Recent Development
On February 1, 2021, the Capital Markets Board of Turkey ("CMB") submitted the Draft Communiqué Amending the Tender Offer Communiqué No. II-26.1 ("Draft Communiqué"), setting forth the proposed amendments to the Tender Offer Communiqué No. II-26.1 ("Communiqué") to public opinion.
What Does the Draft Communiqué Say?
The Draft Communiqué proposes to amend important matters such as the determination of the shareholders subject to the mandatory tender offer; the determination of the offer price; exceptions and exemptions applicable to the mandatory tender offer; the content of brokerage agreements; and the liability arising from the mandatory tender offer information form.
- New exceptions to the tender offer obligation: The Draft Communiqué introduces new exceptions to the obligation to launch a tender offer.
In this regard, in addition to those already provided under the Communiqué, the obligation to launch a tender offer will not arise in the following cases:
- A shareholder who participated in the capital increase and acquired 50% or less of the voting rights of the public company sharing the public company's control with the existing controlling shareholders, equally or to a lesser extent, and for the first time through a written agreement.
- Squeeze-out and sell-out rights arising as a result of obtaining the management control.
- For public companies listed on the stock exchange, changes to management control arising due to new share acquisitions by existing shareholders through participating in pre-emptive rights issues.
- Unintended changes to management control as a result of events such as the suspension of voting rights of certain shareholders, capital decrease through share redemptions, amendments to the privileges assigned to the shares, or share repurchases by the company.
Moreover, those who obtained management control of the company will be required to make a public disclosure within two business days following the acquisition of management control, if an exception to the tender offer obligation is applicable.
- The new exemption under the Draft Communiqué: Pursuant to the Draft Communiqué, in addition to the existing exemptions, if the acquisition of shares triggering the change of management control results from an inheritance or the allocation of matrimonial property, the CMB will be able to exempt the acquirer from the obligation to make a tender offer.
- Mandatory offer price: The CMB will be entitled to recalculate the tender offer price, or to suspend the tender offer, if it decides that there are extraordinary developments affecting (i) the economy or the relevant industry and (ii) the transactions entered into during the periods used as a basis to calculate the daily adjusted average prices applicable to the tender offer price.
- Principles regarding exchange and interest rates while determining the offer price: Pursuant to the Draft Communiqué, if the bidder has no fault, no interest will accrue on the tender offer price even if the offer was not launched on time.
Moreover, the CMB proposed to replace TRLIBOR, the reference rate applicable to TRY, with TLREF.
- Liability arising from the mandatory tender offer information form: The Draft Communiqué adds the brokerage firm on whose behalf the information form was signed to the list of persons liable for the mandatory tender offer information form. Accordingly, the following persons will be liable based on the information form: the bidder(s); the brokerage firm; and the signatories of the form on behalf of the brokerage firm.
- Persons who can benefit from the mandatory offer: Pursuant to the Draft Communiqué, only those who are shareholders as of the date on which the acquisition of management control is disclosed to the public will participate in the tender offer.
For companies listed on the stock exchange, the list of share amounts and shareholders who can participate in the mandatory tender offer will be provided to the target company by the Central Securities Depository of Turkey (Merkezi Kayıt Kuruluşu) on the business day preceding the launch of the mandatory tender offer.
Conclusion
With the Draft Communiqué, the CMB aims to clarify certain matters regarding the tender offer procedure and to provide some flexibility to investors with the new exceptions to and exemptions from the mandatory tender offer.
The CMB also aims to prevent any potential investor losses due to extraordinary developments, by exercising the authority to recalculate the mandatory offer price, or to suspend the offer, if there are extraordinary developments affecting the economy or the sector.
Opinions on the Draft Communiqué can be sent to pattebligi@spk.gov.tr via e-mail or to the CMB in writing until 19 February 2020.
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.