Principles Regarding Related Party Transactions
Article 1: Purpose
The purpose of the Principles Regarding Related Party Transactions ("Principles") is to determine the principles and guidelines regarding the related party transactions to be realized by the Company.
The Company and the Board of Directors aim to conduct all related party transactions in accordance with market conditions as set out in these Related Party Transaction Principles, Turkish capital markets and tax legislation and other relevant legislation.
Article 2: Definitions
"Corporate Governance Communiqué" refers to the Corporate Governance Communiqué numbered II-17.1 of the Capital Markets Board published in the Official Gazette dated 03.01.2014 and numbered 28871.
"Financial Statements" refers to the financial statements prepared in accordance with the Capital Markets Board Communiqué on Principles of Financial Reporting in Capital Markets numbered II-14.1 published in the Official Gazette dated 13.06.2013 and numbered 28676.
"Balance Sheet" refers to the balance sheet in the Financial Statements.
"Profit and Loss Statement" refers to the profit and loss statement in the Financial Statements.
"Audit Committee" refers to the audit committee of the Company.
"Board of Directors" refers to the Board of Directors of the Company.
"Company" refers to Çates Elektrik Üretim Anonim Şirketi.
"Continuous Related Party Transaction(s)" refers to the Related Party Transactions that the Company performs continuously within the scope of its activities, excluding transactions related to negative or positive imbalance related to energy purchase and sale.
"General Assembly" refers to the general assembly of the Company.
"Independent Member(s)" refers to the independent members of the Board of Directors.
"Non-Continuous Related Party Transactions" refers to one-time Related Party Transactions that are not continuous within the scope of the Company's activities.
"Related Party" has the meaning ascribed to this term in the Corporate Governance Communiqué.
"Related Party Transactions" has the meaning ascribed to such term in the Communiqué on Corporate Governance.
Article 3: General Provisions
Related Party Transactions shall be carried out in accordance with market conditions, taking into account the transfer pricing provisions.
The Board of Directors is responsible for the implementation and monitoring of the rules and principles prepared within the scope of these Principles and the implementation of these Principles.
Article 4: Non-Continuous Related Party Transactions
Significance Threshold
Non-Continuous Related Party Transactions exceeding 3% of net sales in the Profit and Loss Statement of the previous fiscal year are subject to the approval of the Board of Directors.
Audit Committee Report
The Audit Committee shall convene extraordinarily and review the existing terms and conditions and prepare a report to the Board of Directors on each Non-Continuous Related Party Transaction that exceeds the threshold mentioned above.
Where the Corporate Governance Communiqué or other relevant rules and regulations require the preparation of an independent valuation report, the Audit Committee shall ensure that such independent valuation report is obtained and that references to the independent valuation report are included in the Audit Committee Report. Board of Directors Approval Procedure
The Board of Directors may convene to vote only on Non-Continuous Related Party Transactions that exceed the above threshold, provided that the Audit Committee's report evaluating the appropriateness of the relevant transaction with respect to market conditions is received.
For the realization of Non-Continuous Related Party Transactions exceeding the threshold stated above, the approval of the majority of the Independent Members is required.
In case the approval of the majority of the Independent Members cannot be obtained, the approval of the General Assembly is required for the Non-Continuous Related Party Transactions.
Article 5: Continuous Related Party Transactions
Significance Threshold
Continuous Related Party Transactions exceeding 3% of the net sales in the previous fiscal year's Profit and Loss Statement are subject to the approval of the Board of Directors.
General Resolution
At the beginning of each financial year, the Board of Directors takes a framework decision on each Continuous Related Party Transaction and, in addition to other matters, on the following matters, if the following matters exist at the date of the relevant Board decision and to the best of its knowledge (i) The parties to the planned transaction
(ii) Expected transaction volume based on annual budget and business plans (in TRY)
(iii) Significant terms and conditions governing Continuous Related Party Transactions
(iv) The methods and procedures to be applied to ensure that the transactions within the scope of Continuous Related Party Transactions are in accordance with market conditions and competitive (for example, comparison with other potential suppliers).
The approval of the majority of the Independent Board Members is required for the Board of Directors to take the general Board of Directors decision mentioned above.
If the majority of the Independent Board Members do not vote in favor of this decision, the approval of the General Assembly is required for these transactions.
Audit Committee Review in Interim Periods
The Audit Committee, in its meetings to be held following the publication of the relevant quarterly financial statements, will review the Related Party Transactions carried out in accordance with the Continuous Related Party Transaction for which annual approval (i.e. a general Board of Directors resolution) has been obtained during the period in question. Public Disclosure
The summary of the Board of Directors' decision taken in relation to related party transactions is disclosed to the public in accordance with the relevant capital market regulations, except for information that is a trade secret.
In addition, the Audit Committee will submit a report to the Board of Directors following its annual review of Related Party Transactions and the conclusions of this report will be included in the Company's annual reports, excluding trade secret information. In addition, if the Audit Committee is required to prepare a separate report on Related Party Transactions within the scope of capital markets legislation, only the conclusion part of this report is disclosed to the public.