On July 3, 2015, the Turkish Capital Markets Board (the
"CMB") announced that it had imposed an
administrative fine of TRY 123,278 (approx. USD 46,000) on a public
company because the company used proceeds from its equity offering
contrary to the disclosures in its offering circular
(izahname). The CMB pointed out that investors who
suffered damage due to the misuse of funds have recourse against
the company's directors. Further, the CMB directed the company
to determine at the company's next general assembly of
shareholders whether the company itself should seek reimbursement
from its directors for the fine imposed.
Under Communiqué No. II-5.1, On Offering Circulars
and Issuance Certificates, an issuer is primarily liable for
any misrepresentation, misleading, or deficient information
disclosed in the offering circular. If a company fails to act in
compliance with its disclosures, the CMB can deem this as a
defective disclosure and impose an administrative fine between TRY
24,672 and TRY 308,408 (approx. USD 9,300 to USD 115,000).
The CMB's scrutiny extends to debt offerings and other
securities transactions where one would normally expect to see
offering and disclosure documents. The fine shows that the CMB
considers disclosures to investors to be a serious issue and
issuers must be diligent to ensure their disclosures and
undertakings in the offering documents are consistent with the
actual use of the proceeds.
The CMB has demonstrated that it robustly polices the securities
market. Issuers' directors must be diligent as they may face
investor claims and the issuer itself may seek recourse against
them. The CMB's action may also trigger more shareholder action
in Turkey, as the CMB is now encouraging investors to pursue
private litigation to supplement the CMB's regulatory
Please do not hesitate to contact us should you have any questions
about how these changes might affect your company.
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guide to the subject matter. Specialist advice should be sought
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