The first step is the adoption of a board resolution and then the formation of a team of mid-level managers, including members from the departments of finance and public relations, which will oversee the whole process, internally and externally, based on this resolution in coordination with the relevant entities.
Following the adoption of a board resolution, the company that will go public must enter into a "brokerage agreement" with a brokerage firm authorized by the company and the Capital Markets Board ("CMB") to manage the entire IPO process. The list of brokerage firms authorized by the CMB is available on the CMB's website. The brokerage agreement should contain the following information: the type of intermediation, the extent of the brokerage firm's services, the IPO method, introductory information about the parties, the rights, commitments and obligations of the parties, and the sale terms (the IPO price, the book-building period, principles regarding the collection and evaluation of bids...). The type of agreement, the obligations of the parties and the legal nature of the agreement differ based on how the IPO will take place.
The company to go public will apply to the CMB with its articles of association and the draft agreement amended as per the capital markets legislation. Provisions that do not comply with the capital markets legislation will be removed or amended accordingly. After the amendments in the articles of association have been approved by the Board, they will be submitted to the approval of the company's general assembly.
The company to go public must prepare its annual and interim financial statements as per the CMB legislation and have them audited independently. In this context, the company should select one of the independent audit firms authorized by the CMB and sign an audit agreement. The purpose is to obtain an independent auditor's opinion on whether the company's financial statements present a true picture of its financial position and operational results in all material respects.
The company should also prepare a prospectus based on the CMB's standards. The prospectus will assert the company's financial and legal statuses, objectives, strategies and risks.
Another early step to be taken by the company that will go public is the setting of an IPO price. The brokerage firm prepares a price determination report to identify the company's value and to set an IPO price. In its report, the brokerage firm also explains how it has determined the price and the value of the company.
The companies that are planning to go public should take the early steps specified above. Afterwards, they should submit the relevant documents to the Board and Borsa Istanbul to complete their IPO preparation process
Originally published on Sep 2, 2024
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