In line with the OECD Corporate Governance Factbook (2015), most listed companies possess a controlling shareholder in the jurisdictions featured by concentrated ownership structures. In Turkey, most listed companies operate as family-controlled financial/industrial company groups assuming cross-ownership within various corporate groups ranging from pyramid structures to state-owned companies. In 2011, Turkey approved of a mandatory approach that necessitates large listed companies adhere to the provisions of the ‘Corporate Governance Principles’ forwarded by the Capital Markets Board of Turkey.

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Usually, the amount of Board members in listed companies ranges from fourteen to five with an average of seven board members. Corporate management in many companies hire outside directors. Most chairpersons do not serve as CEOs simultaneously. At that, at least one board member holds the CEO position.

Companies in 32 jurisdictions appoint the members of their governing bodies for fixed terms that last between three to eight years. Apart from Italy, all jurisdictions allow the re-appointment of Board members. France disallows the re-appointment of the Chairperson. In Turkey along with Spain, Czech Republic, Saudi Arabia, and France, the re-appointment is restricted to one time only. In line with Article 119/2 of the Capital Markets Law, in Turkey a company should have at least one Board member holding 10-year experience at the Capital Markets Board of Turkey. Further, a company should have at least one Board member with at least 10-year experience at private sector capital market institutions.

General meetings affect the feasibility of shareholders’ examination and consultation, and so most listed companies hold general meeting in the same week in the majority of jurisdictions. At that, most jurisdictions require compulsory notification of all shareholders and announcing general meeting in a nationwide daily newspaper. To ease the procedure, many regulators and stock exchanges deploy electronic framework enabling listed companies publish their notifications and proxy materials. Herewith, since 2012, Turkey has applied a mandatory electronic general meeting system (e-GEM) enabling the assembly of hybrid general meetings either in physical or electronic form.

Pursuant to Capital Markets Law, Turkey does not specifically regulate the shares lacking voting rights, while the Commercial Code of Turkey allows issuing shares deprived of voting rights.

National regulatory framework and corporate laws in Turkey cope with party transactions by means of board approval, mandatory disclosure, and shareholder approval. Along with Brazil, Estonia, Chile, France, India, Hungary, Korea, the United States and Portugal, Turkey is among ten jurisdictions that ban certain related party transactions. Instead, these jurisdictions emphasize on existing loan agreement concluded between a companies and their directors. At that, Turkey regards related party transactions subject to shareholder approval as an alternative means to the core method that is board approval procedure. Along with Chile, Argentina and Italy, Turkey is also among jurisdictions where shareholder approval comes into play when audit committee or other committee involving independent directors disapproves a transaction.

Eventually, board decisions in Turkey are mandatory for all the related party transactions as well as any transactions amounting to 5% of the equity capital. In addition, these transactions require an appraisal. Providing that the transaction exceeds 10%, an appraisal should be followed by the approval by the majority of the independent board members and come as a board resolution (at that, the related board members should be absented). Providing that the majority of the independent board members fail to approve the decision on the related party transaction, the same decision shall be subject to the general shareholders meeting.

Turkey is among six jurisdictions that allow special voting arrangements encouraging effective participation of minority shareholders. Along with Brazil and Portugal, Turkey holds a special arrangement facilitating the engagement of minority shareholders when Board is nominated and elected.

Turkey is among 12 jurisdictions requiring candidates to pass a formal screening process held by the nomination committee. Additionally, large listed companies in Turkey compose a list of independent board member candidates. At that, they adhere to the report provided by the nomination committee. The final list of candidates then passes to the securities regulator for further review.

Following the financial crisis, the remuneration of board members and key executives has been a high issue on corporate governance agenda in many countries. All jurisdictions are concerned with the improvement of corporate governance through the promotion of independent board-level committee. Many jurisdictions apply normative controls on remuneration and deploy the “comply or explain” system to set general criteria on their corporate structures. Particularly, listed companies in Turkey must deploy a remuneration policy initially approved by the general shareholders meeting. All companies should publicly disclose their remuneration policies on corporate websites. At that, independent board members are deprived of dividends, performance-based plans, and share options.

Overall, OECD “Corporate Governance in Turkey: A Pilot Study”, forecasts a great future for the corporate governance in Turkey considering the flow of investment and economic growth in the near future. Such solid background will boost companies strive for extra funds to expand their business activities and establish new branches. At that, domestic equity markets should expand and attract more foreign investment. For this strategic purpose, Turkey should maintain high standard of corporate governance providing a well-established and cost-effective regulatory framework to execute best corporate practices that would favor transparency and protect the rights of minority shareholders.