With its decision published in the Capital Markets Board Bulletin dated 30 December 2022 and numbered 2022/74 (the “Decision”), the Capital Markets Board (the “CMB”) amended the financial criteria, specifically the monetary thresholds, that companies must meet in order to go public. The re-evaluated threshold amounts tighten the conditions for initial public offerings (“IPOs”).
What Does the Decision Say?
Pursuant to the Decision:
- The paid-in capital of the companies that will adopt the registered capital system (kayıtlı sermaye sistemi) cannot be lower than TRY 30,000,000.
- The companies will need to meet the following criteria in order to go public:
- The total assets of a company must not be lower than TRY 300,000,000 and its net sales revenue must not be lower than TRY 180,000,000 pursuant to its 2021 year-end financial statements (prepared and audited in accordance with the CMB regulations);
- The total assets of the company must not be lower than TRY 450,000,000 and its net sales revenue must not be lower than TRY 270,000,000 pursuant to its 2022 year-end financial statements (prepared and audited in accordance with the CMB regulations).
- If the market value of the shares to be offered to the public will be less than TRY 231,903,839 (excluding over-allotment), the companies will need to make available for sale additional shares corresponding to 25% of the nominal value of the offered shares to be sold to the public by fully restricting pre-emption rights of the existing shareholders. In these, offerings, the companies will also need to have adopted the registered capital system.
- The intermediary institutions will need to underwrite the following shares:
- All of the unsold shares if the market value of the offered shares will be less than TRY 150,000,000 (excluding over-allotment);
- All of the unsold shares up to TRY 150.000.00, and half of the remaining unsold shares if the market value of the offered shares will range between TRY 150,000,000 and TRY 250,000,000 (excluding over-allotment).
With the re-evaluation of monetary thresholding by the CMB, the conditions for IPOs have become tighter.