Introduction
Material event disclosure in Turkey is one of the most important obligations of issuers, listed companies, public companies and related parties under Turkish Capital Market Law. In Turkish practice, material event disclosure is generally referred to as “özel durum açıklaması”. It is the mechanism through which market-sensitive information is disclosed to investors, shareholders, creditors and the public in a timely, accurate and complete manner.
The main legal source is the Communiqué on Material Events Disclosure II-15.1, issued by the Capital Markets Board of Türkiye, known as the CMB in English and SPK in Turkish. The communiqué was published in the Official Gazette dated 23 January 2014 and numbered 28891. Its purpose is to regulate disclosure of information, events and developments that may affect the value or price of securities or the investment decisions of investors, with the objective of keeping investors informed in a timely, complete and accurate manner and ensuring reliable, transparent, efficient, stable, fair and competitive capital markets.
Material event disclosure is not a public relations exercise. It is a legal duty. A listed company cannot decide to disclose only positive developments while keeping negative or risky developments hidden. Nor can it selectively inform a preferred shareholder, analyst, investment fund or journalist before the market is informed. If the information is material, it must be disclosed through the official system, generally the Public Disclosure Platform, known as KAP.
Legal Framework of Material Event Disclosure in Turkey
The legal framework of material event disclosure is mainly based on Capital Markets Law No. 6362, the Communiqué on Material Events Disclosure II-15.1, the KAP-related regulations and the general public disclosure liability regime. Article 32 of Capital Markets Law No. 6362 regulates liability arising from public disclosure documents and expressly includes material event disclosures, financial reports, prospectuses, takeover bid information forms, merger and demerger announcement texts and exchange admission disclosures among documents that may create legal responsibility if they contain false, misleading or incomplete information.
The SPK’s own announcement on the communiqué explains that II-15.1 was prepared in line with Capital Markets Law No. 6362 and introduced rules on rumors, news and information that may affect the value, price or investment decisions relating to capital market instruments. It also introduced the obligation for issuers to make explanations where news or rumors first disclosed through media or other communication channels differ from previously disclosed information or are important for investor decisions.
Therefore, material event disclosure compliance must be understood as a combined system: the company must identify material information, protect confidentiality until disclosure, disclose through KAP when required, update previous disclosures where necessary, avoid misleading wording, and ensure that directors and signatories understand liability risks.
What Is a Material Event?
A material event is information, event or development that may affect the value or price of capital market instruments or investors’ investment decisions. The concept includes both insider information and continuous information. Insider information generally refers to non-public information that may affect the price, value or investment decisions relating to capital market instruments. Continuous information refers to other information that must be publicly disclosed under the material event disclosure rules.
KAP explains that material events generally consist of insider information and continuous information, and that material events or changes in previously disclosed material events must be disclosed immediately upon occurrence or upon becoming known.
In practice, a material event may include a merger, acquisition, demerger, capital increase, dividend decision, share buyback, major contract, termination of a significant agreement, important litigation, regulatory investigation, tax assessment, production interruption, cyber incident, debt restructuring, default risk, change in management control, change in board composition, related-party transaction, public tender result, investment decision, license cancellation, significant asset purchase or sale, or an unusual development affecting the company’s operations.
The legal test is not whether the event is convenient or favorable for the company to disclose. The test is whether the information may affect investors’ decisions or the value or price of the company’s securities.
Public Disclosure Platform: KAP
The Public Disclosure Platform, or KAP, is the central electronic disclosure infrastructure of Turkish capital markets. KAP is an electronic system through which electronically signed notifications required under capital markets and Borsa İstanbul regulations are publicly disclosed. It is operated by Merkezi Kayıt Kuruluşu A.Ş. Public Disclosure Services on a 7/24 basis.
KAP is designed to allow everyone to access correct, timely, fair and complete information about Borsa İstanbul companies simultaneously and at low cost. It also functions as an electronic archive, allowing investors to access historical information.
This means that a material event disclosure should not be replaced by a press interview, a social media post, an investor meeting, a WhatsApp message, an analyst call or a statement on the company’s website alone. These channels may support communication, but the official disclosure route is KAP when disclosure is required by capital market legislation.
For investors, KAP is the primary source of reliable information. For issuers, KAP is the official record that demonstrates what was disclosed, when it was disclosed and how it was worded.
Scope of the Communiqué
The Communiqué on Material Events Disclosure II-15.1 applies primarily to issuers and related parties, including issuers whose shares are temporarily suspended and issuers whose shares are traded in certain platforms or markets because they acquired publicly held corporation status. It also applies to issuers whose shares are not traded on the exchange but who publicly offer non-share securities domestically until the redemption date of those securities.
The communiqué does not apply in the same way to every capital market transaction. For example, certain provisions do not apply to issuers whose shares are not traded on the exchange and who issue securities to qualified domestic investors without public offering, while obligations from other parts of the communiqué may continue until redemption. Non-public corporations issuing securities through private placement at home or abroad are outside the scope of the communiqué.
This scope is important for legal practice. Before deciding whether a disclosure is required, one must first identify the issuer’s legal status, whether the securities are traded on Borsa İstanbul, whether the transaction is public or private, whether the security is a share or non-share instrument, and whether the obligation continues until redemption.
Insider Information and Confidentiality
Insider information is one of the most sensitive categories under Turkish capital market law. If material non-public information is leaked or used before official disclosure, the market may become unfair. Persons who possess such information may gain an advantage over ordinary investors.
For this reason, companies must protect confidentiality until disclosure is made. Directors, executives, employees, auditors, lawyers, consultants, investment bankers, controlling shareholders and other persons with access to inside information should not share it with unauthorized persons. They should also refrain from trading while in possession of such information.
Material event disclosure rules and insider trading rules are closely connected. A company that delays disclosure without protecting confidentiality may create conditions for insider trading. A company that selectively informs certain investors may expose itself and those investors to legal scrutiny. If the information is material and confidentiality cannot be maintained, public disclosure through KAP becomes necessary.
Listed companies should maintain insider lists, confidentiality undertakings, access controls, blackout periods and internal escalation systems. These controls protect both the company and its directors.
Continuous Information
Continuous information includes information that must be disclosed because of ongoing obligations rather than a single unexpected event. Examples may include changes in shareholding thresholds, transactions of persons discharging managerial responsibilities, changes in capital structure or control, voting rights, certain buy/sell transactions and other information specifically regulated under the communiqué.
The SPK’s 2017 announcement concerning Articles 11 and 12 of the communiqué emphasized the importance of timely and complete disclosures relating to transactions of persons with managerial responsibility and parent shareholders, as well as changes in capital structure and management control. The announcement warned that those responsible for such disclosures may face sanctions under Article 103 of Capital Markets Law No. 6362 if they fail to comply.
This is especially relevant in practice because investors closely monitor changes in ownership and control. If a controlling shareholder increases or decreases its stake, if a board member trades shares, or if voting control changes, the market may interpret that information as a signal. Therefore, delay or omission may affect investor decisions and market pricing.
Rumors, News and Market Speculation
One of the most practical issues in material event disclosure is how to respond to rumors, news and market speculation. The SPK’s announcement on the communiqué states that where news or rumors first disclosed through media or other communication channels may affect the value or price of capital market instruments or investor decisions, or differ from previously disclosed information, issuers are required to make a statement on whether such information is correct or sufficient, regardless of whether the rumor originated from the company.
This is a strong obligation. A company cannot always remain silent by saying, “The news did not come from us.” If a news report or rumor is material and may influence investor decisions, the company may need to clarify the issue.
Examples include press reports about a merger, acquisition, state tender, bankruptcy risk, regulatory investigation, major contract, debt restructuring, tax penalty, management change or production suspension. If the news is false, the company may need to deny it. If it is partially true, the company may need to explain the correct position. If the information is accurate but not yet disclosed, immediate disclosure may be required unless lawful postponement conditions apply.
Timing of Disclosure
Timing is critical. Material event disclosures must generally be made promptly after the event occurs or becomes known. Delay may distort the market because investors continue trading without equal access to material information.
A company should not wait for the next board meeting, quarterly report or annual report if the information is already material and disclosure is required. For example, a major court decision, regulatory sanction, debt default, license cancellation or signed material contract may require immediate disclosure rather than later inclusion in financial statements.
In practice, companies should establish an internal escalation mechanism. Business units must report potentially material developments to the legal, finance and investor relations departments. The investor relations team must coordinate with senior management and legal counsel. The disclosure should be drafted, approved and submitted through KAP without unnecessary delay.
The absence of an internal system is not a defense. If a company fails to disclose because departments did not communicate internally, the issuer and responsible persons may still face liability.
Postponement of Disclosure
In certain circumstances, disclosure of inside information may be postponed. However, postponement is an exception, not a general management tool. It may be relevant where immediate disclosure would harm the issuer’s legitimate interests, confidentiality can be ensured, and postponement would not mislead investors.
For example, early disclosure of an ongoing merger negotiation, financing arrangement or strategic acquisition may harm the company if the transaction is not finalized. However, if the information leaks, if rumors appear in the market, or if confidentiality cannot be preserved, postponement may no longer be appropriate.
Companies that postpone disclosure should document the reasons. They should identify who knows the information, how confidentiality is maintained, when the postponement decision was taken, and when disclosure becomes necessary. If a dispute arises later, records may be essential to show that postponement was lawful and not used to manipulate the market.
Content and Wording of Material Event Disclosures
A material event disclosure must be accurate, complete, clear and not misleading. It should not be written as a marketing text. It should not exaggerate positive aspects or minimize negative risks.
A good disclosure answers the essential questions: What happened? When did it happen? Which company or asset is affected? What is the financial or operational impact, if known? Is the event final or conditional? Are regulatory approvals required? Are there uncertainties? Will further disclosure be made?
For example, if a company signs a major contract, the disclosure should explain whether the contract is binding, whether there are conditions precedent, the counterparty if disclosure is not restricted, expected financial effect if determinable, duration, and major uncertainties. If the company only says “a very important agreement has been signed and it will significantly contribute to our growth” without details or risk explanation, the disclosure may be viewed as incomplete or promotional.
The same principle applies to negative events. A company should not conceal the seriousness of a lawsuit, regulatory investigation or debt problem by using vague language. Investors must be able to understand the material implications.
Updating Previous Disclosures
Material event disclosure is not always completed with a single announcement. If a previously disclosed matter is ongoing, the company may need to update investors when there is a material development. This is especially important for lawsuits, regulatory applications, merger negotiations, debt restructuring, investment projects, tenders and conditional agreements.
The SPK’s 2018 announcement on amendments to the communiqué noted that the previous obligation to disclose every 60 days that there was no development regarding a previously disclosed unresolved issue was removed.
However, removal of the periodic “no development” obligation does not mean that companies may ignore real developments. If a material change occurs, the issuer must disclose it. If a lawsuit is won or lost, if negotiations fail, if a contract is terminated, if a license is granted or refused, if financing is secured or cancelled, investors must be informed when the development is material.
Disclosure of Transactions by Managers and Major Shareholders
Transactions by persons with managerial responsibility and major shareholders may affect investor perceptions. If a board member or senior executive buys or sells company shares, investors may interpret the transaction as a signal. Similarly, changes in the stake of a controlling shareholder may affect control expectations.
The SPK’s 2017 announcement emphasized timely and complete disclosure of transactions falling under Article 11 of the communiqué and changes in capital structure and management control under Article 12. It also warned responsible persons that violations may trigger sanctions under Capital Markets Law No. 6362.
The SPK’s 2017 announcement on amendments also stated that the threshold triggering disclosure for transactions by persons with managerial responsibility, persons closely related to them and the issuer’s parent shareholder was increased to 250,000 TL within a calendar year.
These disclosures are important because capital markets are sensitive to insider conduct. The market should know when key persons trade significant amounts of the issuer’s securities.
Changes in Capital Structure and Control
Changes in capital structure and management control are among the most important disclosure matters. If a shareholder reaches or falls below certain thresholds, or if control changes directly or indirectly, investors must be informed because such developments may affect takeover expectations, governance, voting power and future strategy.
The SPK’s 2018 announcement clarified that where a real or legal person directly reaches or falls below thresholds in Article 12 of the communiqué, the relevant disclosure is made only by MKK; however, where thresholds are reached or crossed through acting together, indirectly or through voting rights, the disclosure obligation belongs to the relevant real or legal person and persons acting together with them.
This distinction is significant in practice. Direct threshold changes may be automatically visible through central registry systems, but indirect control, voting arrangements and persons acting in concert may require active disclosure by the relevant parties.
Financial Reporting and Material Events
Financial reports are separate public disclosure documents, but they are closely connected with material event disclosure. A company cannot wait for a quarterly or annual financial report if a material development occurs earlier. Conversely, financial reports may reveal developments that should have been disclosed previously.
Examples include impairment, liquidity problems, debt covenant breaches, litigation provisions, related-party balances, significant losses, going concern uncertainty, major revenue decline or unusual financial exposure. If such matters are known before the financial report and are material, a separate material event disclosure may be necessary.
Under Article 32 of Capital Markets Law No. 6362, financial reports are also public disclosure documents that may create liability if they contain false, misleading or incomplete information.
Therefore, companies should coordinate material event disclosure with financial reporting. Legal, finance, audit and investor relations teams must work together to prevent inconsistent or delayed disclosures.
Liability for Material Event Disclosures
Legal liability is one of the most important aspects of material event disclosure. Article 32 of Capital Markets Law No. 6362 provides that persons who sign public disclosure documents, and legal entities on whose behalf such documents are signed, are jointly and severally liable for damages arising from false, misleading or incomplete information contained in documents such as material event disclosures, financial reports, prospectuses, takeover bid information forms, merger and demerger announcement texts and exchange trading announcements.
This means that a defective KAP disclosure may create compensation liability. If investors buy or sell securities based on a false or incomplete material event disclosure and suffer loss when the truth emerges, they may seek damages under the statutory framework if the legal conditions are met.
Article 32 also provides that independent audit, rating and valuation institutions and other persons or institutions preparing reports included in or forming the basis of public disclosure documents may be responsible under the law.
Directors’ and Officers’ Liability
Directors and senior managers must take material event disclosure seriously. They are responsible for ensuring that the company has an effective disclosure system. They should not sign or approve KAP disclosures mechanically.
A director should ask: Is the disclosure accurate? Does it omit any material fact? Does it exaggerate positive effects? Does it explain conditions and uncertainties? Is there any need for legal, financial or technical review? Is the disclosure consistent with previous announcements and financial statements? Has the company preserved evidence of the decision-making process?
Article 32 provides a defense for persons who prove that they did not know the information in the disclosure document was false, misleading or incomplete, and that this lack of knowledge was not caused by intent or gross negligence.
This defense shows that liability is not necessarily automatic in every case. However, a director who fails to ask questions, ignores red flags or signs documents without review may have difficulty proving lack of gross negligence. Proper board minutes, audit committee reports, legal opinions and internal confirmations may be important evidence.
Causation and Investor Compensation Claims
Article 32 includes an important causation rule. If investors suffer damage by buying or selling capital market instruments immediately after truthful information becomes public, and the transaction relates to instruments bought or sold while a misleading prospectus was valid or immediately after other public disclosure documents were disclosed, causation between the public disclosure document and damage is deemed established for claims under the article.
This rule is very important for securities litigation because proving causation in capital markets can be difficult. Prices move for many reasons. The law recognizes that false or incomplete disclosure may affect market prices and investor decisions, and therefore creates a statutory causation mechanism in defined circumstances.
However, Article 32 also sets out cases where compensation claims are rejected, including where the transaction was not based on the public disclosure document, where the investor knew the information was false or incomplete, where a correction was announced before the investment decision or transaction, or where the investor would have suffered loss even if the information had been accurate.
The limitation period is also short: claims arising from public disclosure documents become time-barred six months from the date the damage occurs.
Administrative Sanctions
Material event disclosure violations may also lead to administrative sanctions. The SPK’s 2017 announcement specifically warned that persons responsible for disclosures under Articles 11 and 12 of the communiqué may face sanctions under Article 103 of Capital Markets Law No. 6362 if they fail to make timely and complete disclosures.
Administrative sanctions may include fines, corrective disclosure requirements and other measures depending on the nature of the violation. If the facts also involve insider trading, manipulation or unauthorized activity, more serious legal consequences may arise.
For listed companies, administrative sanctions are not merely financial. They can harm market reputation, trigger investor claims, affect analyst coverage and reduce confidence in management.
Material Event Disclosure and Market Manipulation
False or misleading material event disclosures may also create market abuse concerns. If a company or responsible person makes a misleading statement to affect the price, value or investor decisions relating to capital market instruments, the matter may be assessed under information-based manipulation rules.
For example, a company announcing an exaggerated project, a non-existent contract or misleading financial expectation may influence investors. If the disclosure is later corrected, investors who bought at inflated prices may suffer losses.
Conversely, failure to disclose negative material information may also distort prices. If a company conceals a major legal dispute, financial distress or regulatory sanction, investors may trade at prices that do not reflect the truth.
Therefore, material event disclosure is not only an issuer compliance issue. It is also a market integrity issue.
Material Event Disclosure and Insider Trading
Delayed disclosure can create insider trading risk. If a material development is known internally but not disclosed, persons who know the information may trade before the market learns it. This creates unfair advantage.
Examples include trading before announcement of a merger, dividend, capital increase, major contract, loss of license, financial distress or court decision. The risk is especially high if the company has weak confidentiality controls, no blackout periods or no insider list.
To reduce insider trading risk, companies should adopt internal procedures: limit access to material information, use confidentiality undertakings, monitor trading by insiders, establish blackout periods, and disclose promptly when confidentiality cannot be protected.
Disclosure Policy and Internal Governance
Every listed company should have a written disclosure policy. The policy should define who is responsible for identifying material events, who drafts disclosures, who approves them, how KAP notifications are made, how rumors are monitored, how postponement decisions are documented, and how forward-looking statements are handled.
The policy should also cover investor meetings, analyst calls, press interviews, social media posts and website announcements. No company representative should make market-sensitive statements without internal review.
An effective disclosure system usually includes the board of directors, audit committee, investor relations department, legal department, finance department, internal audit and senior management. Disclosure compliance should be treated as a governance function rather than a clerical function.
Practical Checklist for Issuers
A listed company or issuer should use the following checklist:
Identify whether the information may affect investor decisions or the value or price of securities.
Determine whether the information is insider information or continuous information.
Assess whether immediate disclosure is required or lawful postponement is possible.
Protect confidentiality until disclosure.
Draft the KAP announcement in clear, complete and balanced language.
Avoid promotional, exaggerated or vague wording.
Check consistency with previous disclosures and financial reports.
Disclose material conditions, uncertainties and risks.
Monitor press, internet and social media rumors.
Update previous disclosures when material developments occur.
Keep board, management and legal records showing how the decision was made.
Review whether directors, executives, major shareholders or related persons have separate disclosure duties.
Practical Checklist for Investors
Investors should review material event disclosures carefully. A KAP announcement should be read together with financial statements, previous disclosures, annual reports, investor presentations and market conditions.
Investors should ask: Is the event final or conditional? Does the announcement quantify financial impact? Does it explain risks? Is it consistent with previous disclosures? Has the company made repeated vague announcements? Has there been a later correction? Did the share price move before disclosure? Are insiders or major shareholders trading?
If an investor suffers loss due to a suspected false or incomplete material event disclosure, evidence should be preserved immediately. This includes the KAP announcement, transaction records, account statements, screenshots, corrected disclosures, price data and any related company communication. Because Article 32 includes a six-month limitation period for public disclosure document claims, legal advice should be obtained quickly.
Common Legal Mistakes
Common mistakes in material event disclosure include delaying disclosure until financial reporting period, issuing vague announcements, failing to disclose material conditions, using promotional language, not updating previous disclosures, ignoring market rumors, failing to disclose insider or major shareholder transactions, confusing website announcements with KAP obligations, and failing to document postponement decisions.
Another common mistake is treating negative information differently from positive information. Companies often rush to disclose new contracts or investments but delay litigation, debt, default or operational problem disclosures. This creates asymmetry and legal risk. Turkish capital market law requires balanced disclosure, not selective optimism.
Conclusion
Material event disclosure in Turkey is a core obligation under Turkish Capital Market Law. The Communiqué on Material Events Disclosure II-15.1 aims to ensure that investors are informed in a timely, complete and accurate manner about information, events and developments that may affect the value or price of securities or investment decisions.
KAP is the central disclosure platform and enables simultaneous, low-cost access to correct, timely, fair and complete information about Borsa İstanbul companies.
For issuers and listed companies, material event disclosure requires internal systems, legal analysis, accurate drafting, confidentiality controls, rumor monitoring, timely updates and board-level supervision. For directors and executives, it creates real liability risk. For investors, it is one of the most important sources of reliable information.
The liability regime is strict. Under Article 32 of Capital Markets Law No. 6362, persons signing public disclosure documents and legal entities on whose behalf such documents are signed may be jointly and severally liable for damages caused by false, misleading or incomplete information in material event disclosures and other public disclosure documents.
In conclusion, material event disclosure is not a procedural formality. It is the legal foundation of transparency and trust in Turkish capital markets. Any issuer, listed company, director, investor relations officer, controlling shareholder or investor dealing with material event disclosure in Turkey should treat the process as a high-liability legal function and obtain professional legal advice where necessary.
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