Capital Markets Board of Turkey ("CMB") has announced
Draft Legislations on principles of stock offerings and methods for
sales of securities.
CMB Communiqué Serial I No. 26 and Communiqué
Serial VIII No. 22
CMB (Corporate Finance Department)
Joint Stock Companies (listed or having intention to), Brokerage
Firms and Investors
The Drafts are announced -without any legal impacts-
for consultation purposes to have the public comments at this
stage. However the provisions should be considered to understand
the approach of the CMB on the relevant matters which would have
significant impacts in offerings of companies in the near
CMB has announced Draft Legislations (the "Drafts") on
principles of stock offerings and sale methods for securities and
has invited comments from the market. The Drafts aim to revise the
legal infrastructure in order to harmonize the local legislation
with EU Directives and to bring solutions for the problems observed
in public offerings.
The Drafts have been prepared with a liberal perspective in
order to encourage IPOs. It is expected that the Turkish IPO market
may regain its momentum in the second half of 2010 along with the
recovery in the global economic atmosphere.
Below is a brief highlight of the key aspects of the Drafts:
Firm Commitment Underwriting No Longer Required: In
IPOs, brokerage firms may provide intermediary services to issuers
on a best-effort basis, i.e. without firm commitment in full.
Minimum Free Float Requirement: Draft provisions
abolish the minimum free float requirement in IPOs and grant
issuers the opportunity to determine the number of shares to be
sold without any limitation.
Insiders to Acquire Shares in Public Offerings: The
restriction preventing insiders to acquire shares in public
offerings is revoked. However disclosure is required in case of any
More Shares to Foreign Investors: The minimum
allocation threshold envisaged for local individual investors is
decreased to 10% (as of today, it is between 30-50% based on the
volume of offering).
Offerings to Qualified Investors: The term qualified
investor is defined and the procedures for offerings to qualified
investors are determined. In this respect and pursuant to the
Drafts, issuers may invite qualified investors to stock offerings
through advertisements and notices. However, such advertisements
and notices shall clearly state that the offering is directed to
qualified investors and thus shall not be considered as a public
Payment and Book Building Methods: Payment methods
already applicable in Turkish IPO practice are clearly stated in
draft provisions. Accordingly, issuers and brokerage firms may
provide investors the opportunity to make payments either through
depositing foreign exchange, government bonds, liquid investment
funds or any other liquid instruments during the book building
process. In addition, issuers and brokerage firms are granted the
liberty to adopt any type of book building method in relation to
IPOs and SPOs (secondary public offerings) provided that adopted
methods do not violate principles of equal treatment.
Incentives to Support the Marketability of Public
Offerings: Under certain conditions, it is possible to provide
cash or non-cash incentives to specific investor groups.
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.
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