Interesting discussion at the general assembly of the stock exchange company

The minutes of Gözde Private Equity’s ordinary general assembly meeting were marked by the consultancy fee of 286 million TL paid to Franklin Templeton. Minor shareholders demanded that this advisory fee be waived and the dissenting opinion was dropped..

Gözde Venture Capital Investment Trust, one of the listed venture capital companies, increased its loss from 516 million TL in the same period of the previous year to 5.77 billion TL in the first quarter balance sheet of 2023, which caused a discussion in the general assembly. A partner named Kubilay Çilingiroğlu, one of the junior shareholders of the company, asked the management for the details of the consultancy fee, which corresponds to 2 percent of the market value paid to Franklin Templeton, whose name is identified with the famous investor Mark Mobius.

Consulting fee of 286 million TL

The reason for this problem was that, according to the statements in the footnotes of the company, 286 million 185 thousand 67 TL (for 2022) was paid to this company as a consultancy fee. According to the first quarter data of 2023, this figure is 34.5 million TL. In his dissenting opinion, Çilingiroğlu said, “I would like a detailed explanation of the 2% consultancy fee (285 million TL) paid to Franklin Templeton company for 2022 based on Article 5, and an explanation on the Public Disclosure Platform according to which valuation this fee was paid. I suggest that this consultancy fee be waived in the coming years.”

As of the latest situation, the total market value of GOZDE shares is 4 billion 335 million 100 thousand TL. The figure that emerges at the moment with a rate of 2 percent is 86.7 million TL. Gözde Girişim’s highest market value throughout its history is 10 billion 256 million TL. 2 percent of this market value is 205 million TL.

So how does the company explain the consulting fee received from Franklin Templeton in the footnotes?

The services received from Franklin Templeton are explained in paragraph a of footnote 6 of the balance sheet, titled Related Party Balances:

Franklin Templeton has been consulting since 2017

Franklin Templeton Consulting Services, an indirect subsidiary of Franklin Resources, Inc.
Inc. The services provided to the Company within the scope of the ‘Consultancy Agreement’ (Contract) signed on October 29, 2017 (with an option of 5+2 years extension) are as follows. of the 5th year
Finally, he used the option to extend for 2 years.

• Consultancy to the Board of Directors: Having an expert team dedicated to Gözde Girişim to increase the net asset value of the Company,
• Consulting portfolio companies: Providing consultancy services to portfolio companies for improvements in the operational context,
• Improving corporate governance: Creating strategies to improve corporate governance in portfolio companies.
• Finding investments suitable for the Company’s strategy: Identifying and evaluating potential non-public investment opportunities,
• Better communication to create value: Strengthening communication strategies with investors and banks and other potential stakeholders to create value,
• Determining exit strategies: Presenting exit strategies to the Company for existing investments, guiding the sales processes and/or providing consultancy services,
• Providing consultancy services in the preparation of the company’s annual budget and long-term business plan,
• To share information about the market developments with the Company’s Board of Directors.
  The amount of ‘Retainer Fee’ accrued quarterly for advisory services is calculated from the ‘Company Market Value’ calculated over the average share price of the relevant reporting period quarter.
  It is invoiced to the Company with an amount corresponding to 2% of it.

  Details of payment
  Regarding the asset sale and dividend payments to be made to the Company, in accordance with the relevant articles of the contract, the companies to be made to Franklin Templeton Danışmanlık Hizmetleri A.Ş.
  The difference between the entry price (the fair values ​​in the financial statement of the Company dated 30 September 2017) and the sales amount, which is reached after deducting the transaction costs related to purchase and sale.
  ‘CCCF’ (Capital Contribution to Capital Fee) payable at 10% or 15% of the amount, and ‘CCIF’ (Consultancy Contribution to Capital Fee) payable at 3% of gross dividend income
  Income Fee) fee payments were arranged.
  Before the date of signing of the “Consulting Agreement” on October 29, 2017, the CCCF amount formed during the sale of the portfolio companies that are currently in the Company’s portfolio,
  When calculating 10% of the amount reached after deducting the transaction costs of the buying and selling processes from the difference between the entry into the company portfolio and the sales amounts, this ‘Consultancy’
  The CCCF amount, which occurs during the sale of portfolio companies included in the Company portfolio after the signature date of the Agreement, is calculated over 15% of the amount reached after deducting the transaction costs of the buying and selling processes from the difference between the portfolio companies’ entry into the Company portfolio and the sales amounts.
  The ratio of the total amount of services received from Franklin Templeton Consulting to the total assets for the periods of March 31, 2023 and December 31, 2022 is within the rate allowed in Article 26, titled Total Expense Ratio, of the Communiqué on GSYOs numbered III-48.3.