Recent amendments on the Repo Communiqué has been published
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Bearer shares will start to be recorded to Central Registry Agency in Turkey.
January 6, 2021

Communiqué on squeeze-out and sell-out rights in public companies has been published

Recently, CMB published the Communiqué on Squeeze-Out and Sell-Out Rights numbered II-27.3 (“New Communiqué”) in the Official Gazette dated 31 December 2021 numbered 31351.

On 25 February 2020, significant amendments were made in Capital Markets Law of Turkey No. 6362 (the “CML”) through “Law No. 7222 amending the Banking Law and Other Codes”, published in the Official Gazette dated 25 February 2020 and numbered 31050. One of these amendments was in relation to the squeeze-out right of the controlling shareholder(s) who own(s) shares exceeding a certain threshold and sell-out right of the minority shareholder(s) to such controlling shareholder(s), in publicly offered companies or companies deemed to be public, pertaining to Article 27 of the CML. Following this, on 28 October 2020, Capital Markets Board of Turkey (the “CMB”) has announced the draft Communiqué on Squeeze-Out and Sell-Out Rights numbered II-27.3 (the “Draft Communiqué”) and presented the Draft Communiqué to public consultation[i].
Recently, CMB published the Communiqué on Squeeze-Out and Sell-Out Rights numbered II-27.3 (“New Communiqué”) in the Official Gazette dated 31 December 2021 numbered 31351. The New Communiqué enters into force as of the date it is published and accordingly, the Communiqué on Squeeze-Out and Sell-Out Rights numbered II-27.2 is repealed.
What will change with the New Communiqué?
- For the squeeze-out right of the controlling shareholder(s) and sell-out right of minority shareholder(s) to be triggered, CMB requires the controlling shareholder, by way of acting in concert or as a result of tender offer, to hold 98 % of the voting rights in a publicly held corporation or the controlling shareholder buys additional share while holding 98 % of the voting rights in a publicly held corporation. This ratio is maintained as it is in the prior Communiqué.
- The sell-out right and squeeze-out right will not be exercised in a publicly held corporation in case the existing shareholder acquires new shares due to a capital increase through bonus issue and capital increase through rights issues (via pre-emptive right) or through other ways such as inheritance, freeze of voting rights and buy-back shares.
- If the shareholder acquires the management control of the publicly held corporation simultaneously with the birth of the squeeze-out and sell-out rights in the publicly held corporation, the obligation to commence tender offer will not apply.
- The procedure with respect to the exercise of squeeze-out and sell-out rights in publicly held corporation has been structured in a more detailed manner.
- For the exercise of sell-out rights, the preparation of the valuation report in order to determine the share value of the public company, shall be at latest 1 month as of the date the disclosure is made by the controlling shareholder and the period for the exercise of sell-out right is determined to be within 2 months (lapse of time period) as of the date valuation report summary is disclosed to public. The share value of the shareholders who exercised their sell-out right will be paid by the public company to those shareholders on the following business day as of the day the controlling shareholder pays the share value to the public company account. This period is shortened with the New Communiqué.
- With the New Communiqué, Central Registry Agency of Turkey (“CRA” or “MKK”) is responsible to confirm the information of the shareholders who holds dematerialized shares.
- For the exercise of squeeze-out rights, the board of directors’ decision for the cancellation of minority shareholders’ shares, the issue of new shares at the same amount of the cancelled shares and the application to the CMB for approval on the issuance of the new share certificates, shall be made respectively within 5 and 10 business days as of the date the publicly held corporation receives the squeeze-out application of the controlling shareholders. With respect to the share certificates of the publicly held corporations not listed in BIST, such certificates shall be destructed at least 2 times in a year. Also, the squeeze-out amount which shall be blocked at Istanbul Takas ve Saklama Bankası A.Ş. (Takasbank) for 3 years, can no longer be satisfied with a letter of guarantee instead of cash.
- In the New Communiqué, unlike the existing Communiqué, the exercise price of the squeeze-out and sell-out rights is calculated based on the same formula.
- With the New Communiqué, the share price formula for shareholders to exercise squeeze-out and sell-out rights for the publicly held corporations listed on Borsa Istanbul (Istanbul Stock Exchange) (the “BIST”) will change based on whether the shares are listed in the BIST Star Market or any market other than BIST Star Market. Therefore, if the public company is being traded in BIST, the share price for the exercise of squeeze-out and sell-out rights, will be determined based on the highest of the following.
· If the publicly held corporation is listed on the BIST Star Market, the average of the daily corrected average price for the last 1 month before the date of public disclosure of the birth of squeeze-out right and sell-out right, and the value determined in the valuation report for each class of shares,  
·  If the publicly held corporation is listed in a BIST market other than BIST Star Market, the average of the daily corrected average price for the last 6 months before the date of public disclosure of the birth of squeeze-out and sell-out rights, and the value determined in the valuation report for each class of shares,
·  the mandatory tender offer price, if the management control of the public company changes simultaneously with the acquisition of the controlling shareholder status of the public company.
 - If the publicly held corporation is not listed on the BIST, the share price for the exercise of squeeze-out and sell-out rights, will be determined based on the highest of the following.
·  the value determined in the valuation report for each class of shares,
·  the mandatory tender offer price, if the management control of the public company changes simultaneously with the acquisition of the controlling shareholder status of the public company.
- Draft Communiqué also includes certain provisions for the transition period after the Draft Communiqué enters into force. Given this;
· Prior to the date the New Communiqué entered into force, if the controlling shareholder status or the purchase of new shares is disclosed to public, then, the price of squeeze out and sell out rights will be determined based on the principles of the repealed Communiqué numbered II-27.2.
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