CMB Eases IPOs for Priority Sectors

Recent developments

The Capital Markets Board (the “CMB“) had recently increased the financial criteria, specifically the monetary thresholds, that the issuers must meet in order to go public with its decision No. 2023/82 and dated December 29, 2023. You can find our related legal alert here.

The CMB’s new decision No. 18/505 s.k. (the “Decision“) published in the CMB Bulletin No. 2024/17 and dated March 28, 2024 significantly reduces these monetary thresholds for issuers operating in energy, chemical, agriculture, and defense industry, which are listed among the priority sectors in the 12th Development Plan, as well as companies producing solutions based on advanced technology.

What Does the Decision Say?

Pursuant to the Decision, the monetary thresholds for initial public offerings of the issuers below have been amended as follows:

The Issuers:

1. Operating in the renewable energy sector and generating at least 75% of its revenue from the sale of renewable energy according to the independently audited financial statements for the last two years prior to the IPO application date,

2. Operating in the petrochemical sector with a license from the Energy Market Regulatory Authority (Enerji Piyasası Düzenleme Kurumu) and generating at least 75% of its revenue from the production and sale of petrochemical products according to the independently audited financial statements for the last two years prior to the IPO application date,

3. Operating in the defense industry sector or providing information and communication technology or software services to the defense industry sector and generating at least 75% of its revenue from providing services/products to the defense industry according to the independently audited financial statements for the last two years prior to the IPO application date,

4. Operating in the agriculture sector and generating at least 75% of its revenue from the sale of unprocessed raw products obtained as a result of agricultural production according to the independently audited financial statements for the last two years prior to the IPO application date,

5. Certified by a public authority as (i) having an innovative and scalable business model that generates high added value based on advanced technology by supporting green and digital transformation and (ii) meeting any two of the following conditions and generating at least 75% of its revenue from these activities according to the independently audited financial statements for the last two years prior to the IPO application date:

- Having been accepted to one of the zones designated as a Technology Development Zone by the Ministry of Industry and Technology (“Ministry“) and having continuing business activities therein as of the application date.

- Having an active R&D Centre approved by the Ministry in accordance with Law No. 5746 on Supporting Research, Development and Design Activities as of the IPO application date.

- Having a valid patent issued by the Turkish Patent and Trademark Office within the last five years.

- Benefitting from incentives provided within the scope of R&D, P&D and Innovation Support Program of the Small and Medium Scale Enterprises Development and Support Administration within the last five years.

- Having a publicly funded R&D project started or completed within the last five years.

Conclusion

With the decision, the financial thresholds to be met to go public have become sector-spesific. In this context, public offerings will be easier for companies operating in energy, chemical, agriculture, and defense industry sectors and for companies that produce solutions based on advanced technology.