[Last updated: 1 January 2025, unless otherwise noted]

6.1 Inside information

A Turkish public company has the obligation to immediately disclose to the public all "inside information" that relates to it, including all material changes in information that has already been disclosed.

• "Inside information" means information of a precise nature which has not been made public, relating directly or indirectly to one or more issuers of financial instruments or to one or more financial instruments and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments.
• Information shall be deemed to be of a "precise nature" if it indicates a set of circumstances which exists or may reasonably be expected to come into existence, or an event which has occurred or may reasonably be expected to do so, and if it is specific enough to enable a conclusion to be drawn as to the possible effect of that set of circumstances or event on the prices of financial instruments or related derivative financial instruments.
• "Information which, if it were made public, would be likely to have a significant effect on the prices of financial instruments or related derivative financial instruments" shall mean information a reasonable investor would be likely to use as part of the basis of their investment decisions.

It is up to the public company to determine if certain information qualifies as "inside information". This will often be a difficult exercise, and a large gray area will exist as to whether certain events will need to be disclosed or not.

6.2 Insider trading and market abuse

The basic legal framework regarding insider dealing and market abuse under Turkish law is set forth in the Capital Markets Law and the Market Manipulation Communiqué:

• Insider trading – Insider trading is a crime defined in the Capital Markets Law as benefiting from, or permitting others to benefit from, or avoiding losses through, or enabling others to avoid losses through, the use of non-public information which may affect the value of securities. Benefiting from non-public information is the essential element. For an act to constitute an insider trading violation, the information must be utilized in a manner which provides an unfair advantage over other investors. Insider trading violations are punishable by a prison term of three to five years or by fines. The minimum monetary fine imposed may not be less than two times the monetary benefit obtained through such actions.
• Manipulation – The Capital Markets Law defines two types of market manipulation. The provision of information, disseminating news or making comments in a false, falsified, misleading or groundless manner and not disclosing information which is required to be disclosed by law is defined as "market manipulation based on information"; whereas, the sale and purchase of securities for the purpose of artificially affecting supply and demand, creating an impression of an active market, keeping the prices at a particular level or artificially increasing or decreasing the prices is defined as "market manipulation". Manipulation violations are punishable by a prison term of three to five years and by fines. The minimum monetary fine imposed may not be less than the monetary benefit obtained through such actions.

In principle, the rules on insider dealing and market abuse remain applicable before, during and after a tender offer, albeit that during a tender offer additional disclosures and restrictions apply in relation to trading in listed securities.

6.3 Anti-takeover defense mechanisms

Anti-takeover defense mechanisms are not specifically regulated under Turkish law. Therefore, the legislation does not provide for break fees or lock-up arrangements. Under a VTO, a competitive offer and the board's report on the VTO may provide relief as anti-takeover defense mechanisms, yet practice of these in the Turkish market is not developed. Having said that, conventional anti-takeover mechanisms such as the poison pill (capital increase by the board under authorized capital system through limiting subscription rights) and cross-shareholding may, in theory, be applicable.

The majority of Turkish public companies have a low free float and are controlled by a single shareholder (or shareholders acting in concert). In practice, this leaves no room for hostile takeovers in the Turkish market.