Pursuant to the Capital Markets Board (“CMB”)'s decision published in the CMB Bulletin dated December 29, 2023 and numbered 2023/82, the amounts subject to revaluation in the relevant capital markets legislation were determined for the year 2024, and with this revaluation on the financial thresholds, the conditions for public offering became more difficult for the companies whose shares will be offered through initial public offering (“IPO”) in 2024.
Pursuant to the decision published in the CMB Bulletin dated March 28, 2024 and numbered 2024/17 (“CMB Decision”), the financial thresholds applicable to the IPO submissions of companies operating in sectors such as renewable energy, petrochemicals, defense industry, agriculture, etc. have been reduced considering the difficulty of fulfilling a certain monetary levels in the financial statements due to the sector-specific differences of the companies applying to the CMB for the IPO and the priorities and priority sectors set out
in the 12th Development Plan (2024-2028) prepared by the Presidency Strategy and Budget Directorate and approved by the General Assembly of the Grand National Assembly of Türkiye on October 31, 2023.
Recent Amendments
The net sales revenue and total assets amounts for the companies operating in the sectors listed below are determined respectively as TL 180,000,000 (one hundred and eighty million Turkish Lira) and TL 300,000,000 (three hundred million Turkish Lira) for the year of 2022, and TL 270,000,000 (two hundred and seventy million Turkish Lira) and TL 450,000,000 (four hundred and fifty million Turkish Lira) for the year of 2023. These requirements should be fulfilled as from the audited financial statements for the last 2 (two) years prior to the CMB submission date which are prepared in accordance with the CMB regulations (“Financial Statements”)
As per the CMB Decision, the following companies are eligible to benefit from the aforementioned reduction:
Companies operating in the renewable energy sector and generating at least 75% (seventy- five percent) of its revenue from the sale of renewable energy as from the Financial Statements,
Companies operating in the petrochemical sector with a license from the Energy Market Regulatory Authority and generating at least 75% (seventy-five percent) of its revenue from the production of petrochemical products as from the Financial Statements,
Companies operating in the defense industry sector or providing information and communication technology or software services to the defense industry sector and generating at least 75% (seventy-five percent) of its revenue from providing services/products to the defense industry as from the Financial Statements, and
Companies operating in the agriculture sector and generating at least 75% (seventy-five percent) of its revenue from the sale of unprocessed raw products obtained as a result of agricultural production as from the Financial Statements.
In addition to above companies, companies that are certified by a public authority to have an innovative and scalable business model that generates high added value based on advanced technology by supporting green and digital transformation and that have any two of the following conditions and that generate at least 75% (seventy-five percent) of their revenues from these activities as from the Financial Statements will also be able to benefit from the reduced net sales revenue and total assets amounts determined by the CMB Decision:
Companies having been granted admission to one of the zones designated as a Technology Development Zone by the Ministry of Industry and Technology (“Ministry”) and operating the business therein as of the CMB submission date,
Companies having an active R&D Centre approved by the Ministry in compliance with Law No. 5746 on Supporting Research, Development and Design Activities as of the CMB submission date,
Companies having a valid patent certificate issued by the Turkish Patent and Trademark Office within the last 5 (five) years,
Companies receiving support within the scope of R&D, P&D and Innovation Support Program of the Small and Medium Scale Enterprises Development and Support Administration within the last 5 (five) years, and
Companies having a publicly supported R&D project that has started or been completed within the last 5 (five) years.
Conclusion
With the reduction on the financial thresholds outlined in the CMB Decision, the IPO of the companies operating in specific sectors are eased.
For further information on this matter, please contact us via info@sadikcapan.com
This article is provided for informational purposes only and is not intended and should not be construed as legal opinion and legal advice on any specific facts or circumstances.
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