The Communiqué Regarding Principles on Investment Services and Activities and Ancillary Services No. III-37.1 and Communiqué on Principles of Establishment and Operation of the Investment Institutions No. III-39.1 has been amended by the CMB on January 14, 2016 (O.G. January 14, 2016, 29593). With such amendments the items below entered into force:In order to encourage brokerage firms to conduct investment banking activities, investment and development banks are now allowed to make transactions on shares in Borsa Istanbul, provided that they take over an existing brokerage firm of the relevant banks. Before opening an account for leveraged transaction, in order for the investors to gain experience, they must be directed to a trial account first that will remain active for at least six business days to make at least 50 transactions. Brokerage firms’ advertising, marketing and announcement regarding the leveraged transactions are now subject to specific procedures and principles. In order to avoid conflict of interests, it is prohibited to provide individual portfolio management services and investment advisory services to leveraged transaction clients. Investment institutions licensed to deal on own account must produce a list of over-the-counter derivatives and underlying assets and publish these in their website. Brokerage firms may request from professional clients the indemnification of any losses occurred in their collaterals for leveraged transaction. Brokerage firms must report all electronic platforms, including their programs, modules and expansions used for their transactions and over the counter derivatives to the Turkish Capital Markets Association.
The Capital Market Board (the “CMB”) has published the Communiqué on Principles Regarding Record Keeping and Documentation in Investment Services and Activities and Ancillary Services (Communiqué No. III-45.1) (the “Communiqué”) (O.G. January 22, 2015, 29244) in order to be put in effect as of October 1, 2015 without prejudice to several articles which are provisioned to be applicable as of the date of publication of the Communiqué. Accordingly, the Communiqué has broadened the scope of the Communiqué on Principles Regarding Record Keeping and Documentation in Intermediary Activities (Serial No. V/6), combining the regulations of record keeping and documentation of derivatives, leverage procedures and share market transactions in one single regulation. With regard to the above, certain novelties which are included in the Communiqué are as follows:The time period for record keeping is increased from 5 years to 10 years in accordance with the relevant provisions stipulated under the Turkish Commercial Code (O.G. February 14, 2011, 27846). Furthermore, the required record keeping period for voice recordings is also increased from 2 to 3 years. The Communiqué provides that framework agreements can be executed in accordance with the Regulation on Contracts Executed Outside the Workplaces Regarding Financial Services (O.G. January 31, 2015, 29253) and can be amended in the electronic medium provided that the conditions stated in the Communiqué have been met. The Communiqué provides specific provisions regarding the record keeping and documentation of over the counter transactions such as swaps and forwards. The Communiqué also stipulates separate provisions for account abstracts of general customers and professional customers. In the light of the foregoing, the general customers shall no longer be able to reject receiving their monthly account abstracts while professional customers may instruct investment institutions that they do not require account abstracts. Accordingly, investment institutions are required to send account abstracts to the address of general customers. If approved by the customer in writing, such account abstracts may be sent via e-mail, or may be made accessible via the electronic medium. Lastly, the Communiqué requires investment institutions to instill their accounting records with regard to the capital markets transactions to their legal books within the next business day following the settlement.
Within the scope of the Capital Market Law No. 6362 (O.G. December 30, 2012, 28513), the CMB has published Communiqué No. III-48.5 on Principles Regarding Security Investment Companies (“Communiqué”) (O.G. May 27, 2015, 29368). This Communiqué brought a new financial instrument to the capital markets of Turkey which is shares of investment companies with variable capital.
An Investment Company with Variable Capital (“ICVC”) is a legal entity which represents an investment company model that provides an opportunity to access the flexibility created by investment funds and that has an open-ended capital structure.
Certain issues covered within the Communiqué include:Securities Investment Trusts are composed of two different forms: companies with a fixed capital and companies with a variable capital. ICVC can be defined as a capital market institution of which the capital is always equal to its net asset value and which is established in the form of a joint-stock company. The shares of ICVC are issued in two forms: founder shares and investor shares. The assets and instruments that can be taken into the portfolio of ICVC contain all assets that can be included into the portfolio of securities investment trusts and securities mutual funds. ICVC’s shall obtain portfolio management services from a portfolio management company.
The Communiqué No. III-37.1 on the Principles on Investment Services and Activities and Ancillary Services and the Communiqué No. III-39.1 on the Principles of Establishment and Activities of Investment Institutions regarding the capital market activities of intermediary institutions and banks has become effective from July 1, 2014. “The Guide Regarding Investment Services, Activities and Investment Institutions” ( the “Guide”) regarding the above mentioned Communiqués was accepted and updated as Principle Decision of the Capital Market Board (“CMB”) dated May 14, 2015. Certain issues are included in the Guide with respect to the following:The notification obligations of the investment institutions during their intermediation in order transmission. Application of compatibility and appropriateness tests. A transition period is provided to certain personnel with investment services and activities of banks as concerns the license requirements.
The CMB has published the Communiqué Serial No. V/135 which amends the Communiqué on the Principles regarding Capital and Capital Adequacy of Brokerage Firms (O.G. March 20, 2015, 29301) (“Amendment”). Certain issues covered in the Amendment are as following:The brokerage firms shall have the liquid equity in the amount of the risks to appear regarding the service they render, in addition to the minimum equity amount required for their operation. In this regard, the amount calculated as liquid equity shall not be less than 60% of the minimum equity amount determined in the Amendment. The methods to be applied in the calculation of the capital adequacy are restructured.
Evaluation principles to be applied in the calculation of liquid equity and capital adequacy have been broadened so as to cover all of the OTC derivative instruments.
The CMB has published the Communiqué No. II-26.1.a which amends the Communiqué Regarding Tender Offers (“Amendment”) (O.G. February 27, 2015, 29280). The main points covered in the Amendment are set out below:The obligation to make a tender offer does not occur as a result of share purchase in a certain percentage from the shareholders having management control in a publicly held company, provided that the purchaser already shares the management control equally or in less percentage under a written agreement concluded before the share transfer with the other shareholder having management control and on the condition that the purchaser owns 50% or less of the total voting rights of the company, after such share transfer. The provisions on redetermination of the tender offer price regarding share purchase of the target company for a higher price than the tender offer price during the voluntary tender offer process have been removed.
The CMB has published the Communiqué No. II-23.2.a which amends the Communiqué on Mergers and Demergers (“Amendment”) (O.G. February 27, 2015, 29280). Pursuant to the Amendment, in the merger transactions where a non-publicly held company takes over a publicly held company the shares of which are traded on the stock exchange, the non-publicly held company shall meet the requirements regarding public offering, which are stated in the Communiqué No. VII-128.1 on Shares.
The CMB has published Communiqué No. II-23.1.a, which amends the Communiqué on Common Principles Regarding Significant Transactions and the Right to Exit (“Amendment”) (O.G. February 27, 2015, 29280). The main issues set in the Amendment are as follows:Performance of the obligation to contribute capital in cash in the capital increases to be made by publicly held companies by way of deduction of the debts of the company arising from transfer of assets other than cash, shall no longer be deemed as a significant transaction (The Communiqué No. VII-128.1.a prohibits such transactions from being conducted as indicated in the Newsletter Entry: “Prohibition at Capital Increases”) In the case a non-publicly held company takes over a publicly held company in a merger transaction, controlling shareholders of the non-publicly held company and persons acting together with them shall make a tender offer in order to protect rights and interests of investors.
The CMB has published Communiqué No. VII-128.1.a, which amends the Communiqué on Shares (“Amendment”) (O.G. February 27, 2015, 29280). Certain issues covered within the Amendment include:Companies which will be publicly offered or whose shares of which will be traded on the stock exchange shall not carry the conditions to be excluded from the scope of Capital Markets Law regarding growth of financial statements, and The performance of the obligation to contribute capital in cash in capital increases to be made by publicly held companies cannot be made by way of deduction of the debts of the company arising from transfer of assets other than cash.
The Capital Markets Board (the “CMB”) has published the Communiqué No. VII-128.4.a, which amends the Communiqué on Foreign Capital Market Instruments, Depositary Receipts and Foreign Investment Funds (the “Amendment”) (O.G. January 22, 2015, 29244). With the Amendment, the principles to be applied regarding the sale or trading of non-equity capital market instruments owned by the international institutions in which the Turkish public institutions such as Republic of Turkey Prime Ministry Undersecretariat of Treasury or Republic of Turkey Central Bank are members or shareholders, have been regulated in detail. The issuances to be made in this scope have been facilitated.