Initial public offering in Turkey is the process of a company established as a joint stock company in Turkey announcing that it is offering some of its shares for sale by the Capital Markets Law and opening the way for all investors to become company shareholders.
For a joint stock company established in Turkey to be offered to the public, it must be provided to the public by the Turkish Commercial Code and the Capital Markets Law. Turkish Corporate Lawyers check the legality of the initial public offering in Turkey according to Turkish Corporate Law. Turkish corporate lawyers, company officials, brokerage firms, financiers, and accountants work together to organize public offerings in Turkey.
Benefits of IPOs in Turkey
Initial public offering in Turkey benefits the investor and the company that will go public. The reason why a company wants to make a public offering in Turkey is to provide financing. In addition, the company offering public provides prestige, credibility, and value increase. Where the resources provided as a result of the offering will be used must be indicated in the prospectus.
The company meets its resource needs through IPOs. A stock price is calculated for the company that is offered to the public. The company's shares are offered to the public by making a certain discount from the estimated price. In other words, the investor can become a partner in the publicly provided company at a discounted price.
The Regulatory Framework Governing IPOs in Turkey
The Capital Markets Board manages public offering transactions in Turkey. The joint stock companies must apply to the Capital Markets Board for an initial public offering in Turkey. The company may be offered to the public if the Capital Markets Board approves the application.
The Conditions of Initial Public Offering in Turkey
2 years must pass from the date of establishment for companies to initial public offering in Turkey. No significant legal problems will affect the company's production and activities to be offered to the public. It must be confirmed that the legal status of the company, in terms of establishment and activity, as well as the legal status of the shares, complies with the legislation to which they are subject. This confirmation must come from a Turkish corporate lawyer without a direct or indirect relationship with the partnership. It must be documented with a legal expert report by English-speaking lawyers.
The market value of the shares to be offered to the public must be at least 100,000,000 TL (one hundred million Turkish lira). The share of shares to the public must be at least 25% of the company's capital. According to the reports prepared by independent auditors, the joint stock company that will make the initial public offering in Turkey must have made a profit in the last two years. The equity capital ratio of the joint stock company to be offered to the public must be greater than 1.25. Joint stock companies that meet these conditions can provide public offerings.
The Process of Going Public in Turkey
A joint stock company that decides to make an initial public offering in Turkey must first sign an agreement with an intermediary institution authorized by the Capital Markets Board. The company offered to the public in Turkey must have a contract with an independent auditor approved by the Capital Markets Board to prepare its financial statements by the Capital Markets Law.
Afterward, the company's articles of association must be amended by the Capital Markets Law and submitted to the CMB. The share price of the Company to be offered to the public is determined by the agreed brokerage firm. Necessary documents are prepared by company officials and checked by Turkish Corporate Lawyers.
The company's official applies to the Capital Markets Board to be offered to the public, the intermediary institution, or Turkish corporate lawyers. Among these application documents, the prospectus is very important. The prospectus includes all information about the company to be offered to the public, its financial reports, the legal report prepared by the Turkish corporate lawyer, and how the source will be used. At Istanbul Lawyer Firm, our English-speaking lawyers can help you through this process.
Public Offering Methods
Companies that will make an initial public offering in Turkey can do so in three ways: selling existing shares, increasing capital, or both methods.
Public Offering Through Capital Increase
The company, offered to the public, increases its capital and issues new shares. The purchase of these issued shares by the partners is restricted. Thus, newly issued shares are offered to investors through an initial public offering in Turkey.
For this transaction to be carried out, the company's articles of association that will be public offering must be amended and approved by the Capital Markets Board. The Turkish law firm must amend the articles of association by Turkish corporate law. With this method, the income generated is used for company financing if the company goes public.
Sale of Existing Stocks
If this method is used, the shares held by the company's current partners that will be public offering are sold. Then, the income obtained is used to finance the partners within the context of an initial public offering in Turkey. The company's articles of association to be offered to the public must be amended and approved by the Capital Markets Board. The Turkish law firm must amend the articles of association according to Turkish corporate law.
Combination of The Two Methods
The two methods mentioned above can also be done together for an initial public offering in Turkey. In other words, the company's existing capital to be offered to the public is increased, and the shares resulting from the capital increase and the shares belonging to the partners are offered to the public together. Thus, both the company financing and the partners' financing are provided. The company's articles of association to be presented to the public must be amended and approved by the Capital Markets Board. The Turkish law firm must amend the articles of association following Turkish corporate law.
Challenges and Considerations for IPOs in Turkey
Public offerings are not regulated in detail by Turkish corporate law. The public offering is regulated in the Capital Markets Law. However, new rules are added by the Capital Markets Board through communiqués. This causes legal confusion. Another problem with IPOs in Turkey is the high costs. For these costs, it is necessary to obtain legal support from Turkish corporate lawyers by applying to the Turkish Law Firm.
Normally, if the demand is sufficient, the public offering is successful. However, there has been a lot of demand for the initial public offering in Turkey recently, which has been successful for companies. However, the number of IPOs is increasing due to this much demand. This situation makes it difficult to examine companies in detail regarding Turkish corporate law. It is very important to obtain opinions from a Turkish corporate lawyer and a Turkish law firm regarding IPOs made in Turkey. At Istanbul Lawyer Firm, we assist you with our qualified English-speaking Turkish Lawyers to show interest in companies for the initial public offering in Turkey.
You can reach our previous article at https://istanbullawyerfirm.com/blog/how-to-open-a-liaison-office-in-turkey