Dividend Right Certifıcates In Joint-stock Companies
Dividend right certificate in joint stock companies are securities that do not represent the share but give limited rights to its owner. In this article, the subjects such as the concept of the dividend right certificate’s concept, types, the powers of its holders, will be explained in detail.
2. DEFINITION AND ISSUANCE OF DIVIDEND RIGHT CERTIFICATE
Dividend right certificates; are securities that do not give their holders any shareholding rights, unlike share certificates, but only give the rights to participate in the net profit, the amount remaining as a result of the liquidation, or the right to purchase the newly issued shares. Dividend right certificate holders do not gain shareholders title just because they own these certificates, and they cannot benefit from shareholding rights other than the rights granted to them by the dividend right certificate.
Dividend right certificates are regulated in articles 502 and 503 of Turkish Commercial Code No. 6102 (“TCC”). Within the scope of these provisions, the general assembly; in accordance with the articles of association or by amending the articles of association, can decide to issue dividend right certificates in favor of (i) the owners of the shares whose value is destroyed in accordance with the law, (ii) the creditors or (iii) those related to the company for a similar reason. Dividend right certificates, including those issued for the founders, can be promissory or bearer.
It should be stated that dividend right certificates are bonds that only provide some property rights to its owners and unlike the share certificates, they do not represent any shares in the company and do not provide any shareholding rights. In this respect, this bond does not give its owner any property, management, audit and information rights. However, it provides the right to participate in the net profit or liquidation balance.
Dividend right certificates are divided into three groups as founder’s dividend right certificate, ordinary dividend right certificate and participation dividend right certificate. Namely;
- Founder’s dividend right certificates can only be issued on behalf of the founding partners of the company, provided that it was specified in the articles of association. Therefore, it is not possible to issue a founder’s dividend certificate with the amendment of the articles of association after the establishment.
- Ordinary dividend right certificates can be issued by the general assembly of the company in accordance with the articles of association or, in the absence of a provision in the articles of association, by amending the articles of association.
- Participation dividend right certificates unlike other types of dividend right certificates, were regulated in the Capital Markets Law’s Former Communiqué on Principles Regarding the Issuance of Participation Dividend Right Certificates. Today, it is defined as share-like securities issued to be sold for cash within the scope of the VII-128.1 Communiqué on Shares in force.
Relationship between founder’s dividend right certificates holders and the joint stock company is not related to partnership, but a contractual relationship. In other words, the titles of founder’s dividend right certificates holders and shareholders are two completely different entities in a joint stock company. Therefore, it is not possible for a joint stock company to abolish, amortize or limit the founder’s dividend right certificates through a joint transaction without the consent of the founders, since as a rule, it is not possible to abolish a contractual relationship with the unilateral declaration of one of the parties. Since founder’s dividend right certificates holders are completely outside the joint stock company and are in the position of third parties for the joint stock company. 
It is stated that the provisions of article 348 of the TCC, from the article 502 reference, will be applied to the dividend right certificate holders. According to this article, the payments to be made to the holders of dividend right certificates can be made as a maximum of one tenth of the remaining from distributable profit after the reserve fund stipulated in the law and a five percent dividend for the shareholders has been drawn apart.
Dividend right certificate may restrict the shareholders’ right to receive a share of the profits. This restriction is in question for the second dividend distribution since the dividend rights certificate holders do not have the right to the first dividend payable to the shareholders at the rate of 5% of the paid-in capital, since they do not have any shares in the capital. For this reason, in the articles of association or in the general assembly resolution regarding the issuance of dividend rights certificate, it should be determined that at what rate the holders of dividend rights certificate will receive the profit in the second distribution. In the contract between dividend right certificate holders and joint stock companies, their profit utilization rate can be freely determined. Point to be taken into consideration here, when making arrangements with the contract is that the essence of the right to dividend should not be touched. 
If there is a profit that can be distributed, even if the company has decided not to distribute the profit, the founder’s dividend right certificate holders receive their dividends which are stipulated in the articles of association. It should be stated that Supreme Court, in its decisions after year 2000, has adopted the opinion that the dividend to be distributed to the founder’s dividend right certificate holders is not limited to the initial capital, and that the dividends to be distributed should be calculated according to the current capital amount of the joint stock company, that is, at the date of the distribution decision
3. STATUS OF DIVIDEND RIGHT CERTIFICATES IN MERGER AND PUBLIC OFFERING
As it was mentioned above, a dividend rights certificate does not grant its owner any partnership rights based on shareholding. The holder of dividend rights certificate does not have the right to vote in the general assembly as well as the right to object to the decisions taken. In this respect, dividend rights certificate holders will not be able to file a lawsuit for the annulment of the general assembly resolution.
In order to protect the dividend rights certificate holders in terms of mergers, article 140/5 of the TCC obliges the transferee company to grant equal rights to the dividend rights certificate holders of the transferred company or to purchase the dividend rights certificates at their actual value on the date of the merger agreement. As a matter of fact, pursuant to article 146/1(c) of the TCC, the merger agreement must contain the rights granted by the transferee company to the owners of privileged and non-voting shares and to the holders of dividend rights certificate.
Pursuant to article 348/2 of the TCC, in case the company shares are offered to the public, the founder’s dividend right certificates must be canceled without any payment, before the shares are offered to the public. Otherwise, the dividend rights certificates will automatically be deemed invalid.
4. IN CONCLUSION
Dividend rights certificates are securities that do not give their holders any shareholding rights, unlike share certificates, but only give the right to participate in the net profit, the amount remaining as a result of the liquidation, or the right to purchase the newly issued shares. Dividend rights certificate holders cannot gain the title of partnership just because they own these certificates, and they cannot benefit from shareholding rights other than the rights granted to them by the dividend rights certificates. Although the number of cases in which dividend rights certificates can be issued is limited in the law, special regulations regarding mergers and acquisitions and public offering transactions are envisaged. In cases where dividend rights certificates are required to be issued in joint stock companies, detailed regulations must be made by taking the rights of the shareholders into account.
Att. Gülenay KAVCAR
Att. Başak CANSIZ
Legal Int. Sena BAYKUŞ
 11.Civil Chamber, 15.06.2016, Case No. 2015/14641, Decision No. 2016/6636
 Çelik, Aydın, H. Güzin Üçışık. Anonim Ortaklıkta Finansal Tablolar Yedek Akçeler ve Kar Dağıtımı, On İki Levha Yayıncılık, 2018, p. 446, https://www.lexpera.com.tr/literatur/kitaplar/1-intifa-senedi-sahiplerine-kar-payi-verilmesi-978-605-152-637-9-1/1/sayfa-446 (accessed on 16.12.2021)