Following the amendments in the Turkish Capital Markets Law ("CML") made in February 2020, the Capital Markets Board of Turkey ("CMB") published a new communiqué bringing significant changes to the communiqué numbered II-23.1 ("Previous Communiqué") regulating significant transactions and retirement right. This new communique numbered II.23.3 ("New Communiqué") entered into force on 27 June 2020.

Significant Transactions

The amendments in CML authorized the CMB to determine what constitutes a significant transaction depending on the type of public company and on a case-by-case basis. In line with the expectations, CMB set out the rules for determining significant transactions under the New Communiqué.

Accordingly, the following transactions of public companies will constitute significant transactions. Moreover, the CMB has the authority to consider other transactions as significant transactions, if such transactions are fundamental transactions that might affect investment decisions of investors by making foundational changes in company's main activities or substantially altering its ordinary business.

  • Participating in mergers and demergers specified under Article 5 of the New Communiqué1,
  • Transferring a significant amount of assets, or concluding transactions resulting in such transfer or establishing limited rights in rem on such assets2,
  • Changing company's legal form,
  • Granting new privileges, altering the scope or subject of existing privileges.

Moreover, for listed companies with a free-float above 50%, any transaction fundamentally changing the field of activity will be deemed a significant transaction regardless of any significance threshold. However, this rule will not apply to Group 1 and Group 2 companies as defined under the Corporate Governance Communique, which are also subject to stricter application of corporate governance principles and real estate and venture capital investment companies.

Moreover, delisting, termination, change of field of activity by amending the articles and asset purchase from related parties are not listed as significant transactions under the Communique. CMB stated in a press announcement that delisting is possible under the CMB communiqué regulating squeeze out and sell out rights.

Additionally, the New Communiqué also states that all other existing types of significant transactions regulated under the secondary legislation of CML will continue to remain applicable.

Significance Threshold

Under the Previous Communiqué, the significance threshold for asset transactions was 50% of the reference values stated in the communique. Under the New Communique, this threshold is increased to 75%. However, for listed companies that have a free-float of above 50% as of the date of public disclosure of the underlying board of directors' resolution except listed companies qualifying for Group 1 and Group 2 companies under the Corporate Governance Communique at this date, real estate and venture capital investment companies), this threshold will continue to be 50%.

Transactions of subsidiaries

For public companies keeping consolidated financial tables, transactions of subsidiaries may also qualify as significant transactions. Transactions carried out by subsidiaries above the significance threshold calculated for the parent company in relation to consolidated financials will be deemed as a significant transaction of the parent company.

Selling shares in subsidiaries

Sale of shares in subsidiaries consolidated in the financial tables of a public company is subject to the following special significance criteria:

  • If such sale will result in the change of management control of the subsidiary, the significance threshold will be calculated by comparing the total assets or total income in subsidiary's financial statements with the total assets or total income in the consolidated financial statements of the parent company after elimination adjustment regarding consolidation.
  • If such sale will not result in any change of management control, the significance threshold will be calculated by comparing the transaction value with the market value of the parent company (corrected average of corrected daily market value for the last six months). With that said, if CMB resolves to take action regarding information abuse or market manipulation or acknowledges by resolution that there are extraordinary circumstances affecting the economy in general or the relevant sector, the relevant time frames announced in CMB's decisions will not be taken into account.

Retirement right

After the amendments in the CML, retirement right may only be exercised for shares owned at the date of the disclosure regarding a significant transaction. Accordingly, New Communique sets out that retirement right may only be exercised in the amount of shares held at the time of disclosure of the transaction. This amendment prevents third parties from taking advantage of the retirement right provisions by making additional purchases after the transaction was disclosed to the public to benefit from the retirement right price. Furthermore, it is stipulated that shareholders intending to use their retirement right must exercise this right for all their shares, a partial use of retirement right is thereby prohibited.

With the changes in CML, the share price for the retirement right was changed to a "fair price" determined by the CMB, instead of the "average weighted stock price of the last thirty days".

Under the New Communique, fair price is defined as the maximum of:

  • Average of the average weighted stock prices of the last six months, one year and five years as of the date of the disclosure
  • If a mandatory tender offer was carried out within the last one year as of the date of the disclosure
  • The price determined in the valuation report prepared for each share group

For non-listed companies, fair price will be determined based on a valuation report assessing the value of the company on the date of the public disclosure of the transaction.

In addition, with the amendments in CML, CMB was granted with the authority to impose a mandatory first offer for shares subject to retirement right to other shareholders and investors before the company purchases such shares. Under the New Communique, CMB partially exercised this authority and established that companies may choose to carry out a first offer procedure to other shareholders and investors for shares subject to retirement right voluntarily. This voluntary offer may be carried out by taking a board of directors resolution.

Lastly, the CML authorized the CMB to grant exemptions to the exercise of the retirement right for some transactions. CMB has exercised this authority and exempted additional transactions from triggering a retirement right such as rescue mergers and selling shares in subsidiaries via a public offering.

Exemption Application from the Retirement Right

CMB reserved its right to grant further exemptions for specific types of transactions on an exemption-application basis. These types of transactions include cases where the company obtains an approval from the CMB to carry out a voluntary tender offer specific to the significant transaction, significant transactions removing privileges of shareholders for free, significant transactions of companies carried out because of financial hardship.

Transitory Provisions

New Communique sets out that significant transactions disclosed before the New Communique comes into force will continue to be subject to the provisions of the Previous Communique as long as they do not conflict with the latest amendments in CML.

Moreover, in determining the persons eligible for the retirement right, the date of disclosure will be deemed to be 25 February 2020 (the effective date of the amendments in CML) for transactions disclosed prior to 25 February 2020. For transactions disclosed after 25 February 2020, the actual date of disclosure will apply.


1 The New Communique regulates mergers and demergers in greater detail compared to the Previous Communique. Therefore, the types of mergers and demergers that will be considered as significant transactions was narrowed.

2 Under the Previous Communique, renting of significant amount of assets was also considered as a significant transaction. New Communique removed "renting" from the list of examples of significant transactions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.