Turkey: Significant Amendments Recently Introduced By Borsa Istanbul On The Listing Directive

Borsa Istanbul A.Ş. ("BIST") has introduced a number of significant amendments on the Listing Directive on July 31, 2017.

Easy entrance to the Star Market: Star Market listing requirements have been amended and, as per such amendment, part of the listing requirements for the Star Market and its groups (Group 1¹ and Group 2²) have been softened, provided that the applicant companies meet certain conditions.

Previously, the applicant companies were required to satisfy the following conditions of Group 1 or Group 2, as the case may be:

Following the amendment, the applicant companies may be listed in the Star Market pursuant to the decision of the BIST, such a decision is to be made by taking into account the companies' projections as to their activities, financing structures, and how they will utilize the public offering incomes, and provided that they meet the following conditions:

1. Having operating profits as per the latest annual or relevant interim period financial statements audited by the independent auditors;
2. Having an equity/share capital ratio over 0.5 as per the latest annual financial statements audited by the independent auditors;
3. Conducting the public offering through the sale of the existing shares together with the issuance and sale of new shares.

For the calculation of the companies' operating profits, the BIST is also allowed to take into consideration the amortization and redemption amounts of the companies that do not necessitate cash outflows.

In addition to the foregoing, the following significant amendments were also introduced on the Listing Directive:

1. New market for the shares of investment companies: The investment companies' issued shares for qualified investors may be traded on the Qualified Investors Market rather than the Collective and Structured Products Market. Previously, the shares of the investment companies were traded only on the Collective and Structured Products Market.
2. Simplified listing procedure for structured products: Structured products (e.g., fund participation shares, real estate certificates, etc.) other than investment company warrants and certificates are directly listed, without being subject to any assessment by the BIST, upon the approval of the offering circular/issuance document by the Capital Markets Board ("CMB") and the realization of the sale. Such an implementation system did not exist prior to the amendment.
3. Determination of the applicable market for structured products: The listed warrants, certificates, other structured products (e.g., real estate certificates) and fund participation shares issued through a public offering are traded on the Collective and Structured Products Market. Furthermore, the ones issued for qualified investors are traded on the Qualified Investors Market. Such an implementation mechanism did not exist prior to the amendment.
4. New requirement for real estate certificates: With regard to the listing of real estate certificates, obtaining a prior opinion from the BIST has become a requirement before the approval phase of the offering circular/issuance document by the CMB. Previously, the listing of real estate certificates was not subject to any assessment by the BIST.
5. Exceptional listing procedure for the Turkish Sovereign Wealth Fund ("TSWF"): The capital market instruments, issued by the TSWF ("Türkiye Varlık Fonu Yönetimi A.Ş"), its sub-funds and other companies incorporated or authorized by the TSWF, are directly listed and traded without requiring any prior decision or processing by the BIST. Such an implementation mechanism did not exist prior to the amendment. This amendment will accelerate the listing procedure for the TWSF's capital-market instruments.

Footnotes

1. The other conditions for Star Market Group 1 are as follows: (i) the market value of the shares offered to the public should be in the minimum amount of TL 250,000,000, (ii) the total market value should be in the minimum amount of TL 1,000,000,000, and (iii) the ratio of the nominal value of the shares offered to the public to the share capital should be 5%.

2. The other conditions for Star Market Group 2 are as follows; (i) the market value of the shares offered to the public should be in the minimum amount of TL 100,000,000, (ii) the total market value should be in the minimum amount of TL 400,000,000, and (iii) the ratio of the nominal value of the shares offered to the public to the share capital should be 10%.

This article was first published in Legal Insights Quarterly by ELIG, Attorneys-at-Law in December 2017. A link to the full Legal Insight Quarterly may be found here.

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