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Law on the Establishment of DBT
 
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The Official Gazette of the Republic of Turkey

Date : 17 October 1999 Number : 23849

The Law Concerning the Establishment of Türkiye Kalkınma Bankası Anonim Şirketi (Development Bank of Turkey)

(The Law Concerning the Repeal of Decree-Law No: 13 dated 27.11.1975 on the Establishment of Devlet Sanayi ve İşçi Yatırım Bankası (State Industry and Laborer Investment Bank), of Decree having the force of Law No: 165 dated 14.11.1983 on the Establishment of Devlet Sanayi ve İşçi Yatırım Bankası A.Ş.

(State Industry and Laborer Investment Bank Inc.)of Decree having the force of Law No: 329 dated 15.07.1988, Amending Certain Articles of the Decree having the force of Law on the Establishment of Devlet Sanayi ve İşçi Yatırım Bankası A.Ş. and of Decree having the force of Law No: 401 dated 12.02.1990 Amending Certain Articles of the Decree -Law on the Establishment of Türkiye Kalkınma Bankası Anonim Şirketi, and Concerning the Establishment of Türkiye Kalkınma Bankası Anonim Şirketi)

Law No: 4456 Date of Adoption :14.10.1999

Legal Structure

Article 1-
A development and investment bank is hereby established which is subject to provisions of private law except as provided herein, as a joint-stock company with a legal entity of its own. The name of the bank is " Türkiye Kalkınma Bankası Anonim Şirketi"
(Development Bank of Turkey). Its abbreviated name is " TKB".
The Ministry to which the bank is affiliated is the " Prime Ministry ".
The head office of the Bank is located in " Ankara".

Abbreviations

Article 2- The following words used herein shall have the following meanings.
1. The "Ministry", shall mean the Prime Ministry;
2. The "Minister", shall mean the Prime Minister or a Minister of State appointed as such,
3. The "Bank" shall mean Türkiye Kalkınma Bankası A.Ş. (TKB) (Development Bank of Turkey).

The objectives of the bank and the scope of activities

Article 3- The objectives of the Bank are to provide enterprises in the status of joint-stock company with financial and operational support by means of loans and equities participation within the concept of profitability and efficiency, to direct domestic and foreign savings towards investments aimed at development, to contribute to the development of the capital market, to finance domestic, foreign and international joint investments and to carry out all functions of development and investment banking operations.

To reach these objectives, the Bank may,

1. Provide all types of cash and non cash, medium or long term credits in Turkish or foreign currency; carry out lending operations on a profit-sharing or leasing basis; issue guarantees for local or foreign individuals or institutions under the required collateral obtained; and act as an intermediary;
2. Purchase and sell all types of securities, and issue bond guarantees;
3. Carry out researches, project development and training activities by its own or by others; extend technical assistance; and take precautions to ensure the efficient operation of companies with which it has financial relations.
4. Extend loans to companies; participate in companies established at home or abroad ; carry out rehabilitation; improvement and consolidations if necessary; establish companies under its leadership; purchase, sell or repurchase share certificates and issue profit guarantees related to participation.
5. Carry out al types of exchange operations such as those concerning imports, exports and invisible transactions, and hold foreign currency positions.
6. Act as an insurance broker.
7. Open branch offices and representations at home or abroad provided that the necessary permissions are obtained.
8. Cooperate with local or foreign financial institutions and become member to national or international organizations in which they participate.
9. Obtain resources from local or foreign institutions, from money and capital markets and from all types of funds.
10. Take measures to spread industrial property rights to public at large.
11. .Use its resources in accordance with the objectives and principles of the development plans and annual programs.
12. Carry out all types of development and investment banking operations which will help to achieve its objectives.
13. Purchase, sell, rent and lease out all types of movable and immovable properties and establish pledges, mortgages, usufruct, easements, encumbrances on immovable properties, and all other rights in favor of or against to the Bank.
14. Take all types of security against the loans it extends, including chattel mortgage, securities on commercial enterprises and other mortgages.

PART TWO
FINANCIAL PROVISIONS

Resources

Article 4- The owners equity and external resources to help the Bank achieve its objectives are as follows:

a) Owners Equity
1. Subscribed Capital
2. Reserves and Provisions

b) External Resources
1. Bonds to be issued in Turkish or foreign currency under the Treasury guarantee;
2. Loans to be extended and advances to be made available by the Treasury or the Turkish Central Bank;
3. Loans to be obtained from local or foreign institutions under the Treasury or guarantee if necessary;
4. Other resources.

Investment funds and partnerships

Article 5- The bank may establish securities investment partnerships and securities investment funds and act as an intermediary institution in accordance with capital market legislation.

Capital

Article 6- The bank adopts the registered capital system, and its registered capital is TL 75.000.000.000.000.-. Its stocks are registered shares.
The capital may be increased by a resolution of the Board of Directors, within the ceiling of the registered capital, which may be raised by the Council of Ministers upon a resolution of the Assembly of Shareholders.
The Board of Directors shall be authorized to restrict preferential rights, to issue share certificates above the face value, to sell allocated shares and to have share certificates printed in different denominations.
In cases for which this Law makes no provision, the registered capital of the Bank shall operate under the Capital Market Law No: 2499.

Authority to issue securities

Article 7- The bank may issue and sell all types of securities in accordance with the current legislation.
Bonds to be issued by the Bank with the Treasury guarantee shall benefit from all rights, privileges and exemptions attached to government bonds.

Utilization of resources

Article 8- The bank shall utilize its resources in accordance with its annual placement program.
The placement program shall indicate:
a) The allocation of resources according to sectors, regions and types of the company.
b) Allocations for equity participation and for loans; and
c) Interest rates, terms and grace periods applicable to loans, according to types of company.
The annual placement program shall be delivered to the Ministry and to the Ministry of Finance.

Accounting period and work program

Article 9- The accounting period of the Bank shall correspond to the calendar year.
The Bank shall draw up a work program which regulates its activities for each accounting period. This work program shall include:
a) The placement program mentioned in Article 8 above;
b) The personnel cadres;
c) The investment program;
d) The income and expenditure budget;
e) The financing program;
f) The evaluation criteria;
g) The definition of a laborer company; and
h) Any other matters deemed necessary.

PART THREE
BODIES OF THE BANK

Assembly of the Shareholders

Article 10- The Assembly of Shareholders shall consist of the Bank's shareholders. The Assembly of Shareholders shall function in accordance with the provisions of the Turkish Commercial Code, due to the provisions hereof.

Board of Directors

Article 11- The Board of Directors is the decision making body accountable to the Assembly of Shareholders.

a) The Board of Directors shall consist of seven members, including its president, who shall be:
1. The General Director; and
2. Six members elected by the Assembly of Shareholders from among the shareholders.

b) Membership to the Board of Directors shall require:
1. Meeting the general conditions for appointment to the civil service;
2. Having received an education of bachelor degree at least, and
3. To be elected by the Assembly of Shareholders, at least three members are required to have a bachelor degree either in; law, economics, business administration, finance, banking, public administration or an equivalent subject or in a branch of engineering related to the above- mentioned subjects. For the other members, professional expertise shall not be required.

c) The General Director shall be the president of the Board of Directors.

d) The members of the Board of Directors shall serve for a term of three years. A member whose term of office has expired may be re-elected. In the event that a membership become vacant before the expiry of the term of office, the provisions of the Turkish Commercial Code shall apply.

e) The Board of Directors shall meet at least twice a month, with an absolute majority of its members. It shall adapt its resolutions unanimously, under absolute majority. No abstention shall be allowed. In the event of a tie, the president's vote shall be considered as two votes.

Duties of the Board of Directors

Article 12- The basic duty of the Board of Directors is to ensure that the objectives of the Bank as laid down herein are achieved, within the framework of the Assembly of Shareholders resolutions, relevant legislation, the development plan and annual programs.
In this context, the Board of Directors shall:

a) Decide to extend loans to companies or participate in their capital, to establish companies under the leadership of the Bank, to sell or repurchase share certificates and to issue profit guarantees related to participation.

b) Decide to open or close representations, branch offices and liaison offices at home or abroad.

c) Take the necessary precautions and decisions to obtain resources for the Bank;

d) Approve, monitor and if necessary, modify the medium and long-term plans and the annual programs to be drawn up under Article 9 hereof;

e) Prepare and propose to the Assembly of Shareholders; the annual report, the balance sheet, the profit and loss account and profit distribution plan.

f) Establish the necessary organization and working methods; decide on the regulations so that the activities of the Bank may be conducted efficiently;

g) Upon any requisite of the General Director, appoint the top-level managers and determine their duties and powers.

h) If the office of the President of the Board of Directors or the office of the General Director becomes vacant, elect the member of the Board of Directors who shall act as the President of the Board of Directors or the Deputy General Director who shall act as General Director for a period of up to six months, and submit this election to the Minister for approval.

i) Appoint the candidates for the Board of Directors and auditors for the Bank's participants among persons who have the expertise in the field.

j) Carry out other duties assigned by the legislation.

Deemed necessary, the Board of Directors may delegate part of its powers to the General Director, indicating the limits of the powers so delegated. The General Director shall inform the Board of Directors in its next meeting about his actions concerning the matters in which he is so authorized. Such delegation of power shall not relieve the Board of Directors of responsibility.

General Director

Article 13- The General Director shall be appointed by joint decree. The dismissing shall be subject to the same conditions as the appointment.
The General Director is required to have at least a bachelor degree either in; law, economics, business administration, finance, banking, public administration or an equivalent subject or in a branch of engineering related to the above mentioned subjects and possess a minimum of ten-year professional experience in the area of banking or business administration.

The General Director's duties and powers are as follows:

a) To manage the bank in accordance with the relevant legislation and with the resolutions of the Assembly of Shareholders and the Board of Directors;

b) To represent the Bank before the administrative and judicial authorities and before third persons and, if necessary, delegate the power of representation.

c) To propose the appointment of the top-level managers, and to appoint the other personnel;

d) To ensure that the capital of the Bank and its financial resources are used in accordance with the purposes of the establishment and with the principles of efficiency; and

e) To carry out duties assigned by the legislation.

Deemed necessary, the General Director may delegate part of the powers to subordinates. Such delegation of power shall not relieve the General Director of responsibility.

Deputy General Directors

Article 14- The Deputy General Directors shall be appointed by joint decree.
At least half of the number of Deputy General Directors must have a bachelor degree either in; law, economics, business administration, finance, banking, public administration or an equivalent subject or in a branch of engineering related to the above mentioned subjects and posses a minimum of seven year professional experience in the area of banking or business administration.

Bank's personnel

Article 15-
The tasks required by the services of the Bank shall be conducted by contracted personnel who shall not be subject to the provisions of Civil Servants Law No: 657, and other laws that concern contracted personnel.
Concerning the Bank's personnel; the recruitment, the duties and rights, the qualifications; the procedures of appointment, promotion and dismissal; the rules of discipline, the obligations, the job titles and cadre sizes shall be governed by a regulation to be adapted by the Council of Ministers upon the opinion of the State Personnel Agency.
The salaries and other financial and social rights of the Bank's personnel and the principles governing their employment contracts shall be determined by the decision of the Council of Ministers upon the favorable opinion of the State Personnel Agency, only after the proposal of the General Director and the approval of he Board of Directors. Additionally, the Bank's personnel shall receive a bonus equal to monthly salary in January, April, July and October, in proportion to the days actually worked. However, the monthly average of all payments ( including the bonuses averaged monthly and excluding the fee payments to the Board of Directors) made to the personnel as; monthly salary, social benefits, pay increases, compensations and allowances or other payments under any other designations, shall not exceed the upper limit determined by the Supreme Planning Board in relation to the Bank.
The Bank's personnel shall be subject to the provisions of Law No: 5434 on the Retirement Fund for Civil Servants of the Republic of Turkey. Their employment periods shall be treated in accordance with the provisions of Civil Servants Law No: 657 and Law No: 5434
The retirement procedures for the Bank's personnel shall be subject to the additional indices and office compensations specified for the identical staff positions, job titles and levels of the similar offices in the categories in which they would be classified under the Civil Servants Law, in terms of the duties they have performed, not to exceed the additional index specified for the General Directors who serve in the category of General Administrative Services.

Board of Auditors

Article 16- The Bank's Board of Auditors shall consist of three members.
The members of the Board of Auditors shall be appointed by the Assembly of Shareholders from among the candidates proposed by the shareholders.
The auditors shall be required to fulfill the same conditions as those applicable to members of the Board of Directors. The auditors shall serve in accordance with the relevant provisions of the Turkish Commercial Code.
The members of the Board of Auditors shall serve for a term of three years. An auditor whose term of office has expired may be re-elected. In the event that a membership become vacant before the expiry of the term of the office, the provisions of the Turkish Commercial Code shall apply.

PART FOUR
MISCELLANEOUS PROVISIONS

Exceptions, rights and privileges

Article 17- The Bank shall not be subject to auditing by the Audit Office, the Public Accounts Law No: 1050, to Public Procurement Law No: 2886, to Travel Allowances Law No: 6245 or to supplements and amendments thereto.
The Bank's moveable or immovable property, its cash or its rights and claims shall not be subject to attachment.
To fulfill its purpose of establishment and to operate in its scope of activities, the Bank shall dispose of, rent or lease out immovable property and establish pledges for and against, establish mortgages, usufructs, easements or any other liabilities on property.
The loans extended by the Bank out of the Fund for the Promotion of Investments; and all types of repayments made to the bank by the companies that use these loans, shall be exempt from the banking and insurance transactions tax. Promissory notes, receipts, letters of undertaking, contracts, letters of assignment, letters of guarantee and surety, letters and telegrams, advisory notes, transfer payment, shipment delivery and collection orders, all types of papers, registries, books and account statements which are related to those loan operations, the declarations and the balance-sheet and operating accounts extracts to be received by the Bank from the loan beneficiaries; the related chattel pledges, immovable property mortgage transactions, the promissory notes and rediscount notes made out by these companies to the order of the Bank, shall be exempt from the stamp duty, from the fees collected by notaries public and land registries and from all types of other fees and charges.
The purchase and sales of immovable property, as well as- in case of acquisition by the Bank at public auctions, bankruptcy and out sale- the purchase and transfer of moveable and fixed assets taken as collateral against the loans extended by the Bank according to its objectives; any transactions concerning the participation in auctions, in securing credits and in bond issuance abroad; repayments from loans extended, legal actions, proceedings and claims at courts and execution offices are exempted from any collateral, stamp duty, value added tax, inheritance and transfer tax, banking and insurance transactions tax, notary fees, brokerage, land registry fees, execution fees, collection fees, waiver fees, custody fees and from all other taxes, duties and charges.

Distribution of profit

Article 18- In accordance with the provisions of the Turkish Commercial Code, the Banking Law and other relevant legislation, the first dividend shall be paid out of the disposable profit after deducting the taxes and setting aside other legal obligations from the gross profit of the Bank.
A portion of up to 5 %, to be determined by the Assembly of Shareholders, of the profit that remains after the distribution of the first dividend shall be allocated for the personnel as cash dividends to be distributed within the principles set by the Board of Directors, subject to an upper limit in the amount of three month's gross salaries. Subsequently, any other allowances and reserves required by the Turkish Commercial Code and the Assembly of Share holders shall be set aside from the remaining profit, and the rest shall be paid out by the Assembly of Shareholders as a second dividend to the shareholders.

Voting in the General Assembly

Article 19- Each share shall carry one vote in the meetings of the Assembly of Shareholders. The votes shall be cast in the Assembly of Shareholders in accordance with the provisions of the Turkish Commercial Code.

Property and the documents of the Bank

Article 20- All types of moveable and immovable property and cashes of the Bank and all its rights and claims shall be in the status of State property.
Offences committed against the Bank's property and cashes or its valuable papers and instruments or its other assets shall be deemed to be offences committed against State property or against papers and documents of the State.

Equity participation

Article 21- To carry out its objectives and activities as laid down herein, the Bank may establish companies or participate in companies already established. Principally, the Bank's share shall be below 50% . If this rate is ever exceeded, the excess shall be disposed of within three years. This period may be extended by another three years, with the Minister's approval but for once.
The Bank's activities concerning its participation, and the payments to be made to representatives in those participation shall be governed by a regulation.

Supervision and inspection

Article 22- The Ministry shall have the task of supervising the performance of the Bank's activities to be in conformity with the provisions of relevant legislation. This task shall be carried out without restricting the duties and rights of the Bank and without causing any interruption to its normal activities.
The Prime Ministry Inspection Board shall annually prepare a report on the activities of the Bank and submit it to the Turkish Grand National Assembly for acknowledgement.
The Prime Ministry Inspection Board shall communicate the report on the Bank to the Bank itself by the end of April.
The Assembly of Shareholders of the Bank shall meet at the latest by the end of June and adapts its resolutions, taking account also of the Prime Ministry Inspection Board's 'report.

Other provisions

Article 23- Matters for which this Law makes no provisions shall be governed by the provisions of the Turkish Commercial Code and the Banking Law that concern development and investment banks.

Provisions repealed

Article 24- Decree Law No: 13 dated 27.11.1975, Decree Law No: 165 dated 14.11.1983, Decree Law No: 329 dated 15.07.1988 and Decree Law No: 401 dated 12.02,1990 together with the supplements and amendments thereto are hereby repealed.
INTERIM Article 1- In connection with the share issues unpaid at the stages of increase of the main capital from TL 10.000.000.000.000 to TL 50.000.000.000.000.- before the entry of this Law into force, a proposal shall be made to the existing shareholders to exercise a preferential right. Any shares that remain after the exercise of such a right, shall be cancelled. With respect to the exercise of the preferential rights, it shall not be required that the previous capital should be paid in full and in cash.
The paid capital arising after the exercise of this right, shall be registered and publicized as the issued capitaloftheBank.
The preferential right shall be exercised within ninety days from the effective date hereof, in view of the periods envisaged in Capital Market Law No: 2499 and other relevant legislation.
INTERIM Article 2- The staff who are employed as being subject to the Social Insurance Agency in terms of social security as of the effective date hereof, shall continue to be linked to the said Agency if, within three months from the effective date hereof, they apply in written from to the Bank for their continued link to the said Agency in terms of retirement.

Entry into force

Article 25- The law shall enter into force on the date of its publication.

Execution

Article 26- The provisions hereof shall be executed by the Council of Ministers.