Market Profiles

FII Market Entry Requirements for Turkey

RBC IS operates a segregated account structure in this market.

Please refer to 'Market Account Opening Requirements' for information on the market requirements. Clients are requested to refer to the requirements for information purposes only.

For further information or support around accessing this market, please contact your RBC IS representative.

Borsa Istanbul
The Istanbul Stock Exchange (ISE) was established in early 1986.

Capital Markets Board Law no. 6362 went into force after being in published in the Official Gazette dated December 30, 2012. Pursuant to article 138 of the Law, Borsa İstanbul A.S. was founded on the same date, for the purpose of serving as a securities exchange. 

As per the new capital markets law, the Istanbul Stock Exchange (ISE) and the Istanbul Gold Exchange (IGE) were merged under the Borsa Istanbul (BIST). The BIST started trading as of 5 April 2013.

As of 5 August 2013, Turkish Derivatives Exchange (TURKDEX) was also merged under the BIST derivatives market. All open accounts and positions of the TurkDEX were moved to the BIST derivatives market.Borsa İstanbul brings together all the exchanges operating in the Turkish capital markets under a single roof. Its Articles of Association was prepared by the Capital Markets Board, and following its approval by the Minister in charge, it was registered on April 3, 2013, thereby receiving a foundation and operation permit. The main purpose and field of activity of Borsa İstanbul is described as follows: "In accordance with the provisions of the Law and the related legislation, to ensure that capital markets instruments, foreign currencies, precious metals and gems, and other contracts, documents, and assets approved by the Capital Markets Board of Turkey are traded subject to free trade conditions in a facile and secure manner, in a transparent, efficient, competitive, fair and stable environment; to create, establish and develop markets, sub-markets, platforms, systems and other organized market places for the purpose of matching or facilitating the matching of the buy and sell orders for the above mentioned assets and to determine and announce the discovered prices; to manage and/or operate the aforementioned or other exchanges or markets of other exchanges; and to carry out the other activities listed in its Articles of Association." 

Established on the basis of Capital Markets Law no. 6362, Borsa İstanbul is an internal entity under private law. Borsa İstanbul is a self-regulatory entity. Borsa İstanbul CEO is authorized to manage, administer and represent the company. Borsa İstanbul is committed to contributing to the development of the Turkish economy. Borsa İstanbul Chairman & CEO is Mr.Osman Sarac.

Equity trading is fully electronic. Borsa İstanbul members send the orders they collect electronically from the investors to Borsa İstanbul through the “FIX” protocol and “OUCH” protocol of Nasdaq OMX. Brokers may also enter buy and sell orders in the Electronic Trading System through the trading terminals located at Borsa İstanbul and members’ headquarters. Trading in the Equity Market is carried out with “continuous auction”, “continuous auction with market maker” and “single price” trading methods according to price and time priority, with a fully automated electronic trading system. With the launch of BISTECH project, during the order collection in the opening, mid-day single price and closing, and all single price sections of the session, a balance price are calculated and announced. Margin, trading book, open and all orders book files produced at the end of the first session are no longer be available. The opening section in the beginning of the second session will no longer be held, and following the midday single price practice, the session will continue with continuous auction system as from 13:30. Orders that remain unmatched in the order book by midday can be modified or cancelled during the order collection at single price at midday.

Trading is conducted electronically in the Debt Securities Market via the automated multiple price-continuous auction system. 

New trading platform of Borsa Istanbul, Nasdaq Genium INET (BISTECH) went live as on November 30, 2015. As the first phase, equity market moved to the new trading platform.

BIST Equity Market Trading Hours

Opening (Call Auction) 09:40 - 09:55

Continuous Trading 10:00 - 13:00

Single Price 10:00 - 12:55

Midday Single Price (Call Auction) 13:00 - 13:55

Continuous Trading 14:00 - 18:00

Single Price 14:00 - 17:55

Closing (Call Auction) 18:00 - 18:05

Trades at Closing / Last Transaction Price 18:07 - 18:10

BIST Money Market Trading Hours

Opening - Closing 09:30 – 17:30

ISIN (International Securities Identification Numbering): Yes
Other: N/A

Bank Regulation
Banks are supervised by the Central Bank of Turkey, Banks Association of Turkey, Undersecretariat of Treasury and the Banking Regulation and Supervision Agency. Banks who are members of the Borsa Istanbul are also subject to the Rules and Regulations imposed by the CMB, Borsa Istanbul, CRA and Takasbank.

Capital Markets Regulation
The Capital Market Board (CMB) is the regulatory and supervisory authority in charge of establishing and regulating the securities markets in Turkey. It was established by the Capital Market Law (CML) which was enacted in 1981 and has been regulating, organising the markets and developing capital market instruments and institutions.

Equities:
Common shares, preferred shares, rights issues, warrants.

Shares are classified from corporate governance (e.g. Group 1, 2 & 3) and trading rules (e.g. Group A, B, C & D) perspective.

From a corporate governance perspective, the CMB defines listed companies traded on the Borsa Istanbul (BIST) according to the below classifications and outlines the respective trading rules:

Listed companies are classified under three groups based on market capitalisation and actual free float of the companies.

• Companies whose market capitalisation is over TRY 3 billion and actual free float is over TRY 750 million is classified as Group 1,
• Companies whose market capitalisation is between TRY 1 billion and TRY 3 billion and actual free float is between TRY 250 million and TRY 750 million is classified as Group 2,
• All others are classified as Group 3.

The Capital Markets Board of Turkey (CMB), has published a new resolution (No: 31/1080) on 30 October 2014 on the classification of the equities, which are traded on the Borsa Istanbul (BIST) markets. With the new classification, the CMB has changed the determination criteria for A, B and C group companies and also introduced D group for shares traded under the Watchlist market, Pre-Market Trading Platform, BIST Emerging Companies Market and Equity Market for Qualified Investors.

The new classification and relevant rules for each group has become effective as of 2 January 2015. While trading rules for A group shares remained the same, the new classification requires local brokers to check whether there is 100 per cent cash or collateral in the account at the time of trade execution for B, C and D group shares.

However, on 31 December 2014 the CMB published an announcement on its decision to grant an exemption to foreign investors from the pre-funding rules of B, C and D group shares, provided that the local brokers will ensure compliance with the know your customer (KYC) rules, assess relevant risks and allocate limits for their foreign clients.

The CMB also granted exemption for the local collective investment schemes, such as investment trusts, mutual funds and pension mutual funds, from the same requirement.

According to the BIST the calculation methodology to determine A, B, C and D group shares is as follows:

• The classification list will be announced semiannually and will be valid for six months.
• A, B and C group shares will be determined based on free float market capitalisation.
• D group shares will be determined based on the market they are traded in. However, the BIST will calculate the potential group for D group shares in case some of those change market during the 6 months period.
• Announcement day is the last business day of the previous period i.e. last business day of June and December. The announcement will be done through Public Disclosure Platform (PDP) after the closing of trading.
• For the companies that enter the market after an initial public offering (IPO), the BIST will announce under which group, the company belongs to before the trading starts. If there is a secondary public offering (SPO), the group will be announced by the BIST after the shares are delivered as a result of the SPO.
• If a company goes to the watch list market, the company will be included to D group as soon as the watch list market decision is announced.

Equities are currently dematerialised in Turkish market where settlement takes place in book entry form. The Central Registry Agency (CRA), the CSD for equities, keeps electronic registration of equities.

Effective July 2, 2012, government debt instruments have been dematerialised and electronically registered at the Central Registry Agency (CRA). Investors government debt holdings are now held electronically in segregated investor accounts at the CRA having migrated from previously held omnibus holdings at the Central bank of Turkey (CBoT). Whilst the electronic registration at investor account level will be done by the CRA, the CBoT will continue to stay as the central depository for government debt instruments.

BIST has introduced the uptick rule for short selling of equities based on BIST-100 index volatility effective as of February 3, 2023. The uptick rule applies to the equites subject to short selling in case BIST-100 index decreases 3% or more compared to the previous day’s closing BIST 100 index value. Accordingly, the up-tick rule will be automatically applied to the equities that are subject to short-selling until the end of the session.

More details are available here: https://www.borsaistanbul.com/en/sayfa/2857/marketfunctioning

TRY

There is no regulated over the counter market for equities. Interbank trading exists for fixed income.

Pre-matching
With the Swift Integration of members to Takasbank True DvP system, as long as both counterparties (either local custodians or local brokerage houses) feed instructions, based on the receipt of investor instructions, into Takasbank True DVP system, Versus Payment equity instructions will be processed automatically for pre-matching purposes starting from T+0. For all type of government debt securities, pre-matching continues to be executed by phone upon receipt of instructions. The CRA initiated a project to develop auto pre-matching facility in the market for free of payment (FoP) equity transactions. The project went live in 2013. The FoP auto pre-matching facility is a fully SWIFT integrated system where members transmit SWIFT instructions into the CRA system and receive updates via SWIFT. Therefore, participants who are ready to utilize the new facility, can pre-match and settle the FoP transactions in a fully automated environment. Unlike the existing FoP transfer system, the new facility requires instructions to be sent by both members in order to allow auto pre-matching in CRA systems.

Book-Entry: 
Equities: At the end of the trade date, the Borsa Istanbul issues a multilateral net position report for banks and brokers.
Members must ensure that Takasbank pool accounts are sufficiently funded on T+2. Positions are adjusted by Takasbank on using segregated accounts at the Central Registry Agency.

With effect from April 5, 2004 pool accounts have been abolished at the depository and settlement takes place between segregated investor accounts. Due to this change it is now mandatory to quote the counterparty account number in Delivery Free instructions. Cash clearing is still being realised through the pool cash accounts of members.

Borsa Istanbul Debt Securities Market
Secondary Market: after trade execution, the Borsa Istanbul issues trade confirmations to counterparties and Takasbank. At the end of T, the ISE issues net position reports. Members must provide settlement instructions to Takasbank no later than 16:00 on SD (official deadline). Trades executed by 14:00 are settled same-day. Government securities settle delivery versus payment via EMKT, the Central Bank's electronic settlement system. 

Interbank Market: Trading in this market is between banks and brokerage houses by telephone, over-the-counter, or on independent information vendor dealing system. Deals are mostly done in the morning. Settlement occurs on the same or any other day, depending on the arrangement between the parties. Bonds are delivered by book entry transfers between the Central Bank accounts of the counterparties.

Physical: 
All listed shares and corporate bonds are dematerialised and registered at the Central Registry Agency (CRA). Government debt instruments in Turkey are all in electronic form and held with the Central Bank of Turkey. Effective 30 June 2012 the government debt instruments will be registered at the CRA. 

The outstanding non-dematerialized physical shares, which are not submitted to issuer companies for dematerialization by the end of seventh year following the date of commencement of trading via a dematerialisation system, all the rights of the shareholders over such shares shall expire automatically and the title of the shares will be transferred to the issuer which will be entitled to sell them within three months.

With the capital markets law, numbered 6362, issued on 30 December 2012, the title of the shares was required to be transferred to the ICC instead of the issuer. As the registration period ended on 31 December 2012, all rights of shareholders over such shares expired automatically.

Accordingly, the ICC applied to the CRA on 28 June 2013 to register the stocks of 284 different companies listed in the BIST, whose former owners have failed to complete the registration process within the seven-year transition period for dematerialization system and hence are passed into the ownership of the ICC. The ICC will sell these shares through public auctions at a date to be determined and not directly in the secondary market.

Off exchange settlement transactions
Effective November 30, 2015, MKK and Takasbank introduced additional costs for settlement transactions, which are not related to Borsa Istanbul trades. The new tariff will apply to off exchange settlement transactions over TRY 1,000 in value, a fee of 0.3 basis points of the transactional value will be applied. The minimum fee charge is TRY 5 and the maximum is TRY 25 per transaction. 

The maximum cap on penalty fee for incorrectly marked off-exchange transactions is TRY 1,000.

According to the Capital Markets Board regulations, short selling is defined as selling, or giving a sale order, for capital market instruments that are not actually owned. Short selling transactions are done at the Borsa Istanbul. Naked short selling is allowed. The placed order should clearly indicate that it is a short sale order. The securities, transaction prices and volumes are disclosed at the end of the day on Borsa Istanbul’s web site. 

Authorised Borsa Istanbul members are allowed to short sell all equities traded on the BIST markets, except the Companies under C and D groups which are not subject to margin trading and short selling. If the short sale is not covered on the transaction date, the short selling party should borrow the equities either from the OTC market or from the Takasbank Securities Lending Borrowing Market and cover its settlement obligation on T+2.

Sell orders given to the exchange prior to the purchase instruction on the Rights Coupon Market in the case where the shares itself or the rights coupons are not available in the account is considered as short selling. CMB also clarified that giving a sell order before new shares are received into account as a result of rights coupon subscription, is also considered as short selling. Accordingly, declaration from clients are expected to be received by the local brokers and the verification of such declaration are under responsibility of clients and local brokers as per Communiqué Serial: V, No: 65 (Communiqué), articles 24 and 28.

In both cases, CMB indicated that sale orders should be flagged as short sale as per Communiqué.

There is no turn-around concept in the market in the sense of trades being linked to each other. Each trade is treated individually. However, there are no restrictions for investors to buy and sell with same day value.

Takasbank - The clearing and settlement centre for the Borsa Istanbul, and the national numbering agency of Turkey. Apart from these services for the Turkish Capital Market,Takasbank provides Borsa Istanbulmembers with a range of banking services includingcentral settlement, clearing and custody facilities for physical equities, revenue sharing certificates, private sector bonds, and asset-backed securities and derivatives as well as Lending and Borrowing services.

Depository function for equities has been transferred to Central Registry Agency. Takasbank continues to fulfil its infrastructure function as the central and settlement institution. 

Effective from 2 September 2013, Takasbank acts as Central Counterparty (CCP) - buyer against seller and seller against buyer in securities lending market (SLM) and the transactions in SLM will take place under Takasbank guarantee. Also effective from 3 March 2014, Takasbank started to act as the CCP for the BIST Futures and Options Market.

The U.S. SEC confirmed Takasbank as an Eligible Foreign Custodian under Rule 17f -5 (c), 2(iii) on January 24, 1995. Membership to the Association of National Numbering Agencies (ANNA) was accepted on June 8, 1995. Takasbank became a full member of S.W.I.F.T. on December 4, 1995. Participating membership to the International Securities Service Association was accepted on December 11, 1995. Takasbank became a member of European CSD Association (ECSDA) in December 2005. 

Organised market clearing and settlement is realised by Takasbank and is based on multilateral netting. DvP is applied by Takasbank. Securities settlement is finalised at the segregated securities accounts of the investors at the CRA while cash settlement is finalised at the pool cash accounts of the members at Takasbank. 

Takasbank was originally set up as a department of the Istanbul Stock Exchange in 1988. In 1992, the operations of that department were reorganised under a separate company called Istanbul Settlement and Custody Bank Inc. at which point operations began, and the company was transformed into a specialised bank called Takasbank in 1996.

Central Registry Agency - Central Registry Agency (CRA / MKK), (MKK's company name is “Merkezi Kayit Istanbul” and the legal name is “Merkezi Kayit Kurulusu A.S”) is a private company established in 2001 as a legal entity under the provision of the Turkish Capital Market Law (TCML).The registration of securities and the rights related to them are being registered electronically in a book entry form with respect to issuers, intermediary institutions and owner of rights. CRA took over CSD function for equities from Takasbank on November 28, 2005.

Securities settlement is finalised at the records of the CRA as per segregated investors’ accounts upon notifications in the form of online real time messages from Takasbank; while cash settlement is finalised in the accounts with Takasbank.

The CMB decided in its board meeting on 25 August 2011 that Government debt instruments will be dematerialized as of 30 June 2012. The decision is announced in the CMB bulletin (2011/34). With this decision of CMB, the government debt instruments are dematerialized and electronically registered at the CRA records at investor / account owner level. Whilst the electronic registration at investor account level is done by the CRA, the CBoT continues tostay as the central depository for government debt instruments.

With the enactment of the new Capital Markets Law effective 30 December 2012, Investor protection fund is restructured as “Investor Restitution Centre” and CRA is not responsible for the management of this new center. The CMB will be managing the “Investor Restitution Centre”

Central Bank of Turkey (for T-Bills, Government Bonds)
The CBT is in charge of settlement and serves as CSD for government debt securities.

BIS is an international organisation which fosters cooperation among central banks and other agencies in pursuit of monetary and financial stability. The Committee on Payments and Market Infrastructures (CPMI) uses three common structural approaches, or models, to categorise the links between delivery and payment in a securities settlement system.

Not applicable in this market.

CRA (Central Registry Agency)

For dematerialised securities, instant.

Share holdings may be required to be disclosed by the beneficial owner, particularly when holdings reach or exceed prescribed disclosure limits. Investors must ensure that they comply in full by reporting such holdings to the appropriate organisations for this market, within the timeframe required. If you have any questions regarding this issue we encourage you to consult your legal counsel. 

Failure to comply with reporting requirements may lead to penalties and/or other sanctions.

According to CMB regulations the final responsibility of reporting the requested information to the appropriate organisations lies with the investors. 

The Capital Markets Board (CMB) published 2 new communiqués (No: II-15.1 and No: II-15.2) on disclosure
requirements in the Official Gazette (28891), dated 23 January 2014, with an effective date of 23 February 
2014.

The communique no: II-15.1 on the disclosure requirements of listed companies replaces the previous communique (serial VIII, No: 54). Below are some key changes from this communique concerning listed companies:

A company may postpone the disclosure of critical Information that would harm a company’s legitimate interests provided that the company can retain the undisclosed information and not mislead investors. This rule, which is part of EU regulations, is a requirement by listed companies.

Acquisitions or sales that results in exceeding or falling below the specific thresholds of 5, 10, 15, 20, 25, 33, 50, 67 or 95% in the shareholding or voting rights will be disclosed. Any securities giving their holders the right to acquire the shares or voting rights of a publicly traded company in the future (i.e. convertible bonds, exchangeable bonds, warrants) should be aggregated with holdings in shares and Depository Receipts (DRs).

If securities other than equities are publicly offered by a non-listed company, thresholds will be applied as 25, 50 and 67 per cent.

If a shareholder having more than 10 per cent of the company obtains insider information without the knowledge of the issuer, then the shareholder should make a disclosure. The shareholder may postpone the disclosure for the protection of the company’s rights.

Disclosures are required to be made in Turkish. Additionally, they are required to be made both in Turkish and English for Group 1 companies.

Public disclosure is required for those stakeholders holding directly or indirectly the debt instruments, which gives the right to acquire the shares of a listed company in the future, such as, company warrants or convertible bonds, and by holding these instruments has an expected right to acquire shares in the future which falls below, reaches to or exceeds the thresholds mentioned above. 

If the total amount of transactions which the company executives and majority shareholders execute on the securities of the company other than equities exceed TRY 100,000 (approximately USD 44,000) during the year, all the transactions will be disclosed by the transacting parties.

If the company executives and majority shareholders trade the company’s equities or securities based on the equities, those trading persons will disclose the transaction. For the company executives the disclosure threshold is TRY 50,000 (approximately. USD 22,000) in a year. Once the threshold is exceeded, any following sale transaction should also be announced by the transacting parties at least one day prior to the sale; without disclosing the amount of the sale.

Key changes concerning listed companies effective February 23, 2014:
If a company is not listed on the stock exchange but issues securities other than equities (i.e. corporate debt or similar) to the public, as long as those securities are on the market the company is subject to this communique for disclosures.

If any new information or rumor that may affect the price of the company’s shares or the investors’ decision regarding the company is published on media or on another venue, issuers are required to make an announcement to clarify whether the information is true or not. Even though the information source is not the company, issuer will have this requirement.

The Public Disclosure Platform (PDP) shows the shareholders having more than 5 per cent shares of the company. In case of a change in the list of the shareholders having more than 5 per cent shares, the Central Registry Agency (CRA) is responsible to make an amendment on the list.

The issuers will report to the CRA and the CRA will keep the list of persons who are able to access insider information per the issuer.

If there is any disclosure made by the company and there is any pending issue in the disclosure, the issuer will update the disclosure whenever there is any development and also every 60 days even if there is no development.

The communique (No: II-15.2) on the disclosure requirements of non-listed companies states that disclosure forms are specified and it is stated that forms are required to be sent to the CMB and the CMB will announce those forms through its website.

The below is only applicable to equities, there is no buy-in procedure for the fixed income market. 

If trading obligations are not met by 16:30 on T+2, the trade is considered to have failed. Members may settle their obligations by 09:30 on T+3, at the penalty interest rate (triple the prevailing overnight interest rate), otherwise the Borsa Istanbul initiates a buy-in on behalf of the failing member on T+3 on same day value. Any difference in price is paid by the failing member. Trading to cover a failed transaction will settle the same day. With the amendment in the Borsa Istanbul regulation published in the Official Gazette dated 19 August 2011, overnight weighted average interest rate set by the Borsa Istanbul Interbank Repo – Reverse Repo Market is added as a reference rate in the determination of default penalty rate applicable to the Borsa Istanbul members for on-exchange transactions. Accordingly, the default penalty for Borsa Istanbul members will be calculated over the highest of overnight weighted average interest rates set by either: the Borsa Istanbul Repo-Reverse Repo Market or; the Central Bank of Turkey (CBoT) Interbank Money Market or; the ISE Interbank Repo – Reverse Repo Market which was added with the recent amendment.

If an investor fails to provide securities or cash to the local broker on T+2 more than twice over a period of three months, the local broker is required to communicate the name of the investor to the stock exchange for it to be announced via General Letter of the Exchange. Upon such disclosure, the investor is restricted from trading in the market unless securities or cash are consistently made available to the local broker on trade date for a period of six months.

There are some exemptions to the disclosure procedure, such as missing instructions due to time difference, misleading information from the local brokers, technical problems in generating messages, systemic errors at the Borsa Istanbul/CSD/Takasbank etc. If an exemption applies the local broker will continue their reporting, unless there is wilful misfeasance or bad faith by the investor, disclosure of the investor and trading restrictions will not be applied, If the default amount is less than TRY 10,000 (approx. USD 4,000) or not exceeding 5% of the investor's net assets with the local broker, such defaults will not be reported. The Ministry of Finance, in line with the re-evaluation value, will revise the default amount on an annual basis.

Takasbank has been offering on exchange securities lending services since September 23, 1996. Foreign investors may participate in securities lending activities through Takasbank members. The brokerage houses and banks that are authorised to buy and sell capital market instruments are allowed to undertake lending and borrowing of securities without additional permission of the Capital Markets Board. 

Securities lending is permitted for both equities and bonds. Securities lending and borrowing activities are regulated by the CMB under the Communiqué Regarding Margin Trading, Short Selling, Lending and Borrowing of Securities (Communiqué Serial No. V/65) (the "Communiqué Serial No. V/65") (published in the Official Gazette dated July 14, 2003, No. 25168), which provides certain provisions including but not limited to specific and general limits on transactions, pricing limits as well as disclosure requirements. 

It should however be noted that the Communiqué Serial No. V/65 does not provide any restrictions or limitations on or apply to securities borrowing and lending made on a cross border basis. Accordingly, foreign investors may freely enter into securities borrowing and lending transactions with Turkish residents and non-residents.

For OTC lending and borrowing transactions between the parties, agreement copies (i.e. OSLA, etc.) and/or any other documents (i.e. Letter of Undertakings) are not required. Parties to the transaction will only be required to populate the necessary fields in their SWIFT instructions to mark the transactions as securities lending or borrowing activity. (22F fields to read SECL and SECB for such an activity). It is important to note that this mark -up should be in both legs of a lending and borrowing transaction.

Therefore the counterparty should also recognise and identify the transaction accordingly in their SWIFT instruction to match both transactions.

An Investors Protection Fund was established by new Article 46/A of the CMB Law issued on December 15, 1999. It is a private legal entity managed and represented by the Central Registry Agency. 

With the enactment of the new Capital Markets Law effective 30 December 2012, Investor protection fund is restructured as “Investor Compensation Centre” and CRA is not responsible for the management of this new center. The CMB is managing the “Investor Compensation Centre”. 

As per the law, the protection amount will be TRY 114,437 (USD 46,800 as of February 2015).

Turkey has specific Anti-Money Laundering Laws (i.e. Law No: 4208, 5549)

This is an FII market. Please contact your RBC Investor Services' Client Manager before making portfolio investments.

An account per investor is required for tax purposes. A segregated account structure is required per entity level and each entity should have its own tax-id. Non-resident investors need to have a tax identification number from Turkish tax offices to open an account with local banks and brokerage houses. 

Non-resident investors who already have a tax ID and registered as non-resident investment fund (NRIF) through their permanent representatives will continue to use these existing Ids, even if their NRIF status is terminated. However, there will be special tax identification number to benefit from favourable tax rates on dividends and interest income from fixed income instruments through a Double Tax Treaty (DTT). For that, the foreign investor is required to provide a valid Certificate of Tax Residency (CoTR) and is required to renew the CoTR annually.

As per the change of relevant tax regulations effective from January 1, 2006, new registrations as non-resident investment fund status is not available for non-resident investors from January 1, 2006.

None

No restrictions

Only local banks are authorised to enter into FX transactions with the CBT, however, there are no restrictions on the interbank market where local and foreign financial institutions are also allowed to participate. There are no restrictions on the inflow or outflow of foreign currency.

Funds transfers take place via the EFT (Electronic Funds Transfer) system, which is regulated by the Central Bank of Turkey. It is an on-line real-time system to which banks have accesses. Payments are final and irrevocable once they are released. The deadline is 17:30, but can be extended by the Central Bank of Turkey based on the market conditions.

Effective October 30, 2000, the Central Bank of Turkey (CBT) introduced the EMKT (Electronic Security Settlement) system, which facilitates a true DvP environment for settlement of government securities. EMKT enables simultaneous exchange of cash and securities via the CBT. EMKT replaced EFT for transfer and settlement of government debt securities.

The CBoT maintains one integrated system which includes Electronic Funds Transfer (EFT), and the Electronic Security Transfer and Settlement System, or more commonly, EMKT) systems. Both of these systems are directly connected to a single user interface which is called KAS (User Interface System).

Central Bank of Turkey has introduced a new back-up system to support its EFT system (local RTGS system) for Turkish Lira payment transfers. The back-up system enables member banks to exchange payment messages via XML files
between each other and to download related reports from the application portal.

The back-up system does not support message types for securities transactions which are currently executed through CBoT’s EMKT system.

Investors are permitted to be overdrawn in the Turkish market.

Entitlement is on traded positions. CRA pays member accounts through direct credit on pay date based on settled positions on record date (ex date+1). (Although there is no set pay date for cash dividends in Turkish market, as a market practice payments are generally realised on ex date+2).

Annual

Varies by issue.
The Central Bank of Turkey makes interest payments to all entitled member bank accounts on maturity or coupon dates.

Actual/365-day basis

Peak season for corporate actions is from February to June.

Shareholders’ rights and entitlements are protected based on CRA’s records. For government securities, holder’s rights and entitlements are protected based on CBT’s records.

Entitlements are calculated according to ex-date. The entitlement position is based on trade position and trades with a trade date before ex-date are included in the entitlement calculation. In the event of entitlement arising from a pending trade, the local custodian will contact the counterparty to recover the entitlement. There is a Market Claims Communication Platform (the Platform) for corporate actions in the market, which intermediate entitlement reclamation requests between members due to pending transactions. The Platform is expected to shorten the time period required for the finalisation of open claims due to pending transactions; assist the reconciliation of outstanding claims for the members from each other; and bring further efficiency to Turkish market on corporate actions market claim process. The platform is available to members as of January 25, 2010.

Unrestricted voting rights. Partial voting is allowed. Split voting is possible within an account provided that there is no manipulation.

The share blockage requirement has been abolished for the shareholder meetings that are announced after 1 July 2012. 

In line with the new Turkish Commercial Code, electronic voting has been available in the market since 1 October 2012 and physical participation is still an option.

Provided in English. 

Annual general meetings and extraordinary general meetings are announced one to two weeks in advance.

On request, subject to availability.

On request, subject to availability.

Required. The Capital Markets Board determines power of attorney requirements. Powers of attorney must be notarised and apostilled. With the introduction of electronic voting in Turkey, single PoA requirement is abolished for meetings where companies use e-voting platform. One single general PoA at the master relation level is sufficient to cast votes for proxy voting.
However for companies which are not obliged to use e-voting platform (e.g. Pre-Market Trading Platform, unlisted companies), physical voting is still applicable and for that a separate PoA is required at the investor level.

Not applicable

Due to the complexity of the Turkish Tax system, clients are strongly advised to obtain independent tax advice.

Effective December 21, 2021 the standard rate of withholding tax on dividend income received by non-resident decreased from 15% to 10%.

Profit distribution of resident legal entities to non-resident legal entities with a permanent establishment in Turkey, such as non-resident investment funds (foreign investors that have a permanent representative in Turkey), is exempted from corporate tax and not subject to withholding tax applicable to dividend.

The dividends derived by non-resident corporate investors without a permanent representative in Turkey are subject to dividend withholding (at the rate of 10% effective December 22, 2021) by the company. Provisions of tax treaties are reserved.

The companies provide the gross and net dividend rates in their announcements in the Public Disclosure Platform (PDP). MKK, as of March 2006, pays dividends gross even for the new positions of the NRIF status investors. A clarification from the MoTF regarding the application of withholding tax on pre and post 2006 equity holdings of NRIF status investors. This clarification clearly states that the shares acquired after 1 January 2006, by those investors who continue to hold the NRIF status should be subject to withholding tax as per Article 94 of the Income Tax Law, while pre-2006 holdings will not be subject to withholding tax for these investors.

Due to the complexity of the Turkish Tax system, clients are strongly advised to obtain independent tax advice.

Effective December 21, 2021 the standard rate of withholding tax on interest income reduced from 10% to 0%.

Interest is defined as the income derived at redemption or on coupon payment dates as the difference of redemption minus accrued interest paid to purchase security. Please note that sales prior the redemption is treated as capital gain. Calculation of interest:

· Discounted bond - face value of the bond minus purchase price is the interest that forms the tax base for withholding tax.
· Coupon bonds - accrued interest of coupon is calculated on straight line basis. The calculated interest is deemed accrued and paid so for withholding purposes; it is deemed the cost of coupon at redemption. Accrued interest is deducted from purchase value of the security and the remaining amount is deemed cost of bond. If the cost of bond is lower than the nominal value, the difference is taxed at maturity (added to the final coupon interest). If it is higher than the nominal, amount paid over the nominal is considered as the cost for the first coupon payment. 

Due to the complexity of the Turkish Tax system, clients are strongly advised to obtain independent tax advice.

There are two types of taxation for capital gains based on the tax status of foreign investors:

1) Taxation for Investment Funds: Foreign Investors, who had Non-Resident Investment Fund (NRIF) status, as described under Corporate Tax Law and related Communiqués, as of 31 December 2005, will continue to be subject to taxation regime applicable to investment funds, for equities purchased before and fixed income issued before 1 January 2006.

The tax of investment funds is according to a classification of funds, as either A type (equity funds) or B type (other funds). 0 per cent tax is applicable to net income (including capital gains) of A type funds and ten per cent is applicable to B type funds’ corresponding net income. NRIF status continues until i) the equities exist in the portfolio as of 31 December 2005 are disposed and ii) fixed income securities issued prior 31 December 2005 are disposed. Moreover, a) equities purchased on or after 1 January 2006, b) fixed income securities issued on or after 1 January 2006, c) fixed income securities issued prior to 1 January 2006 but purchased after NRIF status was lost, are not eligible for the investment fund status as described earlier. Therefore, they are subject to either withholding based taxation or corporate tax filing as described below.

2) Withholding Based Taxation:
Currently, withholding based taxation is applicable on capital gains and interest for:
· Equities purchased on or after 1 January 2006,
· Fixed income securities issued on or after 1 January 2006.

Agreements, which do not include an amount, are not subject to stamp duty. Loan agreements are exempt from stamp duty and other agreements are generally subject to stamp duty at 0.948 per cent.

Double Tax Treaty Benefits 
It should also be noted that foreign investors might benefit from partial or full relief on withholding tax rate and corporate tax rate, under an existing double taxation treaty (‘DTT’) between their country of residence and Turkey. For precise information regarding relevant status under any DTT, investors should consult their tax advisors. In order to be eligible for such favourable terms, the investor should have a special tax identification number from the Tax Office.

Standard and Special Tax Identification Numbers
Investors are not able to execute any financial transaction without a tax identification number from January 1, 2006. 

Those investors already with a tax identification number will continue to hold those tax identification numbers, even if their NRIF status is terminated. If the investor is under the coverage of any double taxation treaty (‘DTT’) benefit between their country of residence and Turkey, RBC Investor Services' subcustodian, will obtain a special tax identification number for that investor from the relevant tax office (even if the investor already has an standard tax identification number). 

The relevant documents needed are:

• Constitutive Document certifying the establishment of investor (either a Turkish translation certified by the Turkish Consulate in their country or original version with the copies translated in Turkish by locally licensed translation offices).
• Certificate of Tax Residency (CoTR) drawn up and signed by the competent authority referred to in Article 3 of the relevant Double Taxation Treaty, verifying the concerned party’s tax payer status, i.e., tax residency in the concerned country as per Article 4 of the DTT, together with the Turkish translation of the CoTR.

If the investor is not eligible for any double taxation treaty (‘DTT’), subcustodian will obtain new standard tax identification numbers for those investors who does not have any tax identification number and for those investors who newly open accounts. The relevant documents needed are:

• Constitutive document certifying the establishment of the investor (either a Turkish translation certified by the Turkish Consulate in their country or original version with the copies translated in Turkish by locally licensed translation offices.

Documentation provided for tax ID applications
Investors are required to have a local Tax ID to open banking or trading accounts in Turkey. Accordingly, foreign institutional investors are required to provide the following documentation in order to obtain a standard Tax ID:

Constitutive or establishment documents including the full legal name and establishment date of the investor and those documents should be approved by the relevant authority in the country where investor is resident (either a Turkish translation certified by the Turkish consulate in their country or original version with the copies translated in Turkish by locally licensed translation offices). For those investors who wish to provide copies of establishment documents, the documents should be notarised and apostilled.

Turkey Holiday Calendar

• Borsa Istanbul http://www.borsaistanbul.com/en/home-page
• Central Registry Agency mkk.com.tr
• Central Bank of the Republic of Turkey tcmb.gov.tr
• Istanbul Settlement and Custody Bank http://www.takasbank.com.tr/en/Pages/MainPage.aspx
• Capital Market Board cmb.gov.tr