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Turkey

The Turkish Capital Markets Board (CMB) recently issued several key new communiqués alongside new additions to the Turkish securities regulations, such as the shelf registration system. Communiqué Serial IV No 29 on the Principles of Cumulative Voting in the General Assemblies of Corporations Subject to the Capital Markets Law was issued in February 2003.

The purpose of Communiqué IV/29 is to regulate the principles of cumulative voting to provide minority shareholders with an opportunity to ensure that their representatives are elected as members of the board of directors or the auditors committee.

Cumulative voting is a voting system where the number of votes that a shareholder is entitled to cast (either in person or by proxy) in the board of directors/auditors committee elections are multiplied by the number of positions available. Under this system, the shareholder can cast the votes for one single candidate or can divide the votes among several candidates. Furthermore, the cumulative votes are calculated separately in the elections for the board and the elections for the committee.

Cumulative voting is optional, but in order to adopt this system, there must be an explicit provision allowing for cumulative voting in the articles of association of the company. Additionally, the use of staggered terms in corporate boards is not allowed if cumulative voting is to be used. Article 6 of the Communiqué provides that all candidates must stand for election at the same general assembly (except when there is a vacancy on the board or the committee before the expiration of the term). Moreover, there should be no provisions that provide voting privileges for the elections for the board or the committee.

The CMB is also continuing its efforts in issuing other noteworthy communiqués on various issues such as portfolio management, venture capital funds and mergers of publicly-held companies.

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