The Communiqué on Principles Regarding Security Investment Companies (“Communiqué”) has been published in the Official Gazette dated August 29, 2013 and numbered 28750, replacing the former Communiqué dated August 5, 2011 and numbered 28016 (“Repelled Communiqué”).
The Repelled Communiqué has categorized the Security Investment Companies (“Company or Companies”) as Group A and Group B Companies depending on how they have invested twenty five percent of their monthly aggregate portfolio values. The Companies invested their portfolios in companies which were incorporated in Turkey were determined as Group A companies and the remaining Companies were determined as Group B Companies.
Since tax-related differences amongst security investment companies no longer exist, this distinction has been removed so that the Companies that will be incorporated under the provisions of the Communiqué will no longer be categorized.
Both the Repelled Communiqué and the Communiqué include provisions regarding the share transfers of these Companies prior to their initial public offerings. However, the Repelled Communiqué was silent about the procedures for the share transfers performed after an initial public offering.
The Communiqué has filled that gap with respect to the share transfers performed after an initial public offering by pointing that prior approval of the Capital Markets Board (“CMB”) has to be obtained if there is a change of control regarding the shares which grant its holder the right of control in the management of the Company.
There is another significant provision implemented by the Communiqué governing the sale of shares of the Companies which was not covered by the Repelled Communiqué.
Pursuant to Article 14 of the Communiqué, where the aggregate stock exchange prices for the Company shares are below TRY 1,00 prior to the announcement made by the Company regarding a capital increase, the capital increase can be performed either by (i) issuance of shares below the nominal value provided that all privileges (if any) shall be revoked or (ii) an allocated capital increase over a determined price provided that the determined price shall not be less than the nominal value or the unit net asset value.
The Communiqué provides further that provides the Companies may either manage their own portfolio if they employ a sufficient number of qualified personnel or acquire such services from portfolio management companies approved by the CMB. The Repelled Communiqué made no provision in this regard.
Similarly, the Communiqué provides that the Companies may acquire the following services from investment companies:
(i) accounting and operations and employment of the personnel responsible for internal audit, and
ii) services regarding risk management systems provided that its control and supervision shall be performed by the board of directors
Additionally, Companies may acquire services regarding risk management systems from their own portfolio management companies given that they also acquire portfolio management services from these companies.
According to Article 32 of the Communiqué, the assets within the portfolio of a Company shall be kept before a portfolio retaining company effective from July 1, 2014.
Under the Communiqué limitations to the Company portfolio are to be determined in line with the provisions set forth in the Communiqué on Principles Regarding Investment Funds (“Investment Fund Communiqué”) so that the ratios of assets to be included under the Company portfolio should comply with the provisions under the Investment Fund Communiqué.
Previously, the liabilities of the board members of a Company were not addressed under the Repelled Communiqué. This has been rectified by the Communiqué so that the board members or the managing director authorized by the board of directors shall be responsible from their liabilities with respect to portfolio limitations and public disclosures.
Finally, Communiqué regulates in detail the provisions regarding the sale price applicable when the Company secedes from its status as a Security Investment Company. These regulations also include the price calculations that will be applied with respect to the separation right of the shareholders.