Introduction
An initial public offering in Turkey, commonly referred to as an IPO in Turkey, is the process through which a company offers its shares to the public for the first time and, in most cases, has those shares traded on Borsa İstanbul. For growing companies, an IPO can provide access to long-term financing, increase institutional visibility, create liquidity for shareholders and strengthen corporate reputation. However, an IPO is not merely a financial transaction. It is a highly regulated legal process governed by Turkish Capital Market Law, the regulations of the Capital Markets Board of Türkiye and the listing rules of Borsa İstanbul.
In Turkey, the main legal framework for IPOs is Capital Markets Law No. 6362 and the secondary legislation issued by the Capital Markets Board of Türkiye, known as the CMB in English and SPK in Turkish. The CMB’s capital market legislation includes the Communiqué on Prospectus and Issue Document, the Communiqué on Sales of Capital Market Instruments, the Communiqué on Shares, the Communiqué on Corporate Governance, the Communiqué on Financial Reporting and the Communiqué on Material Events Disclosure, all of which may become relevant during or after an IPO process.
A company planning an IPO in Turkey should not approach the process only from the perspective of valuation and investor demand. Legal readiness is equally important. A company must review its corporate structure, articles of association, shareholding rights, financial statements, tax position, litigation risks, regulatory permits, material contracts, corporate governance practices and disclosure capacity before applying to the CMB and Borsa İstanbul.
What Is an Initial Public Offering in Turkey?
An initial public offering is the first public sale of a company’s shares to investors. In Turkish practice, an IPO may be structured as a sale of existing shares, a capital increase through issuance of new shares, or a combination of both. Where new shares are issued through capital increase, the company receives the offering proceeds and may use them for investment, debt repayment, working capital or expansion. Where existing shareholders sell shares, the proceeds are paid to the selling shareholders.
Borsa İstanbul defines public offering generally as the sale of shares through call and announcement to a large number of previously unknown investors. It also states that companies applying to be listed on BIST Stars, BIST Main and BIST SubMarket may offer part of their existing shares, conduct a public offering through capital increase by restricting existing shareholders’ pre-emptive rights, or apply both methods together.
This distinction is important from a legal and commercial perspective. A capital increase-based IPO strengthens the company’s equity and provides new funds to the issuer. A shareholder sale-based IPO may provide liquidity to existing shareholders but does not directly inject capital into the company. In practice, investors, regulators and the exchange may examine whether the offering structure supports the company’s financial position and future plans.
Main Legal Authorities in the Turkish IPO Process
The two most important institutions in a Turkish IPO are the Capital Markets Board of Türkiye and Borsa İstanbul. The CMB is responsible for the regulatory approval of the prospectus and supervision of capital market rules. Borsa İstanbul is responsible for listing and trading admission in the relevant market segment, subject to the company satisfying applicable listing requirements.
Borsa İstanbul expressly states that, for a company’s shares to be traded in the relevant Borsa İstanbul market, the prospectus detailing the offering must be approved by the CMB and the shares must subsequently be listed or registered with the relevant Borsa İstanbul market. Listing or registration means that the shares are accepted for trading in the relevant market, provided that the company complies with the requirements of that market.
Therefore, the IPO process has two parallel dimensions. First, the issuer must satisfy capital market disclosure and approval requirements before the CMB. Second, the issuer must satisfy market admission and listing requirements before Borsa İstanbul. A company cannot treat these as isolated steps; the prospectus, legal report, financial statements, corporate documents and offering structure must be consistent across both processes.
Step 1: Internal IPO Readiness Assessment
The first legal step for a company considering an IPO in Turkey is an internal readiness assessment. This stage should begin before any formal application. The company should determine whether it is suitable for public company status, whether its financial and legal structure can withstand regulatory review, and whether its management is prepared for continuous disclosure obligations.
The readiness assessment should cover corporate law, capital market law, tax law, employment law, intellectual property law, competition law, data protection law, sector-specific regulation and litigation. It should also examine whether the company’s accounting and reporting systems are capable of producing reliable, auditable and timely financial information.
A company that is profitable and commercially successful may still be legally unprepared for an IPO. For example, defective board resolutions, undocumented shareholder arrangements, unregistered intellectual property, unresolved tax exposure, undisclosed related-party transactions, employment disputes, regulatory non-compliance or significant litigation may delay the IPO or reduce investor confidence.
Step 2: Formation of an Internal Working Group
A Turkish IPO requires coordination among management, finance, legal, accounting, investor relations and external advisors. Borsa İstanbul specifically identifies the constitution of an internal working group as one of the preliminary preparations required for a public offering application. According to Borsa İstanbul, because the public offering and trading of company shares involve various procedures that must be completed internally or through external professional assistance, an internal working group should be formed within the company to carry out the required applications.
This internal group should usually include senior management, finance officers, legal counsel, accounting personnel and investor relations representatives. The group should coordinate with the intermediary institution, independent auditors, external legal counsel and other advisors. A weak internal team may cause delays, inconsistent disclosures and incomplete responses to regulatory information requests.
From a legal perspective, the internal working group should also manage confidentiality. IPO preparation involves sensitive financial and strategic information. Premature disclosure, selective sharing of information or informal investor communication may create regulatory risks. Therefore, the company should establish a controlled communication policy at the beginning of the process.
Step 3: Selection of Intermediary Institution and Advisors
A company planning an IPO in Turkey must work with experienced professional advisors. The intermediary institution plays a central role in structuring the offering, coordinating investor demand, preparing application files, managing the sales process and communicating with market participants. Legal counsel reviews corporate documents, drafts or comments on the prospectus, performs due diligence and prepares legal opinions or reports required during the process.
Independent auditors are also essential because Borsa İstanbul listing criteria refer to financial statements audited by independent auditors, including profitability and shareholders’ equity requirements. For BIST Stars, BIST Main and BIST SubMarket, Borsa İstanbul lists criteria such as net profit in annual financial statements of the past years audited by independent auditors and shareholders’ equity to capital ratio based on recent audited financial statements.
Depending on the company’s sector, additional experts may be required. A technology company may need intellectual property and data protection review. A real estate company may need valuation reports and title reviews. A financial institution may need sectoral regulatory approvals. A manufacturing company may need environmental and operational permit analysis.
Step 4: Legal Due Diligence
Legal due diligence is one of the most important stages of an IPO in Turkey. Its purpose is to identify legal risks that may affect the company, the offering, the prospectus or investor decision-making. Due diligence is not conducted only for the company’s comfort; it is the legal foundation of accurate disclosure.
The review should include the company’s establishment documents, trade registry records, articles of association, share ledger, board and general assembly resolutions, capital increases, share transfers, privileged shares, shareholder agreements, material contracts, loan agreements, employment files, litigation, enforcement proceedings, tax disputes, intellectual property rights, regulatory permits, real estate records and related-party transactions.
Borsa İstanbul listing requirements specifically refer to the need for a legal report issued by a lawyer with no direct or indirect relationship with the company, confirming that the company’s legal situation in terms of establishment and business operations and the legal situation of its shares comply with applicable laws and regulations. Borsa İstanbul also requires that the company not be subject to significant legal disputes affecting its production and other activities.
This makes legal due diligence a central part of the IPO process. If a material legal risk exists, the company must decide whether to resolve it before the IPO, disclose it in the prospectus, restructure the transaction or postpone the offering.
Step 5: Corporate Restructuring and Articles of Association Review
Before an IPO, the company’s articles of association should be reviewed in detail. Public companies must have articles compatible with capital market legislation, public trading and investor rights. Transfer restrictions, privileged share structures, pre-emption rights, voting rights, board nomination rights, dividend provisions and general assembly procedures must be examined carefully.
Borsa İstanbul requires that shares of the company must not be restricted by encumbrances preventing shareholders from using shareholding rights, and that the articles of association must not contain provisions restricting the transfer and circulation of shares to be traded on the exchange.
This is particularly important for family-owned companies and closely held corporations. Many private companies have articles of association designed to preserve control among existing shareholders. Such restrictions may be unsuitable for a public company whose shares will trade freely in the market. Therefore, amendments to the articles of association may be necessary before the CMB and Borsa İstanbul applications.
Step 6: Financial Reporting and Independent Audit
Financial reporting is a core requirement in an IPO. Investors rely heavily on audited financial statements to evaluate the company’s performance, profitability, debt position, cash flow and future prospects. The company’s financial statements must be prepared and audited in accordance with applicable capital market rules.
Borsa İstanbul’s listing criteria for BIST Stars, BIST Main and BIST SubMarket include, among other conditions, net profit in annual financial statements of the past years audited by independent auditors and shareholders’ equity/capital ratio in the recent audited financial statements. The current Borsa İstanbul page lists minimum market values of shares offered to the public as TRY 1 billion for BIST Stars, TRY 250 million for BIST Main and TRY 100 million for BIST SubMarket, together with minimum public offering ratios of 10%, 20% and 25% respectively.
These figures are especially important for IPO planning because they affect the target market segment, valuation expectations, free float planning and offering size. However, market requirements may change, so companies should verify current thresholds before filing.
Step 7: Determining the IPO Structure
The company must determine whether the IPO will be conducted through capital increase, sale of existing shares or a combined structure. This decision affects corporate approvals, use of proceeds, investor perception and post-IPO capital structure.
In a capital increase, the company issues new shares and usually restricts existing shareholders’ pre-emptive rights for the purpose of public offering. This structure is attractive when the company seeks new funds for growth, investment, debt reduction or working capital. In a shareholder sale, existing shareholders sell part of their shares to the public, which may be preferred when shareholders seek liquidity.
A combined offering may balance both objectives. The company obtains new funds while existing shareholders partially monetize their investment. However, the prospectus must clearly explain how many shares are being issued by the company, how many are being sold by existing shareholders, who receives the proceeds and how the company will use any funds raised.
Step 8: Prospectus Preparation
The prospectus is the central legal document of an IPO in Turkey. It informs investors about the issuer, the shares, the offering terms, risk factors, financial statements, management, business operations, legal proceedings, related-party transactions, material contracts and use of proceeds.
The CMB’s official communiqué list includes the Communiqué on Prospectus and Issue Document II-5.1, which is one of the main regulations governing the preparation and approval of prospectuses and issue documents. The CMB’s legal framework also lists the Communiqué on Sales of Capital Market Instruments II-5.2 and the Communiqué on Shares VII-128.1, both of which are directly relevant to share offerings.
The prospectus should not be drafted like a marketing brochure. It must be balanced, complete and legally defensible. Risk factors should be specific to the company and sector, not generic. Litigation, tax exposure, debt obligations, regulatory risks, customer concentration, supplier dependency, foreign exchange risk, corporate governance weaknesses and operational risks should be disclosed where material.
Step 9: Application to the CMB
After preparation of the prospectus and supporting documents, the company applies to the CMB for approval. The CMB reviews the application and may request additional information, corrections or amendments. The review focuses on disclosure quality, consistency, completeness and compliance with capital market rules.
The CMB’s role is particularly important because public investors rely on the approved prospectus when making investment decisions. However, CMB approval should not be understood as a guarantee of future investment performance. It is a regulatory approval of the disclosure document, not a state guarantee that the share price will increase after listing.
Companies should respond to CMB comments carefully and transparently. Incomplete responses may delay the process. More importantly, any attempt to minimize or conceal a material risk may create liability for the issuer, directors, selling shareholders and other responsible parties.
Step 10: Borsa İstanbul Listing Application
In parallel with the CMB process, the company applies to Borsa İstanbul for listing and trading admission. Borsa İstanbul evaluates whether the company satisfies the applicable market criteria. The relevant market may be BIST Stars, BIST Main, BIST SubMarket or another appropriate platform depending on the company’s characteristics.
Borsa İstanbul explains that BIST Stars refers to the market where shares with free-float market value equal to or above TRY 1 billion are listed, BIST Main refers to the market where shares with free-float market value between TRY 1 billion and TRY 250 million are listed, and BIST SubMarket refers to shares below TRY 250 million. It further states that market requirements consist of criteria such as activity period, net profit, minimum free-float market value and public offering ratio.
The listing application must be consistent with the prospectus and IPO structure. Any discrepancy between the CMB filing and Borsa İstanbul application may create delays or require revisions.
Step 11: Preliminary Demand Collection and Marketing
Marketing is a sensitive phase of the IPO process. Turkish rules allow certain preliminary demand collection mechanisms, but they must be conducted carefully. Borsa İstanbul states that the intermediary institution authorized by the issuer may collect preliminary requests from buyers within a predetermined price range before CMB approval of the prospectus, but these efforts are non-binding and do not create liability on the buyers’ side.
Borsa İstanbul also notes that, for preliminary requests, the prospectus should already be submitted to the CMB and pending approval; the articles of association, financial statements for the last three years, corresponding auditor reports and annual reports should be available at locations where preliminary requests are collected and provided free of charge upon request. It further states that the preliminary request collection period may not exceed ten business days and that the results must be reported to the CMB within two business days after conclusion.
Marketing materials must be consistent with the prospectus. Statements promising guaranteed returns, unrealistic growth or risk-free investment should be strictly avoided. IPO marketing must support informed investment decisions, not create artificial demand through misleading claims.
Step 12: Book-Building, Pricing and Allocation
The pricing phase is both commercial and legal. The offering price must be determined in a manner that is defensible, transparent and consistent with market conditions. Depending on the method used, investor demand may be collected through book-building or another permitted sale method.
Allocation rules must be applied fairly. If demand exceeds supply, the allocation methodology should be consistent with the prospectus and applicable sales rules. Any preferential allocation, additional sale or incentive must be disclosed and structured lawfully.
Borsa İstanbul states that, in case finalized purchase requests exceed the number of shares publicly offered and the prospectus contains required disclosures, companies may offer additional shares up to 20% of the nominal value of the primarily offered shares, provided that the relevant additional sale structure is predefined and included in the prospectus and sales announcement.
Step 13: Completion of Sale and Trading on Borsa İstanbul
After regulatory approval, pricing and allocation, the public offering is completed and the shares begin trading on the relevant Borsa İstanbul market if listing requirements are satisfied. At this stage, the company becomes subject to market discipline. Investor expectations, share price movements, disclosures, analyst coverage and public scrutiny become part of the company’s daily reality.
Borsa İstanbul explains that shares of companies are traded in the Equity Market and that various markets and platforms have been established to ensure that shares offered by companies are traded in equity markets. It also states that, by offering shares to the public, companies acquire new corporate and individual investors, use resources supplied from the public offering for investment, support employment and play a more active role in improving their financial situation.
From a legal perspective, the first trading day is not the end of the IPO process. It is the beginning of the company’s life as a public company.
Post-IPO Legal Obligations
After an IPO, the company must comply with continuing obligations under Turkish Capital Market Law. These obligations include material event disclosures, financial reporting, corporate governance compliance, investor relations duties, general assembly obligations, dividend rules, related-party transaction rules and insider information controls.
The CMB’s legislation list includes the Communiqué on Corporate Governance, the Communiqué on Principles of Financial Reporting in Capital Markets and the Communiqué on Material Events Disclosure among the key secondary regulations applicable to issuers and public companies.
Public company status requires a cultural change. Decisions that were previously internal may become subject to public disclosure. Material developments must be assessed promptly. Directors and managers must understand that their statements may affect market prices. Investor relations must be professional, consistent and compliant.
Liability Risks in a Turkish IPO
An IPO creates liability risks for the issuer, directors, managers, selling shareholders, intermediary institutions, auditors and other responsible persons. The most significant risks arise from misleading or incomplete prospectus disclosures, inaccurate financial statements, concealed legal disputes, improper marketing, defective corporate approvals and non-compliance with sales rules.
If investors suffer losses because of false or incomplete information, they may seek legal remedies depending on the facts. In addition, the CMB may impose administrative sanctions or take other regulatory measures. In more serious cases, criminal provisions may become relevant.
The CMB has warned that public offerings conducted without fulfilling the obligation to publish an approved prospectus, or issuances conducted without an approved issue document, may be subject to imprisonment from two to five years and judicial fines from five thousand days to ten thousand days.
This warning is especially relevant for companies that attempt to collect money from the public through informal “share,” “partnership,” “dividend” or “investment opportunity” campaigns without CMB approval.
Common Legal Problems Before an IPO
Several legal problems frequently arise during Turkish IPO preparation. These include missing corporate records, defective capital increase procedures, unresolved shareholder disputes, transfer restrictions in articles of association, unregistered trademarks, unrecorded related-party transactions, undocumented loans, tax exposure, employment misclassification, personal data compliance failures and significant pending litigation.
Another common problem is weak disclosure discipline. Private companies are often used to informal communication with shareholders and business partners. Public companies must communicate through structured, accurate and equal disclosure channels. Selective disclosure to favored investors or informal projections may create serious capital market risks.
Companies should also examine whether any shareholder agreement contains provisions inconsistent with public company status. Drag-along, tag-along, veto, transfer restriction, board nomination or dividend provisions may need to be reviewed before the IPO.
Practical IPO Checklist for Companies in Turkey
A company preparing for an IPO in Turkey should complete the following legal and operational checklist:
First, the company should conduct a full legal due diligence review. Second, it should review and amend its articles of association where necessary. Third, it should ensure that its financial statements are properly prepared and independently audited. Fourth, it should appoint an experienced intermediary institution, legal counsel and other advisors. Fifth, it should create an internal IPO working group. Sixth, it should determine the offering structure and use of proceeds. Seventh, it should prepare the prospectus and supporting application documents. Eighth, it should apply to the CMB and Borsa İstanbul. Ninth, it should manage marketing and preliminary demand collection in compliance with the rules. Tenth, it should prepare for post-IPO disclosure and corporate governance obligations.
This checklist should not be treated as a mechanical formality. Each step may reveal legal issues that require strategic decisions. In some cases, postponing the IPO may be better than entering the market with unresolved legal risks.
Conclusion
An initial public offering in Turkey is a complex legal process requiring careful planning, regulatory compliance and professional execution. The process involves the CMB, Borsa İstanbul, intermediary institutions, independent auditors, legal counsel, company management and existing shareholders.
The main legal steps include IPO readiness assessment, formation of an internal working group, appointment of advisors, legal due diligence, corporate restructuring, financial reporting, determination of offering structure, prospectus preparation, CMB approval, Borsa İstanbul listing application, marketing, book-building, allocation, sale completion and post-IPO compliance.
For companies, an IPO can be a powerful financing and growth tool. However, it also creates long-term obligations. A company that becomes public must operate with transparency, accountability and regulatory discipline. For this reason, Turkish IPO preparation should begin well before the formal application stage.
A successful IPO in Turkey requires more than investor demand. It requires a legally sound corporate structure, accurate disclosure, reliable financial reporting, strong governance, effective risk management and full compliance with Turkish Capital Market Law. Any company considering a public offering should obtain professional legal advice before starting the process, because errors made before the IPO may create serious consequences after the shares begin trading.
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