HOW CAN A FOUNDER CONTINUE TO RECEIVE DIVIDENDS EVEN IF HE LEAVES THE COMPANY?
Dr. Soner ALTAŞ
Ankara
November 12, 2023
As known, one of the legal rights granted to joint stock shareholders and limited company partners is to receive dividends from company’s annual profits. However, founders of the company may transfer all of their shares and leave the company over time for certain reasons. In this case, since their title as shareholders or partners will cease, the right of receiving dividends will also end and this right will be transferred to the new partner who buy the shares.
Let’s assume that a founding father transfers all of his shares to his children and leaves the company. Can this beloved father continue to receive dividends even if he no longer has any ties with the company? Or, can his children who inherit the shares give any dividend to their father, who has no income other than his retirement pension?
Let’s answer the question first and then explain how it will be achieved. Yes, founders who completely transfer their shares and leave the partnership can continue to receive dividends. If you ask how this will be done, let us tell you right away: by establishing bonus certificates.
In fact, founders cannot be granted any benefits that may result as a decrease in the company’s capital, such as giving money or free shares, in return for the effort they put into establishing a joint stock or limited company. However, an exception to this rule is included in the Turkish Commercial Code and it is possible to issue a “founder’s bonus certificate” to the founders of the company free of charge. Therefore, the company’s initial articles of association may include a provision regarding the allocation of bonus certificates to the company founders. These bonus certificates may be granted to all of the founders or to any of them.
The amount of dividend that can be given to the bonus certificate holders should be determined as maximum one tenth of the annual profit remaining after allocating legal reserves and a five percent dividend for the shareholders. This rate is the maximum limit and it is not possible to allocate more than one tenth of the total amount to the founders, but a rate below can be determined.
For example, a provision may be included in the articles of association that the founders’ bonus certificate holders will be paid a maximum of 5% of the remaining amount after allocating a reserve fund from the company’s profits and a five percent dividend for the shareholders.