Introduction
Public companies in Turkey are subject to a strict legal and regulatory regime under Turkish Capital Market Law. Once a company becomes publicly held or has its shares traded on Borsa İstanbul, it is no longer regulated only as an ordinary joint-stock company. It becomes part of the capital market system and must comply with disclosure, transparency, investor protection, financial reporting and corporate governance obligations.
The main legal framework is based on Capital Markets Law No. 6362, secondary regulations of the Capital Markets Board of Türkiye, known as the CMB in English and SPK in Turkish, Borsa İstanbul rules and Public Disclosure Platform procedures. The CMB’s official legislation page lists the core regulations applicable to issuers, including the Communiqué on Corporate Governance, Sustainability Principles Compliance Outline, Communiqué on Authorized Capital System, Communiqué on Dividends, Communiqué on Buy-Backed Shares, Communiqué on Merger and Demerger, Communiqué on Takeover Bids, squeeze-out and sell-out rights, and voting by proxy rules.
For investors, these rules are essential because investment decisions depend on accurate, timely and complete information. For companies, compliance is not merely administrative. Disclosure and corporate governance duties affect market reputation, investor confidence, share value, board liability, regulatory risk and access to future financing. A public company that fails to manage disclosure properly may face administrative sanctions, investor claims, loss of market trust and reputational damage.
What Is a Public Company in Turkey?
A public company in Turkey is generally a joint-stock company whose shares are offered to the public, traded on the exchange or otherwise subject to capital market rules. Public company status changes the legal character of the company’s relationship with shareholders and the market. The company’s decisions may affect not only controlling shareholders and management but also thousands of retail and institutional investors.
In ordinary private companies, information is mostly shared among shareholders within the framework of the Turkish Commercial Code. In public companies, however, information must be disclosed to the market through regulated channels. The company must act with transparency and must not selectively disclose material information to certain investors, insiders or business partners.
This distinction is fundamental. A public company cannot manage investor relations informally. It must disclose financial statements, material events and other information required by CMB and Borsa İstanbul regulations through official public disclosure systems. KAP explains that Borsa İstanbul companies are required to disclose financial statements, material events and other required notifications through the Public Disclosure Platform.
Main Legal Framework for Public Companies
The legal framework governing public companies in Turkey consists of Capital Markets Law No. 6362, CMB communiqués, Borsa İstanbul rules, Central Registry Agency procedures and the Turkish Commercial Code. The CMB’s current capital market legislation page places public company rules under the “Issuers” section and lists the Communiqué on Corporate Governance, rules on dividends, buy-back shares, mergers and demergers, takeover bids, squeeze-out and sell-out rights, and voting by proxy.
Public companies must also comply with the Communiqué on Material Events Disclosure II-15.1, which regulates disclosure of information, events and developments that may affect the value or price of securities or investors’ investment decisions. The official English text of this communiqué states that its purpose is to keep investors informed in a timely, complete and accurate manner in order to ensure reliable, transparent, efficient, stable, fair and competitive capital markets.
In practice, the legal framework must be interpreted as a whole. A public company’s board decision may trigger corporate governance rules, material event disclosure obligations, financial reporting requirements, shareholder approval procedures and KAP notification duties at the same time. Therefore, public company compliance requires coordinated work among the board of directors, legal department, finance department, investor relations, independent auditors and external legal counsel.
Public Disclosure Platform: KAP
The Public Disclosure Platform, known as KAP in Turkish practice, is the main electronic disclosure system for public companies in Turkey. KAP is an electronic system through which notifications required by capital market and Borsa İstanbul regulations are publicly disclosed with electronic signature. It is operated and managed by Merkezi Kayıt Kuruluşu A.Ş. Public Disclosure Services on a 7/24 basis.
KAP is designed to allow investors and the public to access correct, timely, fair and complete information about Borsa İstanbul companies through the internet simultaneously and at low cost. It also functions as an electronic archive that provides access to historical disclosures.
This system is central to Turkish capital market transparency. Public companies should not disclose material information first through press interviews, social media accounts, private meetings, investor calls or informal communications. If information is material, it must be disclosed through the legally required channel. Otherwise, selective disclosure, unequal access to information and market abuse risks may arise.
Borsa İstanbul also explains that companies whose capital market instruments are traded on Borsa İstanbul, exchange traded funds, Borsa İstanbul members and mutual funds meet their public disclosure obligations through KAP, and regulatory bodies such as Borsa İstanbul, CMB, Takasbank and MKK also publish investor announcements through the platform.
Material Event Disclosure Duties
Material event disclosure is one of the most important obligations of public companies in Turkey. A material event is generally information that may affect the value or price of capital market instruments or investors’ investment decisions. The purpose of disclosure is to prevent information asymmetry and ensure that all investors have access to important information at the same time.
KAP explains that material events generally consist of insider information and continuous information. Insider information means material information that may influence the value of a capital market instrument or investors’ decisions and has not yet been disclosed to the public. Continuous information refers to other information that must be publicly disclosed under the CMB’s material events disclosure rules.
The rule is not limited to extraordinary transactions. Material disclosure may be required for mergers, acquisitions, capital increases, significant litigation, important contracts, debt restructuring, management changes, regulatory investigations, asset sales, share buybacks, dividend decisions, related-party transactions, production interruptions, cyber incidents, unusual price and volume movements or other developments that may affect investor decisions.
KAP states that material events or changes in previously disclosed material events must be publicly disclosed immediately upon occurrence or upon becoming known. This is a strict obligation. Public companies cannot wait until the next financial report if the information is material and must be disclosed immediately.
Updating Previous Disclosures
Public disclosure is not a one-time obligation. If a company has previously disclosed a pending development, it may need to update the market when the situation changes or remains unresolved. This is particularly important for negotiations, litigation, regulatory applications, collective bargaining processes, major investment projects or transactions subject to conditions.
KAP disclosures often include the company’s declaration that the disclosure complies with the principles of the CMB’s Material Events Communiqué, fully reflects the information known to the company, is consistent with company records and that reasonable efforts have been made to obtain complete and accurate information. Examples of KAP material event disclosures show that companies may also refer to the duty to update previous disclosures and announce continuing developments to investors.
This duty prevents the market from relying on outdated information. If a company announces negotiations for a major acquisition, investors need to know whether negotiations continue, fail, are suspended or result in an agreement. Similarly, if litigation is disclosed, important procedural developments or settlement may require further disclosure.
A public company should therefore maintain an internal disclosure calendar for open matters. Each pending disclosure should be reviewed periodically to decide whether an update is required.
Financial Reporting Obligations
Financial reporting is another core duty of public companies in Turkey. Investors need reliable financial statements to evaluate profitability, debt structure, cash flow, asset quality, operational performance and future expectations. For this reason, financial reports are subject to strict standards and are disclosed through KAP.
KAP explains that financial reports consist of financial statements, board of directors’ operating review reports and representation letters. Financial statements include the statement of financial position, comprehensive income statement, cash flow statement, statement of changes in equity and notes to the financial statements.
KAP also states that corporations apply International Accounting Standards and International Financial Reporting Standards as approved by the European Union, and Turkish Accounting Standards and Turkish Financial Reporting Standards published by the Public Oversight, Accounting and Auditing Standards Authority are applied within that framework.
From a legal perspective, financial reporting is not only an accounting duty. If financial statements are misleading, incomplete or inconsistent with actual company records, directors and responsible managers may face regulatory and civil liability. Financial reports are also connected with corporate governance because they reflect the quality of board supervision, internal control and audit processes.
Corporate Governance Duties of Public Companies
Corporate governance refers to the system by which a company is managed, supervised and held accountable. In public companies, governance is especially important because ownership may be dispersed among many investors, while management power may remain concentrated in the board, executives or controlling shareholders.
The CMB’s legal framework lists the Communiqué on Corporate Governance II-17.1 as a core regulation for issuers. This regulation is central to public company governance because it addresses the relationship between shareholders, board members, management, related parties and the market.
Corporate governance duties include protecting shareholder rights, ensuring fair treatment of minority shareholders, maintaining transparent board procedures, controlling related-party transactions, establishing investor relations mechanisms, complying with public disclosure rules, implementing internal control systems and ensuring that the board acts in the best interests of the company.
Good governance is not only a legal obligation. It is also a market advantage. Institutional investors often evaluate governance quality before investing. Companies with weak governance, opaque related-party transactions or poor disclosure practices may trade at a discount because investors price governance risk into their decisions.
Board of Directors’ Responsibilities
The board of directors has a central role in public company compliance. It is responsible for strategic management, oversight of executives, protection of company interests, financial reporting, risk management, internal control and compliance with capital market obligations.
In a public company, directors must understand that their decisions may affect market prices and investor expectations. Approving inaccurate financial statements, failing to disclose a material event, permitting unfair related-party transactions or ignoring internal control weaknesses may create liability.
The board should establish procedures for identifying material information. Senior executives, finance teams, legal departments and investor relations officers should report developments that may require disclosure. The board should also ensure that the company has an effective system for preparing accurate KAP announcements.
Directors should avoid informal market communication. Statements made in interviews, conferences, social media posts or investor meetings may create legal risk if they disclose material information selectively or conflict with KAP disclosures.
Independent Directors and Board Committees
Corporate governance in public companies generally requires stronger board structure than ordinary private companies. Independent directors and board committees improve oversight, reduce conflicts of interest and protect minority shareholders. Although the exact requirements depend on the company’s classification and applicable CMB rules, the governance logic is clear: public companies need checks and balances.
Board committees may include audit, corporate governance, early detection of risk and other committees required or recommended under applicable rules. These committees support the board by examining financial reporting, internal control, risk management, related-party transactions and governance compliance.
The audit committee is particularly important because financial statements are among the most important public disclosures. If audit systems are weak, financial reporting risk increases. The corporate governance committee is also important because it may oversee investor relations, board nominations, governance compliance and relations with shareholders.
Shareholder Rights in Public Companies
Public companies must protect shareholder rights. These rights include the right to receive information, participate in general assembly meetings, vote, receive dividends if distributed, benefit from equal treatment, examine disclosures and challenge unlawful decisions where legal conditions are met.
Public company shareholder rights are broader in practical importance than private company rights because investors may buy and sell shares on the market. Investors rely on equal access to information and fair governance. If a controlling shareholder or management group receives material information before the market, minority shareholders may be harmed.
Voting by proxy, proxy solicitation, takeover bids, squeeze-out and sell-out rights are all part of the public company legal ecosystem. The CMB’s legislation page lists regulations on voting by proxy, takeover bids, squeeze-out and sell-out rights among issuer-related rules.
A public company should therefore treat shareholder communication as a compliance matter. Investor relations should be transparent, equal and documented. Questions from investors should be answered carefully without disclosing non-public material information selectively.
Related-Party Transactions
Related-party transactions are among the most sensitive issues in public company governance. These transactions may occur between the company and its controlling shareholder, subsidiaries, affiliates, directors, executives or entities connected to them. Such transactions may be legitimate, but they may also be used to transfer value away from the public company or minority shareholders.
For this reason, related-party transactions should be reviewed carefully under corporate governance rules. The company should assess whether the transaction is at arm’s length, whether independent valuation is required, whether board or general assembly approval is needed, whether disclosure is required and whether minority shareholder interests are protected.
Examples include asset transfers, service agreements, loans, guarantees, leases, purchases, sales, management fees and financing arrangements involving related parties. If a public company enters into a material related-party transaction without proper review or disclosure, the CMB may investigate and investors may bring claims.
Transparent related-party transaction policies reduce governance risk. They also protect directors because the decision-making process can show that the transaction was reviewed, documented and disclosed properly.
Dividends, Buybacks and Capital Transactions
Public companies in Turkey must also comply with rules on dividends, share buybacks, authorized capital, capital increases, mergers, demergers and significant corporate transactions. These matters directly affect shareholder value and must be handled with legal precision.
The CMB’s legislation page lists the Communiqué on Dividends, Communiqué on Buy-Backed Shares, Communiqué on Authorized Capital System and Communiqué on Merger and Demerger among issuer-related rules.
Dividend policy is important for investors because it affects expected returns. Share buybacks may support share price or optimize capital structure, but they must comply with applicable rules and disclosure requirements. Capital increases may dilute existing shareholders if not structured properly. Mergers and demergers may materially affect the company’s assets, liabilities and future operations.
Each of these transactions may require board decisions, general assembly approvals, CMB applications, independent reports, KAP disclosures and investor rights mechanisms. Companies should not treat them as ordinary corporate actions.
Insider Information and Confidentiality
Public companies regularly handle inside information. Inside information may include financial results before publication, merger negotiations, major contracts, investment decisions, regulatory approvals, litigation outcomes or other developments that may affect share prices.
KAP defines insider information as material information that may influence the value of a capital market instrument or investors’ decisions and has not yet been disclosed to the public. Public companies must protect such information until proper disclosure is made.
Confidentiality procedures are essential. Access to inside information should be limited to persons who need to know. Employees, directors, advisors and related parties should be warned against trading on inside information. The company should maintain internal controls to prevent leaks.
If inside information is leaked or selectively disclosed, immediate public disclosure may be required. Failure to manage inside information may lead to insider trading investigations, administrative sanctions and loss of investor confidence.
Unusual Price and Volume Movements
Public companies may be asked by Borsa İstanbul or regulatory authorities to explain whether there is undisclosed material information when unusual price or volume movements occur in their shares. KAP examples show that companies may publish disclosures stating whether there is any undisclosed material information under the CMB’s Material Events Communiqué.
Such disclosures are important because unexplained price movements may create market rumors. Investors may suspect that some persons have access to undisclosed information. A company response helps clarify whether the price movement is connected to a material development known by the company.
However, companies must be careful. If there is material information, it must be disclosed accurately. If there is no undisclosed information, the company should state that clearly. A misleading denial may create serious liability if later events show that material information existed but was not disclosed.
Sustainability and ESG Governance
Sustainability and environmental, social and governance issues have become increasingly important for public companies. The CMB’s legal framework includes a Sustainability Principles Compliance Outline under the issuers section.
For public companies, ESG is no longer merely a public relations issue. Climate risks, environmental permits, labor relations, corporate ethics, anti-corruption procedures, board diversity, data security and supply chain risks may affect investor decisions. If such issues are material, they may also become disclosure matters.
Companies should integrate sustainability into governance systems. The board should understand material ESG risks and should ensure that public statements about sustainability are accurate. Misleading sustainability claims may create reputational and regulatory risk.
Liability Risks for Public Companies
Public companies may face liability for failing to comply with disclosure and governance duties. Liability may arise from misleading KAP disclosures, delayed material event announcements, inaccurate financial reports, defective prospectus information, concealed related-party transactions, inadequate governance procedures or misleading investor communications.
The company itself may face administrative sanctions. Directors, managers and signatories may also face personal liability depending on the nature of the breach. Investors may claim damages if they suffered losses due to false, misleading or incomplete information.
KAP disclosure forms often include declarations that the disclosure fully reflects information known to the company, is consistent with company books and records, and that reasonable efforts were made to obtain complete and accurate information. This illustrates the seriousness of public company disclosure responsibility.
Liability Risks for Directors and Executives
Directors and executives of public companies must act carefully. They should not approve disclosures without reviewing the underlying facts. They should not allow optimistic statements that hide material risks. They should not ignore internal warnings about accounting problems, litigation exposure or undisclosed developments.
Liability risk is particularly high in areas such as financial reporting, related-party transactions, insider information, major acquisitions, capital increases and public offering documents. Directors must ensure that legal and financial advisors are consulted when necessary.
Executives responsible for investor relations, finance and legal compliance also carry significant risk. If they prepare or submit inaccurate disclosures, fail to escalate material information or communicate selectively with investors, liability may arise.
Practical Compliance Checklist for Public Companies
A public company in Turkey should maintain a strong compliance program. The program should include a disclosure policy, insider information policy, investor relations procedure, board approval matrix, financial reporting calendar, related-party transaction procedure, KAP announcement process, crisis communication plan and employee training.
The company should identify who is responsible for monitoring material events. It should maintain a list of pending issues requiring disclosure review. It should ensure that KAP electronic certificates remain valid and sufficient because KAP notes that companies are responsible for maintaining valid electronic certificates to allow uninterrupted notification flow.
The company should also establish a review mechanism for all public statements. Press releases, investor presentations, website announcements, social media posts and analyst meetings should be consistent with KAP disclosures. Any statement that may influence investor decisions should be legally reviewed before publication.
Practical Advice for Investors
Investors in Turkish public companies should rely primarily on official disclosures. KAP is the central source for financial statements, material events and other required notifications. Investors should review risk disclosures, financial reports, corporate governance compliance reports, dividend policies, related-party transaction disclosures and material event announcements before making investment decisions.
Investors should be cautious about rumors, social media claims, insider information offers and unofficial price targets. Public company law is built on equal access to information. If a person claims to have secret information, that may indicate legal risk rather than opportunity.
Investors who suffer losses due to misleading disclosure should preserve evidence, including KAP announcements, transaction records, account statements, analyst reports, screenshots and correspondence. Capital market claims usually require proof of misleading information, reliance, causation and damage.
Conclusion
Public companies in Turkey operate under a demanding legal regime based on disclosure, transparency and corporate governance. Their duties are not limited to annual general assemblies or ordinary corporate filings. They must continuously inform the market, protect shareholder rights, disclose material events, publish financial reports, manage inside information, comply with corporate governance rules and act fairly toward all investors.
The Public Disclosure Platform is the central infrastructure of this system. It allows investors to access correct, timely, fair and complete information about Borsa İstanbul companies and serves as a public archive for disclosures. Public companies must therefore treat KAP disclosures as legally significant documents, not as routine announcements.
Corporate governance is equally important. Public companies must maintain accountable boards, effective committees, transparent related-party transaction procedures, reliable financial reporting systems, strong investor relations and internal controls. Poor governance may lead to regulatory sanctions, investor lawsuits and loss of market confidence.
For companies, compliance with disclosure and corporate governance duties is a strategic necessity. For directors and executives, it is a personal responsibility. For investors, it is the legal foundation of informed investment decisions.
In conclusion, public company regulation in Turkey is designed to protect investors and ensure fair, transparent and efficient capital markets. Any company that is publicly held, listed on Borsa İstanbul or planning to become public should obtain professional legal advice on disclosure obligations, corporate governance duties, KAP procedures, board responsibilities, related-party transactions and capital market liability risks before taking action.
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