Pursuant to the third paragraph of Article 3 of the Istanbul Financial Center Law No. 7412 ("IFC Law"), it is mandatory to obtain a "participant certificate" issued by the Presidential Finance Office ("Finance Office") in order to operate in the area designated as the office space of the Istanbul Financial Center ("IFC"). The application and evaluation processes for the participant certificate, along with the procedures and principles to be applied, are regulated within the framework of the Istanbul Financial Center Regulation ("IFC Regulation") published in the Official Gazette dated July 7, 2023, and numbered 32241.
1. Application Procedure
It is important to note that since the participant certificate only grants the participant the right to operate within the IFC office area and to benefit from the opportunities provided for in the IFC Law, obtaining a participant certificate does not serve as a means for participants to fulfill their obligations arising from other regulations, such as banking and capital markets legislation, regarding the activities they will carry out within the IFC office area, such as obtaining permits, licenses, and authorizations. Indeed, as stipulated in the IFC Regulation, the aforementioned obligations related to the activity must be fulfilled prior to applying for a participant certificate. In cases where a lease agreement is required to obtain an operating license for the purpose of conducting financial activities, the relevant process can be completed after the lease agreement between the IFC's management company, TVF IFC Real Estate Construction and Management Inc. ("Management Company"), and the prospective participant is concluded.
2. Assessment of the Application
The IFC Regulation stipulates that applications for participant certificates shall be evaluated taking into consideration (i) the development plan, (ii) the medium-term program, (iii) the annual program, (iv) sectoral plans and programs, and (v) the IFC's strategic priorities. Furthermore, it is stipulated that the activities to be carried out shall be evaluated based on criteria such as their alignment with the IFC's strategic priorities and their potential contribution to Istanbul's status as a global financial center.
Although there are no restrictions on who can apply for a participant certificate to operate at the Istanbul Financial Center, it is anticipated that applications from prospective participants engaged in the activities listed below will be given priority consideration:
- Services and transactions related to financial activities,
- Sea, air, land, and rail transportation, customs and logistics services related to all types of commodities that may be subject to international trade, primarily precious metals and minerals, commodity trading and storage services in organized markets, and financial advisory services related to these commodities,
- Support and auxiliary services for financial activities, such as auditing, accounting, rating, valuation, electronic infrastructure and software, telecommunications, media, intellectual and industrial property, legal consulting, and similar services,
- High value-added sectors, primarily energy and infrastructure, and any one or more segments thereof, health and health technologies, agriculture and agricultural technologies, artificial intelligence and similar areas, and services for investing in and financing these areas,
- Regional treasury and financial management operations established within a company or as a separate legal entity to formulate the investment and management strategies of legal entities or to carry out the financial operations of these companies,
- Green finance and sustainable finance, as well as financial services supporting international trade,
- Financial services or other activities supporting the financial sector that are in line with the strategic priorities of the IFC.
Except for natural and legal persons operating on their own property within the office space, a lease agreement must be signed with the Management Company in order for the participant certificate to be issued.
If the application is accepted as a result of the evaluation, the Finance Office will issue a participant certificate. The participant certificate will be recorded on the IFC portal and shared by the Finance Office with the relevant public institutions and organizations.
3. Suspension and Cancellation of the Participant Certificate
The circumstances under which a participant certificate may be suspended or revoked are also regulated in the IFC Regulation. Accordingly, if the license, permit, or authorization certificate obtained by the participant in relation to their activities at the IFC is suspended, the participant certificate will be suspended following notification of this matter to the Finance Office by the relevant institution. On the other hand;
- Termination of the participant's lease agreement for the IFC office space,
- Revocation of the license, permit, or authorization certificate obtained by the participant in relation to their activities at the IFC,
- The participant certificate application is canceled if the conditions existing at the time of application are subsequently lost, the commitments made during the application are not fulfilled, or it is determined that false statements were made in the participant certificate application, or
- The participant's tax identification number changes.
In such cases, the participant certificate shall be canceled.
Finally, it should be noted that it is possible to operate within the IFC—but in the excluded area—without having to fulfill the obligations related to obtaining a participant certificate. However, in order to operate in the non-excluded area, the real estate where the activity will be carried out must be leased from the Management Company, as explained below.
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.
