserves allocated by the articles of association, and privileges
A different reserve regime or a profit privilege may be provided in the articles of association in accordance with the law. Without examining the company’s share groups, the basis of the privilege and the order of distribution, it cannot be said that all shareholders will receive the same amount in every case. However, privileges cannot be interpreted in a way that removes mandatory provisions and the principle of equal treatment.
When is the allocation of extraordinary reserves lawful?
Under TTK Art. 523/2, the general assembly may allocate additional reserves when this is necessary to replenish the company’s assets, or when it is considered justified for the company’s continuous development and as stable a profit distribution as possible, taking into account the interests of the shareholders as a whole. Reasons such as investment, working capital needs, indebtedness or economic risk must therefore be demonstrated with concrete data.
By contrast, where reserves are accumulated for years without any distribution despite high profit on the basis of abstract explanations such as “we will invest in the future,” and at the same time an advantage is obtained for the controlling shareholder through related companies, the resolution may be argued to be contrary to the law and the rule of good faith. TTK Art. 523 does not give the management body an unlimited privilege not to distribute.
To whom and in what proportion is a dividend distributed?
Calculating the dividend in proportion to shares
TTK Art. 507 regulates the basis of participation in profit, and Article 508 the calculation criterion. Unless there is a valid provision to the contrary in the articles of association, profit and the liquidation share are calculated in proportion to the payments the shareholder has made to the company for his or her capital share. It should not be forgotten that Article 508 is especially important where nominal share ratios and the ratios of capital actually paid in differ.
Privileged shareholders and holders of founders’ certificates
A privilege in profit share is a superior or priority right to participate in profit determined by the articles of association within the framework of TTK Art. 478 and related provisions. This privilege must be clearly shown in the distribution table. The participation of holders of founders’ certificates (intifa senedi) in profit is not of the same status as shareholding; the conditions of incorporation and the articles of association, the TTK provisions on founders’ certificates and the limits on profit distribution are assessed together.
Profit share for board members and employees
The giving of a profit share to board members is subject to the order in TTK Art. 511: first the necessary statutory reserves must be allocated, and a dividend must have been distributed to shareholders on 5% of paid-in capital or a higher rate set in the articles of association. Giving employees a performance bonus and giving them a special share of company profit are not the same legal transaction; the contractual basis, wage and withholding obligations must be investigated separately.
Bonus shares by capitalisation differ from a cash dividend
Giving bonus shares by adding past-year profits or suitable reserves to capital is a capital increase mechanism. Not every cash dividend resolution can be converted into bonus shares at the shareholder’s request; the capital increase procedures of the general assembly and, where required, of the SPK are carried out separately.
When is a dividend paid and when does it become a claim?
The general assembly resolution and the payment date
The distribution resolution determines the concrete right to demand of the person in whose favour the distribution is made. If the general assembly has set a payment date, the claim as a rule falls due on that date; if no date is stated, the resolution date may be taken as the basis, taking into account the concrete conditions and the content of the resolution. The general assembly merely approving the balance sheet or the activity report does not mean that it has resolved to distribute profit.
If there is a distribution resolution but payment is not made
The shareholder should bring together the general assembly resolution, the records of his or her shares and, if any, of the transfer date, the payment plan, the replies received from the company to notices, and the records showing that payment was not made. Depending on the nature of the dispute, a commercial claim action, enforcement proceedings, interest and mediation as a condition precedent to litigation are considered. Maturity, the start of interest, entitlement as between the transferor and the transferee of the share and, if any, the provisions on assignment must be determined according to the specific case.
Statute of limitations on the dividend claim
The period for a matured dividend claim
For a dividend claim whose distribution has been resolved and which has fallen due, a five-year statute of limitations under Turkish Code of Obligations (TBK) Art. 147/4 comes into play. The period does not start automatically from the date the annual profit was earned; the date the claim fell due, the content of the distribution resolution and the grounds interrupting the limitation are important. Indeed, the decision of the 11th Civil Chamber of the Court of Cassation (Yargıtay) of 17.03.2025, E.2024/3656, K.2025/1873 clearly dealt with the absence of a distribution resolution and the distinction as to maturity.
Separate limitation for recovery of an unjustified dividend
There is a separate period that should not be confused with this: under TTK Art. 512/2, the right to recover a dividend received unjustly and in bad faith is time-barred five years from the date the money was received. This is not the same action as the shareholder’s distribution claim, nor does it have the same starting point.
The regime in non-public companies, companies listed on the stock exchange and publicly held companies outside the stock exchange
Non-public joint-stock companies
In non-public joint-stock companies, the TTK, the company’s articles of association and the Communiqué on the Distribution of Dividend Advances based on TTK Art. 509/3 mainly apply. Unless there is a special provision to the contrary in the law or the articles of association, it cannot be said that all joint-stock companies are obliged to distribute a fixed percentage of distributable profit every year. Even so, the general assembly’s discretion under TTK Art. 523 is limited by the principles of good faith and equal treatment.
Publicly held companies whose shares are traded on Borsa Istanbul
The Capital Markets Board’s Dividend Communiqué No. II-19.1 regulates the profit distribution policy, decision-making, distribution table, public disclosure, instalment and advance procedures of publicly held companies whose shares are traded on the stock exchange. According to the SPK’s explanation, the policy covers whether a dividend will be distributed, the form and time of payment, and the principles of advances if any. The time at which the distribution is to begin and the public disclosures are determined in accordance with the specific Communiqué and Board regulations.
Important: The general statement seen in older articles that “listed companies always distribute at least a 20% dividend” does not correctly reflect the regime in force. It is wrong to apply this rate automatically to all listed companies.
Special distribution rate in publicly held joint-stock companies outside the stock exchange
According to the SPK’s current explanation, in publicly held companies whose shares are not traded on the stock exchange, there is, as a rule, an obligation to distribute in cash at least 20% of the net distributable profit for the period, with donations added, calculated within the framework of Communiqué No. II-19.1. However, special exceptions and disclosure obligations stated by the SPK must be observed, such as a distribution amount lower than 5% of the capital or net distributable profit for the period falling below TL 100,000. The regulation to be applied is checked together with the company’s legal status and the current 2026 Board decisions.
What is a dividend advance and how is it distributed?
Interim financial statements and the general assembly resolution
A dividend advance is a provisional distribution based on interim financial statements, to be set off against the future final dividend. In non-public joint-stock companies, the Communiqué on the Distribution of Dividend Advances of August 9, 2012 requires that profit has arisen in the three-, six- or nine-month interim financial statements and that the general assembly has resolved to distribute the advance. It is not sufficient for the board of directors alone to transfer money to shareholders under the name “advance.”
The maximum limit of the dividend advance and its calculation
From the relevant interim profit, prior-year losses, taxes and other financial provisions, the reserves that must be allocated, and the relevant share and profit rights are first deducted; the advance that can be paid cannot exceed half of the amount calculated in this way. Advances paid in earlier interim periods of the same accounting period are deducted separately in later calculations. The interim financial statements supporting the distribution and the management body’s report must be kept.
If a loss arises at the end of the accounting period, is the advance recovered?
The Communiqué provides a set-off and refund mechanism for cases where the final profit does not cover the advance or a loss arises. Which reserve is to be used first, the excess distribution amount and the shareholders’ refund obligation are assessed together with the content of the general assembly resolution. The assumption that “because an advance has been paid, it cannot be recovered in any circumstances” is not legally safe. In publicly held companies, the SPK’s own advance regime applies.
If a joint-stock company does not distribute profit, what legal routes can a shareholder use?
First, the general assembly resolution and the financial records must be separated out
The first question is whether a distribution resolution was taken. If there is a distribution resolution, the payment claim; if there is no resolution at all, the corporate rights aimed at compelling a resolution and the right to information; if there is a resolution not to distribute, the lawfulness of that resolution is assessed. When these different requests are presented as if they were the same legal ground, the risk of dismissal on procedural or substantive grounds increases.
Annulment of a general assembly resolution that continually transfers profit to reserves
Under TTK Arts. 445 and 446, annulment of a general assembly resolution contrary to the law, the articles of association or the rule of good faith may be requested, provided that the capacity to sue and the other conditions in the law are satisfied. In its decision of 25.02.2014, E.2012/13234, K.2014/3514, the 11th Civil Chamber of the Court of Cassation emphasised that, under concrete facts such as profit not being distributed for years and reserves not being used, the company must explain with concrete data its reasons with regard to a resolution transferring profit entirely to reserves. The decision relates to the period of the repealed TTK No. 6762; today a similar balance must be examined under Article 523 of TTK No. 6102.
The three-month period in an annulment action, and dissent at the meeting
Under TTK Art. 445, an annulment action is brought within three months from the date of the general assembly resolution. As a rule, a shareholder who attended the meeting voting against and having his or her dissent recorded in the minutes is important under TTK Art. 446. In special situations such as irregularity in the summons, the agenda, unauthorised participation or prevention of the exercise of voting rights, the law provides different conditions. Capacity to bring an annulment action is not the same as an allegation of non-existence or nullity; it is not correct to call every resolution “null” in order to go beyond the period without a substantial violation.
Nullity, non-existence and annulment must not be confused
Null general assembly resolutions regulated in TTK Art. 447 are distinguished from annullable resolutions that are contrary to the rule of good faith merely in terms of content or reasoning. In its decision of 12.09.2024, E.2023/3784, K.2024/6352, the 11th Civil Chamber of the Court of Cassation emphasised that resolutions to transfer to extraordinary reserves cannot in every case be regarded as tainted with nullity, and the importance of choosing correctly the conditions of the annulment and claim routes. Elements such as shareholding on the date the action was filed, the period in which the resolution was taken and the statute of limitations are also examined separately.
A direct dividend claim action without a general assembly resolution
In its decision of 17.03.2025, E.2024/3656, K.2025/1873, the 11th Civil Chamber of the Court of Cassation found lawful the dismissal of a direct claim in respect of a company in which the general assembly had not resolved on profit distribution. The consequence of this approach is: That the company has been profitable for years does not by itself allow the court, in the absence of a distribution resolution, to take the place of the general assembly and fix a specific dividend amount. A request for annulment of an unlawful resolution not to distribute is built on a separate footing.
Which documents and evidence matter in the action?
The resolution subject to the action and the meeting minutes, summons and agenda announcements, the share register and shareholding records, any Central Registry Agency (MKK) records relating to bearer shares, financial statements, the independent audit report, reserve movements, the board’s distribution proposal, profit distribution resolutions of previous years, bank account movements, transactions with affiliated/related parties, and budgets and contracts relating to investments must be assessed together.
Defence strategy: A shareholder seeking annulment of a decision not to distribute should not be content with merely saying “the company made a profit”; he or she should compare the company’s distribution practice over the years, its financial strength, its concrete investment need and the payments made to the controlling shareholder. For the company, working capital needs, credit covenants, investment costs and financial risks must be shown with objective documents.
The information and audit rights of minority shareholders
The right to examine the financial statements and the profit distribution proposal
Under TTK Art. 437, the financial statements, the board’s annual activity report, the relevant audit documents and the profit distribution proposal must be made available for examination at least fifteen days before the general assembly. The shareholder may request explanations and documents under the conditions provided in the law. Exceptional trade secret defences cannot be used as a tool for arbitrary withholding of information.
Minority postponing the discussion of the financial statements
Under TTK Art. 420, a minority holding at least 10% of the capital, or at least 5% in a publicly held company, may request that the discussion of the financial statements and related matters be postponed for one month. For a duly made first request, no affirmative vote of the general assembly is additionally required. For a second postponement, the special conditions of the law are sought. This route is important in preventing a hasty profit distribution decision on the basis of inadequately disclosed financial data.
Special audit, management liability and related-party transactions
If the conditions in TTK Art. 438 and the following articles are met, a request for special audit may come into play to establish whether profit actually arose or to explain amounts transferred to related companies. If the company or shareholders have suffered loss because of managers’ unlawful acts, the liability regime is assessed separately under TTK Art. 553 and the relevant special provisions. Not every decision not to distribute profit automatically gives rise to the liability of the board of directors for compensation.
The principle of equal treatment in profit distribution and disguised profit distribution
Payment to the controlling shareholder while no profit is distributed to the minority
Where the company lends to a shareholder without a genuine commercial reason, transfers assets at a price off the market, makes unusual payments to relatives, or there are transactions without consideration between related companies, the nature of these transfers must be investigated. Items claimed to be managerial remuneration, the price of genuine services or loan repayments must be supported by bank, contract and accounting records. Where necessary, the principle of equal treatment in TTK Art. 357, TTK Art. 395 and other restrictions on transactions, and the tax provisions on disguised profit distribution are assessed together.
Proving the company’s real cash need
It cannot be said that a decision not to distribute profit must be annulled in every case. For example, if high prior-year losses, an investment that cannot be postponed, financial ratio conditions in a loan agreement and a high working capital need can be proved with objective data, a decision not to distribute may be legitimate. The centre of the legal examination is the reality and proportionality of these needs, the sustainability of the company and the common interest of all shareholders.
Taxation of dividends: 2026 withholding, exemption and declaration
The general withholding rate on profit distribution
By Presidential Decision No. 9286 dated December 22, 2024, the withholding rates on dividends falling within Income Tax Law Art. 94 and Corporate Tax Law Arts. 15 and 30 were generally raised from 10% to 15%. This rate does not mean that every shareholder bears the same final tax burden. Whether the recipient is an individual or a legal entity, full or limited liability, participation income and double taxation treaties are each examined separately.
A simple payment example: On a distribution of gross dividends of TL 100,000 subject to the relevant general 15% withholding, assuming there is no special situation arising from an exemption or treaty, TL 15,000 is withheld and a net payment of TL 85,000 is made. If the person has an annual declaration obligation, the final income tax calculation is made separately. This transaction is different from the company’s corporate tax.
Half exemption for individuals and the 2026 declaration threshold
According to the Revenue Administration (GİB) information for 2026, half of dividends obtained from fully liable corporations is exempt from income tax. In assessing the amount remaining subject to tax after the exemption together with other income subject to declaration, the TL 400,000 threshold for the 2026 calendar year is important. If a tax return is filed, the whole of the withholding deducted at distribution may be set off. For example, the fact that half of the gross dividend is exempt does not mean “up to TL 400,000 gross is automatically tax-free”: the half to be taxed and the aggregated income are decisive.
Special cases for corporate shareholders and foreign shareholders
A dividend that one corporation receives from another corporation may, depending on its conditions, benefit from the participation income exemption. For limited-liability foreign shareholders, the withholding provisions in Türkiye must be assessed together with the relevant double taxation treaty in force, the status of beneficial owner, the certificate of residence and the limitations of the treaty. Generalisations such as “a fixed 15% is withheld from all foreign shareholders” or “there is no tax on foreign companies” are wrong.
Capitalisation of profit and withdrawing money from the company account
In a lawful capitalisation, the tax consequence may not be the same as the consequence of a cash dividend distribution. On the other hand, it is also not automatically correct to treat every money transfer made through the “shareholder current account” as a dividend. The legal basis of the transaction, the special provisions in tax legislation, transfer pricing and the prohibitions of company law must be examined.
Irregular payments in profit distribution and liability for refund
The principle of protection of capital and unlawful dividends
A payment made without any actually distributable resource, with a balance sheet that does not reflect the facts, or without a resolution of the competent general assembly does not become lawful merely because the bank receipt says “dividend.” Under TTK Art. 512, a shareholder who receives a dividend unjustly and in bad faith may be obliged to refund it. The provision also applies to the profit shares of board members. Refund, managerial liability and tax assessment may give rise to independent legal consequences.
Liability of the board of directors and auditors
In cases of financial statements prepared contrary to the facts, distribution proposals contrary to the law or removal of assets from the company, TTK Art. 553 and related provisions come into play within the framework of concrete fault, damage, causation and duties. In such assessments, not only the payment record but the resolution, accounting documents, audit records and the internal control process are important.
Concrete application scenarios: what should be done in which situation?
The company is profitable but the general assembly takes no distribution resolution at all
First, the annual general assembly minutes, financial statements, reasons for the use of reserves and profit distribution proposals are requested. If the shareholder brings a direct collection action on the ground that “there is profit,” he or she may meet the objection that there is no matured claim. The general assembly agenda, the lawfulness of the resolution and, where necessary, the time limit for an annulment action must be assessed separately.
The general assembly resolved to distribute profit but payment was not made
The resolution, shareholding and maturity are established; for the unpaid dividend, the claim request, interest, notice, enforcement and the conditions precedent to commercial litigation are examined. In this scenario the question is not having a distribution resolution made in place of the general assembly, but collecting a concrete claim that has already arisen.
The majority shareholder pays himself while leaving no profit for the minority
The text of the distribution resolution, privileges, how similar shares are treated, related-party payments and bank movements are compared. Equal treatment, unlawful profit distribution, managerial liability and annulment of the general assembly resolution are assessed together or in the alternative. Merely being in the majority does not confer the right to make arbitrary distinctions between shareholders in the same legal position.
The company does not distribute profit for five years in a row citing investment
Explanations are requested from the company on the investment feasibility, budget, financing need, loan agreements, cash projection and the actual use of the reserves allocated. If these data do not exist and high profit and high free reserves keep accumulating, the option of annulment, within the time limit, of the relevant general assembly resolution may be considered under TTK Art. 523 and the rule of good faith. The time limit and the shareholding status are checked separately for each past resolution.
The shareholder has left the company or transferred his or her shares
It cannot be automatically assumed that a dividend claim that has been resolved and matured before passes to the transferee on transfer of the share. The transfer contract, the record of entitlement, the type of share and the provisions on assignment must be examined. In companies listed on the stock exchange, SPK and MKK records and the dates for exercising rights are important.
Type of action, competent court and proof in dividend disputes
Annulment or nullity of a general assembly resolution
Within the conditions of TTK Arts. 445–447, the dispute is, as a rule, heard before the commercial court of first instance. The three-month annulment period, the conditions of dissent, the place where the company’s head office is located and the specific procedural rules are checked in preparing the action. Nullity under TTK Art. 447 and annulment under TTK Art. 445 must not be used in place of one another.
Collection of a matured dividend claim
Where there is a general assembly payment resolution and the conditions of the claim are met, the demand for payment is treated according to the nature of a commercial claim. Competence, jurisdiction, interest, the statute of limitations and the provisions on mediation as a condition precedent to litigation in commercial actions whose subject is the payment of a sum of money are examined according to the specific request. It must not be assumed that a monetary claim joined with a request to annul a general assembly resolution is subject to the same mediation regime.
Questions to be put in expert examination
It is not enough to ask the expert only to answer “has the company made a profit?” The commercial and tax profit of the relevant period, the statutory/free reserves, prior-year losses, the resource actually available for distribution, related-party transactions, the protection of equity and the numerical grounds of the reason for not distributing must be examined. The legal assessment belongs to the court; the expert cannot form a final legal judgment on whether the general assembly resolution complies with the rule of good faith.
Conclusion
The right to a dividend in a joint-stock company is among the shareholder’s fundamental proprietary rights; however, there is an important difference between the right and a matured dividend claim in terms of the general assembly resolution and the resources that are legally distributable. The existence of net profit for the period or of free reserves does not by itself create an order to pay. The board’s proposal, the annual financial statements and the general assembly resolution are complementary but legally distinct transactions.
It is possible for company profit to be lawfully retained within the company; but the use of the power not to distribute profit for the purpose of systematically depriving minority shareholders is open to judicial review. The shareholder’s effective strategy for seeking legal redress rests on correctly determining the type of action, not confusing the three-month annulment period with the statute of limitations of a matured claim, examining the real reserve need through documents, and establishing the SPK regime that depends on whether the company is publicly held. The 2026 tax withholding and the conditions of annual declaration must also be assessed independently of the distribution resolution.
Frequently Asked Questions
Must a joint-stock company necessarily distribute a dividend every year?
No. Not distributing profit may be possible on statutory and financial grounds; but this power of the general assembly is subject to the rule of good faith, TTK Art. 523 and regard for the interests of all shareholders.
Why might a company not pay a dividend even though it is profitable?
Past losses, statutory reserve obligations, working capital needs or a documented investment programme may cause this. The reason must be concrete and proportionate.
Can a dividend claim action be brought without a general assembly resolution?
As a rule, a distribution resolution is required for there to be a matured dividend claim. If there is no resolution, a direct claim action is risky in most cases; the correct legal route against the general assembly resolution must be determined separately.
What is the time limit for bringing an action against a decision not to distribute profit?
For an annulment action, under TTK Art. 445, it is three months from the general assembly resolution. Nullity or non-existence depends on different conditions; the wrong type of action should not be chosen merely to go beyond the period.
Is a dissent note at the general assembly mandatory?
Under TTK Art. 446/1-a, for a shareholder who attended the meeting, voting against and having the dissent recorded in the minutes is important. Irregular summons and other special situations are subject to different conditions.
In how many years does a dividend claim become time-barred?
For a matured partnership claim, the five-year period in TBK Art. 147/4 is generally considered. The period is determined not automatically from the date the profit was earned but according to when the claim fell due.
Is the dividend calculated according to shareholding ratio?
TTK Arts. 507 and 508 apply; unless the articles of association provide validly otherwise, the payments made to the company for the capital share are the basis. Profit privileges are also taken into account separately.
If the company makes a loss, can it distribute dividends out of previous years?
The source of free reserves in TTK Art. 509/2 and the regime for the protection of capital are reserved. A definite answer cannot be given without examining prior-year losses and the legal nature of the reserves.
Can board members be given a share of company profit?
Yes, but the necessary reserve allocations in TTK Art. 511 and the conditions of priority distribution to shareholders must be met. An attendance fee or a wage is a separate legal institution.
Is a general assembly resolution required to distribute a dividend advance?
Yes for non-public joint-stock companies; in addition, there must be profit in the three-, six- or nine-month interim financial statements and the calculation limits in the Communiqué must be observed.
If a loss arises at the end of the year, is the dividend advance refunded?
The Communiqué contains set-off and refund rules. A refund obligation may come into play for the part of the advance that cannot be covered by the final profit and suitable reserves.
Do publicly held joint-stock companies necessarily distribute a 20% dividend?
No. Companies traded on the stock exchange and publicly held companies not traded on the stock exchange are subject to different rules. The SPK’s special 20% rule relates mainly to certain conditions of publicly held companies outside the stock exchange.
What is the dividend withholding tax in 2026?
The general rate under Presidential Decision No. 9286 is 15%. The application may vary according to the nature of the recipient and special exemptions or treaties.
Must an individual declare dividends received in 2026?
Half of the dividend of a fully liable corporation is exempt from income tax; whether the remaining part, together with other relevant income, exceeds the TL 400,000 declaration threshold for 2026 is assessed. If a return is filed, the set-off of the withholding made is also important.
Can interest be claimed if a dividend is not paid?
Depending on maturity, the general assembly resolution, the payment schedule and the conditions of default, a claim for interest may come into play. An automatic starting point for interest should not be assumed.
Can the majority shareholder distribute profit to himself and exclude the minority?
Unless there is a valid privilege and legal difference, arbitrary distinctions cannot be made between shareholders in a similar position. Equal treatment, unjust payment, managerial liability and annulment of the general assembly resolution may come into play.
What rights does the minority use to examine the profit distribution resolution?
Under TTK Art. 437, information and examination; under the conditions of Art. 420, postponing the discussion of the financial statements; and under Art. 438 and the following articles, the options of special audit.
If the company continually postpones profit distribution, which documents are important?
At the very least, multi-year financial statements, general assembly resolutions, reserve movements, loan and investment plans, bank records, related-party contracts and shareholding records should be compared.
Can an unjustly received dividend be demanded back?
Under the conditions in TTK Art. 512, a dividend received unjustly and in bad faith may be refunded. The right of recovery has its own five-year statute of limitations.
To whom does the past dividend of a person who transferred his or her shares belong?
The transfer contract, the resolution and maturity dates, the type of share, the record of entitlement and, if any, the provisions on assignment are examined. The same result does not follow automatically in every case.
Bibliography and verifiable legislation
1 — Turkish Commercial Code No. 6102: Arts. 357, 408, 420, 437–439, 445–447, 478, 507–512, 519, 523, 553. Legislation Information System (Mevzuat Bilgi Sistemi): Source
2 — Capital Markets Law No. 6362 and SPK Dividend Communiqué (II-19.1). SPK, obligations of listed companies: Source
3 — SPK, obligations of publicly held companies outside the stock exchange: Source
4 — Ministry of Trade, Communiqué on the Distribution of Dividend Advances (Official Gazette 09.08.2012/28379): Source
5 — Ministry of Trade, explanation on the dividend advance: Source
6 — Revenue Administration (GİB), Presidential Decision No. 9286 and the 15% dividend withholding announcement: Source
7 — Revenue Administration (GİB), 2026 income from movable capital and dividend declaration: Source
8 — Court of Cassation 11th Civil Chamber, 25.02.2014, E.2012/13234, K.2014/3514: Source
9 — Court of Cassation 11th Civil Chamber, 12.09.2024, E.2023/3784, K.2024/6352: Source
10 — Court of Cassation 11th Civil Chamber, 17.03.2025, E.2024/3656, K.2025/1873: Source