Capital Markets Board of Turkey (the "CMB") has revised the legislation on related party transactions and internal organization of listed companies with a view to relax and abolish certain requirements as well as to boast investor protection.

Below is a brief highlight of the notable aspects of the recent amendment:

  • The percentage of a specific one- off related party transaction requiring an independent appraisal report has been decreased to 5% (it was 10%).
  • Listed companies are no longer required to obtain an independent appraisal report for related party transactions with a continuous and prevalent nature and exceeding 10% of their total assets or gross sales in a particular accounting period. As per the new provisions, board of directors of the listed company shall prepare a report comparing the terms of such type of related party transactions with market practices, disclose this report to shareholders 15 days in advance of the annual general assembly meeting and inform shareholders at the meeting with respect to the particulars of the transactions. In this respect, independent appraisal for continuous and prevalent related party transactions has become an optional issue for listed companies and has been left to the discretion of the company management. However, it should be noted that the CMB reserve the right to step in and is entitled to require the preparation of an independent appraisal report when it deems necessary.
  • Listed companies, excluding the ones listed on Emerging Companies Market, have been required to hire a full time high level executive in order to secure compliance with capital markets legislation and coordinate corporate governance practices. Under the former provisions such executives, depending on the market value of the relevant listed company, shall solely hold an advanced level capital market license or corporate governance license in addition to advanced level capital markets license. Although the above principles are still applicable, the recent amendment has relaxed these requirements for certain type of companies.
  • Please refer to the below table summarizing the fundamentals of the currently applicable hiring and licensing requirements for listed companies.

Hiring And Licensing Requirements For Listed Companies

* Investment companies with market value of above TL 200.000.000 and is not fully or jointly controlled by an entity hiring a high level executive holding advanced level license and corporate governance license, such investment companies shall hire a full time high level executive for the purposes of the CMB Communiqué Serial: IV, No: 41.

** It differs according to the market value of the investment company. If certain conditions are met investment company is not required to hire a full time high level executive.

***If a group of listed companies each having a market value which is equal to or exceeding TL 200.000.000, is either fully or jointly controlled by the same entity, those companies can hire a full time high level executive who does not hold a corporate governance license provided that the controlling entity has already hired a full time high level executive person holding the said license in addition to advanced level license.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.