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24 January 2018

Public disclosure obligations of companies in Turkey

Companies operating under Turkish law are subject to registration and announcement to the relevant Trade Registries of Turkey and other public disclosure obligations.

Under the Turkish Commercial Code No. 6102 ("TCC") and other relevant legislation, limited liability companies and joint stock companies incorporated under Turkish Law ("Companies") are obliged to publicly announce and disclose certain transactions which may have positive or negative effects on public interest. The TCC regulates the rules broadly in order to protect the public interest. This article summarises Companies' material obligations under the principle of "public disclosure". 

A. Registration at the Trade Registries and announcements to the public
Pursuant to the TCC, Companies are obliged to register certain corporate actions with the relevant Trade Registry of Turkey and to disclose such actions at the official Trade Registry Gazette. Actions which must be registered and disclosed are broadly defined and listed in the TCC and the official websites of each provincial Trade Registry. Transactions which must be registered and disclosed include, but are not limited to: (i) any action in relation to the incorporation of Companies; (ii) all ordinary / extraordinary general meetings of joint stock companies; (iii) capital increase / decrease; and (iv) any change in representation. 
If the relevant parties do not meet the registration and disclosure obligation under this principle within 15 (fifteen) days following the transaction day, the transaction is deemed null and void.

B. Independent audit and publicly disclosed information
Under the TCC, Companies subject to an independent audit are obliged to establish a website to publicly announce and disclose their corporate actions and transactions. Companies that satisfy two of the three following conditions (separately or together with their subsidiaries or affiliates) are subject to an independent audit: (i) Companies with active assets valued at    TRY 40 million (approx EUR 10 million) or more; (ii) Companies with annual revenue of at least TRY 80 million (approx EUR 20 million) or more; and (iii) Companies with at least 200 employees. These conditions must be satisfied for two consecutive fiscal years. The obliga-tion to set up a website starts in the following fiscal year.

Companies may fulfil the requirement to establish a website either by themselves or through official service providers called Centralised Database Service Providers (MTHS), which are licensed private legal entities for setting up and protecting contents to be published on the official websites of companies subject to independent auditing. Such company websites are also registered under the Central Registration Recording System of the Ministry of Customs and Trade (MERSIS) number of the relevant company under the public disclosure obligation of the Companies.

Certain contents which have to be continuously disclosed to the public through the company's website include: (i) Company's title, address, paid and unpaid capital, details of board of directors members for joint stock companies and managers for limited liability companies, as well as the details of the independent auditor; and (ii) information on the legal entities appointed as members of the board of directors for joint stock companies and as managers for limited liability companies, as well as information on the natural person representative of the legal entity.

Mandatory contents which have to be disclosed on the website for a minimum of six months include: (i) information regarding any lawsuit, legal action against or initiated by Companies; (ii) resolutions regarding the representation and binding of the respective company; (iii) resolutions regulating the principles of the acquisitions of newly issued shares; (iv) the acquisition of the company shares by a company from within the same group company and within the thresholds as stated under the related regulations; and (v) dominance agreements executed between Companies.

Members of the managing bodies of Companies who fail to publish and / or disclose the related content on their websites in due time may face monetary fines from 100 days to 300 days. In addition, persons who fail to duly disclose the relevant content will face fines up to 100 days. The fines are calculated based on daily income as subject to certain thresholds. 

C. Public disclosure obligation in group companies
In line with other public disclosure requirements of Companies subject to the TCC (whether publicly held or not), the TCC regulates specific public disclosure obligations regarding the changes in shareholding structure of group companies. Group companies are defined as "a group of companies consisting of a controlling capital company and at least two capital companies controlled by such controlling company, whether directly or indirectly". The respective provision, Article 198 of the TCC, regulates the following:

  • if a company acquires shares corresponding to 5%, 10%, 20%, 25%, 33%, 50%, 67% or 100% of the entire capital of a capital company or the respective shares fall under these percentages, the respective company has to notify the competent authorities with respect to the change within 10 days following the completion of the transaction. Accordingly, an announcement has to be made in the Trade Registry Gazette under the public disclosure obligation of the relevant parties;
  • although the notification is made in a simple form, failure to notify shall have certain consequences on the relevant parties. In the event of failure to comply with the notification, registration and announcement obligations under Article 198 of the TCC, the shareholding rights, including the voting right pertaining to the relevant shares, shall be suspended until the full performance of the obligations. In the preamble of the law, the basis of the disclosure is set forth as a "public interest" and "public disclosure requirement." 

D. Public disclosure platform
Under the Turkish Capital Markets Law No. 6362 ("CML"), starting from 1 June 2009, companies traded on capital markets and all brokerage houses are required to publicly disclose their financial statements, balance sheets, material events, explanatory notes and other notifications in a digital data collection system called the Public Disclosure Platform (Kamuyu Aydınlatma Platformu) operated by the Istanbul Stock Exchange. The main purpose of the CML is to efficiently protect the rights and benefits of the third party beneficiaries and to ensure the sustainability of the public interest. In the event of a failure to disclose the relevant information, the breaching parties must pay significant administrative fines. 

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