As you may remember, Capital Markets Board of Turkey ("CMB") recently enabled the sale of the shares of non-public corporations, to be issued through capital increase, to qualified investors without public offering and such shares to be traded in the Venture Capital Market ("VCM") of Borsa Istanbul A.Ş. (Istanbul Stock Exchange) ("BIST") as per the Communiqué on Principles Regarding Corporations Whose Shares To Be Traded on Venture Capital Market numbered II-16.3 ("Communiqué"). Following the issuance of the Communiqué, as expected, VCM, as a sub-market under the BIST Equity Market is established subject to the decision of BIST Board of Directors which is announced to public on 29 September 2023.
With the establishment of the VCM, companies wishing to grow with equity will be able to obtain funding via capital markets by way of issuing shares through capital increase. These companies will submit the prospectus to the CMB for approval, which will be prepared in accordance with the requirements of BIST Listing Directive and the Communiqué as well as the respective capital markets legislation, and subsequently, the newly issued shares of these companies will be sold to qualified and institutional investors through eligible investment institutions. It should be noted that these shares will be traded under VCM only among institutional and qualified investors. Once the company's shares start to be traded under the VCM, such company will be deemed to be publicly held and will be under the obligation to comply with the requirements of capital market legislation and BIST regulations.
In this way, CMB aims to finance the companies by enabling their shares to be traded through VCM and as a result, these companies are expected grow and institutionalise with the support of institutional investors and be prepared to be publicly offered. Once these companies are prepared to be publicly offered, they will be able to apply to the CMB to offer their shares to the public within the framework of the Communiqué and the capital market legislation.
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