COVID-19 was first detected in Wuhan, China on December 31, 2019. In a matter of months, COVID-19 spread to several countries, and the World Health Organization declared COVID-19 a pandemic on March 11, 2020. COVID-19's impact on Turkey, like everywhere else worldwide, has become the most important issue on companies' agendas.

This client alert aims to draw attention to key items that we believe public companies should consider during these difficult times from the Turkish capital markets laws perspective.

1. Information Obligations

Public disclosures are necessary to manage public companies in a transparent, effective, fair, and accountable way. Particularly, during these difficult times, public companies' effective dialogue with their employees, investors, customers and suppliers plays a significant role in the companies' reputation as well as their operations. Therefore, p we urge public companies to analyze the current and potential impacts of the COVID-19 outbreak on their operations to fulfill their public disclosure requirements.

Material Disclosures

Public companies must publically disclose all information, events and developments that may affect the value of their securities and/or investors' investment decisions, other than in limited and exceptional circumstances.

Public companies' managements are required to analyze the current and future impacts of the COVID-19 outbreak on all of their operations. Managements must decide whether the relevant situation is likely to affect the value of the company's securities or their investors' investment decisions.

In this regard, public companies need to assess any COVID-19 related information, development and/or event that may affect their business and to make necessary disclosures.

Although every circumstance may be unique and differ from one company to another, public companies may particularly consider to make disclosures in the following circumstances:

  • If the executives or a significant portion of the company's employees have tested positive for COVID-19 or are quarantined.
  • If the public company's operations are partially or completely halted or suspended due to the COVID-19 outbreak.
  • If a significant number of employees are sent to paid/unpaid leave or terminated.
  • If there are significant changes in the company's business plans and/or strategy due to COVID -19 outbreak.
  • If previously disclosed transactions that have not closed (such as investments, financings, mergers and acquisitions) are postponed or cancelled due the COVID-19 outbreak.
  • If suppliers that are material to the company's operations and that are not easily replaceable are located in a country or a region severely affected by the COVID-19 outbreak and these suppliers are unable to perform their obligations, either partially or completely.
  • If there have been material changes to the future projections of the company that have been previously disclosed.

Financial Statements

We also recommend public companies to commence assessing the potential impact of the COVID-19 outbreak on their financial results with their independent auditors.

In this respect, we would like to remind you that the Capital Markets Board (CMB) issued a decision on March 19, 2020, providing that all public companies will have a 30-day extension to disclose their financial statements, including public companies subject to a special financial reporting period.

2. Director Liability

Turkish law offers the principles that guide boards of directors. These principles include, among others, the fiduciary duty (duty of care) and loyalty. Accordingly, the directors must actively monitor the company's operations and take all necessary measures to prevent foreseeable risks.

The board of directors has responsibility for monitoring the company's operations and that the risks it may be subject to. It is key that the company management continuously informs the directors of the developments that the company is going through in order for the directors to duly perform their obligations. Therefore it is imperative to maintain all reporting channels up and running. On the other hand, the directors must analyze the information they are receiving on a real-time basis and guide the company properly.

In this regard, it is crucial that the company management continuously briefs the board of directors on the developments related to COVID-19 so that the board of directors analyzes the material risks posed by the virus and its potential impacts on the company, paving the way for the board of directors to take the necessary measures.

3. Determination of Current and Potential Risks

Public companies are required to have early risk detection committees which are responsible for early detection of risks, advising necessary precautions and risk mitigating activities, and such committees should, in these difficult times, work on potential risks relating to COVID-19 outbreak, as well as the precautions that the company may take to mitigate and manage such risks. In this respect, we urge early risk detection committees to undertake these studies to direct the public companies to take necessary actions.

4. Share Buy-Back Programs

The CMB's decision entitling public companies to buy back their own shares from the market without limit is in force until further notice. Accordingly, public companies can continue to buy back their shares under an existing buy-back plan or pass a board resolution to conduct a new buy-back plan.

5. Postponement of General Assemblies

Although Turkish capital markets laws allow shareholders of public companies to electronically participate in general assembly meetings, all planned general assemblies need to be considered to be postponed to prevent the spread of COVID-19. We refer to our client alert dated March 23, 2020 on this subject matter.

Please refer to https://www.esin.av.tr/coronavirus-desk/ for our client alerts regarding the legal impacts of COVID-19 on public and private companies and their operations.


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