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Turkey

The statistics for 2002 published by the Capital Markets Board revealed a noteworthy growth in the number of foreign funds that entered the market. In fact, 19 different foreign funds' securities were issued last year, thus boosting the total number of foreign mutual funds with interests being traded in Turkey to 40 since 1997.

The trade in foreign mutual funds' securities is subject to the Capital Market Regulations. Various preliminary conditions must be fulfilled by foreign funds before entering into the Turkish market as provided for in the Communiqué Series VII and No 14 for the Registration and Sale of Foreign Mutual Fund Interests. For instance, if a foreign fund's interests are to be traded, the fund must have been established for at least three years, it must not own more than 9% of the shares or voting rights of any other issuer, and the total effective value of the interests publicly offered in the jurisdiction in which the fund is incorporated must be at least $1 million.

Each foreign fund must have a representative in Turkey - a bank or a brokerage house - that is in charge of conducting all the sales of the fund's securities. The representative is in charge of applying to the Board for registration of the fund's securities, ensuring the accuracy of the information and of the documents submitted to the Board, as well as recording the identity of the purchasers and the amount and date of sale of the interests sold.

Registration with the Capital Markets Board is a necessary step for the public and private offerings of foreign mutual funds' securities. An offering circular and a prospectus prepared in Turkish by the fund must be submitted together with the application for registration. In evaluating the application, the Board reserves the right to request additional information regarding the fund and its managers from the relevant authorities of the fund's country of incorporation if it deems necessary. The Board is required to conclude the applications within 30 days following the application date.

The registration of a fund's securities is permitted if the Board determines that all the conditions are met. Following the approval, the prospectus must be registered in the trade registry and announced in the Turkish Trade Registry Gazette. Afterwards, any changes and new issues that may arise in relation to the disclosure made in the prospectus and circular before the public offering or after the date of sale must be notified to the Board as soon as possible and no amendments may be made to the prospectus or circular without the approval of the Board. The Board has the authority to suspend the public offering if any of the preliminary conditions described above are no longer met. In addition, every time new interests of already registered foreign funds are to be issued, they must be registered with the Board.

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