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20. RETAINED EARNINGS AND LEGAL RESERVES
Under Turkish Tax Law and Turkish Commercial Code (“TCC”), consolidated reporting for tax and statutory purposes is not recognised. Each company within the Group is treated as an
individual tax paying and statutory entity. The ability of an individual company to distribute dividends to its direct shareholders is dependent on its statutory profits.
Retained earnings as per the statutory financial statements, other than legal reserves, are available for distribution subject to the legal reserve requirement referred to below:
The statutory legal reserves consist of first and second reserves, appropriated in accordance with TCC. TCC stipulates that the first legal reserve is appropriated out of statutory profits
at the rate of 5% per annum, until the total reserve reaches 20% of the entity’s paid-in share capital. The second legal reserve is appropriated at the rate of 10% per annum of all cash
distributions in excess of 5% of the paid-in share capital. Under the TCC, the legal reserves can be used only to offset losses and are not available for any other usage unless they
exceed 50% of paid-in share capital. Dividend distributions are made in TL in accordance with its Articles of Association, after deducting taxes and setting aside the legal reserves as
discussed above.
Revaluation fund from participations and special funds cannot be distributed to the shareholders, but can be added to the share capital.
As of 31 December 2014 and 2013, general and legal reserves including inflation corrections (as per statutory financial statements of the Holding) are as follows (TL):
31 December 2014
31 December 2013
Legal reserves
56,148,916
49,333,728
Revaluation fund from participations
13,783,557
13,874,872
Retained earnings
166,148,389
127,812,008
Special funds
14,516,111
14,516,111
Inflation adjustment on capital
47,501,810
47,501,810
Gain on sale of investment to be added onto capital
16,237,255
16,237,255
Retained earnings and legal reserves
314,336,038
269,275,784
BORUSAN HOLDING A.Ş. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014
(Currency - US Dollars (“USD”) unless otherwise indicated)