The amounts specified in the capital markets legislation have been re-evaluated for the year of 2024 and thus increased by the decision of the Capital Markets Board of Turkey (the "CMB") dated 28 December 2023 and numbered 81/1811 (this decision is published in the CMB Bulletin dated 29 December 2023 and numbered 2023/82). With the increase of the amounts through the referred revaluation, the initial public offering requirements that should be met by companies going public for the first time in 2024 have become harder. In parallel with the changes of the CMB, the listing requirements envisaged under Borsa İstanbul A.Ş. Listing Directive have been changed in order for companies to list their shares on the Star Market, Main Market or Sub-Market of Borsa İstanbul A.Ş.

In this context,

  • The thresholds for underwriting commitment of the brokerage firm intermediating the public offering, which are determined according to the market value of the company as calculated based on the public offering price of the shares to be offered to public (excluding over-allotment), have been increased. Accordingly, in case the market value of the shares to be offered to public as calculated based on the public offering price is (excluding over-allotment), 
    • less than TL 400 million, then the underwriting commitment will be applicable for all the unsold shares (in 2023, this amount was TL 150 million). 
    • between TL 400 million and TL 800 million, the underwriting commitment will be applicable for all the unsold shares up to TL 400 million and half of the unsold shares exceeding TL 400 million (in 2023, these amounts were respectively TL 150 million and TL 250 million). 
    • more than TL 800 million, there will not be an underwriting commitment (in 2023, this amount was TL 250 million).
  • The companies whose shares will be offered to public for the first time are required to fully restrict the pre-emption rights of the current shareholders and make 25% of the shares to be offered to public available as sale of additional shares in case the market value of the shares to be offered to public as calculated based on the public offering price is (excluding over-allotment) is less than TL 500 million (in 2023, this amount was TL 231,903,989). Requirements of Initial Public Offerings for the Year of 2024 Have Changed January 5, 2024
  • The total assets and the net sale revenue of the companies going public should meet certain thresholds as stated in their financial statements pertaining to last two years prior to the application date which are prepared and audited in accordance with the CMB regulations. 
    • According to the financial statements dated 2023, net sale revenue should be TL 750 million and total assets should be TL 1 billion 500 million. The total asset and net sale revenue amounts in these financial statements should be met as of 2023 year-end financial statements prepared and audited in accordance with CMB regulations for applications to be made in 2024. 
    • According to the financial statements dated 2022, the net sale revenue should be TL 270 million and the total assets should be TL 450 million.
  • In practice, companies amend their articles of association in order to comply with the capital markets legislation before going public and adopt registered capital system. In this context, companies that will adopt the registered capital system will need to have a paid-in capital of at least TL 100 million (in 2023, this amount was TL 30 million).
  • In addition to the above, the thresholds specified in the relevant capital markets regulation regarding exemption from obligation to prepare a prospectus and an announcement text for investors have also been increased and thus this should be taken into consideration based on each public offering structure.
  • Lastly, the required amounts for listing in the Borsa İstanbul's relevant market have changed. Accordingly, the market value of shares offered to public should be a minimum of TL 1 billion for listing on the Star Market, TL 250 million for listing on the Main Market and TL 100 million for listing on the Sub-Market. The minimum ratio of the nominal value of shares offered to public to share capital should be 10% for the Star Market, 20% for the Main Market and 25% for the Sub-Market. Additionally, it is possible to apply to Borsa İstanbul for listing on Star Market even though the conditions of "profit in independently audited annual financial statements" and/or "equity/capital ratio in the latest independently audited financial statements" are not met provided of course that other relevant conditions are satisfied. However, in this case, the market value of the shares offered to public should be a minimum of TL 1.5 billion and if this is not satisfied even after the public offering, then the referred application for listing on Star Market will not be accepted.

The amounts increased by revaluation will not be applied to the companies that have already applied to the CMB until December 31, 2023, and thus the amounts applicable on the date of application will be taken into account for those companies. In our opinion, 2024 will create a more selective environment for public offerings and bring out the potential on public offerings of companies having a certain financial strength.

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.