On January 2, 2018, the CMB has amended the Tender Offer Communiqué (II-26.1), its main piece of regulation governing the MTOs, and introduced a new exemption from the MTO requirement.

Summary

If a party acquires the management control in a public company in Turkey, such acquiring party is obliged to make a mandatory tender offer (“MTO”) to the other shareholders, unless there is an exception, or the Capital Markets Board of Turkey (the “CMB”) grants an exemption from the MTO requirement. Management control can be acquired by holding more than 50.0% of voting rights or acquiring privileged shares that grant the power to nominate the majority of the board of directors.

On January 2, 2018, the CMB has amended the Tender Offer Communiqué (II-26.1), its main piece of regulation governing the MTOs, and introduced a new exemption from the MTO requirement. Accordingly, if existing shareholders acquire the management control during a rights issue of a listed company, the acquirer of management control can apply to the CMB for an exemption from the mandatory tender offer requirement.

Analysis

As the Turkish tender offer regulations are particularly restrictive with a limited number of exception and exemption types, new exception or exemption types introduced by the CMB are usually welcome. However, due to the structural nature of this new exemption, it would be applicable only for a handful of listed companies where a majority shareholder’s (which would be the de facto controlling shareholder) stake lingers shyly below the 50.0% threshold of triggering a mandatory tender offer. Although an immediate application of this exemption may very well be announced in the first quarter of 2019, we do not believe this clause will present itself as a widely used exemption.