CMB Amends Disclosure Rules For Listed Companies

Introduction

The Turkish Capital Markets Board (the “CMB”) effected changes to Communiqué II-15.1 on Material Events Disclosure (the “Material Disclosures Communiqué”) on 17 November 2018.  

The Material Disclosures Communiqué sets out the principles and procedures relating to the disclosure of price-sensitive information to capital markets.

The recent amendments aim to resolve and facilitate some operational and practical issues relating to the disclosures of changes of ownership and the disclosure of continuing developments.

Disclosure of changes of ownership

According to paragraph (1) of Article 12 of the Material Disclosures Communiqué, if a person or persons acting in concert acquire or divest below certain specified thresholds[1] of the overall issued share capital or voting rights of a listed company, they will be subject to regulatory disclosure obligations.

This regulatory disclosure obligation was previously shared between investors and the Central Registration Agency, the central securities depository of Turkey for dematerialized securities. 

According to the amended paragraph (4) of Article 12 the Material Disclosures Communiqué, going forward, change of ownership disclosures relating to a direct acquisition or divestment exceeding applicable thresholds will be made by the Central Registration Agency.

However, indirect changes, changes in voting rights, and acquisitions by persons acting in concert will still need to be disclosed by the relevant investors and not the Central Registration Agency.

Another noteworthy change is that the CMB has revised its standard notification form for changes of ownership as set out in the annex to the Material Disclosures Communiqué. The CMB noted that this change will require trades to be reported as at the end of the day, allowing intra-day trades to be netted off.

Continuing disclosures

Article 23 of the Material Disclosures Communiqué previously required periodic disclosures, within sixty-day intervals, on continuing events regardless of whether any developments occurred after the latest disclosure.

According to the amended Article 23 of the Material Disclosures Communiqué, issuers will be required to “continuously update” and disclose any developments in previously disclosed matters. However, they will no longer be required to make periodic disclosures if no tangible movement has occurred following the latest disclosure.

Conclusion

The recent changes to the Material Disclosures Communiqué intend to address some operational and practical issues encountered in practice by listed entities and facilitate compliance with regulatory disclosure requirements.

However, investors should be mindful that paragraph (1) of Article 12 of the Material Disclosures Communiqué still places an unqualified regulatory disclosure obligation on them to notify changes of ownership, and should consider taking steps to ensure compliance with this requirement in parallel to the Central Registration Agency, until the CMB clarifies the apparent conflict within the Material Disclosures Communiqué.

Readers are reminded that the CMB has also issued related updates to its Disclosure Guidance, and should refer to the updated guidance document for further detail on the changes discussed in this article.

Authors:

Murat Soylu

Can Özilhan

Furkan Karaçam