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Capital Markets Board of Turkey
WHAT ARE THE POLICY TRADE-OFFS
FOR IMPROVING DISCLOSURE OF
BENEFICIAL OWNERSHIP?
OECD MOSCOW ROUNTABLE
November 2004
İ. KUBİLAY TEMUÇİN
Vice Chairman of
Capital Markets Board of Turkey
ktemucin@spk.gov.tr
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Capital Markets Board of Turkey
Background
Fighting against the abuses of the global financial
system is crucial for a sound financial system.
Capital movements by the merit of technology is
possible everywhere.
These improvements also serve for financing the
increasing terrorist activity, insider dealings etc.
Under the corporate governance aspect, disclosure
will enhance transparency and give investors better
insight of the capital and control structure of the
company.
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Capital Markets Board of Turkey
Background
Beneficial ownership, by its nature has a strategic
importance for the realization of illicit purposes.
In order to tackle with the misuse of corporate
entities;
Supervisors should be able to obtain information on the
beneficial ownership and control of corporations.
Information sharing mechanisms with the domestic and
foreign authorities are also vital.
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Capital Markets Board of Turkey
OECD Report – Options For Disclosure
Three of the options are efficient vehicles to
cope with the problem.
Each option presents different approaches
so they are available in adapting different
systems.
Parallel to the investigative powers of the
system, the option changes.
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Capital Markets Board of Turkey
TURKEY CASE
The main characteristic of Turkish Corporate sector is
concentrated ownership. In 46% of listed companies, one
shareholder holds more than 50% of voting rights. Generally,
controlling shareholder is a holding company controlled by a
family.
Shares of joint stock corporations may be in issued two types.
Registred form
Bearer form
The owner of the share is anonym.
The ownership transfer of these shares are not subject to
any formal requirement other than delivering the share
itself.
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Capital Markets Board of Turkey
Bearer Form Shares- Making Up The
Disadvantages
Anonymty brings the risk of being used for illicit
purposes.
Knowing the owners of these bearer form shares is
important for investigative authorities with respect to
tax evasion and money laundering.
The use of bearer shares may be abolished or
enjoying the administrative or financial rights may
be subject to the deposit condition for holders of
these shares.
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Capital Markets Board of Turkey
Bearer Form Shares- Making Up The
Disadvantages- Dematerialization
As per March 2005, capital market instruments will be
dematerialized.
A Central Registry Authority will handle the beneficiary
ownership upon the shareholders’ claim.
A shareholder who does not want to be known as a security
holder but wants to enjoy the financial and administrative
rights will inform the intermediary institution and intermediary
institution will inform the Central Registry Authority
accordingly. Beneficial ownership practice will be applicable in
Turkey. This information shall only be delivered to the
supervisory and regulatory authority. The competent authority
shall have proper oversight and high integrity for obtaining
beneficial ownership and control information.
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Capital Markets Board of Turkey
TURKEY CASE
Currently, in technical terms concept of beneficial
ownership does not exist.
There are various disclosure requirements at the
acquisition and disposal procedure of shares.
Pursuant to CMB’s “Communique On Principles
Regarding Public Disclosure Of Material Events”,
changes in capital structure and control of the
corporation should be disclosed to public.
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Capital Markets Board of Turkey
TURKEY CASE-Changes in capital
structure and control of the corporation
Change in the control of management, either directly
or indirectly due to changes in the capital structure,
voting rights of shares,
Cases of changes either within the direct or indirect
ownership of 5%, 10%, 15%, 20%, 25%, 1/3, 50%,
2/3 or 75% or more of the total voting rights or
capital of the corporation by real or legal person,
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Capital Markets Board of Turkey
TURKEY CASE-Changes in capital
structure and control of the corporation
Direct or indirect ownership of 5%, 10%, 15%, 20%,
25%, 1/3, 50%, 2/3 or 75% or more of the total
voting rights or capital by the mutual funds founded
by the same legal person,
Purchase or sale of the stocks of the corporation by
such persons as chairman or members of the board
of directors, general directors or assistant general
directors, shareholders who directly or indirectly
own 5% or more of the capital or voting rights
should make disclosures.
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Also client identification and “know your customer”
rule is available.
Capital Markets Board of Turkey
Know Your Customer Rule
Intermediary institutions,
Must know the identity of the customers prior to opening
an account according to the Law on Prevention of Money
Laundering.
For the joint accounts each account holder should be
identified separately. Apart from the customer, only the
persons who have been authorized through proxy drawn
before the public notary can make transaction on behalf of
the customer.
Shall request from foreign banks and brokerage firms a
written undertaking that they would provide identification
details of the customers on behalf of whom the transaction
is to be made, before getting their buy and/or sell orders.
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Capital Markets Board of Turkey
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Capital Markets Board of Turkey