Financial Criteria for Initial Public Offerings Has Been Increased
A. INTRODUCTION
The financial criteria required to be met by companies planning an initial public offering (IPO) have been raised through the Capital Markets Board of Türkiye (“CMB”) decision dated December 26, 2024, numbered 66/2058 (“CMB Decision”), published in the CMB Bulletin dated December 31, 2024, and the amendments made to the Listing Directive by Borsa İstanbul A.Ş. (“Borsa İstanbul”) on December 31, 2024.
B. SIGNIFICANT REGULATIONS IN THE DECISION
Under the framework of the CMB Decision, the minimum capital requirement for companies seeking to transition to the authorized capital system has been increased. Additionally, companies planning their initial public offering must now meet higher thresholds for total assets and net sales revenue as reported in their financial statements, which must comply with CMB regulations and be audited by an independent auditor. Furthermore, it has been clarified that for applications submitted by December 31, 2024, the figures or values in effect at the time of application will continue to apply. Details regarding these criteria are provided below:
1. Minimum Capital Requirement for Transition to the Authorised Capital System Increased
According to the CMB Decision, the minimum capital requirement for companies transitioning to the authorised capital system, as stipulated under Article 5 of the Communique on Authorised Capital System No. II-18.1, has been set at TRY 150,000,000 for the year 2025.
2. Financial Criteria for Total Assets and Net Sales Revenue of Companies Planning Their First Public Offering Increased
According to the CMB Decision, the required financial criteria for total assets and net sales revenue have been increased for companies planning their first public offering. This also applies to companies covered under the CMB’s Principal Decision numbered i-SPK 128.22 (dated March 28, 2024, and numbered 18/505) (“Principal Decision”) which addresses the reduction of certain financial criteria for preconditions to be met before the initial public offering of shares.
The financial criteria for total assets and net sales revenue must be met based on the financial statements for the last two years, audited in compliance with CMB regulations. However, for applications submitted by December 31, 2024, the financial criteria valid as of the application date will continue to apply.
According to the CMB Decision, the financial criteria that companies planning their first public offering must meet, based on their independently audited financial statements for the last two years, are as follows:
In addition, the Principal Decision provides for the application of reduced financial criteria for companies meeting the following conditions prior to their initial public offering (IPO):
(i) Companies operating in the renewable energy, petrochemical, defence, and agriculture sectors, where at least 75% of their revenue over the past two years has been derived from sales in these fields.
(ii) Companies with an innovative and scalable business model that produces high value-added outputs based on advanced technology, supports green and digital transformation, and has been certified by a public authority as meeting these criteria. Such companies must also meet any two R&D-related criteria outlined in the Principal Decision.
Under the CMB’s Principal Decision, companies eligible for reduced financial criteria must meet the following requirements based on their independently audited financial statements for the past two years:
The amounts set forth in the CMB Decision must be met for applications submitted in 2025, based on financial statements for the years 2023 and 2024, which are prepared in compliance with CMB regulations and audited by an independent auditor.
C. SIGNIFICANT AMENDMENTS TO THE LISTING DIRECTIVE
According to the amendments made by Borsa İstanbul on 31 December 2024, the market values of the shares offered to the public within the scope of the listing requirements of the BIST Stars, BIST Main and BIST SubMarket regulated in the Listing Directive have been increased.
As of 2025, the trading market for companies making their first public offering will be determined based on the market value of the shares being offered, according to the following criteria:
In addition, it is stipulated that for applications to list company shares on the BIST Stars, the requirement for the nominal value of the publicly offered shares to constitute at least 10% of the company’s capital will not apply if the market value of the shares offered exceeds TRY 6,000,000,000 and their nominal value represents more than 6% of the capital.
In listing applications for the BIST Stars, it is stipulated that the market value of the shares offered to the public must be at least TRY 4,000,000,000,000 for the shares of companies that do not meet the requirements of having a net profit in their independently audited annual financial statements and/or the equity-to-capital ratio in their latest independently audited financial statements to be accepted for listing at the discretion of the Borsa Istanbul Board of Directors.
D. CONCLUSION
According to the CMB Decision and the amendments made by Borsa Istanbul to the Listing Directive, the financial criteria for the public offering and listing of shares have been raised, and the conditions for public offerings have become more stringent.
For further information and support, please contact us at info@lbfpartners.com.
LBF Partners Law Firm
The financial criteria required to be met by companies planning an initial public offering (IPO) have been raised through the Capital Markets Board of Türkiye (“CMB”) decision dated December 26, 2024, numbered 66/2058 (“CMB Decision”), published in the CMB Bulletin dated December 31, 2024, and the amendments made to the Listing Directive by Borsa İstanbul A.Ş. (“Borsa İstanbul”) on December 31, 2024.
B. SIGNIFICANT REGULATIONS IN THE DECISION
Under the framework of the CMB Decision, the minimum capital requirement for companies seeking to transition to the authorized capital system has been increased. Additionally, companies planning their initial public offering must now meet higher thresholds for total assets and net sales revenue as reported in their financial statements, which must comply with CMB regulations and be audited by an independent auditor. Furthermore, it has been clarified that for applications submitted by December 31, 2024, the figures or values in effect at the time of application will continue to apply. Details regarding these criteria are provided below:
1. Minimum Capital Requirement for Transition to the Authorised Capital System Increased
According to the CMB Decision, the minimum capital requirement for companies transitioning to the authorised capital system, as stipulated under Article 5 of the Communique on Authorised Capital System No. II-18.1, has been set at TRY 150,000,000 for the year 2025.
2. Financial Criteria for Total Assets and Net Sales Revenue of Companies Planning Their First Public Offering Increased
According to the CMB Decision, the required financial criteria for total assets and net sales revenue have been increased for companies planning their first public offering. This also applies to companies covered under the CMB’s Principal Decision numbered i-SPK 128.22 (dated March 28, 2024, and numbered 18/505) (“Principal Decision”) which addresses the reduction of certain financial criteria for preconditions to be met before the initial public offering of shares.
The financial criteria for total assets and net sales revenue must be met based on the financial statements for the last two years, audited in compliance with CMB regulations. However, for applications submitted by December 31, 2024, the financial criteria valid as of the application date will continue to apply.
According to the CMB Decision, the financial criteria that companies planning their first public offering must meet, based on their independently audited financial statements for the last two years, are as follows:
In addition, the Principal Decision provides for the application of reduced financial criteria for companies meeting the following conditions prior to their initial public offering (IPO):
(i) Companies operating in the renewable energy, petrochemical, defence, and agriculture sectors, where at least 75% of their revenue over the past two years has been derived from sales in these fields.
(ii) Companies with an innovative and scalable business model that produces high value-added outputs based on advanced technology, supports green and digital transformation, and has been certified by a public authority as meeting these criteria. Such companies must also meet any two R&D-related criteria outlined in the Principal Decision.
Under the CMB’s Principal Decision, companies eligible for reduced financial criteria must meet the following requirements based on their independently audited financial statements for the past two years:
The amounts set forth in the CMB Decision must be met for applications submitted in 2025, based on financial statements for the years 2023 and 2024, which are prepared in compliance with CMB regulations and audited by an independent auditor.
C. SIGNIFICANT AMENDMENTS TO THE LISTING DIRECTIVE
According to the amendments made by Borsa İstanbul on 31 December 2024, the market values of the shares offered to the public within the scope of the listing requirements of the BIST Stars, BIST Main and BIST SubMarket regulated in the Listing Directive have been increased.
As of 2025, the trading market for companies making their first public offering will be determined based on the market value of the shares being offered, according to the following criteria:
In addition, it is stipulated that for applications to list company shares on the BIST Stars, the requirement for the nominal value of the publicly offered shares to constitute at least 10% of the company’s capital will not apply if the market value of the shares offered exceeds TRY 6,000,000,000 and their nominal value represents more than 6% of the capital.
In listing applications for the BIST Stars, it is stipulated that the market value of the shares offered to the public must be at least TRY 4,000,000,000,000 for the shares of companies that do not meet the requirements of having a net profit in their independently audited annual financial statements and/or the equity-to-capital ratio in their latest independently audited financial statements to be accepted for listing at the discretion of the Borsa Istanbul Board of Directors.
D. CONCLUSION
According to the CMB Decision and the amendments made by Borsa Istanbul to the Listing Directive, the financial criteria for the public offering and listing of shares have been raised, and the conditions for public offerings have become more stringent.
For further information and support, please contact us at info@lbfpartners.com.
LBF Partners Law Firm
e.copur@lbfpartners.com