Scrapping Founder Shares
Garanti Bank is going to repurchase founder share certificates (with having right to receive 10 % of payable dividend and without having voting rights). Bank decided to eliminate the founder share certificates to eliminate the negative impact they have over the market value of the Bank's shares. Founder shares of the Bank are entitled to a significant cash flow out of Bank's earnings, redemption will enable Garanti Bank to unburden cash outflows, higher retained earnings will help finance high growth of the Bank, which will create value of Garanti Bank shareholders. Ordinary shareholders will be able to receive dividends from a larger pool of distributable profit. Currently cash outflows to Founder shareholders exerted a downward pressure on Garanti Bank share price as the Founder dividends penalized ordinary shareholders.
A wide range of dual-class structures exist in Turkish corporate environment. Dual share structures are unfair and give economic power to superior shareholders while facing the same financial risk with minority ones.
