Introduction
Share buyback regulations in Turkey under CMB rules are an important part of Turkish capital market law. A share buyback, also known as a share repurchase, occurs when a public company purchases its own shares directly or through its subsidiary. In Turkish practice, this is generally called “pay geri alımı” or “geri alınan paylar”. Share buybacks may be used to support market confidence, manage capital structure, provide shares for employee stock programs, reduce outstanding shares, signal management’s view that the market price does not reflect fair value, or prepare for future corporate actions.
However, share buybacks are legally sensitive because a company trading in its own shares may affect the market price, liquidity, voting structure and minority shareholder expectations. If not regulated carefully, buybacks may also be misused for market manipulation, insider trading, selective investor protection or artificial price support. For this reason, Turkish law regulates share buybacks through the Capital Markets Board of Türkiye, known as the CMB in English and SPK in Turkish.
The principal regulation is the Communiqué on Buy-Backed Shares II-22.1, published on 3 January 2014. The CMB’s official communiqué list identifies Communiqué on Buy-Backed Shares II-22.1 as one of the core capital market regulations applicable to issuers and public companies.
The main purpose of the communiqué is to regulate the principles concerning public companies’ purchase of their own shares or acceptance of their own shares as pledge. It also regulates the disposal or redemption of repurchased shares, public disclosure duties and circumstances where buybacks are not treated as insider trading or market manipulation.
What Is a Share Buyback?
A share buyback means the purchase of a public company’s own shares by the company itself or by its subsidiaries. Communiqué II-22.1 defines buyback as the purchase of company shares by the company or its subsidiaries within the framework of the communiqué. It also defines a buyback program as the procedures and principles prepared under the communiqué and approved by the general assembly for the repurchase of company shares.
In economic terms, a buyback reduces the number of shares held by outside shareholders if the shares are later cancelled, or creates treasury shares if the shares are held by the company. A buyback may increase earnings per share, support market liquidity, or show that management believes the market price is undervalued. However, it may also reduce cash resources and may harm creditors or future investment capacity if used imprudently.
From a legal perspective, a buyback is not merely an investment decision. It is a regulated capital market transaction. A listed company cannot buy its own shares whenever it wishes and in any manner it chooses. It must comply with CMB rules, general assembly or board authorization requirements, public disclosure obligations, trading principles, limits, accounting rules and restrictions on use of repurchased shares.
Legal Framework of Share Buybacks in Turkey
The legal framework consists mainly of:
Capital Markets Law No. 6362, Communiqué on Buy-Backed Shares II-22.1, CMB principle decisions, Turkish Commercial Code provisions, Borsa İstanbul trading rules, KAP public disclosure rules, financial reporting standards and market abuse regulations.
Communiqué II-22.1 states that it was prepared based on Articles 22, 48, 101 and 108 of Capital Markets Law No. 6362. This means that buyback regulation is connected not only with public company powers, but also with market integrity and market abuse prevention.
The communiqué applies not only to direct purchases by the company. Its scope also covers purchases by subsidiaries, purchases by third persons acting in their own name but on behalf of the company or its subsidiary, and cases where a third person accepts company shares as pledge in its own name but on behalf of the company. It also covers transactions where the company or subsidiary gives advance, loan or security to third persons for the purpose of purchasing company shares.
This broad scope is important. A company cannot avoid buyback rules by using an affiliate, nominee, third-party account, financing arrangement or indirect structure. If the economic result is that the company’s own shares are acquired for the company or its subsidiary, CMB rules may apply.
Companies Subject to Buyback Rules
Communiqué II-22.1 applies to publicly held corporations, meaning joint-stock companies whose shares have been offered to the public or are deemed to have been offered to the public. The communiqué also makes clear that certain categories are excluded, such as variable capital investment companies and investment companies offering shares to qualified investors. It also contains special provisions for special-purpose acquisition companies and preserves provisions in special laws applicable to certain companies.
This distinction matters because ordinary private joint-stock companies may be subject primarily to the Turkish Commercial Code, while public companies and listed companies are subject to the additional CMB regime. A company whose shares are traded on Borsa İstanbul faces stricter public disclosure and market conduct requirements.
Banks, insurance companies, financial institutions and other regulated entities may also be subject to sector-specific restrictions. A public bank’s buyback decision, for example, may require analysis not only under CMB rules but also under banking and prudential regulations.
General Assembly Authorization
The basic rule is that a public company may conduct a buyback only if the general assembly authorizes the board of directors. This authorization is given by approval of the buyback program prepared by the board of directors at the general assembly meeting. Once authorized, the board may delegate the implementation authority to persons it determines.
This general assembly approval requirement protects shareholders. Since buybacks use company assets to purchase company shares, shareholders should know the purpose, size, duration and limits of the program. A buyback program may affect company liquidity, share price, capital structure and distribution policy. Therefore, shareholders should be able to review and approve the framework.
The buyback program should be carefully drafted before submission to the general assembly. It should not be a vague authorization such as “the board may buy shares whenever it wishes.” It should define the purpose, maximum number of shares, maximum fund amount, duration, sources of funds, method of purchase, possible disposal or cancellation and public disclosure procedures.
Subsidiary Buybacks
A public company’s shares may also be repurchased by its subsidiary, but this is subject to additional requirements. Communiqué II-22.1 states that for a subsidiary to purchase the parent company’s shares, the parent company’s general assembly must approve the buyback program and the subsidiary’s board of directors must also resolve to conduct buybacks within that program. If the subsidiary is itself a public company, the buyback program must also be approved by the subsidiary’s general assembly.
This rule prevents indirect circumvention. A public company cannot avoid shareholder approval by directing a subsidiary to buy parent company shares without proper authorization. The subsidiary’s own governance and financial position must also be considered.
Subsidiary buybacks may create complex accounting and control issues. If a subsidiary holds parent company shares, voting rights, consolidation effects and group-level treasury share treatment must be analyzed carefully.
Buybacks by Listed Companies
For companies whose shares are traded on Borsa İstanbul, buybacks are usually carried out through exchange transactions. Such transactions must comply with CMB trading principles, price rules, timing restrictions, volume limits and public disclosure obligations.
The SPK’s application guidance states that the repurchase of a public company’s own shares, acceptance of such shares as pledge, disposal or redemption of repurchased shares, public disclosure of these matters and cases where buybacks are not considered insider trading or manipulation are regulated under Communiqué II-22.1. It also confirms that general assembly authorization is the basic rule for public companies to conduct buybacks.
Listed company buybacks are highly visible because they may affect market pricing. Investors often interpret buyback announcements as a signal that management believes the share price is undervalued. For that reason, disclosures must be accurate, balanced and not misleading.
KAP examples show that listed companies disclose the company performing the buyback, the company subject to buyback, the purpose of the buyback, board decision date, number of shares to be acquired and maximum fund amount. A BİM disclosure, for example, stated that the purpose was to protect shareholders where the share price did not reflect company performance and to support price formation in line with fair value.
Buybacks by Non-Listed Public Companies
Public companies whose shares are not traded on the exchange are subject to special rules. According to the SPK application guidance, for non-listed public companies, buybacks are carried out through a voluntary tender offer to shareholders, based on a buyback program approved by the general assembly and implemented by board decision of the company or subsidiary purchasing the shares.
This distinction is logical. A listed company can buy shares through the exchange. A non-listed public company does not have an exchange market where shares can be repurchased transparently. Therefore, a tender offer mechanism helps ensure equal treatment of shareholders.
For non-listed public companies, the buyback program and tender offer terms must be prepared carefully. The company must avoid favoring certain shareholders, creating unequal liquidity opportunities or setting an unfair price.
Exceptional Board Decision-Based Buybacks
Although general assembly authorization is the basic rule, Turkish capital market practice has also included exceptional CMB principle decisions allowing board decision-based buybacks under certain circumstances. This became especially important after extraordinary market conditions.
The CMB’s i-SPK.22.7 principle decision of 14 February 2023 had temporarily facilitated buybacks after the 6 February 2023 earthquakes by allowing listed companies and their subsidiaries to start buyback programs by board decision without waiting for general assembly approval. However, the CMB’s later i-SPK.22.8 principle decision dated 1 August 2024 repealed i-SPK.22.7, considering that around 18 months had passed since the earthquakes.
The same 1 August 2024 principle decision stated that future buybacks, including by companies with ongoing buyback programs, must comply with Communiqué II-22.1 and the still-effective CMB principle decisions. It also clarified that board decision-based buyback programs already started and ongoing would remain valid until the company’s first general assembly meeting, and that they could be terminated earlier by board decision and public disclosure.
This history is important for compliance. Companies should not rely on old emergency relaxations without checking whether they remain in force. As of the cited 2024 principle decision, the temporary earthquake-period facilitation was repealed, and companies must carefully follow the ordinary communiqué framework unless a current CMB decision provides otherwise.
Buyback Program Content
A buyback program should include the essential terms of the repurchase. Although the exact requirements must be checked from the applicable communiqué text and current CMB practice, a compliant program generally includes:
The purpose of the buyback, the maximum duration, the maximum number or nominal value of shares to be purchased, the maximum fund amount, the source of funds, the method of purchase, whether purchases will be made by the company or subsidiary, principles for disposal or redemption, and disclosure commitments.
In KAP practice, buyback disclosures often include the board decision date, maximum nominal amount of shares, ratio to capital, maximum fund amount and planned period. A SASA disclosure, for instance, included the buyback program approval by the general assembly, the planned buyback period and total fund set aside for acquisition.
A vague or open-ended program may create legal risk. Investors must be able to understand how much cash may be used, how many shares may be acquired and why the program is being implemented.
Transaction Limits
Buybacks are subject to transaction limits. The CMB’s English PDF text of the communiqué explains that shares bought back in violation of the communiqué must be disposed of within one year, and shares not disposed within that period must be redeemed through capital reduction. It also states that the portion of repurchased shares exceeding 10% of paid or issued capital must be disposed of as soon as possible without loss and, in any case, within three years from acquisition; otherwise, they must be redeemed through capital reduction.
The 10% rule is one of the most important limitations. It prevents public companies from using excessive amounts of corporate resources to accumulate their own shares indefinitely. It also protects the capital maintenance principle and reduces risks of market distortion.
The CMB’s 2024 principle decision confirmed that for shares repurchased above the 10% threshold, the three-year disposal period continues to be calculated by reference to the acquisition date under Article 19/3 of the communiqué.
Price and Order Rules
Buybacks by listed companies must respect trading rules. The CMB’s 2024 principle decision repealed an earlier principle decision and clarified that Article 15/1-b of Communiqué II-22.1 would be applied as follows: the price order given for buyback cannot be higher than the current highest bid price waiting in the order system.
This rule is designed to prevent companies from aggressively lifting prices through their own purchase orders. A buyback should not be used to push the market upward artificially. It should be conducted in a manner consistent with fair price formation.
A company that places buy orders above the permitted price parameters may face regulatory scrutiny. Brokerage firms executing buyback orders should also ensure compliance with CMB and exchange rules.
Public Disclosure Obligations
Public disclosure is one of the most important parts of share buyback regulation. Investors must know when a buyback program is adopted, when transactions are conducted, when repurchased shares are sold, and when the program is terminated.
Communiqué II-22.1 includes a separate section on public disclosure and specific articles for companies whose shares are traded on the exchange and companies whose shares are not traded on the exchange.
KAP practice confirms the importance of disclosure. Listed companies disclose transaction details such as transaction date, nominal value of shares subject to transaction, ratio to capital, transaction price and previously repurchased nominal value under the program. A KAP example concerning ALFA Solar shows disclosure of program termination and buyback details.
Public disclosure protects investors in two ways. First, it allows investors to understand whether the company is buying, holding or selling its own shares. Second, it reduces the risk of selective information, insider trading or market manipulation.
Disposal of Repurchased Shares
Repurchased shares do not necessarily remain with the company forever. They may be sold, used in employee share programs, transferred under convertible instruments, or cancelled through capital reduction.
The CMB English text states that companies whose shares are traded on the exchange may dispose of repurchased shares through sale on the exchange during or after completion of the relevant buyback program, except for specific restricted periods. Wholesale market sales are also treated as exchange sales, and sales to related persons must comply with price rules.
For non-listed public companies, repurchased shares under a buyback program may be disposed of only after completion of the program and generally through secondary public offering procedures or use of pre-emption rights, with an application to the CMB before such transactions.
Disposal of repurchased shares may affect market price and investor expectations. If a company sells repurchased shares at a loss or to a related party, shareholders may question whether the buyback served corporate interests. Therefore, disposal should be disclosed transparently and justified commercially.
Redemption and Capital Reduction
If repurchased shares are not disposed of within the legally required period, they may need to be redeemed through capital reduction. The CMB English text provides that shares bought back in violation of the communiqué and not disposed within one year must be redeemed through capital reduction, and shares exceeding the 10% capital threshold and not disposed within three years must also be redeemed through capital reduction.
Capital reduction is a regulated corporate action. It may require CMB application, board and general assembly procedures, creditor protection, trade registry filings and KAP disclosures. Therefore, a company should not enter into a buyback program without considering what will happen to the repurchased shares later.
Rights Attached to Repurchased Shares
Repurchased shares generally do not function like ordinary shares held by outside investors. Treasury shares may be restricted in terms of voting and dividend rights under applicable law and capital market rules. The purpose is to prevent the company or its management from influencing general assembly votes through shares owned by the company itself.
This is particularly important where a controlling shareholder or board could indirectly influence treasury share treatment. Buybacks should not be used to manipulate voting balances, reduce minority influence unfairly or affect control contests improperly.
The company should disclose the amount of repurchased shares and their ratio to capital, because investors need to understand how many shares are effectively outside public circulation and how buybacks may affect shareholder structure.
Accounting Treatment
Repurchased shares must be accounted for in accordance with applicable financial reporting rules. Communiqué II-22.1 contains a specific article on accounting for repurchased shares.
Accounting treatment matters because buybacks affect equity, cash resources, treasury shares and financial ratios. A company that repurchases shares using substantial internal resources may reduce liquidity. If the shares are later sold at a loss, this may also affect financial statements.
Investors should not evaluate buybacks only by looking at the announcement. They should review subsequent financial statements, cash flow effects, equity changes and notes to financial statements.
Buybacks and Market Abuse
One of the most sensitive aspects of share buybacks is the relationship with insider trading and market manipulation. Communiqué II-22.1 expressly regulates cases where buybacks are not considered insider trading or market manipulation and includes transaction principles for this purpose.
The policy is clear: properly conducted buybacks under an approved program and public disclosure framework may be legitimate. However, buybacks conducted while the company possesses undisclosed inside information, or buybacks intended to create artificial price support, may raise market abuse concerns.
For example, if a company buys its shares before disclosing a major positive development, insider trading issues may arise. If it buys aggressively to create an artificial appearance of demand, manipulation concerns may arise. If it announces a large buyback program but does not actually intend to implement it, investors may claim that the announcement was misleading.
Buybacks and Insider Information
Listed companies often possess non-public information before the market. This may include financial results, acquisition negotiations, litigation outcomes, regulatory approvals, dividend decisions or debt restructuring. Conducting buybacks while in possession of such information can be risky.
A prudent company should maintain internal blackout periods and legal review before executing buybacks. If a material event disclosure is pending, the company should consider whether buyback transactions should be suspended until public disclosure is made.
Investor relations, legal, finance and board teams should coordinate. A buyback order should not be treated as a routine treasury transaction if material non-public information exists.
Buybacks and Corporate Governance
Share buybacks are also a corporate governance issue. The board must determine whether the buyback serves the company’s interests, not merely the interests of controlling shareholders or short-term market perception.
A buyback may be appropriate where the company has excess cash, the share price is significantly below intrinsic value, or the buyback supports a lawful employee share plan. But it may be problematic if the company has high debt, weak liquidity, major investment needs, or hidden financial stress.
Directors should ask: Is the buyback financially sustainable? Does it serve all shareholders? Is the market informed properly? Is there any pending inside information? Does the company have enough cash? Will the buyback harm creditors? What will happen to the repurchased shares?
Liability of Directors
Directors may face liability if they approve or implement buybacks in violation of CMB rules, company interests or public disclosure obligations. Liability may arise from unlawful use of company funds, misleading KAP disclosures, failure to obtain proper authorization, violation of transaction limits, market abuse, insider trading, unequal treatment of shareholders or failure to dispose of shares within required periods.
The communiqué includes a specific article on responsibility. In practice, directors should document the rationale for the buyback, review financial capacity, obtain legal advice where necessary, ensure public disclosure and monitor execution.
A board decision should not merely say “shares will be repurchased.” It should state the legal basis, purpose, maximum amount, funding source, implementation principles and persons authorized for execution.
Liability of the Company
The company itself may face CMB administrative sanctions, investor claims and reputational damage if it violates buyback rules. A defective buyback program may be challenged by shareholders. Misleading disclosures may create compensation claims. Transactions contrary to price or volume restrictions may trigger regulatory review.
If the company repurchases shares in violation of the communiqué, the shares may need to be disposed of within the specified period or redeemed through capital reduction. This can create additional procedural burden and financial consequences.
Investor Protection
Share buyback rules protect investors by ensuring transparency, limiting excessive treasury share accumulation, requiring shareholder authorization, regulating trading methods, preventing market abuse and requiring disclosure of buyback and disposal transactions.
However, investors should understand that a buyback announcement is not a guarantee that the share price will rise. A company may authorize a large program but repurchase fewer shares than expected. A company may repurchase shares and later sell them at a loss. A buyback may support short-term market confidence but reduce cash available for investment or dividends.
Therefore, investors should read buyback disclosures critically. They should review the company’s financial condition, debt level, free cash flow, dividend policy, reason for the buyback, actual execution and later disposal of shares.
Practical Checklist for Public Companies
A public company planning a buyback should follow a strict compliance checklist:
Prepare a clear buyback program.
Obtain general assembly authorization unless a current CMB exception applies.
If a subsidiary will repurchase shares, obtain required subsidiary board and general assembly approvals.
Define maximum share amount, maximum fund amount, duration and purpose.
Check whether the company has inside information.
Review financial capacity and liquidity.
Ensure compliance with transaction limits and price rules.
Make timely KAP disclosures.
Keep detailed transaction records.
Monitor the 10% threshold.
Plan whether shares will be held, sold or redeemed.
Disclose disposal or termination of the program.
Review accounting treatment and financial reporting effects.
Practical Checklist for Investors
Investors should review:
The purpose of the buyback.
The maximum fund amount.
The maximum number of shares to be repurchased.
The program duration.
Whether the program is general assembly-approved or board decision-based under a valid CMB rule.
Actual buyback transactions disclosed through KAP.
Whether repurchased shares are later sold or cancelled.
The company’s cash position and debt.
Whether the buyback coincides with material undisclosed developments.
Whether the buyback is consistent with dividend policy and long-term strategy.
A buyback may be positive, neutral or negative depending on context. Legal compliance does not automatically mean the buyback is economically beneficial.
Common Legal Mistakes
Common mistakes include starting a buyback without proper authorization, relying on expired emergency CMB decisions, failing to disclose the buyback program, using vague purposes, exceeding transaction limits, buying while inside information exists, ignoring the 10% threshold, failing to dispose of excess shares, selling repurchased shares to related parties on unfair terms, and not reflecting buybacks correctly in financial statements.
Another common mistake is announcing a buyback for market confidence but not implementing it meaningfully. If the announcement creates investor expectations but the company never intended to execute the program, this may create misleading disclosure risk.
Conclusion
Share buyback regulations in Turkey under CMB rules are governed primarily by Communiqué on Buy-Backed Shares II-22.1, Capital Markets Law No. 6362, CMB principle decisions, KAP disclosure rules and market abuse principles. The communiqué regulates public companies’ purchase of their own shares, acceptance of own shares as pledge, disposal and redemption of repurchased shares, public disclosure and cases where buybacks are not treated as insider trading or manipulation.
The general rule is that public companies require general assembly authorization through approval of a buyback program prepared by the board. Subsidiary buybacks also require proper authorization and board decisions.
Emergency facilitation introduced after the 2023 earthquakes was later repealed by the CMB’s 1 August 2024 principle decision, which emphasized that future buybacks must comply with Communiqué II-22.1 and applicable current principle decisions.
For companies, share buybacks are powerful but high-liability transactions. They require legal planning, financial capacity, board diligence, public disclosure and market abuse controls. For directors, buybacks create responsibility because corporate funds are used to trade in the company’s own shares. For investors, buyback announcements should be evaluated carefully and should not be treated as guaranteed price support.
In conclusion, share repurchases in Turkish public companies are not ordinary treasury transactions. They are regulated capital market actions that affect shareholder rights, market transparency and investor confidence. Any listed company, public company, board member, controlling shareholder, subsidiary or investor dealing with share buybacks in Turkey should obtain professional legal advice before acting, especially where authorization, disclosure, transaction limits, treasury share disposal, market abuse risk or director liability is in question.
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