ISE Rules and Regulations

Istanbul Stock Exchange

Istanbul Stock Exchange Rules and Regulation

Initial Listing Requirements for the Securities Representing Partnership Rights

A) The application:

must refer to the entire stocks of the same type issued until the application date,

B) Requirements concerning the company:

1. Its latest annual and quarterly financial statements must have been independently audited and for group companies, consolidated financial statements must have been prepared; in the case of audit reports involving qualified opinion, the consequences of the events leading to such opinion must be reflected in the financial statements and explained in footnotes,

2. At least three calendar years must have elapsed since its corporation (two years if the free float rate is at least 25%),

3. It must have earned profits before tax in the last two consecutive years (in the previous year if its free-float rate is at least 25%),

4. Its paid-in or issued capital must be minimum TL 1.250 billion (this amount may be increased by the Executive Council in consideration of the revaluation rate announced annually),

5.Its free-float rate must be :

15% if its capital is up to TL 750 billion,

10% if its capital is within range of TL 750 billion and TL 1.5 trillion,

5% if its capital is more than TL 1.5 trillion.

Nevertheless, companies that initially offer their shares representing less than 15% of their capital to the public must have the balance of the shares registered with the Capital Markets Board by the end of the third year following the date of initial public offering. In the calculation of the said rate, the nominal capital as of the date when such rate is increased to 15% is taken into consideration.

6. The Executive Council must have had the corporation’s financial situation examined and accepted its ability to continue as a going concern,

7. The statement required by the Exchange must be submitted to the ISE Chairman’s Office after being printed on the corporation’s letterhead, signed by two signatories with first degree authority and attested by the notary,

8. Its articles of incorporation must not include any provisions limiting the transfer and trading of the securities or preventing the shareholders from exercising their rights,

9. Material legal disputes which may affect the corporation’s manufacturing activities must have been settled or about to be settled,

10. For reasons other than acceptable to the Exchange, the corporation must not have suspended its manufacturing activities for more than a quarter within the previous year, not applied for liquidation of its assets or entered into composition or any other arrangement with its creditors, and not have faced similar situations envisaged by the Exchange.

11. Its securities must comply with the criteria envisaged by the ISE management in terms of the current and potential trading volume.

C) With respect to the listing of corporations to which another corporation whose securities are traded on the Exchange and has been active in the previous three years and earned profits before tax in the previous two years transferred at least 15 % of the total assets stated in its last balance-sheet and holds minimum 51 % of the former’s shares, the foregoing requirements as to profitability and the period of time that must have elapsed since foundation do not prevail. In the event that a new corporation(s) is/are established through the allocation of at least 15 % of the assets, or the abolition of the legal personality of a corporation whose securities are listed on the Exchange, the shares of such newly founded corporations shall be listed on the Exchange upon application to the Exchange along with the relevant supporting documents.

For the initial listing of a corporation 51% of whose capital is provided by the assets of another corporation that has been active for three years and earned profits in the previous two consecutive years, and established through the transfer of the manufacturing or other activities of the transferee in part or in whole, the foregoing requirements as to profitability and the period of time that must have elapsed since foundation do not prevail.

Listing Requirements for Securities Representing Indebtedness

Application must refer to the entirety of the series.
The nominal value of the issue related to the specific application must not be less than the amount set by the Executive Council.
The entire amount of the issue must be offered to the public.
Of the partnership with securities to be listed;

At least three years must have elapsed since the incorporation date. This obligation is reduced to two years if at least 25% of the capital is publicly held, and to one year if 40% is publicly held.
The latest financial reports should have been independently audited.
The corporation should have shown profit before taxation in the consecutive two years before the application. (if the floatation rate is minimum 25%, it should have shown profit in the previous year.)
The shareholder's equity in the last balance sheet which has been approved by the General Assembly and independently audited should not be less than the amount specified by the Executive Council.

e) The financial position of the corporation must be determined and approved by the Exchange

Administration to be at a level to enable the corporation to carry out its activities soundly.

f) The concerned security must conform to the pre-determined criteria by the Exchange.

De-Listing

Conditions for Situations Necessitating De-listing

The Board may determine a time frame for correcting problems or issue a warning to any corporation under de-listing consideration, prior to making a decision. Securities. may be de-listed per the following:

If the nominal value listed on the ISE is not equal to the paid in capital of the corporation,
If the current year losses and cumulative losses exceed shareholder's equity,
Non-compliance with any declarations made to the Exchange,
Not exerting the maximum effort to comply with obligations or not disclosing all information, potentially influencing the decisions of the investing public, via the fastest communication channels,
Non compliance with the rules and regulations of the ISE,
Filing for bankruptcy or suspending production for more than three months, other than exceptions accepted by the Board.
Dissolution of the corporation due to liquidation or terminating operations,
A concordat or a petition for protection from creditors is requested from the partners,
Non payment of fees and any collection legal action being ineffective,
Any mortgage, security or guarantee on the assets in excess of the maximum amount specified by the Board,
Any permits, licenses, or agreements, crucial to operations, being canceled or invalidated. Lawsuits negatively affecting operations,
Default on any agreements to list whether official or not,
Loss of two thirds of the corporation capital,
Independently audited reports consisting of negative opinions for the last two financial periods,
Any disasters such as fire, war, terrorism, etc., which affect the loss of two thirds of the operational capacity,
1. Submission of any information and/or documents to third parties such as the press, other companies and institutions by authorized persons or persons in management positions, prior to disclosure to the Exchange.
Non payment of interest or not redeeming debt securities listed on the Exchange,
The market price dropping below the nominal value, trading volume dropping below the market average or being suspended from trading,
Not providing information and documents requested from the ISE. Providing incorrect, misleading, or insufficient information or impeding the ISE from by withholding and/or destroying. documents.

De-listing by Request of the Corporation

Corporations can apply for de-listing of listed securities on the Exchange. Such a request may require actions, on the part of the corporation, to protect investors rights prior to the Board approving the request.

Disclosure Requirements Regarding Financial Statements

A. The companies traded on the ISE are obliged to present their financial statements on a quarterly basis according to the standards required by the Capital Markets Board.

B. Independently audited year-end financial statements and reports prepared in accordance with the Capital Markets Board's accounting standards shall be submitted to the Exchange within a period of 10 weeks following the end of the accounting period.

C. Independently audited six-month results of companies traded on the ISE shall be submitted to the Exchange within 6 weeks following the end of the accounting period. This period is 8 weeks for banks traded on the ISE.

D. Independently unaudited 3-month and 9-month financial statements of companies shall be submitted within 4 weeks following the end of the accounting period. This period is 6 weeks for banks traded on the ISE.

Disclosure Requirements Regarding Special Situations

The “special situations communiqué” published by the Capital Markets Board (CMB) states the disclosure requirements.

It is compulsory to disclose the following special situations;

1. When a person or a legal entity or persons or legal entities acting together acquire 10% or more of the total voting rights or of the total number of stock certificates issued; or when the portion held by those persons falls below 10% of the total voting rights or of the total number of stock certificates issued.

2. When the total purchases or sales of the shares of a company (whose stocks are traded on the stock exchange) by its Chairman, members of the Board of Directors, General Manager, his deputies or by those shareholders who own 10% or more of the total number of issued stocks, reach 1% of the total paid-in capital.

3. Large amount of Stock Sales on the Stock Exchange

For companies whose stocks are traded on the Exchange including the stocks of corporations within the scheme of the privatization program; the shareholder is obligated to notify the Capital Markets Board and the Exchange the commencement of the sale of stocks or of the sale agreement made with a financial intermediary to sell the stocks of companies not in circulation (i.e not freely floated) on the Exchange. The disclosed information should constitute information concerning stocks to be sold, the nominal amount of the stocks and the time period of the sale.

An application must be made, on the day of disclosure or on the next business day following the disclosure day at the latest, to the CMB in order to register the stocks with the CMB pursuant to Article 5 of the “Rules Concerning the Registration with the Capital Markets Board and Sales.”

Sales of stocks pursuant to this article will commence, at the earliest, on the 5th day following the disclosure date.

Corporations whose securities are traded on the Stock Exchange, should inform the Capital Markets Board and the Istanbul Stock Exchange through the fastest communication means, as soon as the situations mentioned in (1) and (2) arise or are publicly heard.

The disclosure must be submitted to the Capital Markets Board and to the Istanbul Stock Exchange until 9.00 a.m. on the following business day after the situation arises.

The situations mentioned in (2) should be disclosed in a written form by the persons carrying out the transactions to the Capital Markets Board and to the Istanbul Stock Exchange by stating the prices and the amount of stocks purchased or sold and the trading dates within the first week of the following month.