Statement of Compliance with Corporate Governence Principles
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STATEMENT OF COMPLİANCE WİTH CORPORATE GOVERNANCE PRİNCİPLES
1- The Statement of Compliance with Principles of Corporate Governance
The Bank's operations have been consistent with the provisions of Law No. 4456 governing its establishment, the Banking Law, and other judiciary regulations. Efforts have been made in fulfillment of compliance with the corporate governance principles to the utmost extent. Studies are carried out in this context.
With the decision of the Board of Directors dated 15.06.2007 and numbered 185, the Corporate Governance Committee was established and with the Decision dated 24.07.2007 and numbered 209 the Working Principles and Procedures of the Corporate Governance Committee” was put into force, and the Committee pursues its activities.
SECTION I: SHAREHOLDERS
2- Department of the Relations with the Shareholders
With the decision of the Board of Directors of our Bank dated 02.03.2009, internal arrangements for the functions of the Department of the Relations With the Shareholders, whose establishment is required by Capital Markets Board (CMB) Series IV, No. 41 on “the Principles which the Partnerships subject to the Capital Market Law are Required to Follow” have been realized and the following included in the duties of our Bank's Directorate of Institutional Banking and Investments:
The information of the managers in charge of relations with the shareholders is given below:
3- The Use of Shareholders' Right to Access Information
Within the period, 15 written applications in total, 5 of which were digital, were received from the small shareholders requesting information regarding situation of customer account related to the shares, usage of pre-emptive rights, profit ratio and the affiliations. And, these requests were replied via written or electronic methods.
It is continued to use electronic methods as announcing devices in the purpose of usage of shareholders' rights efficiently. In the Main Contract of the Bank, the appointment of a private inspector has not been regulated as an individual right.
The Article 17 of the Main Contract which indicates “For matters that don't have a reference in this Main Contract, related provisions of the Law No. 4456, which regulates Bank's establishment, Turkish Commerce Law, Stock Market Law and Banking Law will be used”, is making a reference to the mentioned regulations regarding the appointment of a private inspector.
4- Information about General Assembly
The General Assembly Meeting regarding the activities of 2007 was held on 30.04.2008 with the representation of (99.08 %) 15.853.072.031,7 pieces of the overall share 16.000.000.000 and the participation of media members. Because the bank share-proofs had been issued at ISE (Istanbul Stock Exchange) and recorded by the Central Registry Agency, regarding the invitation of shareholders to the General Commission Meeting; it has been reported, in accordance with the related regulations, on the issue of Turkey Commerce Registry Gazette dated 03.04.2008 and numbered 7034 as well as Zaman and Dünya newspapers dated 04.04.2008, and announced at the national media, and via Media Portal along with a web-page on 28.04.2008 and the necessary information has been given out to inform the public.
Before the General Assembly Meeting in line with the related regulation, the Annual Balance Sheet, Income Table, Activity Report of the Board, Inspection Committee Report and Independent Inspection Report were made ready in the meeting building for the control/ evaluation of the shareholders. During the meeting, the shareholders have not used their rights to ask questions. The agenda suggestions were presented by the representative of the major shareholder, and the agenda was approved unanimously.
In addition, an extraordinary General Assembly Meeting associated with 2009 was held on January 30th, 2009, with the representation of (99.08 %). 15.853.045.231,7 pieces of the total 16.000.000,000 shares. As for invitation of the shareholders to the meeting, it has been reported, in accordance with the regulations, in Turkey Commerce Registry Gazette dated January 13th, 2009 and numbered 7226 copy as well as daily Referans and Star newspapers dated January 13th, 2009, and also announced via a web-page, and the necessary information has been given out to inform the public in line with the regulation regulations. During the meeting, the shareholders have not used their rights to ask questions. The agenda suggestions were presented by the representative of the major shareholder, and the agenda was approved unanimously.
There is no provision in the Main Contract stipulating that important decisions, such as sale/ purchase/ rent a big value properties be made by the decision of the Board. Since the Bank was established in pursuant to a special Law and that it is a public institution, these kinds of decisions are subject to approval of the Minister of State to whom the Bank reports or revision of the Law if it is required.
5- Voting Rights and Minority Rights
The Main Contract of the Bank grants no privileges with respect to voting rights. The Law on the establishment of the Bank and the Bank's Main Contract do not provide any right in participating to management and cumulative voting system.
6- Profit Distribution Principle and Time of Dividend Payment
No privilege has been granted regarding profit distribution. The distribution of profit, according to the Main Contract of the Bank and the Establishment Law No. 4456 of the Bank, from the distributable profit which is gross profit less the taxes and other legal obligations is made according to the provisions of Turkish Commercial Law, Banking Law and other related regulations, as a first dividend.
Up to 5 percent of the profit portion remaining after the first dividend distribution may be given to the personnel as bonus dividend, provided the percentage is determined by the General Assembly and at a level not to exceed the amount of three month's salary of the personnel. From the remaining amount of profit after the above deductions the other appropriations and reserve Money assignments are made which were found necessary by the Turkish Trade Law and the General Assembly. And the remaining amount is distributed to the shareholders as the second dividend.
The distribution of profit is made within the legal period and in accordance with the decision of the General Assembly.
7- Transfer of Shares
The Main Contract does not stipulate any restrictions regarding the transfer of shares.
SECTION II – INFORMATION AND TRANSPARENCY
8- Corporate Policy for Information
In accordance with notice of Stock Market Commission's Serial VIII No. 54 “Conditions Related to Public Announcements of Exceptional Cases” the works for establishing our Bank's policy and informing public are maintained.
In addition, along with the rules set by the regulations that are binding, the Bank has embraced the policy of enlightening the public on the issues that are not commercial secrets in accordance with its mission.
For informing the investors, the creditors, the shareholders, the workers and the other commissions and the associations, the related departments have been charged. The credits extended, conditions of credit usage, information regarding credit operation mechanisms, application methods and documents for application are posted on the web-page. Financial tables and independent inspection reports
prepared every 3 months regarding our bank's financial structure are posted on the web-page as well as on the ISE web pages. Form for Enlightening the Public that has been created in the framework of Stock Market Commission's regulations on “Basics for Mediator Commission's Public-Informing” Notice is periodically posted on The Association of Capital Market Intermediary Institutions of Turkey's web-page.
In addition, within the framework of the texts of Establishment Law No. 4456 and Main Contract, Organizational Structure, Annual Report and Bank's mission; Sectoral Research Reports and the reports on appropriate local investment areas are served to the public on the web-page.
In accordance with the regulation of “Rules and Regulations for Implementing the Right to Access Information Law” that was published in the Official Gazette dated 27.04.2004 and numbered 25445, the Information Access Unit within Training and Public Relations Directorate was established in order to carry out the services to inform the public, and necessary arrangements at web site were made. In 2008, 183 applications related to various matters had been replied in coordination with the related departments.
9- Exceptional-Case Explanations
In the exceptional cases that require special explanations, the notices are made on time. In 2008, 11 special case notifications were made. There has not been any further explanation request for the declarations made.
10- Company Internet Site and Its Content
On the web site of the Bank, the texts of Establishment Law and Main Contract, management structure, associational and financial information, announcements, organizational structure, annual reports, periodic financial tables and reports, contact information, social responsibility activities, and the information regarding human resources, and the credits extended, application conditions for credit, and credit operation mechanisms and application documents are posted on the web site, and the web site was put into service at the address of www.kalkinma.com.tr .
In order to improve the services to the shareholders via internet, the works to reorganize the web site continue.
11- Disclosure of majority shareholding by real person.
There is no real person who holds the majority of shares.
12- Announcement of Insiders to the public
Although any list regarding potential insiders has not publicized, the information about the Board Members and the managers who have access to such information are posted on the web site.
All necessary measures are taken to prevent the use of inside information.
SECTION III – STAKEHOLDERS
13- Providing Information to the Related Parties
The Bank takes great care in providing its services in an honest, reliable, understandable, timely and impartial manner to stakeholders, employees, creditors, clients and all parties that have a vested interest in its function. The Bank observes the principle of confidentiality by not disclosing the
information that it receives due to its banking relations to the parties other than law and regulations allow.
On the other hand, the stakeholders (the shareholders) are informed through media, verbally, directly in writing, by internet and other instruments within the framework of public information practices.
14- Stakeholders' Participation in Management
Stakeholders' participation in management is not applicable.
15- Human Resources Policy
Personnel related issues and the criteria applicable to the personnel recruitment are established by the Bank's Personnel Regulation in writing.
The recruitment and promotion of assistant inspectors and inspectors are carried out according to the Regulation of Inspectors Board, and the recruitment and promotion of assistant experts and experts, according to the provisions of “the Regulation on Recruitment, Proficiency and Promotions of Assistant Experts and Experts”, and the promotion of other personnel, according to ”the Personnel Regulation”.
Within the framework of creating a better and safer working environment, information infrastructure and equipment were renewed.
In addition, in the framework of the provisions of Public Officials Union Law No. 4688 and other related laws and regulations, at the Corporate Management Board meetings held with joint participation of the Bank representatives and the representatives of the members of the Union, the proposals aiming at improving the social and personal rights of the all employees and the issue related to the working conditions are jointly developed.
16- Relations with Clients and Suppliers
The procured resources of the Bank are extended to the clients with the understanding of productivity and profitability as investment, operation, capital and export loans. Conditions concerning the use of loans are published on internet site (www.tkb.com.tr). Because of the intensive competition in the banking sector, a Loan Marketing Directorate was established in 2006 in order to improve the effectiveness of marketing activities and the relations with clients.
The Bank informs its clients within the framework of the cooperation agreement signed with TOBB by organizing joint meetings with the chambers of industry and the commerce, participating in fairs on related sectors and visiting investment regions.
As a development bank having banking experience based on project evaluation, the Bank provides technical assistance services to the clients thus helps to obtain more healthier results from the projects.
All transactions made in the name of the clients in fund management and on stock Exchange are realized with clear net instructions of the clients.
17- Social Responsibility
A number of social activities are carried out annually observing public benefit. In this context, a kindergarten is operated by the Bank for the children 3-6 ages, and the library of the Bank are kept open for the public, and the requirements of various institutions and organizations for
publications, training and stationary etc are met, and the participation of the employees to the campaigns such as blood donation are encouraged.
At the art gallery of the Bank operated in the building of the Bank located at İzmir Caddesi, artworks of 18 different including ceramic, painting and photographs are exhibited during 2008.
The participation of the Bank employees to cultural activities is encouraged.
Our Bank gives special importance to financing the projects aiming at protecting environment, and law and regulations related to the environmental issues are closely observed. In 2008, the works for making the Bank gain ISO 14001 Environment Management System have been initiated, and training programs on Environment Management Information Systems have been organized.
In 2008, a report on Discarding Solid Wastes in Cement Kilns was prepared and a presentation on this issue was carried out in the Bank. The works aiming at preparing a report over Carbon Absorption and Storage were initiated in 2008 as well. The developments on the fields such environmental technology, carbon emission etc are closely followed by participating in related fairs, congress and meetings and contributions required are made.
There is no law suit that has been filed against the Bank for any damage caused to the environment.
SECTION IV- BOARD OF DIRECTORS
18- The Structure and Composition of the Board of Directors and Independent Members
The structure of the Board of Directors is determined by the Establishment Law No. 4456 of the Bank. The Board is composed of seven members including the CEO and six members are elected by the General Assembly. According the Establishment Law, the General Manager is also the Chairman of the BOD.
Members of the BOD possess the required conditions to be elected that are stipulated by Turkish Trade Law, Banking Law No 5411 and the Bank Establishment Law No 4456.
In addition to this, an Auditing Committee was formed within the body of the Board of Directors according to the provisions of “the Regulation on Internal systems of the Banks” that is put into force by the Banking Regulation and Supervision Agency and published in the Official Gazette dated 01.11.2006 and numbered 26333, and a Corporate Governance Committee was established in accordance with the “Regulation on the Principles of Corporate Governance of the Banks”.
Board of Directors
(*) The following persons have served their terms of office as BOD members between the dates indicated:
Osman KARA 28.04.2003- 30.04.2008; Mehmet UNCU 28.04.2003-30.04.2008; Asım ALTUN 01.05.2007-30.04.2008;
Nedret Şerif ÇAKIRSOY 01.05.2007-30.04.2008; Ömer Faruk ÖZTÜRK 17.05.2007-30.04.2008; Zekai IŞILDAR 02.05.2008-15.01.2009;
Adnan YALÇINCI 02.05.2008-29.01.2009.
Board of Auditors
(*) The following persons have served their terms of office as the members of Board of Auditors between the dates indicated:
Esat Kaya TURGAY 30.11.1999-30.04.2008; Hasan AYDIN 02.07.2004-30.04.2008; Mustafa ÇOLAK 30.04.2007-30.04.2008;
Mehmet AYDIN 30.04.2008- 20.02.2009.
19- Qualification of the Members of the Board of Directors
The members of the Board of Directors have the minimum qualifications stipulated by Article 3/1 of Section IV of the Corporate Governance Principles put by the Capital Market Board of Turkey, and the Banking Law, and Law No. 4456, and the Main Contract of the Bank.
In order to be elected to the membership of BOD, one should have the general qualifications that are required to be appointed as a public officer, and have university education, and three of the BOD member who are elected by General Assembly among the shareholder should have education on law, economics, business management, finance, banking, public management or on an equivalent field and on a branch of engineering that is associated with these branches at least license level. There is no precondition for other members of BOD.
20- The Bank's Mission, Vision and Strategic Objectives
Law No. 4456 regulating the establishment of the Bank defines the objectives and scope of the Bank as follows: “In order to promote Turkey's development; is to grant loans to enterprises incorporated as joint stock companies, to provide them with financial and operational support by participating in them, to channel both domestic and foreign savings into investments having potential to make contribution to the development of the country, to make contribution to the development of the capital markets, to finance domestic, foreign and international joint investments, and to carry out all functions of development and investment banking.”
The Bank's mission and vision adopted by the Board of Directors have been publicized by publishing at the web site of the Bank. The Mission of our Bank is “In the direction of development and sustainable growth of the country, by supporting the investments of the companies having status of Joint Stock Company through providing them with loans from domestic and international sources, and by participating in leading/ model enterprises as shareholder, to ensure to increase the level of employment, income and welfare.” And the vision of the Bank is: “As a leading institution for development and sustained growth, by supporting the investments on the basis of region, sector and technology, and by financing them efficiently and quickly, and by providing investors with supports in various form such as strengthening, encouraging and giving technical assistance, to become a development and investment bank at the international level.”
The mission, vision and strategic targets of the Bank are approved by the Board of Directors and the annual budget is prepared in accordance with these targets. The strategic targets, in compliance with the strategic objectives of the Bank, are in the forms of sub-objectives of each objective. Strategic targets are determined by taking into consideration the satisfactory, common, logical, outstanding, attainable and numerical qualities and with maximum participation.
The Bank's activities are arranged, in the form of tables, on the basis of the rate of attainment of the objectives and the past performances. These tables are given at monthly and annual reports and at annual work programs and the annual budgets that are submitted to the cognizance of the Board of Directors. And, the annual reports, work programs and the budget are submitted to the Board of Directors for the approval. The Board of Directors of the Bank monitors the attainment levels of these objectives together with the activities and the past performances and evaluates them as of six month periods.
21- Risk Management and Internal Control
The risk monitoring and internal control mechanism have been established in 2001, in compliance with the provisions of the Regulation on the Banks' Internal Control and Risk Management Systems published by the Banking Regulation and Supervision Agency (BRSA) depending on the Banking Law. It was reorganized later in accordance with the requirements of the Regulation on the Banks' Internal Systems that was published depending on the Banking Law No. 5411 which was put into effect in 2005. In the scope of the reorganization in question, the Executive Risk Management Committee was abolished, and a new Auditing Committee, which consists of three members of the Board of Directors, and which has no operational power, was set up. Board of inspectors, Internal Control and Risk Monitoring Managements, which are within the internal systems, are connected to Board of Directors via this Committee. Auditing Committee is responsible for providing effectiveness and proficiency of the units within the internal systems.
In this context, Board of Inspector, Risk Monitoring and Internal Control Managements present their reports and the results of the inspections they carry out to the Auditing Committee.
Internal Control Management, by taking into consideration certain control points specified, carries out its daily, weekly and monthly controls over the operative units that have direct effects on the profit and the loss of the Bank because of the results of the functions they have, in other words that have income creating activities. The control activities are monthly reported to Auditing Committee, to General Manager and to Board of Inspectors.
Since the risk management systems are established, the Risk policy that is observed by our Bank is briefed as to gain appropriate expertise on the subjects of duty, mission, and to assume the risks that can be defined, and that can be controlled and/ or that are manageable. The management of the risks in our Bank is carried out under supervision of the committees specified according to their activity areas. In this sense, the Assets and Liabilities Management Committee defines the risk policy of the Bank on the issues of current assets and foreign currency position in general, and Loans and Equity Participation Committee deals with the principles associated with credit risks. And the Risk Monitoring Committee of our Bank deals with the measurement and determining the effects of the risks that the Bank currently is under influence of and/ or that it may face in the future. In this regard, in the reports that are prepared by Risk Monitoring Committee (other than those that are sent to Banking Regulation and Supervision Agency), credit and market risks are measured by using various tables and calculations, and these reports are presented to the Auditing Committee once a month. The reports that are presented to the Committee are also distributed to the members of the Board of Directors on monthly basis and are presented to the Board of Directors with the same intervals. So, both operative and managerial units of the Bank are kept informed about risk position of the Bank.
The risks of the Bank faces are followed up according to the risk definitions that is defined and reported for certain periods within the framework of BRSA regulations and within the framework of monthly TKB Risk Monitoring Format prepared by the Directorate of Risk Monitoring of the Bank. TKB Risk Monitoring Format which is developed by the Risk Monitoring Directorate of the Bank aims defining, inspecting, guessing development trend and in this connection, creating/ forming future scenarios for the exposed risks. In the framework of this format, risks of the Bank are examined under the six main headlines as Liquidity Risk, Exchange Rate Risk, Interest Rate Risk, Maturity Risk, Credit Risk and Operational Risk.
22- Authorities and Responsibilities of Members of Board of Directors and Executive Staff
The tasks and responsibilities of the board members are specified by the Law No. 4456 and the Main Contract that was amended at the General Assembly meeting held on 12.05.2000 in accordance with the Law.
The basic duty of the Board of Directors of the Bank is to act in order for the achieve the objectives specified in the framework of related legislations, Development Plans and Annual Programs.
The tasks of the Board of Directors and duties and authorities of the General Manager are defined by the Law No. 4456 and the Main Contract of the Bank. Similarly the tasks and authorities of the executive staff of the Bank are specified by Board of Directors in accordance with “Regulation on Task, Authority, Responsibility and Principles of Organization”.
In this sense, the Board of Directors resolves on;
a) The issues of extending credits to the clients and participating in their capitals, establishing new companies under the leadership of the Bank, selling and repurchasing the shares of the affiliated companies, and issuing profit guarantees,
b) Opening, representation offices, branches and liaison offices in the country and abroad.
c ) Making decisions and taking precautions in order to provide financial sources for the Bank,
d) Approving, monitoring and revising, when it is necessary, medium- and long- term plans and annual work programs that are prepared according to the article 9 of the Law .
e )Making proposals to the General Assembly on the issues such as Balance Sheet, Profit- Loss Statement and the method of dividend distribution,
f) Determining the rules and principle of the organization and the works that are required to achieve an effective operation, and making decisions on regulations,
g) Appointments of executive staff in line with the suggestion made by the General Manager,
h) In the case of any vacancy in the positions of Chairman and General Manager, determining the BOD member who will substitute the Chairman, and the Deputy General Manager who will substitute the General Manager for a period not more than six month, and submitting its proposal to the Minister for approval,
i) Selecting the candidates who will represent the Bank as BOD member and auditor at the affiliated companies. among the experts on the related area,
j) Carrying out other tasks.
If the Board of Directors considers that it is necessary, it can transfer some of its authorities to the General Manager by setting the limits. The General Manager informs the Board of Director at its first meeting about what has been done on the issues authorized. The transfer of authority does not abolish the responsibility of the BOD.
23- Working Principles and Procedures of Board of Directors
The Law for Establishment No. 4456 and the Main Contract of the Bank stipulates that BOD meet minimum two times a month with absolute majority, that the resolutions be made with unanimous decision of this absolute majority, that the member be not allowed to use abstaining vote on any issue, and in the case of equality in any voting, the vote of the Chairman be regarded as two votes. The members of BOD are not furnished with veto right.
The procedure of informing the BOD members are conducted by Secretary to General Manager and BOD. The meeting time and the agenda of the BOD meeting are determined by the Chairman.
The files that are prepared according to agenda of the meeting are distributed to the members by Secretary to General Manager and BOD. Minutes are not recorded during the board sessions. Justification notes associated with counter votes should be given in writing and be attached to Decision Book, which should be notarized. Counter vote justification notes are not publicized due to confidentiality principle.
Members personally participate to the Board meetings, in which important issues associated with the activities of the Bank are discussed.
In 2008, the Board held 25 meetings. Additionally, 22 interim decisions were made.
24- Prohibition of Transaction and Competition for Board Members
Board members are prohibited to be involved in any transaction and go into competition with the Bank.
25- Code of Ethics
An Ethics Commission was established within the Bank, according to the article 29 titled “Ethics Commission” of the “Regulation on Codes of Ethical Conduct for Civil Servants and Application Procedures and Criteria”, effective since it was published by the Prime Ministry in the Official Gazette dated 13.04.2005 and numbered 25785, and with the approval of the General Directorate, dated 22.04.2005 and numbered 1165. In addition, according to the article 23 of the same regulation having the title “Adhering to Ethical Conduct Principles, the “Ethical Contract” contained in the appendix of the regulation was signed by all Bank employees and placed in their personal files.
26. Number, Structure and Autonomy of Committees Established by the Board
Within the framework of article 24 of the Banking Law No. 5411 and the provisions of “the Regulation on the Internal Systems of Banks”, and in accordance with the interim resolution Board of Directors numbered as 2006- interim resolution/ 227 and dated 31.10.2006, an Auditing Committee is established within the BOD in order to assist the BOD performing inspection and control the activities.
İrfan TOKGÖZ and Özcan TENGİLİMOĞLU were elected as the members of Auditing Committee with the decision of the Board of Management dated 12.05.2008 and numbered 2008-10-13/098. In the meeting of Auditing Committee on 21.05.2008 numbered 2008/5, İrfan TOKGÖZ is appointed as chairman, Özcan TENGİLİMOĞLU as deputy chairman.
Auditing Committee performs its duties in according to “the Working Principles and Procedures of the Auditing Committee”, which was put into effect with the resolution of the Board of Directors dated 24.01.2007 and numbered 2007-02-08/036. Committee held 14 meetings in 2008.
(*) Hakan TOKAÇ and Osman Kara served as members of the Auditing Committee between the dates indicated respectively:
01.05.2007-12.05.2008 and 28.03.2003-12.05.2008
Corporate Governance Committee
Within the framework of the “Regulation On the Institutional Management Principles of Banks” published by Banking Regulation and Supervision Agency in the T.R. Official Gazette dated 01.11.2006 and numbered 26333 and the “Institutional Management Principles” published by the Capital Markets Board, a Corporate Governance Committee was established in order to perform activities for determining the principles related to Bank's policy on corporate management, and to monitor the adaptation with governance management principles, and to conduct activities aiming at improvements in this matter, and to make suggestions to the Board of Directors. The Committee was established with the resolution of our Board of Directors dated 15.06.2007 and numbered 2007-12-18/185, and Operation Procedures and Principles of Institutional Management Committee was put into effect with the resolution dated 24.07.2007 and numbered 2007-15-01/ 209.
The duty of chairmanship of Board of Directors has been conducted by BOD member Ahmet YAMAN, who does not have an executive duty, since 12.05.2008. In his absence, the duty is conducted, as vice president, by BOD member Hakan TOKAÇ who also does not have an executive duty. The Management of Institutional Banking and Investment performs the secretary services for Corporate Governance Committee. The Committee conducted two meetings in 2008. Corporate Governance Committee continues its activities in order to improve the Corporate Management practices in the Bank.
(*) Nedret Şerif ÇAKIRSOY and Asım ALTUN served as members of the Corporate Governance Committee between
dates indicated respectively: 15.10.2007-12.05.2008 and 15.10.2007-12.05.2008.
27- Financial Privileges Provided to the Board Members
The salaries of BOD members are determined by the General Assembly. They are not entitled to any other compensation. However personnel credits are made available to BOD members according to the rules applied for Bank's personnel as prescribed by the Personnel Loan Regulation. There is no credit, debt record or bail, concerning any board member or post- holder whether directly or through a third party, other than the credits stated above.