CMB and Borsa İstanbul Increases IPO and Listing Thresholds

Recent Developments

What Do the Changes Mean?

Pursuant to the Decision:

1. 1. The paid-in capital of the companies that will adopt the registered capital system (kayıtlı sermaye sistemi) cannot be lower than TRY 150,000,000. This minimum threshold was previously TRY 100,000,000.

2. 2. The companies will need to meet the following criteria in order to go public:

• ▪️ The total assets of the company must not be lower than TRY 1,500,000,000 (this threshold was TRY 450,000,000 for 2022 year-end financial statements), and its net sales revenue must not be lower than TRY 750,000,000 (this threshold was TRY 270,000,000 for 2022 year-end financial statements), pursuant to its 2023 year-end financial statements (prepared and audited in accordance with the CMB regulations);

• ▪️ The total assets of the company must not be lower than TRY 2,400,000,000 (this threshold was TRY 1,500,000,000 for 2023 year-end financial statements), and its net sales revenue must not be lower than TRY 1,200,000,000 (this threshold was TRY 750,000,000 for 2023 year-end financial statements), pursuant to its 2024 year-end financial statements (prepared and audited in accordance with the CMB regulations).

3. 3. Pursuant to the decision numbered i-SPK 128.22 (dated March 28, 2024 and numbered 18/505 p.k), published in the Capital Markets Board Bulletin dated March 28, 2024 and numbered 2024/17, these thresholds will be applied as follows for certain companies operating in the energy, chemical, agriculture and defense industry, and companies producing solutions based on advanced technology:

• ▪️ The total assets of the company must not be lower than TRY 450,000,000 (this threshold was TRY 300,000,000 for 2022 year-end financial statements), and its net sales revenue must not be lower than TRY 270,000,000 (this threshold was TRY 180,000,000 for 2022 year-end financial statements), pursuant to its 2023 year-end financial statements.

• ▪️ The total assets of the company must not be lower than TRY 1,200,000,000 (this threshold was TRY 450,000,000 for 2023 year-end financial statements), and its net sales revenue must not be lower than TRY 600,000,000 (this threshold was TRY 270,000,000 for 2023 year-end financial statements), pursuant to its 2024 year-end financial statements

4. 4. If the market value of the shares to be offered to the public is less than TRY 750,000,000 (excluding over-allotment), the companies will need to make available for sale additional shares corresponding to 25% of the nominal value of the offered shares to be sold to the public, by fully restricting the pre-emption rights of the existing shareholders. In these offerings, the companies will also need to have adopted the registered capital system.

5. 5. The intermediary institutions will need to underwrite the following shares:

• ▪️ All of the unsold shares, if the market value of the offered shares is less than TRY 600,000,000 (excluding over-allotment);

• ▪️ All of the unsold shares up to TRY 600,000,000, and half of the remaining unsold shares if the market value of the offered shares ranges between TRY 600,000,000 and TRY 1,200,000,000 (excluding over-allotment).

For applications to be made in 2025, these figures will be based on the amounts to be calculated in accordance with the purchasing power as of December 31, 2023 for the financial statements of 2023, and December 31, 2024 for the financial statements of 2024. Companies preparing financial statements pursuant to a special accounting period will apply this rule mutatis mutandis.

For applications made until December 31, 2024, the values in effect as of the date of application will continue to apply.

Pursuant to the changes in the Listing Directive:

• ▪️ The minimum market value of the shares offered by issuers to be listed on BIST Stars has increased from TRY 1,000,000,000 to TRY 2,000,000,000,

• ▪️ The market value of the shares offered by issuers to be listed on BIST Main has increased from TRY 250,000,000 – TRY 1,000,000,000 to TRY 500,000,000 – TRY 2,000,000,000, and

• ▪️ The maximum market value of the shares offered by issuers to be listed on BIST SubMarket has increased from TRY 250,000,000 to TRY 500,000,000.

As a result, these are the new listing conditions:

In listing applications for BIST Stars, if the market value of the shares offered is above TRY 6,000,000,000 and the ratio of the nominal value of these shares to the share capital is greater than 6%, the minimum 10% condition will not be required.

Lastly, the exceptional condition of minimum market value of the shares offered, which is required for companies that cannot fulfill the annual profit requirement and/or the equity/capital ratio required to be listed on BIST Stars, has been increased to TRY 4,000,000,000 from TRY 1,500,000,000.

Conclusion

With the re-evaluation of monetary thresholds by the CMB and Borsa İstanbul, the conditions for initial public offerings and listing have become tighter.