1. Source of Legislation
According to the Turkish Capital Markets Code ("CMC"), the issuers of capital markets instruments must disclose to the public all information, instances and progress, which may affect the value of their capital markets instruments, their market price or the investment decision of their investors.
The Communiqué No. II-15.1 on Special Circumstances ("Communiqué") is the primary source of legislation in this respect. The purpose of this Communiqué is to ensure transparent and fair operation of the capital markets, by ensuring timely provision of correct and full information to investors, shareholders and other stakeholders.
The Communiqué mainly sets rules regarding disclosure requirements for material events which may affect i) the value of capital market instruments traded on a stock exchange or ii) investors' investment decisions or exercise of their rights.
- The Communiqué applies also to issuers of which the stock exchange transactions are temporarily suspended by the Capital Markets Board.
- Issuers the shares of which are not traded on a stock exchange and which offer their non-share instruments to the public in Turkey, are governed by and subject to the provisions of the Communiqué until the date of redemption.
- The provisions included in the second and third parts of the Communiqué are not applicable to the issuers the shares of which are not traded on a stock exchange and which issue instruments to qualified domestic investors without offering them to the public. Other parts of the Communiqué apply until the date of redemption of the relevant instruments.
- Moreover, the provisions of the Communiqué are not applicable to non-publicly held legal entities which issue instruments on private placement basis in or outside of Turkey.
3. Disclosure Requirements
According to the Communiqué, material events that are required to be disclosed are defined as instances leading to i) insider information or ii) continuous information.
3.1. Rules regarding insider information
Insider information means any information that i) may affect the value of capital markets instruments and investors' investment decisions and ii) is not yet disclosed to the public. Issuers are required to make a disclosure to the public in case material events leading to insider information (as well as changes on the already disclosed issues) arise or are found out.
Unless there is a contractual confidentiality requirement; i) in case an insider information is learned by persons who directly or indirectly own at least %10 share capital or voting rights or at least 10% of the privileged shares granting the right to appoint the board members in an issuer, beyond the issuer's knowledge, such persons are under the obligation to disclose the relevant insider information to the public; and ii) in case an insider information is disclosed to third persons by the issuer or persons acting on behalf of such issuer within the context of the performance of a job or duty, such insider information must be disclosed also to the public by the issuer.
Issuers are required to prepare (and update) a list of persons having regular access to insider information. If requested, such list must be delivered to the Central Registry Agency Incorporation.
Neither the CMC nor the Communiqué gives an example or makes an exhaustive list of what is insider information. Therefore, the obligation to disclose insider information must be evaluated on a case-by-case basis taking into account different aspects such as the size and structure of the issuer, its business, financial condition, market conditions, etc.
That said, the Communiqué requires disclosure in certain specific instances such as material changes in the activities, financial statements, management/capital structure of the issuers or their subsidiaries or unusual price and volume movements as well as in case of confirmation of news or rumors.
Article 11 of the Communiqué governs provisions regarding the disclosure requirements for the transactions conducted by persons having administrative responsibility or third parties closely related to such persons or the main shareholder of the issuers, depending on the total value of the said transactions in a given calendar year.
The obligation to disclose insider information may be postponed if certain conditions stipulated under the Communiqué are met.
3.2. Rules regarding continuous information
Continuous information is defined as any information that is i) not regarded as an insider information and ii) required to be disclosed to the public according to the provisions of the Communiqué.
For example, under the Communiqué, there is a disclosure requirement in the event of a change in the shareholding structure of an issuer, which results in the number of shares or voting rights directly or indirectly owned by real or legal entities individually or jointly by other entities, reaching or falling under %5, %10, 15%, 20%, 25%, 33%, 50%, 67% or 95% as thoroughly described under the Communiqué.
Issuers are also required to disclose various information regarding their General Assembly meetings. There are also certain disclosure requirements in cases of issuance of capital markets instruments (other than shares) or sale of capital instruments to qualified investors.
The procedure on how the disclosure must be made is described in detail in Articles 23 and 24 of the Communiqué.
All notifications of the issuers are announced to the public on the Public Disclosure Platform (www.kap.gov.tr).
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.