Significant Transactions

With the amendments in the article of the CML that governs significant transactions, certain examples of significant transactions such as taking a resolution to terminate the company, transferring the whole or an important part of its assets and delisting were taken out from the article’s text. With the amendment, examples of significant transactions were narrowed and the Capital Markets Board’s (the “Board”) authority in determining which transactions to constitute a significant transaction was broadened. While exercising this authority, the Board shall use the criteria of “any fundamental transaction that would alter an investor’s decision to invest”.

The Board is also entitled to impose different significance criteria to different listed companies.

Retirement Right

With the amendments made in the relevant article of the CML that governs the retirement right, the retirement right may only be exercised by shareholders for the shares they owned at the time of the public disclosure regarding the significant transaction. As a result, benefiting from retirement right by purchasing shares after the significant transaction is announced has been effectively prevented.

The Board is also authorized to regulate the retirement right procedures and foresee different regimes for different public companies. Additionally, the retirement right price calculation was changed from “the average of the weighted average prices formed on the exchange within the last thirty days” to a “fair” price to be determined by the Board. The reasoning behind entitling the Board to define and impose a different, “fair” price for different transactions was stated as conforming Turkish law to the global practice of using a fair price method.

With another important amendment, a provision was added to the CML, which entitles the Board to require shares subject to the retirement right to first be offered to other shareholders and investors before the company is obligated to purchase such shares.

Lastly, the Board was authorized to grant exemptions to retirement right obligation of public companies.

Mandatory tender offer

An amendment similar to the one made in the article on retirement right obligations was made in the article regarding mandatory tender offers. Mandatory tender offer will only be applicable to shareholders who owned shares at the date of disclosure with respect to the change of control of the public company.

Debt instrument owners’ board

With an additional article added to the CML, a new organ named “debt instrument owners’ board” can now be formed by investors of the issuer’s outstanding debt instruments. The article also allows establishment of different debt instrument owners’ board for each tranche. The principles regarding meeting and decision taking of such boards must be stipulated under the prospectus or issuance certificate of the relevant debt instrument.

Unless a higher quorum is set by the Board and/or in the prospectus or the issuance certificate, the decision quorum is the affirmative votes of debt instrument owners holding at least half of the relevant debt instruments’ outstanding nominal value. The decisions adopted by such boards will be binding upon all owners of the relevant debt instruments.

If the terms and conditions of an issuance is amended in case of an event of default in the repayment of the relevant debt instrument, all ongoing execution proceedings shall halt and interim injunctions and interim seizures shall not be carried out.

Trust management agreement and trustee

Another new provision added to the CML introduced a version of “trusts” common in Anglo-Saxon law into Turkish law. Pursuant to the provision, for capital markets instruments to be determined by the Board, the title of the issuers’ assets are permitted to be transferred to a trustee or rights in rem upon such assets are permitted to be granted in to a trustee through a trust management agreement in order to secure issuers’ obligations.

Crowdfunding platforms

With the amendments made in the article on crowd funding platforms, the Board was granted with the authority to determine whether the crowdfunding activities would be based on equity or debt. The reasoning for the amendment states that the intention of this amendment is to grant the Board more authorities in respect to crowdfunding activities and provide more flexibility for other crowdfunding methods such as donation/help and rewards-based crowdfunding, which are currently not explicitly regulated in the legislation.

Secondary services that can be carried out by investment firms and portfolio management companies

With an amendment in the CML, investment firms were permitted to provide services and engage in activities to be determined by the Board including project financing and granting loans. The reasoning states that this amendment also aims to enable investment firms to establish project financing funds for these purposes.

Representation of investment funds before public institutions

With the amendments to the article of the CML regulating investment funds, investment funds, which normally do not qualify as legal persons, shall be deemed as “limited” legal persons before land registries, trade registries and other official registries. The amendment aims to solve the problems faced by these funds before government institutions and especially trade registries for the limited liability and joint stock companies that they hold shares in and to eliminate public officials’ doubts around registering such funds before land registries as the owner of a real estate.

Representation of real estate funds and wealth financing funds

A similar amendment was made in the article of the CML governing real estate funds and wealth financing funds. With the amendments, real estate funds and wealth financing funds shall be deemed as “limited” legal persons with respect to transactions at land registries, trade registries and other official registries.

Project financing, project financing fund and project based securities

With a new article added to the CML, project financing, project financing funds and project based securities were defined and regulated. Project financing fund is defined as “a collection of assets that do not have legal personality and is established to manage the portfolio that consists of funds and/or other assets collected within the scope of a specific project and earnings derived from such assets and rights on account of the fund investors”.

In line with the amendments introduced to the CML for other types of funds, project financing funds shall also be deemed legal persons limited to registry transactions before land registries, trade registries and other official registries. Accordingly, transfer of assets and rights requiring a registration at the land registry or other public registries shall be registered under the name of the relevant fund.

The article further states that the principles and procedures regarding the assets and rights subject to project financing, project financing fund founders, establishment of these funds, their principles of operation, their management, termination and issuance of project based securities shall be determined by the Board.

Sanctions for unlawful issuances and breaches of information and disclosures obligations in prospectus

Scope of the relevant article of the CML that governs sanctions for unlawful issuances was amended to include sanctions for breaches of information and disclosure in prospectuses. In case of acting against the information and disclosure provided in the prospectus, the Board can request (i) rectification of relevant transactions, (ii) interim injunctions and interim seizures, (iii) annulment of the transactions and (iv) refunds to be made to the company.

Acts requiring administrative fines, general principles

With the amendments made in the relevant article of the CML governing the general principles regarding administrative fines, administrative fines to be applied to legal persons for breaches of the CML and secondary capital markets legislation were increased. Administrative fines up to a maximum of the greater of 1% of gross sales proceeds or 20% of earnings before tax will be imposed on companies.

Through another amendment made in the same article, failing to provide documents and information requested by the Board or providing insufficient/false documents and information will be subject to these increased fines.

Information abuse and securities fraud

The lower limit of imprisonment for information abuse and securities fraud was increased from two years to three years.