The Communiqué On Principals Regarding Registration Of Debt Securities With The Capital Markets Board And Sales Of Debt Securities

February 2011
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Preamble

Registration with the Capital Markets Board (“CMB”) and sales of debt securities such as bonds and commercial paper are regulated under the Communiqué on Principals Regarding Registration of the Debt Securities with the CMB and Sale of Debt Securities Serial: II, No: 22 (“Communiqué”). Please find a brief summary of the regulations and general information with respect to the registration of debt securities with the CMB and the sale of these debt securities in accordance with the Communiqué.

Regulations in the Communiqué

Debt securities means bonds; bonds convertible into shares; convertible bonds; commercial paper; gold, silver, platinum bonds; bank bonds, and other capital markets instruments to be approved by the CMB as debt securities which are either registered or bearer instruments, or promissory notes that are issued and sold by the issuers as the debtor for registration with the CMB in accordance with the Communiqué.

Registration with the CMB

The issuers must register debt securities with the CMB in accordance with the regulations in the Communiqué. The issuer must adopt a general assembly decision for the issuance of debt securities. The authority to resolve the issuance of debt securities can be assigned to the board of directors through a provision in the articles of association. General provisions with respect to the amount, type, maturity and interest of the debt securities to be issued must be stated in the decision of general assembly.

The application for the registration with the CMB must be made within one (1) year starting from the date of such corporate decision. Please note that debt securities registered with the CMB can be sold in a different maturity structure and with a different interest ratio within this one (1) year period.

If the sale of debt securities which are already registered is cancelled, this matter must promptly be notified to the CMB. The debt securities which are discarded for sale or which are not sold, can be offered for sale by obtaining a CMB opinion within one (1) year from the registration.

Application to CMB for registration

An application for the registration of debt securities with the CMB must be made to the CMB with relevant documents. An application concerning whether the debt securities to be offered to the public can be traded in the relevant market of the stock exchange is required to be made to the Istanbul Stock Exchange.

A prospectus and a circular must be prepared if the debt securities will be sold by way of a public offering.

The CMB reviews and finalizes the applications made with respect to the registration of the debt securities. A registration document must be prepared with respect to the registered debt securities, and the issuance and sale operations cannot be made without such a registration document.

The CMB may, at its discretion, request from the issuer that the liabilities arising from the debt securities be guaranteed by a local bank or a third party.

Types of debt securities

Debt securities may be sold by way of a public offering or by a private placement without a public offering. The type of the debt securities to be registered, bearer instruments, or promissory notes must be stated in the prospectus and the circular.

Sale of debt securities by a private placement or to qualified investors[i]

An offer made only to or directed at qualified investors or a private placement does not require the production of a prospectus and a circular. In case of a private placement, the number of persons who would buy the debt securities cannot exceed 100 during and after the registration stage with the CMB.

Debt securities can be sold to or directed at qualified investors by a private placement or by soliciting them for the sale. In such case, there is no limit in the number of persons. In other words, the limit which is supposed not to exceed 100 is not required herein.

Issuance limits

Pursuant to the Council of Ministers decision announced in the Official Gazette on 03.09.2009 and numbered 27338[ii], the total amount of the debt securities to be issued by publicly-held companies must not exceed ten (10) times the total amount of equity shown on its annual financial statement for the last accounting period after the statement’s preparation in accordance with the capital markets legislation, an audit by an independent auditor, and approval by the general assembly.

The total amount of the debt securities to be issued by non-public companies must not exceed six (6) times the total amount of equity shown on its annual financial statement for the last accounting period after the statement’s preparation in accordance with the capital markets legislation, an audit by an independent auditor, and approval by the general assembly.

The total amount of the debt securities to be offered to public cannot exceed half of the general issuance limit calculated above.

Requirement to use intermediary institution

The sale of the debt securities offered to the public and the payment of principal, interest and similar obligations must be conducted through intermediary institutions (banks and brokerage houses).

Prospectus, registration and announcement

A prospectus must include any information that may impact the decisions of the investors, including but not limited to the financial status of the issuer, risks, and information required by law and by the CMB. Following the registration of the debt securities to be sold by way of a public offering with CMB, the approved prospectus must be registered with the trade registry where the issuer is registered and published in the Turkish Trade Registry Gazette (“TTRG”) within fifteen (15) days from the date of the registration document. Such registration in the trade registry and announcement of the prospectus must also be announced on the issuer’s web site and Public Disclosure Platform.

Sale period and commencement date of maturity

The sale period of the debt securities to be offered to the public cannot be less than two (2) business days and not more than six (6) business days. However, the bank bonds to be offered to the public can be sold during the maturity period of the bonds. The CMB may, at its discretion, extend the sale period for such debt securities with reasonable grounds.

The day on which the debt securities are deposited to the investors account will be deemed the commencement date of the maturity.

Notification to the CMB of Results of the Sale

The intermediary institution or the issuer will, within six (6) business days from the last date of the sale period of the debt securities, submit to the CMB (i) the TTRG where the prospectus was announced; copies of any gazette where the circular was announced (if any); written publishing instruments where the commercials were announced; the details of the buyers of such debt securities; the amount of their purchase; documents showing their capital, administrative and commercial relationship with the issuer (if any); and the document to be obtained from the Central Registry Agency with respect to the results of the sales.

Bonds (maturity, payout, early payout etc)

The maturity can be determined freely provided that it is not less than one (1) year. The principal of the bonds can be paid all at once on the maturity date or in installments during the duration period. Bonds with whole or partial early payouts can be issued based on the needs and demands of the issuers and buyers. The payout plan for the bonds to be offered to the public must be shown in the circular and on the web site of the issuer. The principals of aforementioned matter will be identified in the prospectus.

[i] Qualified investors are local and foreign investment trusts, pension funds, investment funds, brokerage houses, banks, insurance companies, portfolio management companies, mortgage finance institutions, pension and aid unions, trusts, funds that were established in accordance with temporary article 20 of the Social Insurance Law numbered 506, organizations, investors that are determined as similar to the aforementioned institutions by the CMB and real/legal persons holding Turkish lira or/and foreign exchange or capital markets instruments in the amount of at least TRY 1 million as of the date of issuance.

[ii] Decision dated 03.08.2009 and numbered 2009/15344.

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