Upon enactment of the new Capital Markets Law (CML), the
Capital Markets Board (CMB) has issued new communiqués
providing an insight into the implementation of the new capital
market, including exit and delisting principles in 2014.
A change: Squeeze-out right
The squeeze-out right of a majority shareholder was initially
introduced by the Turkish Commercial Code (TCC), enacted in 2012.
But Article 29 of the CML explicitly omits the application of the
TCC to public companies. The CMB issued the squeeze-out
communiqué (Communiqué) on February 2014, effective
as of 1 July 2014, regulating principles and procedures for
exercising squeeze-out right.
Triggering event and process
Either as a result of a mandatory tender offer or through other
means (eg, acting in concert, voluntary tender offer), the
shareholding percentage exceeds 95%), the persons holding such
shares have the right to squeeze-out the minority shareholders.
Under the Communiqué, to exercise the squeeze-out right,
the majority shareholder should apply to the company within three
months upon reaching the 95% voting right threshold. The
squeeze-out right lapses if not exercised within three months upon
reaching the 95% threshold.
Upon application, the board of directors (Board) of the public
company should assess whether (i) the shareholding threshold is met
and (ii) the purchase price has been calculated correctly. Upon
such assessment, the Board should make a simultaneous application
to the CMB and the Istanbul Stock Exchange (ISE). Upon approval of
the CMB, the squeeze-out price must be paid to the company's
account. Within six business days upon approval of the CMB, the
squeeze out must be registered in the relevant trade registry. A
successful squeeze-out process results in the delisting of the
public company from the ISE and deregistration from the CMB.
Calculation of the squeeze-out price
The calculation of the squeeze-out price is regulated in the
Material Transactions Communiqué. The calculation method
differs between listed and non-listed companies. For listed
companies, the squeeze-out price must be equal to the arithmetic
average of the weighted average trading prices of the company's
shares within the 30-day period before the public disclosure of
reaching/exceeding the 95% threshold by the controlling
shareholder. In practice, there have been discussions around the
pricing methodology and its being unfair and causing information
irregularity between the controlling shareholder and the minority.
The CMB therefore announced that the below amendments are being
considered for the pricing methodology for squeeze-out and
"The squeeze out and delisting price will be the highest of
arithmetic average of the weighted average of the company's
shares within a 30-day period, a 180-day period and a one-year
period before the public disclosure of reaching/exceeding the 95%
threshold by the controlling shareholder; and
the company's share valuation determined in an appraisal
report to be prepared or in any valuation made on the shares of the
company (through acquisition, or merger etc.) during the last
The pricing methodology will likely change soon.
Quote:Public companies intending to get
off the CMB's radar and capital markets legislation have
started to pursue voluntary tender offers followed by squeeze-out
and delisting. Although the communiqué provides detailed
provisions on squeeze-out rights, the CMB's decisions on the
calculation of the squeeze-out price will shed light on the
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