Investment regulation - Turkey
Reference
Regulatory structure
Please refer to the Market infrastructure - Turkey page for the complete information about the regulatory structure.
Holding restrictions
Holding restrictions – CSD Market – Turkey
There are no holding restrictions on foreign portfolio investments in the Turkish market.
However, Turkish capital markets legislation does not recognise the nominee concept. Foreign investors are required to obtain a Turkish tax ID in order to meet their Turkish tax obligations. One tax ID must be obtained for each beneficial owner.
Disclosure requirements
Introductory information and categories
This section provides general information about the disclosure requirements for fund securities holdings with which Clearstream Fund Centre must, according to the information available at the time of the present publication, comply with each of the domestic markets and fund markets covered by the disclosure requirements.
Fund securities that are held remotely are usually not disclosed by CFCL. A disclosure request received by CFCL regarding such a holding will be forwarded to the relevant client without assessing its validity and the CFCL client shall handle the request on a voluntary basis.
Disclosure requirements are only available for those countries where CFCL has a link to the respective domestic market or direct access to local domiciled funds that are held in Clearstream’s name on the register.
For fund securities holdings where CFCL has no such link or direct access to the register, clients must be aware that local laws might provide for mandatory disclosure. A disclosure request in this regard will be forwarded to clients without assessing its validity. Clients commit not to unreasonably withhold their consent to such a request and agree to indemnify CFCL for damages resulting directly from non-compliance with mandatory local disclosure requirements.
In most cases, the obligation to disclose is based on the domestic equivalent of a Companies Act, relevant investment funds act or anti-money laundering act and covers all security types.
In some instances, the obligation to disclose is based on stock exchange laws or regulations and only applies to listed domestic and foreign securities.
The disclosure requirements do not constitute legal advice and the clients should seek independent professional advice in relation to fund securities deposited with CFCL, especially as, for those jurisdictions in which no disclosure obligation falls on CFCL, there may be separate disclosure requirements that apply directly to clients of CFCL, shareholders and beneficial owners.
Note: CFCL is not always given comprehensive information or advised of changes affecting local disclosure requirements.
It remains the sole responsibility of the client to ensure compliance with local disclosure requirements. If a requirement is not met, it is the client who will be liable to any related penalty. Clients are therefore advised to seek independent legal advice on the existence and interpretation of local disclosure requirements.
In the case of a discrepancy between the general information contained in this document and the information provided by CFCL for a specific market, as applicable (irrespective of whether this information has been obtained from an agent of Clearstream Fund Centre, or, as the case may be, a foreign regulator of a branch of CFCL), the information provided by CFCL for the specific market as applicable, shall prevail.
N.B.: In all countries, if it is suspected that a disclosure obligation has been breached (for example, that a threshold of holdings under custody has been crossed without being reported), the regulators and the authorities may have the power to investigate. Moreover, in all countries, disclosure obligations might be triggered by enforceable judgements of the competent jurisdiction of the country in question.
Disclosure categories
Clearstream Fund Centre classifies disclosure scenarios according to the following market categories:
Markets where disclosure by Clearstream Banking as custodian of Clearstream Fund Centre to issuers, investment fund managers and/or to regulators or market authorities is mandatory under applicable law;
Markets where disclosure by Clearstream Banking as custodian of Clearstream Fund Centre of account holders to issuers, investment fund managers and/or foreign regulators or market authorities is a legal obligation in respect of securities in specific circumstances;
Markets where there is no obligation for Clearstream Banking as custodian of Clearstream Fund Centre to disclose account holders to issuers, investment fund managers and/or regulators, notwithstanding any disclosure requirement falling directly on clients of Clearstream Fund Centre, shareholders and/or beneficial owners or notwithstanding disclosure necessary to obey an enforceable judgement of the country in question.
Disclosure requirements – CSD Market – Turkey
Disclosure Category: 2
Local law and regulations may require Clearstream Banking, as a custodian of Clearstream Fund Centre S.A. (“CFCL”), and upon request, to disclose details of its account holders to issuers or regulators in specific circumstances.
Consent
In order to comply with the legislation as mentioned above and, more generally, with applicable Turkish laws and regulations, clients entering into transactions in the Turkish market consent and are hereby deemed to consent to disclosure and to the appointment of CFCL and/or its local agent as their attorney-in-fact, under power of attorney to collect from CFCL such information to be disclosed as is required by the issuer, regulator or other requesting party. Clients not willing to give this consent cannot hold such securities and/or financial instruments in their account with CFCL.
Background and legal basis
The disclosure requirement for shareholding in Turkey is primarily derived from the Capital Markets Law dated 30 July 1981, No. 2499 (Articles 1 and 16/A). In addition, the Capital Markets Board of Turkey (CMB), the local securities market regulator, issued Communiqué no. II-15.1.c on “Principles Regarding Public Disclosure of Material Events”. This communiqué has been effective since 17 November 2018 and replaces a series of prior communiqués.
Disclosure requirement
1. Disclosure related to tax:
In the Turkish market, local brokers and other custodians must be aware of who has been appointed as the tax agent and permanent tax representative, when applicable.
CFCL, through its local agent, shall perform such disclosure of this status to local counterparties or other parties upon request from such parties, including:
- The tax ID (or, in the case of a Turkish resident individual, the Turkish national ID number) of the beneficial owner; and
- Confirmation that, in the case of beneficial owners with NRIF status (that is, Non-Resident Investment Funds holding securities purchased before 1 January 2006), CBL’s local agent acts as the permanent tax representative of the beneficial owner; and
- Confirmation that CBL’s local agent acts as tax agent in relation to CFCL accounts opened with the local CSD (MKK).
As long as CFCL’s local agent is appointed by the beneficial owner as permanent tax representative, such agent is deemed responsible for the book-keeping of any NRIF's portfolio, tax accounting responsibilities and the preparation of the legal tax declaration, as required under Turkish law. In addition, CFCL’s local agent would be entitled to contact any previous agent to obtain full details of the transactions linked to the beneficial owner under the regime applicable to securities purchased before 1 January 2006, including, among other things, tax return papers already submitted to the tax office (as relevant).
2. Disclosure in the case of repetitive trade failures
According to Borsa Istanbul (BIST) Circular 193, dated 14 January 2004, local brokers provide additional reporting to the BIST when their clients cause more than two trade failures within three consecutive months. Disclosure is made when the default amount exceeds TRY 10,000 or 5% of the investor’s net assets held with the local broker.
Obligation to report threshold crossings
Any acquisition or disposal that causes a holding to reach, exceed or fall below 5%, 10%, 15%, 20%, 25%, 33%, 50%, 67% or 95% of the total voting rights or share capital of a (Turkish or foreign) BIST-listed company is disclosed by the MKK via the Public Disclosure Platform on the investors’ behalf, without requiring further action by the investors.
Such disclosure is based on the transaction and holdings data recorded in all individual or joint MKK accounts linked to the same tax ID(s) or Turkish national ID number(s).
However, whenever investors are acting together with other investors, keeping their holdings on separate MKK accounts linked to different tax IDs or Turkish national ID numbers, and their acquisitions or disposals cause their joint holdings to reach, exceed or fall below 5%, 10%, 15%, 20%, 25%, 33%, 50%, 67% or 95% of the total voting rights or share capital of a (Turkish or foreign) BIST-listed company, such investors are required to disclose the relevant threshold crossing through the MKK’s Public Disclosure Platform.
Likewise, investors whose total voting rights or share capital reach, exceed or fall below 5%, 10%, 15%, 20%, 25%, 33%, 50%, 67% or 95% for reasons other than a direct investment must disclose the relevant threshold crossing through the MKK’s Public Disclosure Platform.
Additional obligation to report
As per the Capital Markets Board of Turkey (CMB), decision published in the Official Gazette No 31195 and dated 24 July 2020, Article 27 of Communiqué on Shares (VII-128.1) entitled “Obligation of corporations, shares of which are traded in the exchange, to prepare and issue a memorandum of information for shareholders”, has been amended. Through the amendment, the criteria on the issuance of a memorandum of information on share sales are revised.
In the event that the shares, which are in the exchange, are going to be sold by shareholders in excess of ten percent of capital within any period of twelve months, the relevant partners are under obligation to prepare and issue a memorandum of information under the principles determined by the CMB in the Communiqué on Shares.
This form should be approved by the CMB before the sale. The issuer takes necessary actions in facilitating the preparation of this memorandum of information.
The obligations are applicable under the following conditions:
- Shareholders holding more than 20% of a company’s capital, either directly or joint with other parties.
- Shareholders of privileged shares which give the right to elect board members or nominate board members at the general assembly.
Conversion of non-tradeable shares to tradeable shares exceeding ten percent of the company’s capital within a twelve-month period is required to be announced at Public Disclosure Platform (PDP), following the CMB’s approval and prior to Merkezi Kayit Kurulusu (MKK) application for conversion.
Shareholders must publish a material disclosure at the PDP on the next business day following the CMB application for the sale of shares. The equity sale disclosure form will be published at the PDP after five business days upon the CMB’s approval. Trading of the shares at the exchange may start on the third business day following the disclosure of the equity sale disclosure form at the PDP.