First Published on 2 November 2010

The CMB, in an attempt to provide a wide-array of products in Turkish Capital Markets, has revised the legal infrastructure governing offerings of foreign securities and depository receipts. The initiative coincides with the recent public offering filing of the Do&Co Restaurants and Catering Aktiengesellschaft, a Vienna Stock Exchange traded company, intending to conduct a secondary listing on the Istanbul Stock Exchange (the "ISE") and the plans of certain other foreign issuers considering the opportunities provided by Turkish Securities Markets. The CMB, by taking into account the recent foreign issuer interest, has preferred to ease the bureaucracy arising from formerly applicable rules and has set a relatively flexible framework for the upcoming offerings. Below is a brief highlight of the notable aspects of the new Communiqué:

  • Stock offerings of foreign firms are no longer required to be conducted within the framework of depository receipts. In other words foreign firms are free to issue their stock in the local market either through depository receipts or without making any depository receipt arrangement.
  • For foreign issuers intending to offer depository receipts, the prerequisites requiring (i) a minimum two-year operating period, (ii) a recent annual financial statement showing profits, and (iii) a minimum one-year stock exchange listing together with a minimum 100-day stock exchange trading have been abolished. However, the issuers are still required to comply with the ISE quotation rules governing foreign securities listing.
  • The preliminary CMB filing process granting foreign issuers and their local representatives the opportunity to get a CMB opinion before making the actual filing has been abolished.
  • New principles, unlike former rules, do not envisage a home stock exchange listing for foreign securities to be offered to public. However, it would not be possible to conduct a public offering for those securities, if a listing filing addressed to a stock exchange in the home country was rejected for investor protection purposes or for similar reasons.
  • The new Communiqué has clearly defined the roles, functions and obligations of the custodian, depository and representative institutions providing certain services with respect to foreign securities/depository receipt offerings and envisaged detailed disclosure requirements for foreign issuers.
  • The new Communiqué does not cover offerings of foreign investment fund shares and has totally left the issue to the currently applicable CMB Communiqué Serial: VII, No: 14 on Principles Regarding the Registration of Foreign Investment Fund Shares with the CMB.
  • Distribution/sale of foreign firm shares to the employees of foreign firms/ foreign firms' subsidiaries under an employee stock ownership plan or a similar arrangement is not subject to CMB registration provided that (i) such distribution/sale is conducted abroad, (ii) such distribution/sale does not fall under the definition of public offering, and (iii) information to be provided to employees in relation to such distribution/sale does not contain any expression giving the impression of a public offering. This perspective is a reflection and clear announcement of the currently adopted CMB practice and is part of the regulation as from the promulgation of the new Communiqué.

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.