Disclosure requirements for selling shares

The Communiqué Series II, number 15.1 on Disclosure of Material Events (“Disclosure Communiqué”) issued by the Capital Markets Board of Turkey (“CMB”) sets forth the principles of disclosure requirements in Turkish Public companies.

The Disclosure Communiqué requires the trading shareholders to disclose their direct/indirect, joint/standalone shareholding or voting rights held in Turkish public companies should the shareholding either reach or fall below the following thresholds: 5, 10, 15, 20, 25, 33, 50, 67 or 95% (provisions of article 13 of the Disclosure Communiqué should be taken into consideration when calculating voting rights percentages). 

Falling below or reaching these thresholds will trigger a public disclosure requirement. If a trading shareholder holds, say, 5.31% of the shares in a public company, sale of its 0.31% shareholding (i.e. falling to exactly 5%) or purchase of additional 4.68% shareholding (i.e. reaching 9.99%) will not trigger any public disclosure requirement.

As per the new provision included in the Disclosure Communiqué, effective as of February 13, 2018, and further amended November 17, 2018, if the trading shareholder directly (and on a standalone basis) holds shares in a Turkish public company and his shareholding ratio either reaches or falls under the thresholds mentioned, the disclosure is made automatically on behalf of the trading shareholder by the Central Registry Agency (“CRA”). It is advisable, however, to check whether this disclosure has been made by the CRA, and if it has not, perhaps due to an oversight at CRA, then the trading shareholder should make a disclosure to prompt this process. 

If a change in the shareholding ratio arises from joint or indirect shareholding of a trading shareholding, then the disclosure requirement lies with that trading shareholder or the persons acting in concert with them.

In the case of beneficial ownership, for example where the shares in a Turkish Public Company are held on account of another person or legal entity, perhaps via an offshore company setup, the Disclosure Communiqué does not explicitly set forth any disclosure requirement. However, provisions of the Disclosure Communiqué are interpreted in terms of their objective (i.e. ensuring transparency in Turkish Public Companies), and it may be concluded that the fact that an entity holding shares in a Turkish Public Company on account of a beneficial owner, as well as the identity of such beneficial owner, should also be subject to public disclosure. Since this is a matter of interpretation of the provisions of the Disclosure Communiqué, concrete guidance on the public disclosure requirements relating to beneficial ownership is not available. If it is decided to disclose the beneficial ownership, shareholding threshold calculations should take into account the standalone additional shareholding percentage held by such beneficial owner (i.e. shareholding percentage in addition to the percentage held through an offshore company), if any.

Making a disclosure

Disclosure is made via the “Public Disclosure Platform” web site operated by the CRA (www.kap.org.tr). General information on all publicly traded company shares are held in electronic form by the CRA as book keeping entries. The disclosure should be made by the owner of the shares as registered with the CRA.

The form of disclosure text is annexed to Disclosure Communiqué, and all disclosures must be submitted in Turkish language. Disclosures must be made before 9 a.m. on the third business day following the date of transaction.