New Year, New IPO Conditions

Recent Developments

With its decision published in the Capital Markets Board Bulletin dated December 29, 2023 and numbered 2023/82 (the “Decision”), the Capital Markets Board (“CMB”) amended the financial criteria, specifically the monetary thresholds, that companies must meet in order to go public. The re-evaluated threshold amounts tighten the conditions for initial public offerings.

What Does the Decision Say?

Pursuant to the Decision:

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

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 450,000,000, and its net sales revenue must not be lower than TRY 270,000,000, pursuant to its 2022 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 1,500,000,000, and its net sales revenue must not be lower than TRY 750,000,000, pursuant to its 2023 year-end financial statements (prepared and audited in accordance with the CMB regulations).

3. If the market value of the shares to be offered to the public is less than TRY 500,000,000 (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.

4. 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 400,000,000 (excluding over-allotment);
• All of the unsold shares up to TRY 400,000,000, and half of the remaining unsold shares if the market value of the offered shares ranges between TRY 400,000,000 and TRY 800,000,000 (excluding over-allotment).

The new requirements will not apply to submissions filed until December 31, 2023, for which the thresholds in force at the date of submission will continue to be applicable.

Conclusion

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