The Turkish Capital Markets Board (“Board”) has amended the Corporate Governance Communiqué (“Communiqué”) (published in the Official Gazette No 31262 of 2 October 2020) and added an Article that binds companies already included in the scope of the Communique to the Framework for Compliance with Sustainability Principles (“Framework”). This Framework is also published by the Board.
Companies are now obliged to indicate in their annual activity report whether they apply the sustainability principles. If they do not, they must give detailed reasons for this and list the social and environmental risks arising from non-compliance.
Although public companies do not fall within the scope of the Communiqué, the added Article states that while compliance with the sustainability principles is voluntary, companies are obliged to disclose in their annual activity report whether or not they comply with these principles and must provide an interim report in case of significant changes. With this reporting liability, public companies also become included in the scope of the Communiqué.
The Framework comprises various sustainability principles under “General Principles”, “Environmental Principles”, “Social Principles” and “Corporate Governance”.
The “General Principles" relate to the strategies, policies and objectives of companies with regard to sustainability, the application and review of these strategies and policies, and the review of the process to achieve an objective. The "Environmental Principles" require that companies comply with environmental legislation and international standards such as ISO 14001, disclose the highest level of environmental and climate change management bodies and employees, identify incentives for environmental management, explain how environmental issues are integrated into labour-related matters and how environmental issues affect the value chain and customers, disclose measures and strategies to address the climate crisis, provide data on the use of renewable energy, etc.
The "Social Principles" set standards for human and labour rights, health and safety at work, protection of personal data, ethical principles, social responsibility, customer satisfaction and transparency.
The Corporate Governance Communiqué was published in the Official Journal No. 28871 of 3 January 2014 to set out the principles and procedures for corporate governance. The scope of this Communique covers non-public companies. Previously, the Communique only contained provisions instructing companies to adopt and apply the "Corporate Governance Principles" annexed to the Communique. These principles related to shareholders, general assembly meetings, voting rights, profit sharing, public disclosure, policy towards stakeholders, board of directors and other board meetings.
For further information on this change and on corporate governance in Turkey, please contact your CMS Partner or your local CMS expert: Dr. Döne Yalçın and Taner Elmas.