Recent development   

On July 3, 2015, the Turkish Capital Markets Board (the "CMB") announced that it had imposed an administrative fine of TRY 123,278 (approx. USD 46,000) on a public company because the company used proceeds from its equity offering contrary to the disclosures in its offering circular (izahname). The CMB pointed out that investors who suffered damage due to the misuse of funds have recourse against the company's directors. Further, the CMB directed the company to determine at the company's next general assembly of shareholders whether the company itself should seek reimbursement from its directors for the fine imposed.

Under Communiqué No. II-5.1, On Offering Circulars and Issuance Certificates, an issuer is primarily liable for any misrepresentation, misleading, or deficient information disclosed in the offering circular. If a company fails to act in compliance with its disclosures, the CMB can deem this as a defective disclosure and impose an administrative fine between TRY 24,672 and TRY 308,408 (approx. USD 9,300 to USD 115,000).

The CMB's scrutiny extends to debt offerings and other securities transactions where one would normally expect to see offering and disclosure documents. The fine shows that the CMB considers disclosures to investors to be a serious issue and issuers must be diligent to ensure their disclosures and undertakings in the offering documents are consistent with the actual use of the proceeds.


The CMB has demonstrated that it robustly polices the securities market. Issuers' directors must be diligent as they may face investor claims and the issuer itself may seek recourse against them. The CMB's action may also trigger more shareholder action in Turkey, as the CMB is now encouraging investors to pursue private litigation to supplement the CMB's regulatory action.