The CMB, in an attempt to provide a wide-array of products in
Turkish Capital Markets, has revised the legal infrastructure
governing offerings of foreign securities and depository receipts.
The initiative coincides with the recent public offering filing of
the Do&Co Restaurants and Catering Aktiengesellschaft, a Vienna
Stock Exchange traded company, intending to conduct a secondary
listing on the Istanbul Stock Exchange (the "ISE") and
the plans of certain other foreign issuers considering the
opportunities provided by Turkish Securities Markets. The CMB, by
taking into account the recent foreign issuer interest, has
preferred to ease the bureaucracy arising from formerly applicable
rules and has set a relatively flexible framework for the upcoming
offerings. Below is a brief highlight of the notable aspects of the
Stock offerings of foreign firms are no longer required to be
conducted within the framework of depository receipts. In other
words foreign firms are free to issue their stock in the local
market either through depository receipts or without making any
depository receipt arrangement.
For foreign issuers intending to offer depository receipts, the
prerequisites requiring (i) a minimum two-year operating period,
(ii) a recent annual financial statement showing profits, and (iii)
a minimum one-year stock exchange listing together with a minimum
100-day stock exchange trading have been abolished. However, the
issuers are still required to comply with the ISE quotation rules
governing foreign securities listing.
The preliminary CMB filing process granting foreign issuers and
their local representatives the opportunity to get a CMB opinion
before making the actual filing has been abolished.
New principles, unlike former rules, do not envisage a home
stock exchange listing for foreign securities to be offered to
public. However, it would not be possible to conduct a public
offering for those securities, if a listing filing addressed to a
stock exchange in the home country was rejected for investor
protection purposes or for similar reasons.
The new Communiqué has clearly defined the roles,
functions and obligations of the custodian, depository and
representative institutions providing certain services with respect
to foreign securities/depository receipt offerings and envisaged
detailed disclosure requirements for foreign issuers.
The new Communiqué does not cover offerings of foreign
investment fund shares and has totally left the issue to the
currently applicable CMB Communiqué Serial: VII, No: 14 on
Principles Regarding the Registration of Foreign Investment Fund
Shares with the CMB.
Distribution/sale of foreign firm shares to the employees of
foreign firms/ foreign firms' subsidiaries under an employee
stock ownership plan or a similar arrangement is not subject to CMB
registration provided that (i) such distribution/sale is conducted
abroad, (ii) such distribution/sale does not fall under the
definition of public offering, and (iii) information to be provided
to employees in relation to such distribution/sale does not contain
any expression giving the impression of a public offering. This
perspective is a reflection and clear announcement of the currently
adopted CMB practice and is part of the regulation as from the
promulgation of the new Communiqué.
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.
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