Turkey: Latest Developments In Banking & Finance: Reform On The Securities Investment Trusts In Turkey

The New Communiqué on the Principles Regarding Securities Investment Trusts has been published in the Official Gazette numbered 29368 (hereinafter referred as to "Communiqué") on 27 May 2015. 

This Communiqué is quite attractive for the foreigners as well as the Turkish citizens who are interested at foundation of securities investment funds. Within the frame of the New Communiqué, securities investment trusts have been separated in securities investment trusts with fixed and variable capital. It is possible that securities investment trusts with fixed capital may be transformed to securities investment trusts with variable capital. Securities investment trusts with variable capital are new in Turkish Law and this type of investment trust exists also in other jurisdictions in Europe.

Securities investment trusts with fixed capital

The securities investment trusts with fixed capital are capital markets institutions established as joint stock corporations and on the principle of authorized capital, with the purpose of administration of a portfolio including assets and instruments specified below, in accordance with the provisions of the Capital Markets Law (hereinafter referred to as "Law").

  • Shares of the corporations established in Turkey, including those included within the privatization framework, as well as government debt securities and private debt instruments,
  • Foreign government debt securities and private debt instruments and shares allowed to be traded within the framework of the provisions of Decree Numbered 32 regarding the Protection of the Value of Turkish Currency,
  • Gold and other precious metals traded in national and international exchanges, as well as capital market instruments backed by such metals and traded in exchanges,
  • Lease certificates, repurchase, reverse repurchase and future, option and forward contracts, Cash collaterals for transactions carried out in the Turkish Derivatives Exchange and money market transactions in the presence of the Settlement and Custody Bank Inc. carried out to invest cash,
  • Other assets and instruments approved by Capital Markets Board of Turkey (hereinafter referred to as "Board").

Securities investment trusts differ from other types of trusts that securities investment trusts' activities are limited to the portfolio management consisting of capital market instruments, gold and other precious metals. However, some activities have been prohibited to securities investment trusts such as lending money, commercial, industrial, agricultural and intermediation activities, short selling or margin trading, mortgage or offer as collateral the assets in their portfolio, acquire movable and immovable property exceeding the amount and value required for the activities.

Securities investment trusts with variable capital

Securities investment trust with variable capital is defined as investment trust established as joint stock company capital of which is equal with its net asset value. The main difference of these investment trusts from investment trusts with fixed capital is that the investment trust with variable capital may obtain the permissions regarding their control, accounting, operation and risk management from other institutions stated in the Communiqué. Moreover, these trusts will be subject to their specific legislation with regard to the capital, nominal value, capital increase and decrease procedure and liquidation, the TCC is not applicable to these investment trusts.

The major functions of securities investment trusts in general

Major functions of securities investment trusts have been stated in the Communiqué as follows;

  • To create and administrate the Trust portfolio, to effect changes in the portfolio when necessary,
  • To diffuse investment risk through portfolio diversification, so as to minimize the risks per fields of activity and the state of companies,
  • To continuously monitor developments regarding capital market instruments, financial markets and institutions, and corporations, and to take necessary measures with respect to portfolio management,
  • To engage in research to preserve and increase the portfolio value.

Establishment requirements

Securities investment trusts may be established in accordance with general foundation procedures in accordance with Turkish Commercial Code. The approval regarding the establishment of these trusts which is given by the Board are subject to certain conditions such as an initial capital not less than TRY 20 million. For securities investment trusts with variable capital, this amount shall not be less than TRY 2 million.

Not only the securities investment trust, but also its shareholders shall fulfill the requirements stated in the Communiqué.

In investment trusts with fixed capital, shareholder(s) which hold a share of at least 25% of the capital in the Trust singlehandedly or jointly, are defined as leading shareholder in the Communiqué. The leading investor should meet the requirements specified herein, in addition to the requirements stated in the Communiqué.

Establishment proceedings

Any real person or legal entity which may establish a joint stock company and fulfill the requirements set forth in the Capital Markets Law may establish a securities investment trust. The establishment proceedings of securities investment trusts have been regulated in the Communiqué. To sum up, the founders of the trusts to be established should apply to the Board with the establishment form subject to the principles and form to be determined by the Board, and the documents specified in such form.

In case the application is approved by the Board, the application to the Ministry shall be made with all required documents including those attesting the payment of the capital in accordance with the provisions of the Communiqué, accompanied with the approval petition for the establishment.

Management of the trust and trust portfolio

Requirements for members of the board of directors, auditors and general managers in the investment securities trust have been specified in the Communiqué. The members of the board of directors who meet these requirements should be determined at the time of the application to be made to the Board.

In investment trusts with variable capital, the board of directors is appointed according to the articles of TCC and appointment of a new board member shall be notified to the authorized institution stated in the Communiqué.

The general manager may sit in the boards of directors or auditors at entities with which the trust is engaged in management, audit or capital relations, entities which have direct or indirect control over the management, capital, or audit of such entities, exchanges and organized markets, settlement and custody agencies, and other financial agencies which may be approved by the Board, provided that the position is not an executive one, and which shall not hamper the execution of the position in the trust.

The trusts may either manage their portfolios themselves through the employment of an adequate number of employees or may outsource from an institution having portfolio management authorization certificate from the Board, within the framework of a contract signed and the Board regulations regarding portfolio management.

Advantages of securities investment trusts

Securities investment trusts provide numerous opportunities to the investors such as professional management of the investors' capital, possibility of investment in securities with benefit potential, saving on time and money and minimization of risk due to the diversity of securities in trust's portfolio.

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