Representatives of Turkey's Capital Markets Board foresee
that the amendments on primary and secondary capital markets
legislation for purposes of integration with the EU legislation
will be completed by the end of 2005.
Amendments to secondary legislation
Throughout late 2003 and 2004, there have been many
amendments to the capital markets secondary legislation, such
as an increase in free float on the stock exchange, a
definition of investor groups in public offerings, extension of
the scope of public disclosure requirements to provide more
information to investors, improvement in offering circular
standards, acceptance of real persons as incorporators of
portfolio management companies, regulation of mergers of
publicly listed companies, acceptance of International
Financial Reporting Standards for publicly listed companies,
securities companies and portfolio management companies, and
revision of the public offering and sale of shares in
The Capital Markets Board (CMB) promulgated a number of new
regulatory acts for governing these matters with the aim of
providing a better investment environment and ensuring
compliance with the acquis communautaire, which is a
requirement according to the Ministry of Council's decision
dated 24 June 2003 to coordinate the adoption of EU
To ensure compliance with the acquis communautaire,
the CMB has amended eight communiqués.
The Communiqué on Principles Regarding Public
Disclosure of Material Events Series VIII 39 was amended to
improve the definition of controlled undertaking. It
introduced an additional disclosure requirement related to
rights attached to shares to be obtained as a result of
converting convertible bonds.
The Communiqué on Principles Regarding Issuers
Exemption Conditions and Deletion From Board's Registry Series
IV 9 was amended to grant an exemption to issuers from
publishing a prospectus in certain cases (for example, private
placement, merger, or issuance of convertible bonds).
The following communiqués were amended to oblige the
mandatory use of a broker company during the public offering of
the securities: Communiqué on Principles Regarding the
Registration of Bonds with the Board Series II 13,
Communiqué on Principles Regarding Registration of
Profit and Loss Sharing Certificates with the Board Series III
27, Communiqué on Principles Regarding Registration of
Asset Backed Securities and Establishment and Activities of
General Finance Undertakings Series III 14, Communiqué
on Principles Regarding Registration of Commercial Papers with
the Board Series III, 13, Communiqué on Principles
Regarding Issuance of Publicly Offered Dividend Right
Certificates Series III 10, and Communiqué on Principles
Regarding Registration of Gold, Silver, Platinum Bonds with the
Board Series III 26.
The Turkish capital markets have made rapid progress since
the 1980s, transferring a significant amount of funds to the
real sector. However, with the adverse effects of macroeconomic
inconsistencies, the Turkish capital markets have failed to
meet their potential.
To increase the demand for security instruments in the
market, a platform for individual and corporate investors must
be developed. Promotion of financial awareness to investors
through disclosure is crucial for the direction of investments
to the capital markets. For this purpose, a national campaign
will be organized to provide information to the public on every
aspect of the capital markets.
On the other hand, capital markets in Turkey have a fast
operating and well-organized structure. Use of high technology
enables speedy and safe transactions and safe record-keeping in
relation to these transactions. The capital markets employees
are well educated, open minded and visionary. Moreover, the
legal structure of the capital markets is suitable for any
integration attempts with the EU legal framework.
Implementation of the corporate governance principles,
adaptation of a registration system for the security
instruments, establishment of courts with expertise on capital
markets and revisions in the taxation system will increase
investors' faith in the market.
The amendments to the Capital Markets Law and the secondary
legislation will address the loopholes in the legislation on
capital markets. As a result of the integration of Turkish
Capital Markets with EU legislation and practices, the needs of
the market players will be better addressed.
Part I of this briefing appeared in the July 2005 issue