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Turkey

The Capital Market Board (CMB) is using its best efforts in order to ensure a transparent environment, enabling investors and publicly held companies to become part of a sound and prosperous market. As a result of these efforts it has promulgated several new communiqués.

The CMB has determined the principles by which dividends of publicly traded joint stock corporations must be advanced, how dividends will be paid to shareholders without voting rights and how dividends will be protected. Disclosure of the first dividend ratio in the articles of association and the distribution of dividends of publicly held companies is now obligatory pursuant to the Communiqué on Dividends. This Communiqué further stipulates that the first dividend amount must not be less than 20% of the distributable profit after the cash reserves, taxes, fund and financial payments, and the losses from previous years, if any, have been subtracted, for the accounting period in question. Now, a company must distribute dividends within five months after the end of the accounting period whereas, previously, publicly traded companies could only distribute dividends once a year.

The CMB's Communiqué on Inflation Adjusted Financial Statements addresses compliance with inflationary accounting methods and will be binding on publicly held companies, intermediary institutions and investment companies and their affiliates and subsidiaries as of December 31 2002. In order to effectively implement the inflationary accounting methods in 2003, companies are required to make certain changes to their balance sheets in 2002 and to prepare financial statements and reports pursuant to the Communiqué. The period of high inflation will be treated as being over if that year's balance sheet index price is less than twice the amount of the index price three years prior, including that year.

The CMB's concerted efforts to jump-start the market by providing further transparency measures and confidence for investors are optimistic steps towards attracting further investment in Turkey. Important mechanics, however, such as price adjustments and squeeze-outs as well as detailed mechanics of tender offers, are yet to be incorporated into the legislation.

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