INFORMATION NOTE ON THE COMMUNIQUÉ ON THE PRINCIPLES REGARDING THE PARTNERSHIPS WHOSE SHARES WILL BE TRADED ON THE VENTURE CAPITAL MARKET (II-16.3)

Pursuant to the "Communiqué on the Principles Regarding the Partnerships whose Shares will be Traded in the Venture Capital Market (II-16.3)" (the "Communiqué") published by the Capital Markets Board (the “Board”) in the Official Gazette dated 18 May 2023 and numbered 32194, the sale of the shares of non-publicly traded partnerships to be issued through capital increase to be traded in the Venture Capital Market (the “VCM”) to qualified investors without public offering has been enabled and, the procedures and principles regarding the obligations and exemptions of such partnerships have been regulated.

The relevant Communiqué regulates the procedures and principles regarding the sale of shares without public offering through capital increase, the principles to be complied with after the sale of shares without public offering through capital increase, financial reports and independent audit, material event disclosures, exemptions and other obligations of the partnerships.

In particular, Article 4 of the Communiqué requires the preparation of a prospectus, the principles of which are determined by the Board, and the approval of this prospectus by the Board in order for the shares of the partnerships to be issued through capital increases to be sold to qualified investors without public offering and to be traded on the VCM. Within this framework, the procedures to be performed by the partnerships before obtaining approval from the Board and the documents to be submitted to the Board are listed in detail in paragraph 2 of Article 4 of the Communiqué. Following the fulfilment of these procedures by the partnerships and the preparation of the documents requested by the Board, the documents prepared together with the petition in Annex-2 of the Communiqué must be submitted to the Board.

Another important regulation is that a monetary limit is stipulated in the financial statements of the companies in order to obtain approval from the Board within the scope of the Communiqué. In this context, the following requirements will be required in the financial statements of the partnerships prepared in accordance with the Board regulations and audited by a special independent auditor for the year preceding the year in which the shares will be offered for sale:

1. the total assets must be at least twenty million Turkish Liras,
2. the net sales revenue must be at least ten million Turkish Liras,
3. its registered capital must be at least ten million Turkish Liras and fully paid up in order to switch to the registered capital system.

Provisions of the "Communiqué on Prospectus and Issuance Document (II-5.1)" regarding the prospectus shall be applied by analogy for the fulfilment of the requirements set forth in the Communiqué, preparation of prospectus by the partnerships pursuant to these requirements and submission of the relevant prospectus for the approval of the Board, approval of the prospectus by the Board, registration, announcement, amendment of the prospectus and other issues.

In addition to the above, Article 5 of the Communiqué regulates the principles to be followed after the sale of the shares of the partnerships through capital increase without public offering, Article 6 exempts the partnerships whose shares will be traded on the VCM from the obligation to prepare quarterly and nine-month interim financial reports, Article 7 details the material event disclosures to be made on the Public Disclosure Platform ("PDP") and the conditions under which disclosures will be made on the PDP, and Article 8 regulates the exemptions and other issues for the partnerships whose shares will be traded on the VCM.

To summarize, the Communiqué allows partnerships that fulfil certain conditions to sell the shares issued through capital increases to qualified investors without public offering. It can be said that the process for the trading of shares in the VCM is similar to the public offering process, but less comprehensive; however, the obligations imposed and the deemed exclusion of the partnerships from the VCM in case of non-compliance with these obligations are also regulated.

The above-mentioned provisions have entered into force as of 18 May 2023, the date of publication of the Communiqué.

This information note is intended to provide an  overview. We recommend that you seek counselling regarding your specific situation and circumstances.