Dividend shares in capital companies

Dividend right certificates are promissory or bearer certificates acting as securities issued by the general assembly of joint stock companies and limited liability companies pursuant to the articles of association or by amending the articles of association in favor of the holders of the shares disposed of in accordance with the law, creditors or those affiliated with the company for a similar reason. A maximum of one-tenth of the amount after allocating the reserves stipulated in Article 519/1 of the TCC and a five percent share of profit for shareholders from the distributable profit shall be paid to the founders in the form of dividend right certificates (Article 348 of the TCC). Despite the similarity in name, the concept of "dividend right" used herein shall not be mistaken for "usufruct right", which is a limited real right regulated under Article 794 et seq. of the TCC. The usufruct right regulated under the TCC grants its holder full power to benefit from the subject matter. On the other hand, dividend right certificates regulated under Articles 502-503 of the TCC grant their holders a limited right to benefit from the assets of the company. Hence, the provisions of the TCC regarding usufruct rights shall not be applied to dividend right certificates. Article 503 of the TCC stipulates that the holders of dividend right certificates may not be granted shareholding rights and that they may be granted the right to participate in the company's profits, the amount remaining after liquidation, or the right to acquire new shares. In fact, these rights are not required to be documented on the certificate. The rights provided under Article 503 of the TCC shall arise automatically upon the incorporation of the company through the articles of association or the subsequent amendment and registration of the articles of association. Therefore, dividend right certificates are not founding (constitutive) but explanatory (declaratory) securities. Ownership of dividend right certificate alone does not provide the title of shareholder. As a third party against the company, the holders are not entitled to management rights such as participating in the general assembly, casting votes, and filing an annulment action. Therefore, in this study, initially, the legal nature of dividend right certificates will be addressed, and then the types of these certificates, the rights they provide, the ways in which holders can appeal in case of limitation of these rights, and the situations where the rights are extinguished will be discussed in accordance with the opinions in the doctrine and practice. Keywords: dividend right certificates, founder dividend right certificates, participation dividend right certificates, share of profit right, share of liquidation right