Reservations

Companies state that there are no tax incentives for publicly traded companies

Yes, there are currently no tax incentives for publicly traded companies. However, Article 11 of the High Planning Council's Istanbul International Finance Centre Strategy and Action Plan, published in the Official Gazette dated 2 October 2009, states that efforts will be made to encourage new companies to participate in the capital market. Accordingly, it is stated that necessary steps, including tax incentives, will be taken. The transformation of Istanbul into an international financial centre will both support economic growth and pave the way for new public offerings by increasing capital supply. In future regulations, it is expected that all publicly traded companies will benefit from the incentives, not only the companies making initial public offerings.

Companies Worried About Losing Management Control

This concern is not necessary. Capital markets legislation allows for arrangements that can protect the management control of companies. For example, companies can take advantage of this by creating different share groups. In addition, within the framework of the new Turkish Commercial Code, companies can secure management control prior to public offering by making appropriate amendments to their articles of association. In Turkish capital markets, takeover operations, as in other developed countries, are almost unprecedented. Investors generally aim to realise capital gains on their investments.

Independent Audit Obligation is Thought to Create Costs

It can be said that the companies are partially right in this regard. With the new Turkish Commercial Code, the obligation of independent audit has reached a wide scope. Therefore, this obligation has become a legal requirement. However, independent auditing should not be seen only as a cost factor. This practice, which accelerates institutionalisation by providing transparency, discipline and self-control in companies, makes significant contributions to the sustainability of companies. Independently audited financial statements also provide a great advantage in terms of the reputation and reliability of the company.

There is a Concern that Public Disclosure will Negatively Affect Competitiveness

There is no need to worry about this issue. Public disclosure regulations include flexibilities for the protection of trade secrets and postponement of disclosures. In addition, public disclosure can be considered as an opportunity to increase the recognition of companies. Disclosures can reach large masses through the press and media and increase the visibility of companies. With the new Turkish Commercial Code, it has become mandatory for all companies to open a website and share information such as financial statements. This is part of public disclosure.

The Costs of Going Public are Considered to be High

Although it is true that the IPO process has a certain cost, these costs are usually incurred once and are quite reasonable considering the benefits it provides to companies in the long run. The costs of going public can generally be categorised under the following headings:

Intermediary Institution Fees: Paid to intermediary institutions depending on the size of the public offering and the scope of service.

Capital Markets Board Fees: A registration fee of 2 per thousand is paid according to the value of the shares to be issued.

Borsa Istanbul Fees: One thousandth of the nominal capital is paid as listing or market registration fee.

Central Registry Agency Fees: Companies going public are required to pay a membership entrance fee depending on the capital amount.

Other Costs: Expenses such as independent audit fees, promotion and advertisement expenses.

Bureaucratic Procedures in the IPO Process is the Subject of Complaint

There are some bureaucratic procedures during the public offering. However, these procedures are necessary to ensure the regular functioning of the capital market and to protect investors. In the recent period, improvements have been made to reduce bureaucratic burdens and arrangements in this regard are ongoing.

Concerns of Insufficient Funds in Capital Markets

This issue should be addressed with its domestic and international dimensions. Although there has been a decline in the number of domestic investors compared to previous years, there has been an upward trend in the recent period. Moreover, it is observed that individual investors have become more conscious and professional. Although there have been some fund outflows due to economic uncertainties abroad, Turkey's economic resilience allows these funds to be attracted again. As a matter of fact, the fact that approximately 65 per cent of the publicly traded shares in Borsa Istanbul are held by foreign investors shows that investor interest from abroad is still strong.