Abstract
This article examines the legal transition from private ownership to a public offering and continuing listed-company regulation in Turkey. It considers the distinction between offering and admission, corporate preparation, due diligence, prospectus responsibility, intermediary arrangements, disclosure, governance and minority-shareholder protection. It also addresses foreign issuers, overseas shareholders and the financing developments discussed in the manuscript. The analysis emphasises the continuing nature of the issuer's obligations. Successful preparation should leave the company with an accurate ownership record, a coherent disclosure process and clear responsibility for the legal duties that remain after the offering proceeds have been received.
Keywords initial public offerings, Turkey, listed companies, prospectus liability, corporate governance, public disclosure
Introduction
Taking a company public in Turkey changes who can buy its shares and how the company must conduct its affairs. The transaction can provide new capital, allow an existing shareholder to realise part of an investment, or combine both objectives. It also brings continuing disclosure, governance and investor protection obligations that remain long after the offering proceeds have been received.
For a foreign sponsor, a Turkish business preparing to list, or an overseas investor considering an IPO, the central legal question is whether the company and the proposed transaction are ready for public ownership. This article explains the process from its starting point, the allocation of responsibility for disclosure, the rights created for investors and the recent official developments relevant to financing decisions.
Public offering and stock exchange listing are separate steps
A public offering involves an invitation to purchase capital market instruments and their sale following that invitation. Listing concerns admission under the exchange’s rules. The Capital Markets Board, referred to here as SPK, approves the prospectus within the statutory framework. Borsa İstanbul separately examines the relevant admission conditions. An approval at one level should not be described as the completion of the entire process.1
A company can also become subject to public company regulation without having completed a conventional exchange IPO. Article 16 of Law No. 6362 deems a joint stock company with more than five hundred shareholders publicly held, subject to the statutory exception for funds raised through crowdfunding platforms. The subsequent obligation concerning application for exchange trading is another reason to monitor shareholder numbers during private fundraising.2
The proposed security must be identified at the beginning. Equity financing introduces shareholders. A debt issue creates repayment obligations according to its terms. A sale limited to qualified investors is not the same process as an unrestricted retail offering. The appropriate document, selling restrictions and potential trading venue depend on that choice.
Who receives the money and who gives up ownership
In a primary issue, the company creates and sells new shares, receiving the subscription proceeds. Existing shareholders may be diluted unless they participate or other arrangements apply. In a secondary sale, an existing shareholder sells shares already held, and receives the consideration. An offering can contain both components. The distinction should be visible in the documents and in the description of how proceeds will be used.3
A foreign sponsor should model its voting position after the offering, rather than looking only at the percentage sold. Different classes, nomination privileges and agreements between shareholders may affect control. Commercial arrangements that were workable in a closely held company can become difficult to reconcile with freely transferable listed shares and public company governance.
Pre-emption rights require deliberate treatment. Article 461 of the Turkish Commercial Code protects the shareholder’s right to subscribe proportionately to new shares, while permitting restriction or removal under its conditions. Public company capital increases also engage Law No. 6362 and SPK rules. A transaction should not proceed on the assumption that the board may disregard existing rights simply because a public offering is planned.4
Legal preparation before the application
The preparation should begin with the company’s capital history and corporate records. Counsel needs to establish that the shares exist validly, the proposed sellers own what they intend to sell and the necessary corporate approvals can be obtained. Unrecorded transfers, disputed privileges, unpaid capital or inconsistent constitutional documents should be resolved before they become prospectus qualifications.
The review must then reach the business itself. Material contracts, financing arrangements, security interests, licences, employment liabilities, intellectual property and significant disputes can affect both eligibility and disclosure. A consent requirement in a loan agreement or a termination right in a key commercial contract may change the feasibility of the proposed structure. The objective is to understand the legal consequences of the offering, not simply to assemble a room of documents.
The Listing Directive requires a legal report by a lawyer without the specified direct or indirect relationship to the company on matters including the legality of the company’s establishment, activities and shares and significant disputes affecting operations. This requirement should be considered when appointing advisers. The transaction team should identify any independence issue before the report is commissioned.5
Legal and financial due diligence should be coordinated. For example, a large receivable from an associated company may appear as an asset in the accounts while its collection depends on disputed terms or an insolvent counterparty. A guarantee can create exposure that is not apparent from revenue growth. Material findings should be reflected consistently in the financial review, risk factors and explanation of the business.
The prospectus is a legal disclosure document
The prospectus must contain the information needed for an informed assessment of the issuer, its financial position and prospects, and the rights and risks attached to the securities. It should describe the actual company and offering. Generic warnings about competition or economic conditions are inadequate substitutes for explaining a known financing shortfall, dependence on a major customer or a material pending claim.6
SPK examines the prospectus for the statutory standards of consistency, comprehensibility and completeness. Article 6 expressly states that approval does not guarantee the accuracy of its contents or constitute a recommendation concerning the securities. The issuer and other responsible participants therefore cannot treat approval as a transfer of responsibility to the regulator.7
Article 6 provides review periods after the required information and documents are complete, including a twenty-business-day period for the relevant first public offering. Missing information and requests for completion affect the timetable. These provisions do not promise that the entire IPO, from the first adviser meeting to trading, will be finished in twenty business days.8
The information must also remain current during the offering process. A material development after submission may require a prospectus amendment or supplement and can engage investors’ withdrawal rights under the applicable conditions. A company should have a clear internal process for escalating developments during bookbuilding, rather than treating the filed document as a closed record.9
Responsibility for inaccurate disclosure
Under Article 10, the issuer is responsible for losses caused by inaccurate, misleading or incomplete prospectus information. The statute also provides for responsibility of other participants, including the seller, lead intermediary, guarantor and board members, under its conditions. Experts and institutions producing reports can be responsible for the reports they prepare. Responsibility must be analysed by reference to the defendant’s role and the applicable statutory test.10
Article 32 extends the civil liability framework to other regulated public disclosure documents. It contains rules on responsibility, causation and circumstances in which a claim is rejected. It also states a six-month limitation period from the occurrence of the loss described in its fourth paragraph. Investors and issuers should obtain advice on that specific provision promptly. Applying a general contractual limitation period without examining the capital markets rule can be a serious mistake.11
A fall in price does not prove that the prospectus was defective. Equally, the presence of a risk warning does not answer a claim that a material fact was misstated or withheld. The legal analysis compares what was disclosed, what should have been disclosed, when the investor traded and what caused the loss. That inquiry is more demanding than demonstrating that the investment performed badly.
Borsa İstanbul admission and the choice of market
The Listing Directive distinguishes the Star Market, Main Market and SubMarket, with conditions relating to matters such as the market value and proportion of shares offered, operating history, profitability and equity. It also provides specific exceptions and alternative routes. An eligibility opinion should identify the relevant route and the currently applicable amounts, rather than copying a financial threshold from an earlier transaction.12
Meeting financial criteria does not resolve every admission issue. The exchange also considers matters relevant to orderly and reliable trading, the legal position of the shares and the issuer’s ability to operate. The application should disclose an obstacle early enough for it to be addressed. An unresolved transfer restriction or material operational dispute is unlikely to become easier to explain immediately before launch.
The proposed free float deserves commercial as well as legal attention. A small number of shares available for trading can make a security more sensitive to concentrated orders. The prospectus and admission conditions should be reviewed together with the expected shareholder structure. Listing creates a trading venue, but does not guarantee that every investor will be able to sell a large position at a preferred price.
Intermediary agreements and completion risk
The engagement letter should specify whether the intermediary is undertaking an underwriting commitment or providing placement services without that commitment. It should also address termination, conditions to launch, fees, expenses and responsibility for information. These are separate categories of service under the capital markets statute. The commercial expectation that an adviser will find buyers is not a substitute for an agreed obligation to purchase unsold securities.13
The allocation rules, settlement mechanics and any price stabilisation or selling restrictions must be understood from the offering’s actual documents. An investor should not assume that an application guarantees an allocation or that an intermediary will support the market price after listing. A company should equally avoid announcing an unconditional funding expectation while material conditions remain outstanding.
Continuing disclosure after the first trading day
Public ownership creates an ongoing disclosure discipline. The company must prepare and publish the required financial reports and disclose material developments through the applicable system. The information obligation extends beyond scheduled results. A development in financing, operations, a dispute or control may require assessment when it arises.14
The Material Events Communiqué permits delayed disclosure of inside information only under specified conditions, including protection of a legitimate interest, avoidance of misleading investors and preservation of confidentiality. The decision and its basis must be documented as required. A desire to avoid an adverse market reaction is not, by itself, a complete legal justification for silence.15
Announcements should be accurate, sufficient and understandable. Article 24 prohibits misleading, exaggerated or incomplete disclosures and the use of material event announcements as advertising. Where a development remains uncertain, the disclosure should identify that uncertainty. An initial agreement to negotiate, for example, should not be presented as an unconditional completed contract.16
For a group with overseas operations, information must reach the Turkish disclosure team quickly enough to permit a proper assessment. The company should identify who receives information from subsidiaries, who evaluates materiality and who authorises publication. A translation completed after a foreign announcement may be too late if the underlying development already triggered a Turkish obligation.
Governance and the interests of minority shareholders
The Corporate Governance Communiqué establishes obligations concerning governance principles, board arrangements and investor relations, with scope and mandatory requirements that vary according to the applicable classification. An IPO preparation exercise should therefore produce a company-specific compliance schedule. Merely appointing people with independent director titles does not complete the governance work.17
The investor relations function should be able to respond to shareholder information requests, maintain the relevant records and support compliant general meetings and disclosure. The applicable transition provisions for newly listed companies should be identified in the timetable. Commercial teams should know where investor questions are to be directed instead of providing inconsistent answers privately.18
Transactions with controlling shareholders or associated businesses deserve particular scrutiny. Article 21 prohibits transfers of value through transactions departing from the relevant arm’s length standards. Related party procedures can additionally require valuation, independent director consideration, disclosure or shareholder approval, depending on the transaction. Calling a payment a management fee does not remove the need to examine the service, price and beneficiary.19
A proposed merger, change of legal form or transfer of important assets can engage the material transaction and exit right rules. These rules do not give every dissatisfied investor a standing right to sell shares back to the company. The nature of the transaction, eligibility, voting conduct, procedure and pricing rules must all be considered.20
A subsequent change of control can trigger a mandatory tender offer under Article 26. An investor buying a controlling block should include the potential offer obligation in its funding model and transaction conditions. A share purchase agreement allocating responsibility between buyer and seller does not itself displace statutory rights belonging to other shareholders.21
Foreign issuers and overseas shareholders
A Turkish incorporated company with foreign shareholders and a company incorporated abroad are different legal starting points. Foreign incorporation brings additional questions about the validity and transfer of the securities, shareholder rights under the home law, custody arrangements and the relationship between disclosure systems. Borsa İstanbul’s Listing Directive expressly addresses foreign issued instruments, including depositary receipts, and contains a framework for dual listing.22
An existing overseas listing should not be described as automatic permission to offer securities to the Turkish public. The relevant SPK document approval, the exchange route and any additional conditions must be confirmed. Counsel in both jurisdictions should agree who verifies corporate capacity, who is responsible for each disclosure and how later changes will be communicated.
Foreign investors should also distinguish their subscription rights from any separate contractual protection negotiated with a sponsor. A side agreement cannot be assumed to bind the listed company or its other shareholders. Before relying on a veto, nomination right or exit commitment, check its validity, disclosure consequences and practical enforceability within the public company structure.
Court of Cassation guidance on financing and shareholder claims
On 3 February 2026, the Court of Cassation’s 11th Civil Chamber (Yargıtay 11. Hukuk Dairesi, E. 2025/2348, K. 2026/675) upheld dismissal of a damages action arising from a proposed corporate bond issue and related banking arrangements. The underlying assessment included the parties’ termination and release protocol, concerns about financial information and failure to establish the alleged causal link. Although the transaction concerned debt rather than an equity IPO, it illustrates the importance of accurate financing information and the actual intermediary contract. Regulatory approval alone did not establish liability for the alleged funding loss.23
The Court of Cassation’s 11th Civil Chamber (Yargıtay 11. Hukuk Dairesi), in its decision of 10 December 2025 (E. 2025/2457, K. 2025/7441), considered a listed shareholder’s subscription rights and an alleged failure to deliver privileged shares. The court upheld the result reached on the particular facts, including consideration of an offer to provide the shares. For an issuer, the practical lesson is to retain a complete record of subscription instructions, payment channels and proposed corrective action. For the investor, the choice between delivery and damages must be assessed against the circumstances rather than assumed.24
Neither decision supplies a universal answer to every failed offering or shareholder complaint. Both demonstrate why legal advice should examine the transaction record and the relief sought. A case name quoted without its facts can obscure the very distinction that determined the outcome.
Recent developments in Turkish capital market financing
On 13 August 2026, SPK adopted Decision i-SPK 128.29, numbered 49/1500, introducing updated guidance for green, sustainable and social capital market instruments and a separate framework for sustainability-linked instruments. The changes broaden the financing framework and address external review, disclosure and reporting. They are relevant to companies comparing an equity offering with other capital market funding.25
For sustainability-linked instruments, the framework addresses performance indicators, targets, instrument characteristics, reporting and verification. Coupon payments or other terms may change depending on target performance. SPK also announced a fifty per cent reduction in its fees for qualifying issues under the guides. That is a targeted measure, not a general discount for every IPO or a guarantee that a sustainability claim is sound.26
For legal preparation, these developments create additional drafting questions: which commitment is binding, how performance is measured, who verifies the result and what contractual consequence follows a missed target. A company should be able to support the selected indicators with reliable records. An ambitious description in marketing materials does not resolve an imprecise payment adjustment clause.
The events of September 2026 also underline the need to distinguish permanent offering rules from temporary market measures. A current trading or margin decision may affect investor demand and launch planning without changing the prospectus standard. The issuer and its advisers should check official SPK bulletins and exchange notices again when fixing the timetable, particularly where the market position has changed since the application was prepared.
The practical role of legal counsel
An effective engagement should specify responsibility for corporate restructuring, due diligence, the prospectus, the independent legal report where required, intermediary documentation and the continuing compliance programme. Foreign participants should ask how home-country advisers will be coordinated and how documents will be translated and verified. The fee proposal should distinguish the work required to launch from the work that continues after admission.
The company should leave preparation with an accurate ownership record, identified legal risks and named people responsible for ongoing obligations. An investor should leave its review knowing what rights it is buying, where the offering proceeds go and which disclosed risks can affect value. Those are useful legal outcomes even if market conditions ultimately lead the company to defer the offering.
Frequently asked questions
Does every IPO raise new money for the company?
No. A sale of existing shares pays the selling shareholder. A capital increase raises money for the company. Many offerings combine both, and the documents should explain the proportions and intended use of proceeds.
Does an approved prospectus remove the issuer’s liability?
No. SPK approval does not guarantee the information or recommend the investment. The statutory responsibility of the issuer and other participants remains relevant.
Can a company complete an IPO within twenty business days?
The statutory prospectus review period is tied to complete information and documents. Corporate preparation, due diligence, exchange admission and the offering itself require separate work. The entire transaction should not be promised on that statutory period alone.
Can an overseas company list in Turkey?
The legal framework provides routes for foreign issued securities, including depositary receipts and dual listing. Eligibility and document requirements must be assessed for the issuer and the selected route.
Can a shareholder obtain compensation simply because the IPO price falls?
A price decline alone does not establish a disclosure claim. The investor must identify a legally relevant defect, loss and the applicable basis of responsibility and causation. Short statutory deadlines may apply.
What changes after a company becomes listed?
Disclosure, governance and shareholder obligations continue. Material developments, related party transactions, changes of control and major structural decisions may require procedures that were unnecessary or different before public ownership.
Do the August 2026 sustainability measures apply to every share offering?
No. The guides and associated fee reduction apply to qualifying instruments and issues within their scope. A company must examine the chosen financing structure before relying on them.
Conclusion
A successful public offering rests on a company that can explain its legal and financial position accurately and maintain that discipline after listing. Preparing for those continuing responsibilities is as important as preparing the offering document itself.
Footnotes
1. Capital Markets Law No. 6362, arts. 3-6; Borsa İstanbul, Listing Directive (Kotasyon Yönergesi), application and admission provisions. Official source.
2. Capital Markets Law No. 6362, art. 16; Capital Markets Board, “Başvuru Süreçleri”, section on becoming subject to the Law. Official source.
3. Capital Markets Law No. 6362, arts. 12 and 18; Share Communiqué VII-128.1, provisions governing public offerings and capital increases. Official source.
4. Turkish Commercial Code No. 6102, art. 461; Capital Markets Law No. 6362, art. 18. Official source.
5. Borsa İstanbul, Listing Directive (Kotasyon Yönergesi), share-listing conditions and independent legal report requirement. The current directive and amendments must be read together.
6. Capital Markets Law No. 6362, arts. 4 and 5; Prospectus and Issue Document Communiqué II-5.1. Official source.
7. Capital Markets Law No. 6362, art. 6(1). Official source.
8. Capital Markets Law No. 6362, art. 6(2). Official source.
9. Capital Markets Law No. 6362, art. 8. Official source.
10. Capital Markets Law No. 6362, art. 10. Official source.
11. Capital Markets Law No. 6362, art. 32, especially paras. 4-6. Official source.
12. Borsa İstanbul, Listing Directive (Kotasyon Yönergesi), share-admission conditions, market classifications and alternative listing routes.
13. Capital Markets Law No. 6362, art. 37(e)-(f); Investment Services and Activities Communiqué III-37.1, public-offering intermediation provisions. Official source.
14. Capital Markets Law No. 6362, arts. 14 and 15; Financial Reporting Communiqué II-14.1; Material Events Communiqué II-15.1. Official source.
15. Material Events Communiqué II-15.1, art. 6. Official source.
16. Material Events Communiqué II-15.1, art. 24. Official source.
17. Corporate Governance Communiqué II-17.1, arts. 5-6 and the annexed corporate-governance principles. Official source.
18. Corporate Governance Communiqué II-17.1, art. 11. Official source.
19. Capital Markets Law No. 6362, art. 21; Corporate Governance Communiqué II-17.1, arts. 9-10. Official source.
20. Capital Markets Law No. 6362, arts. 23-24; Communiqué II-23.3 on Material Transactions and Exit Rights. Official source.
21. Capital Markets Law No. 6362, art. 26; Tender Offer Communiqué II-26.1. Official source.
22. Borsa İstanbul, Listing Directive (Kotasyon Yönergesi), provisions concerning foreign-issued instruments, depositary receipts and dual listing.
23. Yargıtay, 11th Civil Chamber, E. 2025/2348, K. 2026/675, 3 February 2026. Citation retained from the source article; official decision-search record. Official source.
24. Yargıtay, 11th Civil Chamber, E. 2025/2457, K. 2025/7441, 10 December 2025. Citation retained from the source article; official decision-search record. Official source.
25. Capital Markets Board, Bulletin No. 2026/51, 13 August 2026, section E.2, Decision i-SPK 128.29 (49/1500), and the two guides adopted under that decision. Official source.
26. Capital Markets Board, Bulletin No. 2026/51, 13 August 2026, section E.2, including the 50 per cent Board-fee reduction for qualifying instruments. Official source.
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.
