Turkey: A Major Shift In The Regulatory Perspective Regarding IPOs, Rights Issues And Bonus Issues

 Capital Markets Board of Turkey (the "CMB") announced new principles (the "New Principles") on IPOs, Rights Issues and Bonus Issues with a view to discipline the supply side of Turkish Capital Markets. This recent regulatory step is a major shift in the regulatory perspective and puts a prominent emphasis on the quality of fund raising activities in Turkish capital markets.

According to the new perspective, the capital markets motto which was largely based on increasing the number of companies benefiting from equity capital markets has turned out to be a motto with a conservative, but investor friendly character. From now on, companies intending tap into equity capital markets, their controlling shareholders and brokerage firms acting as intermediaries in the IPO market shall comply with certain principles.  

Below are the highlights of the principles envisaged by the CMB Resolution;

A) Principles for IPOs

  • Under the latest financial tables of the relevant company, the ratio of all receivables from related parties shall not exceed 50% over total short and long term receivables or 20% over its total assets. These restrictions may not be applicable, subject to discretion of the CMB, provided that (i) funds to arise from the IPO shall be used for collecting the receivables from the related parties as to meet the referred ratios; and (ii) it is committed that the company shall not be converted back into creditor status with respect to such receivables.
  • The intermediary institution shall underwrite the IPO at sale price;

(a)   for all shares to be offered when the value of IPO is up to TL 20 million; or,

(b)   for all shares up to 20 million and for 50% of the upper amount when the value of IPO is between TL 20 million and TL 40 million. 

It is also stated in New Principles that the intermediary institution shall not sell the shares that it acquired as a result of its underwriting hereabove below the IPO price for a term of six months following the trading date of such shares.

  • In public offerings conducted through a price range, the maximum price shall not be higher than 20% of the minimum price.
  • The valuation report may be subject to analysis and critics by any institutions other than the underwriter. In case such reviewers prepare an analyst report, this report shall also be announced to public.
  • In order for a brokerage firm  to prepare a valuation report in an IPO, such firm should have prepared and announced at least three analyst reports addressing the valuation reports with respect to IPOs in which it has not acted as leader or co-leader of the IPO during previous twelve months' term.

B) Principles re. After the IPOs

  • The shareholders holding 10% or more shares in capital of the company as of the date of the IPO and the shareholders holding the management control in the company shall not sell their shares below the IPO price for a term of one year following the trading date for the IPO. Shares to be acquired after the trading date shall be exempt from this prohibition.
  • With respect to companies with a total value lower than TL 40 million (to be calculated based on IPO price), additional shares corresponding to 25% of the nominal value of the shares to be offered to public shall also be made available for public offering through restricting the pre-emptive rights of existing shareholders. In case the market price of IPO shares go above 25% of the IPO price, these shares may be offered to public within 1 year after the publication of the prospectus. Until these shares are entirely sold, the shareholders holding 10% or more shares in capital of the company and the shareholders holding the management control in the company shall not sell their shares through the exchanges.
  •  The underwriter of the IPO shall prepare and announce at least 2 analyst reports on the publicly offered company  within one year following the IPO .
  • The company is required to make announcements addressing (a) whether the assumptions considered in calculation of IPO price have come true, and if not, the reasons of the same; and (b) whether the funds obtained through the IPO have been used in accordance with the principles set forth in the IPO prospectus, within 10 business days following the announcement of financial tables for two years following the IPO.

C) Capital Increase of Listed Companies through Rights Offerings

  • In case the funds to be obtained through the respective IPO exceeds the capital of the company and the funds are to be used for making the payments to the related parties arising from transfer of assets to the company other than cash, this capital increase shall be treated as a "Substantial Issue" as referred to in Article 23 of Capital Markets Law (Law No: 6362) (the "CML"). Accordingly, the shareholders who voted against such decision shall be granted the right to sell their shares to the company in accordance with Article 24 of the CML ("Right to Exit") prior to conducting the capital increase.
  • In capital increases through cash, the company is required to prepare and announce a report that describes the purposes of the funds to be obtained through the public offering. Furthermore, after the IPO, the company is also required to make announcements addressing whether the funds obtained through the IPO have been used in accordance with such purposes within 10 business days following the announcement of financial tables for two financial terms (including interim terms.

D) Capital Increase of Listed Companies through Bonus Shares

  • In capital increases where internal reserves, other than profits, are added to capital, and in consideration of the weighted average price of the shares at the exchanges during thirty days prior to announcement of such capital increase, in case the adjusted price of the shares is calculated below TL 2,- (two Turkish Liras), the respective company is not permitted to conduct such capital increase.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions