101 CAPITAL MARKETS LAW suer’s general liability which are collateralized by cover assets. According to the CML, the MCBs are essentially regulated under the CMB’s Communiqué on Covered Bonds under serial number III-59.1 (“Communiqué”) and its other regulations regarding debt instruments to the extent applicable. The Communiqué provides the framework for both asset covered bonds and MCBs, whereas some provisions relating to MCBs have major differences from the asset covered bonds. As per Article 31 of the CML (Issue limit and authority regarding capital market instruments qualified as debt instruments), the authority to issue capital market instruments qualifying as debt instruments may be transferred to the board of directors by the articles of association. In this case, the board of directors’ decision should as a minimum specify the issuance of the MCB as well as the nominal value of the MCB that is planned to be in circulation and the method of sale. MCBs can be issued by public offering, or be sold solely to qualified investors, or be sold by private placement – provided that the unit nominal value is at least TRY 100,000. In case there is a private placement of MCBs to international investors, there is no unit nominal value requirement. In accordance with the provisions of the Communiqué, MCBs can only be issued by mortgage finance institutions or housing finance institutions. If MCBs are offered to the public in Turkey, issuers are required to apply to the CMB with the documents listed in the Appendix-1 of the Communiqué in order to obtain the CMB’s approval for the prospectus. The issuers should apply to the CMB with the documents listed in Appendix-2 of the Communiqué to obtain CMB’s approval for the issuance certificate in case there is domestic offering without public offering, or if MCBs are to be sold to international investors. MCBs can be sold in tranches within the issuance ceiling determined by the CMB. However, for sale of each tranche during the time limit for the validity of the prospectus, the issuer has to apply to the CMB. For domestic offerings without a public offering, the sale of each tranche within the issuance ceiling determined by the CMB is conducted through Central Securities Depository (Merkezi Kayıt Kuruluşu A.Ş.) and there is no additional requirement for the issuer following the approval of the issuance certificate.
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