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A New Era in the Istanbul Stock Exchange: Venture Capital Market

A New Era in the Istanbul Stock Exchange: Venture Capital Market

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With the Communiqué on Principles Regarding Companies Whose Shares Will Be Traded on the Venture Capital Market [II-16.3] [“Communiqué”] published in the Official Gazette on 18.5.2023, the procedures and principles regarding the sale of non-public joint stock companies to qualified investors for trading in the stock exchange came into effect.

The draft for the Communiqué were previously published for public feedback in September 2022. While the regulations in the draft were mostly implemented as is by the Communiqué, the threshold values in the draft were decreased.

You can find our article on the draft of the Communiqué here. In this article, we covered the key matters of the procedures and principles brought by the Communiqué.

What Does the Communiqué Offer?

Due to the Communiqué, joint stock companies that do not desire to offer their shares to the public but wish to sell the shares to qualified investors by being traded on the stock exchange can now operate in Istanbul Stock Exchange as publicly traded companies. In this framework, non-public joint stock companies will be traded on the Venture Capital Market [“VCM”], which is established as a separate market, and will be able to offer their shares to qualified investors through capital increase.

Within the scope of the Communiqué, some requirements are stipulated to be complied by joint stock companies that wish to issue their shares to the VCM through capital increase. These requirements are as follows:

• Harmonizing the articles of association of the joint stock companies with the Capital Markets Board [“CMB”] regulations,
• Making a decision regarding partial or total limitation of the right to purchase new shares, excluding joint stock companies with the registered capital system, and
• The prospectus’ approval by the CMB, as determined by the CMB.

Apart from these, the financial statements of joint stock companies whose shares will be traded in the VCM for the previous year must have (i.) total assets exceeding 20 million Turkish Liras, (ii.) net sales revenue exceeding 10 million Turkish Liras and (iii.) and a registered capital of at least 10 million Turkish Liras must be fully paid in order to transition to the capital system.
Joint stock companies that meet the above-mentioned conditions will be able to be traded by qualified investors by increasing their capital. In other words, non-public joint stock companies will be able to issue their shares to qualified investors. However, these companies are not allowed to sell additional shares or to convert the shares of their present partners that are not subject to capital increase into a listed property. These companies will also not be able to repurchase their own shares.

Liabilities and Exemptions After the Sale of Shares

Joint stock companies traded in the VCM by fulfilling all the requirements are subject to certain obligations after the sale of their shares. Accordingly, the following requirements must be met in order to prevent the related shares from being later withdrawn from the VCM:

• The company cannot initiate an initial public offering within two years following the year it started to be traded on the VCM,
• Within five years at the latest, it should apply to the CMB for public offering through capital increase and ensure that this application is approved by the CMB, in order to ensure that its shares are traded in other markets,
• It cannot be a party to any transaction involving a merger or division.

In addition, companies whose shares are traded on the VCM will also be subject to the public disclosure obligation that is applicable to public companies in case of change of control or transfer of certain amount of shares outlined in the relevant regulation. It is also obligatory for these companies to publish general information on the Public Disclosure Platform and make necessary updates within two business days in case of any change in this information.

On the other hand, these joint stock companies are also granted some exemptions, and they have been exempted from the requirement to publish interim financial reports every three and nine months. Additionally, these companies will not be required to abide by the terms of the Communiqué on Corporate Governance No. II-17.1, Communiqué on Mandatory Tender Offer No. II-26.1, and Communiqué on Material Transactions and Exit Rights No. II-23.3.


With the entry into force of the Communiqué, joint stock companies in Türkiye will be able to issue their shares to the stock exchange -without offering to the public- in the new market called "Venture Capital Market" established within the Istanbul Stock Exchange. In this way, they will be able to reach qualified investors and obtain financial support.

By Zahide Altunbas Sancak, Partner, and Beliz Boyalikli, Associate, Guleryuz Partners