New Rules in IPO

New Rules in IPO

The Capital Markets Board [the "CMB"] introduced critical amendments to the sale methods and distribution principles to be applied to initial public offering of shares of non-public companies with the publication of its Decision No. i-SPK.128.21 [the “Decision"] on March 30, 2023. Accordingly, the relevant provisions of the Communiqué on Sales of Capital Market Instruments No. II.5.2 of the CMB will be superseded by the rules outlined in the Decision until a contradicting decision is made.

Implications of the Decision

According to the Decision, key provisions to be applied in the initial public offering of non-public companies are as follows: 

  1. In case the market value of the shares offered to the public is above 750 million Turkish liras and the sale method by way of book-building is applied, the rules below will be followed:
    • Investors in an individual investor group will only be allowed to receive equal distributions, and not proportionate distributions.
    • Investors individually will not be allowed to bid in excess of a quarter of the total number of shares allotted to the relevant investor group.
    • For domestic institutional investor, if there is sufficient demand, it will be necessary to calculate the number of shares to be divided among each investor within a cap of one percent of the total number of shares offered to the public. Such limitation will be implemented to the funds, of which a portfolio management company is the founder and/or manager, on the basis of the portfolio management company and at a rate of three percent.
    • If at the end of the book-building period, a sufficient number of bids are received for a specific investor group, the shares allocated to the relevant group shall not be reallocated to another investor group. If there is an investor group which has not made sufficient demand, the remaining shares of that group will first be reallocated to meet the bids of domestic individual investors, if any, and if there is no such demand or if any left, only then the remaining shares can be reallocated to other groups.
  2. In case the market value of the shares offered to the public is 750 million Turkish liras or below, only the sale on stock exchange method can be applied.
  3. Shares purchased by institutional investors for their own portfolios may no longer be transferred to individual investor accounts.
  4. In the event of a distribution, investors who purchase shares will not be able to engage in certain transactions with the shares that have been transferred to their accounts after the distribution list has been finalized. For 90 days from the day the shares are transferred to their accounts, the investors will not be able to sell the shares outside of the stock market, transfer them to other investor accounts, or subject them to a special order and/or wholesale transaction. For the shares held by the existing shareholders (except for the shares sold within the scope of the respective offering), such restriction will continue for 180 days as of the approval date of the offering circular and will also apply to any sale in the stock exchange.


The CMB clearly states in its Decision that the need to introduce these new rules stems from the fact that some transactions have become unbalanced among investors considering the high demand for public offerings. It can be said that with the new regulations, the aim is to prevent the concentration of shares in certain groups, and capital inclusion is taken into consideration.