1. Threshold concerning Squeeze-Out and Sell-Out Rights

According to the CMB legislation, if the shareholding of the controlling shareholder of a public company reaches a certain threshold or additional shares are obtained by such controlling shareholder where such threshold has already been reached, such controlling shareholder will have a right to squeeze out the other shareholders and similarly the other shareholders will be granted with a right to sell their respective shares to the controlling shareholder. Such threshold is set as 98% under the current Communiqué No. II – 27.2 on Squeeze-Out and Sell-Out Rights (the “Communiqué”). The Draft Communiqué foresees to lower such threshold to 95%.

The Draft Communiqué also stipulates that squeeze-out and sell-out rights will not arise when new shares are acquired by existing shareholders either in the form of bonus shares or through share capital increases where the existing subscription rights are protected.

2. Amendment to the Calculation Method regarding Squeeze-Out and Sell-Out Rights

The current Communiqué stipules different formulas for the calculation of the price regarding squeeze-out and sell-out rights. However, the Draft Communiqué abolishes such discrepancy by introducing a unified formula. 

Pursuant to the Draft Communiqué, the calculation method in determining the price of squeeze-out and sell-out rights will depend on whether the shares of the public company in question are traded on a stock exchange and if so, on which market.

Accordingly:

• As regards public companies whose shares are traded on the stock exchange

The highest of the following amounts will be used as the price for the relevant squeeze-out and sell-out rights:

• as regards any companies listed on the Yıldız Market, the average of (i) the daily [1]average price for the last month prior to any public disclosure regarding the triggering of the squeeze-out and sell-out rights, and (i) the price set out in the valuation report regarding each share group;


• as regards any companies listed on other markets, the average of (i) the daily average price for the last six months prior to any public disclosure regarding the triggering of the squeeze-out and sell-out rights, and (ii) the price determined in the valuation report regarding each share group; and.


• where the acquisition of a controlling shareholder status simultaneously leads to a change in the management control, the mandatory tender offer price to be determined in accordance with the mandatory tender offer regulations.

• As regards public companies whose shares are not traded on any stock exchange

The price determined in the valuation report prepared to evaluate the price of each share group will be used in the calculation of the price for the squeeze-out and sell-out rights.

3. The Scope and the Entry into Force

Where a person becomes a controlling shareholder prior to the entry into force of the Draft Communiqué, the provisions of the current Communiqué will continue to apply.

The transition provision of the Draft Communiqué clarifies that squeeze-out and sell-out rights will not be triggered in respect of those persons who acquired a controlling shareholder status due to the entry into force of the Draft Communiqué. In other words, those persons who acquired a controlling shareholder status due to the lowering of the threshold ratio from 98% to 95% will not be put under an obligation to exercise such rights. However, such rights will become available if a controlling shareholder acquires further shares following the entry into force of the Draft Communiqué.

Conclusion

The Draft Communiqué aims to facilitate the consolidation of public companies by lowering the threshold ratio concerning squeeze-out and sell-out rights. It also intends to ensure that the process relating to the exercise of such rights is more streamlined and foreseeable.