The Capital Markets Board’s Principle Decision dated March 30, 2023 and numbered i-SPK.128.21 (“Decision”) introduced amendments regarding the implementation of the Communiqué No. II-5.2 on the Sale of Capital Market Instruments. The Decision introduces significant changes regarding the sale methods and distribution principles applicable to the initial public offering (“IPO”) of the shares.

As per the Decision, the significant amendments applicable to IPOs are as follows:

  1. If the market value of the shares subject to IPO corresponds to TRY 750,000,000 or less, the IPO can only be carried out via the sale-on-stock exchange method.
  2. If the market value of the shares subject to IPO is above TRY 750,000,000 and the public offering will be carried out via book-building method outside of the stock exchange, the following principles will be applicable to the respective transaction:
    • Equal distribution method will be applicable to the individual investors group, and proportional distribution method will not be applicable to such individual investors.
    • Each investor will only be allowed to bid for an amount of shares equal to or less than 1/4 of the total amount of shares allocated to the relevant investor group.
    • Provided that there is sufficient demand, the amount of shares to be distributed to each local institutional investor will not exceed 1% of the total amount of shares which will be subject to IPO. However, the funds incorporated and/or managed by portfolio management companies (“PMCs”) will be subject to a limitation corresponding to 3% of the total amount of shares which will be subject to IPO.
    • If sufficient number of demands are collected for a specific investor group at the end of the book-building period, such shares allocated to the specific investor group will not be reallocated to another investor group. If an investor group does not collect sufficient number of demands, the remaining portion of such investor group’s shares will first be transferred to local individual investor group, in case of any unmet demands. After such transfer or in case the collected demands are not as much as the amount allocated to the domestic individual investor group, the remaining portion can then be transferred to other groups.

3. Once the institutional investors purchase shares for their own portfolios, they will not be able to transfer such shares to their individual investor accounts under any circumstances. The regulations applicable for any requests regarding the client portfolios of intermediary institutions, investment and development banks and PMCs are further detailed in the Decision.                                                                                                                                                                4. Investors who acquired their shares upon finalization of the distribution list will not be able to (i) sell their respective shares outside the stock exchange, (ii) transfer them to other investor accounts, or (iii) carry out any special order sale and/or wholesale transaction on the stock market, for 90 days as of the date of acquisition of such shares. On the other hand, the limitation period applicable to the shares owned by the existing shareholders (excluding the shares subject to IPO, if any) of the company subject to IPO is determined as 180 days as of the approval date of the IPO circular, and such limitation also bans any sale in the stock exchange.

    Bahar Ülgen Hasşerbetçi
    Partner | [email protected]
    Sevim Özkan
    Associate | sev[email protected]