Public offering

Scope

A public offering is defined in Article 3/1-f of Capital Markets Law No. 6362 (SPKn). Issuance is a broader concept and refers to the issuing of instruments by the issuer and their sale, with or without a public offering (Art. 3/1-ğ). The offeror is not only the company that issues new shares; it may also be a natural or legal person that applies to the Capital Markets Board (SPK) to offer capital market instruments it owns to the public (Art. 3/1-g).

For capital market instruments to be offered to the public or traded on an exchange, a prospectus must be prepared and approved by the Board (Art. 4). Approval does not mean that the Board assumes the accuracy of the information in the prospectus or gives investment advice (Art. 6/1). The Law also deems the shares of joint-stock companies whose shares are not traded on an exchange and whose number of shareholders exceeds the statutory threshold to have been publicly offered (Art. 16).

Practical significance

For a company preparing for a public offering, adapting the articles of association to capital markets legislation, the independent audit of financial statements, the prospectus and post-offering public disclosure obligations come to the fore. For losses arising from false, misleading or incomplete information in the prospectus, the issuer is liable first; if the loss cannot be recovered from it, the offerors, the lead brokerage firm, the guarantor, if any, and the members of the board of directors may be held liable in proportion to their fault (Art. 10). A public offering without an approved prospectus is a crime (Art. 109).

Commonly confused concepts

A public offering and an issuance are not the same: an issuance may also be made without a public offering, for example by sale to qualified investors or to specified persons; in that case an issue document approved by the Board is required instead of a prospectus (Art. 11). A public offering is also confused with the start of trading on an exchange; admission to exchange listing is a separate stage subject to the conditions in the relevant regulations (Art. 68). Crowdfunding is also a way of raising money from the public, but it is carried out through platforms permitted by the Board and is not subject to the obligation to prepare a prospectus (Art. 4/1).