Recent Developments In Turkish Capital Markets - February 2022

The CMB Issued the Communiqué on Issuance of Secured Capital Market Instruments

By the end of January, the CMB issued "The Communiqué on the Procedures and Principles on the Issuance of Secured Capital Market Instruments" which regulates the concept of the security agent and its responsibilities, together with the general principles of the issuance of secured capital markets instruments. With this new regulation:

• The capital markets instruments to be determined by the CMB will be secured with the assets listed in the communiqué by the CMB.
• It was prohibited to subject these assets to seizure, pledge, provisional attachment and preliminary injunction by setting the framework of these assets.
• Terms of the Security Management Agreement have been determined.
• The security agent was defined as the investment institution having general custody authorisation of the security in accordance with Turkish capital markets legislation and powers and duties of the security agent have been regulated.

You can read our summary of the Communiqué here.

Identifying Clients and Executing Contracts in The Electronic Media Became Possible

The CMB issued two pieces of legislation, namely "The Communiqué on Remote Identification Methods to be Used by Intermediary Institutions and Portfolio Management Companies and the Establishment of Contractual Relationships in Electronic Media" and "the Communiqué Amending the Communiqué on Documentation and Record-Keeping Systems Regarding Investment Services and Activities and Ancillary Services". Some of the concepts that were introduced are as follows:

• Remote communication tools were introduced for the communication between intermediary institutions, portfolio management companies and their customers.
• Requirement to implement the identity authentication mechanism has been introduced for investment services and activities offered to customers in the electronic media.
• Intermediary institution and portfolio management companies will be responsible for ensuring that solutions are used to minimize the risk of misidentification of the person during remote identification.
• Requirement to obtain application forms from customers before video have been introduced.
• Minimum conditions for the completion of remote identification, concluding a contract and ensuring the system security have been determined.
• Mandatory retention period for all documents, including voice recordings and those obtained during the remote identification process, has been set as 10 years.
• Time for account extracts requested to be delivered to customers has been decreased to five working days from seven working days.

You can read our summary of these two Communiqué here.

The CMB Provided Flexibility by Extending the Sale Period for Initial Public Offerings

CMB extended the sale period for initial public offerings to take place from January to February 2022. Accordingly:

• Sale period set as January 1 to February 15 has been amended as January 1 to February 28 and financial statements for the last three years; or financial statements for the last three years preceding the relevant sale period, and financial statements of the nine-month interim period can be used for this new settled period.

The CMB Published A Guideline Encourages Financing for Capital Investments That Can Contribute Positively to Environmental Sustainability

By the end of February, The CMB published "Green Debt Instruments, Sustainable Debt Instruments, Green Lease Certificates and Sustainable Lease Certificates Guideline" which encourages financing for capital investments that can contribute positively to environmental sustainability. Within the scope of this guideline:

• The basic principles and obligations indicated on green debt can be applied to sustainable debt instruments, green lease certificates and sustainable lease certificates.
• Capital market instruments specified can be qualified as green-themed capital market instruments provided that they meet the qualifications and fulfil the obligations set out in the guideline.
• Obligations determined for issuers are to be fulfilled by the asset leasing company and/or fund user in green lease certificate issues.
• Obligation to obtain separate issue ceiling from the CMB for issuances to be made has been determined.
• The elements that green debt instruments must have and examples (but not comprehensive) of eligible green project types have been determined.
• The usage, management and external evaluation procedures of funds have been indicated.

You can read our summary of the Guideline here.

ISSUANCES APRROVED BY THE CAPITAL MARKETS BOARD OF TURKEY- FEBRUARY 2022