CHANGES INTRODUCED BY THE NEW TURKISH COMMERCIAL CODE REGARDING JOINT STOCK COMPANIES

1. CHANGES INTRODUCED BY THE NEW TURKISH COMMERCIAL CODE REGARDING JOINT STOCK COMPANIES Av. Dr. Umut Kolcuoğlu 30 November 2011, London

2. General Overview INTRODUCTION TO THE NEW COMMERCIAL CODE INCORPORATION BOARD OF DIRECTORS AUDIT GENERAL ASSEMBLY SHARE AND SHARE CAPITAL SHAREHOLDERS STRUCTURAL CHANGES

3. Introductionto the New Commercial Code • Main Objectives of the New Turkish Commercial Code • (“New TCC”) • Technological Developments • Transparency / Access to Information • Compliance with European Union Legislation • Introducing International Corporate Governance Standards • Introducing Internationally Accepted Auditing and Reporting Standards • Increasing Shareholder Value

4. I. Incorporation (i) • A. Minimum Capital • Minimum amount of share capital of a joint stock company (“JSC”) is TRY 50,000, while this amount is TRY 100,000 for non-public JSCs adopting the registered capital system (Start-up Capital). • B. Public Offering at the Incorporation • Public offering is available at the incorporation stage. • C. Renouncing the Principle of Ultra Vires • JSCs will be able to carry out any transactions that fall within the scope of their business.

5. I. Incorporation (iii) • D. Single Shareholder Companies • The New TCC launches JSC with single shareholder in line with the 12th European Union Directive numbered 89/667. This reform also enables a shareholder to buy other shareholders’ shares and convert the company into a single shareholder company. In such case, the board of directors (“BoD”) must register the single shareholder with the relevant trade registry within seven days following the transfer date. Limitations for JSCs having a Single Shareholder Transactions between the single shareholder and the company must be in writing except for the ordinary day-to-day transactions. JSC cannot acquire its shares and be converted into a single shareholder JSC. 5 5

6. I. Incorporation (iv) • E. Capital Contributions • Values that can be contributed as capital have been diversified. • Intellectual property rights and virtual environments including electronic media, domain names and websites can be contributed as capital. • I. Contributions in cash • At least ¼ of the nominal share value must be paid at JSC’s registration whereby the remaining portion must be paid within 24 months following the registration. • II. Contributions in kind • Assets that are not subject to any seizures, pledges or any similar encumbrances may be contributed as capital in kind. Receivables that are not due, service acts, personal works and commercial reputation may not be contributed.

7. II. Board of Directors (i) • A. Criteria of Membership • One member BoD is introduced. • BoD members are not required to be a shareholder. • At least one BoD member who is authorized to represent the company must reside in Turkey and be a Turkish citizen. • At least one fourth of the BoD members must have a graduate degree. This requirement is not applicable for BoDs consisting of one member. • Legal entities may become a BoD member (significant change in the liability regime). Legal entity’s representative will be registered with the trade registry and the registration will be announced on the company’s web site. 7

8. II. Board of Directors (ii) • B. Meetings of BoD • Meetings of BoD may be held through electronic media. • The meeting quorum for BoD of half-plus one of the directors, as provided by the Turkish Commercial Code No. 6762 (“Existing TCC”), is abolished. The presence of the majority of BoD members is adequate. • C. Assignment of Duties • The BoD may delegate its management rights to certain BoD members or third parties that are not BoD members. As a result, the BoD members may be classified as executive and non-executive members. • The non-assignable duties of BoD are explicitly set. 8 8 8 8

9. II. Board of Directors (iii) • D. Representation • As a result of abolishment of the ultra vires principle, transactions concluded between JSCs’ authorized representatives and third parties that are beyond the purpose and scope of the company are binding for JSC unless the third party is aware or should be aware of the fact that the transaction is beyond the purpose and scope of the company. • E. Prohibition to become Indebted to the Company • BoD members and their related parties specified in the New TCC cannot borrow from the company. The company cannot provide surety, guarantee or security for these persons and cannot take over their liabilities. 9 9 9 9 9 9

10. II. Board of Directors (iv) • F. Invalid Resolutions • The New TCC provides examples of invalid decisions of BoD, without being exhaustive. According to Article 391 of the New TCC, the BoD decisions; • violating the principle of equality, • conflicting with the essential character of the corporation and principle of maintenance of capital, • violating the fundamental rights of the shareholders; or • violating non-assignable powers of other corporate bodies • are invalid. • Determination of the invalidity of the BoD decisions may be requested from the court. 10 10 10 10 10 10 10

11. III. Auditing (i) • A. IndependentAuditor • Internal auditor that was among the mandatory organs of JSC is replaced by external independent audit mechanism. • Audit is carried out by; • independent audit firms for big sized companies; • sworn financial advisors (Yeminli Mali Müşavir) or independent accounting financial advisors (Serbest Muhasebeci Mali Müşavir) for medium and small sized companies. Audit is performed in accordance with the Turkish Auditing Standards which are identical with IFRS. 11 11 11 11 11 11 11 11 11 11 11 11 11

12. III. Auditing (ii) • B. Transaction Auditor • Transaction auditors audit certain transactions of JSC such as incorporation, capital increase and decrease, merger, de-merger, conversion and issuance of securities. • C. Special Auditor • Any shareholder may request appointment of a special auditor from the general assembly (“GA”). A special auditor will be appointed by court if GA accepts the request.

13. IV. General Assembly (i) • A. General Overview • The non-assignable and exclusive authorities of GA are listed. • Nullity of GA decisions is regulated. The provisions of nullity stated in the New TCC are not numerusclausus. • The shareholders may participate to GA, submit proposals and vote through electronic media. • Executive BoD members, one BoD member, independent auditor and transaction auditor must attend GA meeting. • The right to call GA meetings has also been granted to liquidators. • An internal regulation must be prepared by BoD in relation to the conduct of GA meetings. 13 13 13 13 13 13 13 13

14. IV. General Assembly (ii) • B. Capital Increase • Unless the share capital is completely paid up, GA cannot decide to increase its capital, except for the capital increase through internal funds. • The corporate body authorized to decide on the increase is the GA in the issued capital system and the BoD in the registered capital system. • BoD must prepare a report with respect to the type of the capital increase. The transaction auditor appointed by BoD must evaluate the BoD report and audit whether the capital increase is in line with the law and the Turkish Accounting Standards. 14 14 14 14 14 14 14 14 14 14

15. IV. General Assembly (iii) • I. Capital Increase through External Funds • The first portion representing 25% of the capital must be paid at the time of registration of the capital increase and the remaining 75% must be paid within 24 months following the registration. • The provisions under the Capital Market Law regarding capital increase in the registered capital system for public JSCs are reserved. • II. Capital Increase through Internal Funds • In a capital increase through internal funds, (i) statutory reserves not allocated for a certain purpose, (ii) part of the statutory reserves that may be freely utilized and (iii) funds that may be included to the capital and the balance sheet are converted to capital. 15 15 15 15 15 15 15 15 15 15 15

16. IV. General Assembly (iv) • III. Conditional Capital Increase • The New TCC introduces conditional capital increase mechanism. • AoAmay grant a right to receive new shares by exercising an option or conversion right to; • employees; • owners of debt instruments of the company or its subsidiaries. • The capital will be increased upon the exercise of the conversion or option rightswithout further action. • Conditional capital increase is an exception of the fixed capital system. The total nominal value of the capital which is increased conditionally may not exceed 50% of the share capital of the company. 16 16 16 16 16 16 16 16 16 16 16 16

17. IV. General Assembly (v) • C. Restriction of Pre-Emption Rights • Each shareholder has the right to acquire newly issued shares on a pro-rata basis. • The pre-emption right may only be restricted or removed by a GA resolution, • if there is a just cause (e.g., acquisition of a business or a part thereof, participation of the employees in the company); and • upon the affirmative votes of the shareholders representing 60% of the share capital. • This provision also applies to BoD resolutions in the registered capital system. • Under the Existing TCC, pre-emption rights may be restricted without a just cause. 17 17 17 17 17 17 17 17 17 17 17 17 17

18. V. Share and Share Capital (i) • A. General Overview • Minimum nominal value per share is 1 Turkish kuruş. • Share without a nominal value is not recognized. • Distribution of advance profit is introduced also for non-public companies. • Registered capital system for non-public JSCs is introduced. Accordingly, capital increases of non-public JSCs can be effectuated up to the registered capital limit through a BoD decision. 18 18 18 18

19. V. Shareand Share Capital (ii) • B. Privileged Shares • Privilege may be granted regarding (i) dividend, (ii) liquidation share, (iii) pre-emption and voting rights or (v) another shareholding right not specified by law. • I. Creation of Privileged Shares • Privileges may be stipulated by the AoA. Decision Quorum GA resolutions for the amendment of AoA regarding the “creation of privileged shares” require the affirmative votes of shareholders representing at least 75% of the share capital. 19 19 19 19 19 19 19 19 19 19 19 19

20. VI. Share and Share Capital (ii) • II. Privilege on Voting Rights • Privilege on voting rights may be provided by granting unequal voting rights to shares of equal nominal value. • Each share may entitle its owner maximum of 15 votes. This limitation may not apply if the corporate governance principles require to do so or in the presence of a valid reason, in any case upon court decision. • Privileged voting right cannot be exercised for the following resolutions: • amendment of AoA; • appointment of transaction auditors; • release and liability claims of BoD members. 20 20 20 20 20 20 20 20 20 20 20 20 20

21. VI. Share and Share Capital (iii) • III. Representation of Share Groups in the BoD • In principle privileges are granted to shares and not to shareholders. However, Article 360 of the New TCC sets forth an exception: • Certain share classes; • shareholders who form a group in terms of their characteristics; and • the minority shareholders • may be granted the right to be represented in the BoD. 21 21 21 21 21 21 21 21 21 21 21 21 21 21

22. VI. Share and Share Capital (iv) • IV. Privileged Shareholders Special Committee (“PSSC”) • The following resolutions of the GA that may infringe the rights of privileged shareholders, require approval of the PSSC: • amending of the AoA; • authorizing BoD regarding the capital increase; and • BoD resolutions on the capital increase. • The BoD may initiate an action for annulment against the resolution of the PSSC within one month from the date of the resolution. If the privileged shareholders approve the amendment of the AoA in the GA meeting, no PSSC meeting is necessary. 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22

23. VI. Share and Share Capital (v) • Share Transfers • In principle, shares can be transferred without any restriction unless otherwise provided by the New TCC or the AoA. • I. Restrictions arising from Law • Registered shares, which have not been totally paid up, may only be transferred with the approval of BoD. • BoD may refuse to grant its approval, ifthe transferee’s ability to pay raises doubts and the security requested by the company is not provided. The provision of the Existing TCC restricting the transfer of shares corresponding to capital in-kind for a period of two years has been abolished. 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23

24. VI. Share and Share Capital (vi) • II. Restrictions arising from AoA • AoA may regulate that the registered shares may only be transferred with the company’s approval. • Transfer of the non-listed registered shares may only be disapproved based on an important reason laid down in the AoA. • The disapproval grounds are stipulated in the New TCC. • The transferability restrictions cannot be aggravated by the AoA. • If BoD disapproves transfer of shares, the ownership of the shares and all the rights related thereto shall remain on the transferor. 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24

25. VI. Share and Share Capital (viii) • D. JSC’s Acquisition of its own Shares • The New TCC allows JSCs to acquire up to 10% of their own shares subject to the following conditions: • GA must authorize BoD for the acquisition. • Shares subject to the acquisition must be fully paid-up. • Net assets minus the price paid for the value of the acquired shares cannot be less than the sum of issued capital and non-distributable reserves. • If there is an imminent and serious loss, JSC may acquire its own shares in the absence of a GA resolution authorizing the BoD. • JSC cannot subscribe for its own shares. 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25

26. VII. Shareholder (i) • A. General Overview • I. Equal Treatment • Every shareholder must be treated equally under equal circumstances. • II. Prohibition to become Indebted to the Company • Shareholders may not become indebted to the companyexcluding debts arising from their share subscriptions. • However, if the debt is related to a transaction with the company within company’s scope of activity and business of a shareholder and if such debt is on arm’s lenght terms, this prohibition may not be applicable. 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26

27. VII. Shareholder (ii) • B. Shareholder Rights • I. Voting Rights • Voting right is determined in accordance with the nominal value of the share. • Each shareholder has at least one vote and if a shareholder holds more than one share, his/her voting rights may be limited with the AoA. • The right to elect BoD members by way of cumulative voting is introduced to non-public companies; the Ministry of Industry and Trade is authorized to regulate cumulative voting with a communiqué. In order to have the voting right, the minimum share capital determined by law or by AoA must be paid up. 27 27 27 27 27 27 27 27 27 27 27 27 27 27 27 27 27 27 27 27 27

28. VII. Shareholder (iii) • II. Right to Information • Shareholders’ right to information is expanded. • Legal remedies are strengthened. • Limitation of right to information of a shareholder is strictly defined. • Website Requirement  Every JSC has to create a website • The following and other similar information should be announced on the website: • Documents and notices regarding GA meetings and the means for electronic GA and BoD meetings and for electronic voting • Year-end and interim financial statements and merger and de-merger balance sheets, audit reports, valuation reports, etc. 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28

29. VII. Shareholder (iii) • III. Right to request Special Audit • Every shareholder has the right to request special audit fromGA. • As a new minority right, if GA does not accept special audit request of a shareholder, the minority shareholder may request appointment of a special auditor from the court. 29 29 29 29 29 29 29 29 29 29 29 29 29 29 29 29 29 29 29 29 29 29

30. VII. Shareholder (iv) • B. Minority Rights • The New TCC includes new minority rightsfor those owning • 10% of the shares in private companies; and • 5% of the shares in publicly held companies. • Accordinglyminority shareholders may; • apply to court for appointment of a new auditor; • requestfrom BoD toprintshare certificates; • demand company’s dissolution on just cause; and • nominate a BoD candidate. 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30

31. VII. Shareholder (v) • C. Squeeze-Out • I. Squeeze-Out by the Majority Shareholder • Shareholders who own directly or indirectly at least 90% of the share capital and the voting rights can squeeze out the minority shareholders if the minority shareholder(s) hinders activities of the company, acts in bad faith, causes distress or acts recklessly. • In this squeeze-out process, the purchase price of the minority shareholder(s)'s shares will be the stock exchange or actual value. • II. Squeeze-Out in Case of Merger • The dissolving company may squeeze out the minority shareholders with at least 90% of the total votes. 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31

32. VIII. Structural Changes (i) • Group of Companies • New concept of “group of companies” (controlling shareholder/subsidiary) is introduced. • Group of companies is formed when a company; • owns the majority of voting rights in another company; • can appoint the majority of the members of the BoD pursuant to its bylaws; • has executed a control agreement with another company; or • holds control in any other way. • At least one controlling shareholder or the subsidiary must be in Turkeyforthe New TCC toapply. 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32

33. VIII. Structural Changes (ii) • Reporting Obligations, Right to Information and Special Audit • Reporting obligations and right to obtain information among the parent and the subsidiary company are regulated. • Subsidiary’s shareholders has the righttoclaim for appointment of a special auditor before the court. • Abuse of control by the parent company is regulated. 33 33 33 33 33 33 33 33 33 33 33 33 33 33 33 33 33 33 33 33 33 33 33 33 33

34. VIII. Structural Changes (iii) • B. Merger • Merger of different types of capital companies is available. • Insolvent companies or companies in the process of liquidation can merge. • Expedited merger procedures are available for group companies and small sized companies. • The merger agreement may provide to the shareholder an option to choose either to have shares in the surviving company or to exit and receive compensation (ayrılmaakçesi). • Compensation can be paid to shareholders in exchange for the privileges that will not be preserved after the merger. • Unless the transactional auditor reports that there’s no risk for the creditors resulting from the merger, creditors may request collaterals during the three-month period following announcement of merger. 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34

35. VIII. Structural Changes (iv) • B. De-Merger • De-merger is currently regulated only by the Corporate Tax Code and the Communiqué on Mergers of Commercial Companies. • New TCC regulates de-merger and partial de-merger. • Symmetric (ratios are preserved) and asymmetric (ratios are not preserved) de-merger is introduced. 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35

36. Effective Dates 13 January 2011 The New TCC was accepted by the Turkish Parliament. 14 February 2011 The New TCC has been published in the Official Gazette. 1 July 2012 The New TCC will be effective. 14 August 2012 Deadline for the compliance of the AoA with the New TCC. 1 March 2013 Deadline for appointment of independent auditors. 1 July 2013 Deadline for website requirement. 36 36 36 36 36 36 36 36 36 36 36 36 36 36 36 36 36 36 36 36 36 36 36 36 36 36