Turkey: Going Public in Turkey - Part One Of A Series: Overview

Last Updated: 4 August 2014
Article by Gary Lachman and Hande Hamevi

"Going public" through an initial public offering of its shares ("IPO") can be an efficient source of direct funding for many joint stock companies. The means in which companies may offer their shares to the public may vary according to the particular circumstances of each company. For example, a company may offer its current shares (owned by current shareholders) to the public in the classic IPO format, or may go public through a capital increase (whereby the pre-emption rights of the current shareholders are not exercised).

A public offering of shares requires a vast amount of preparation. Articles of association must be amended in line with the requirements of the Turkish Capital Markets Board ("CMB") and financial statements must be prepared in accordance with the standards applicable to publicly traded companies. An application for prior approval regarding the public offering which includes the offering circular is submitted to the CMB as a first step. If such application is positively received by the CMB, the offering circular is submitted to the stock exchange (together with all other documents and information also submitted to the CMB). The offering circular is one of the most important documents in the application package, and must be carefully prepared by the company's attorneys and financial advisors to avoid any confusion and/or rejection by the CMB.

For purposes of verification, the company (and its major assets and subsidiaries, if any) are inspected by the officials of the CMB and the stock exchange. Offering circulars are required to be drafted in accordance with the applicable legislation (i.e. contain all matters required to be included in an offering circular). This includes complete and accurate information regarding the shares to be offered, the activities and financial condition of the company, and a full disclosure of all risks associated with any potential investment in the company. In the event that the CMB takes the view that the offering circular does not accurately and transparently reflect the current situation of the company, the application for its public offering may be rejected. However, it is noteworthy that even if the CMB approves an offering circular, it does not indicate that the CMB has itself conducted an independent study on the company and approved its financial condition. Offering circulars are examined by the CMB only in terms of compliance with the applicable regulations of the CMB, and not on the "quality" of the investment. In other words, the concept of caveat emptor remains in effect. Upon completion of the application process, the offering circular is announced and the IPO process commences.

An IPO affords several advantages to companies. First of all, it is a proven method of funding for companies in need of cash for expansion or debt reduction. For substantial amounts of fundraising, the cost of an IPO is much less compared to conventional debt financing obtained from banks and other financial institutions as it does not involve repayment of any principal or interest to the investors. Although interest expense and the time pressure of repayment of a debt is obviated, it must remembered that there will be ongoing costs associated with being a public company such as audited financial statements and the preparation and submittal of quarterly reports. On the positive side, going public generally enhances the reputation of a company. This is primarily because listed companies are under strict scrutiny by the CMB and must abide by numerous rules and standards, including corporate governance principles and material event disclosure requirements. Such a high level of scrutiny inevitably results in a considerable amount of trust in the company in the eyes of the public. Furthermore, statutory requirements imposed on listed companies pave the way for such companies to evolve from being mere "family businesses" to professional entities (at least theoretically) motivated by the interests of all shareholders, family and public alike.

As stated above, companies whose shares are traded publicly are required to be transparent in all their affairs and transactions. In this respect, pursuant to the communiqués of the CMB, listed companies are required to regularly disclose their financial statements prepared in line with IFRS or the principles mandated by the CMB, alongside independent audit reports prepared by unrelated licensed professionals. Material event disclosure requirements serve to maintain transparency and protect the interests of the investors by ensuring that they are kept informed about all significant matters that may affect their investment decisions. CMB's Material Events Communiqué (Serial II No.15.1) sets out the principles applicable for disclosures to be made by listed companies. Such disclosures are required to be made accurately and in a timely manner.

Prior to 2010, the minimal number of public offerings and unsettling fluctuations in the capital markets were a concern for Turkish capital markets regulators. Inconsistent, burdensome, and downright byzantine bureaucratic procedures and regulatory requirements served as deterrent factors for companies to go public. After the 2008 financial crisis that severely affected both the international and local capital markets as well as the global financial sector, it became crucial to strengthen the Turkish capital markets system if Turkey wanted to remain a sustainable emerging market investment destination. With such concerns in mind and also in line with the constructs and requirements introduced by the new Turkish Commercial Code (Law No. 6102), the regulatory framework for Turkish capital markets has undergone major changes in recent years. These were designed to facilitate the IPO process, achieve harmonization with the European Union legislation, encourage companies to go public, and boost the number of IPO's and secondary offerings, thus ensuring robust growth for the Turkish capital markets. Following such amendments, not only has interest in IPO's significantly grown, but also it has become possible to trade foreign capital market instruments in the Turkish capital markets. This is considered a major breakthrough for Turkey in terms of its efforts to integrate into the global markets.

Recent regulatory developments in the Turkish capital markets have fostered trust not only with the local capital markets but also upon local investment and finance institutions. However, although many new laws and communiqués have been introduced in recent years, it remains to be seen if the current framework will suffice to eliminate prior concerns. With that sole caveat, in comparison to the previous investment environment, the current framework stands out as sophisticated, proactive, and in alignment with the global marketplace.

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.

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”

Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

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