For further information,
please contact:
Legal Alerts

Proposed Changes to Turkish Companies’ Material Transactions and Minorities’ Exit Rights

Legal Alerts
Capital Markets

Recent Development

The Capital Markets Board (“CMB”) presented the Draft Communiqué (“Draft Communiqué”) on Material Transactions and Exit Right No. II- 23.1 (“Material Transactions Communiqué“) for public consultation on March 16, 2020.

The Draft Communiqué plans to abolish the current Material Transactions Communiqué and introduce new rules and procedures regarding material transactions; determining shareholder(s) who have an exit right, their number of shares and the exit price of the shares; offering exiting shareholders’ shares to other shareholders and/or investors; transactions that do not trigger the exit right; and exceptions to these determinations.

What’s New?

Material Transactions

The Draft Communiqué narrows and amends the scope of material transactions that trigger the exit right regulated under the current Material Transactions Communiqué. The Draft Communiqué will not define the dissolution of public companies, the complete or material alteration of the field of activity and the de-listing from the exchange as material transactions. Thus, de-listing which is also regulated under the Communiqué on Exclusion of Stock Corporations from the Scope of the Law and Requirement for Trading of Shares on Stock Exchange No. II-16.1 will not trigger any exit rights. Under the Draft Communiqué, the following transactions of public companies will be deemed material transactions:

  • Certain mergers and spin-offs defined under the Draft Communiqué
  • Transferring or facilitating similar transactions that have the same consequences as the transfer of the assets of, or establishment of limited rights in rem in favor of a third person on, the public companies’ assets, provided that they satisfy the materiality criteria (the ratio of the transaction value to the public company’s value must be exceed 75% of the total public company’s value with respect to the calculation method set out in the Draft Communiqué)
  • Conversion of public companies
  • Introducing a new privilege or modifying the existing privileges of the shareholders

In addition, the CMB is also authorized to classify transactions as material transactions under the Draft Communiqué if the fundamental transaction(s) will change the structure of the public companies and affect investors’ investment decisions.

Pursuant to the Draft Communiqué, all asset related transaction(s) of public companies listed as tier 3 under the Corporate Governance Communiqué No. II-17.1 and whose free floating ratio of shares representing the share capital is more than 50% will be classified as material transactions if these transaction(s) will cause a change in the main area of activity of the public companies, regardless of the materiality criteria set out in the Draft Communiqué.

The CMB’s other secondary legislation regulating material transactions will continue to be effective when the Draft Communiqué enters into force, except for the current Material Transactions Communiqué.

Determination of Shareholder(s) Possessing Exit Rights and Amount of Shares

The Draft Communiqué grants exit rights to shareholders holding shares as at the public disclosure date of the material transaction. In this respect, benefitting from the exit right by acquiring shares after the public disclosure will be prevented.

The Exit Price of Shares

The exit price of the public companies’ shares listed on the exchange will be calculated based on a fair value pursuant to the principles determined by the CMB in the Draft Communiqué.

Under the Draft Communiqué, the highest of the share prices listed below will be set as the exit price of the shares:

  • The average of the shares’ weighted average prices for the last six months, one year and five years on the exchange prior to the disclosure date of the transaction
  • The mandatory tender offer’s price for the last one year prior to the disclosure date of the transaction, if any
  • The price set out in the valuation report prepared to calculate the price for each share class

The exit price of public companies’ shares not listed on the exchange will be calculated pursuant to the valuation report based on the public company’s value at the public disclosure date of the transaction.

Offering Exiting Shareholders’ Shares to Other Shareholders and/or Investors

The Draft Communiqué introduces a new option for offering these shares to other shareholders and/or investors before the shares are acquired by the public company.

Transactions That Do Not Trigger Exit Rights and Exemptions

In addition to the existing exemptions, the Draft Communiqué will classify rescue mergers and sales of a subsidiary’s shares through public offering as transactions that do not trigger the exit right.

Also, the CMB will be entitled to grant an exemption to the companies for certain transactions, such as relief from financial stress and other actions that fall outside of the scope of the exemptions pursuant to the current Material Transactions Communiqué.

Public companies requesting an exemption from the CMB to recover from their financial stress must prove that the public company is in the state of financial stress and that the planned material transactions will have a positive effect on this situation. In addition, the CMB requires these public companies to submit independent assurance reports written by the institutions authorized to conduct independent audits and prepared in accordance with the principles set out in the CMB’s regulations.


The Draft Communiqué clarifies the new principles and procedures of material transactions and exit rights pursuant to the Amendments to the Capital Markets Law No. 6362.

You may submit your opinion on the Draft Communiqué to via e-mail or in writing to the CMB until March 31, 2020.