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COVID-19 update: New limitations to dividend distributions introduced

April 30, 2020

The omnibus law published in the Official Gazette on April 17, 2020 introduced new limitations to dividend distributions of companies to preserve their equities. These limitations will remain in effect until September 30, 2020 and include the following:

  • Dividends to be distributed cannot exceed 25% of a company’s net profit in 2019.
  • Retained earnings and free reserves cannot be distributed.
  • Board of directors cannot distribute advance dividend.

The time period can be extended (or shortened) for a period of three months upon a decision by the President of the Republic.

Outstanding dividend payments authorized by the general assembly prior to April 17, 2020 must be postponed to a date later than September 30, 2020 to the extent such dividend payments exceed 25% of the company’s net profit in 2019.