With the decision published in the Capital Markets Board Bulletin dated 29.12.2023 and numbered 2023/82 ["Decision"], the amounts subject to revaluation in the Capital Markets Law No. 6362 and related regulations and other regulations were determined for the year 2024.
Implications of the Regulation
According to the Decision, the increased amounts will be applicable in all applications made after December 31, 2023. The main ones to be applied especially in the initial public offering of non-public companies are as follows:
i. If the market value of the shares to be offered to the public in the IPO is less than 400 million Turkish liras, all of the unsold shares, and if the market value of the shares to be offered to the public is between 400 million Turkish liras and 800 million Turkish liras, all of the unsold shares up to 400 million Turkish liras and half of the shares exceeding 400 million Turkish liras will be purchased by the intermediary institutions at the public offering price. In 2023, these limits were applied as 150 million Turkish liras and 250 million Turkish liras.
ii. If the market value of the shares offered to the public in the IPO is below 500 million Turkish liras, 25 per cent of these shares will be kept ready for sale by restricting the shareholders' right to acquire shares. In 2023, this limit was applied as approximately 232 million Turkish liras.
iii. The asset and sales revenue amounts required in the financial statements of the companies to be offered to public for the last two years have been increased. In this context, companies to be offered to public will have to meet the criteria of 450 million Turkish liras in total assets and 270 million Turkish liras in net sales revenue in 2022; and 1.5 billion Turkish liras in total assets and 750 million Turkish liras in net sales revenue in 2023.
Conclusion
The increase of the monetary limits concerning IPOs, especially the total assets and net sales revenue requirements, even above the official inflation rates announced by the Central Bank, will mean that only companies of a certain size will be able to enter the capital markets in an environment where the interest of retail investors in IPOs is increasing. Thus, it is expected that the demand for public offerings will decrease and the confidence in publicly offered companies will increase.
Therefore, it can be said that the increased amounts within the scope of the reassessment take into account the objective of protecting and balancing the interests of retail investors and institutional investors, which was also aimed with the rules previously introduced regarding the distribution of shares. For detailed information on the share distribution principles regulated by the CMB's Resolution dated 30 March 2023: New Rules in IPO
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