ADVANTAGES OFFERED BY THE ECM

 

In order to facilitate it for the companies to raise funds through the ECM and encourage going public, exceptions are granted in many areas; including fee cuts, requirement alleviations, and incentives. Advantages offered by the ECM are summarized under the headings below.

Requirements for Exchange Trading
No quantitative criteria such as profitability, operational age, and capital or market capitalization size are sought for admission of shares to the ECM Directory. Companies can access the capital markets much more easily through the ECM.

Fees
In order to provide cost advantage for ECM companies, the ISE and the CMB both cut their fees to 1/10th of the fees applied in the other ISE markets. There are attempts to lower the Central Registry Agency (CRA) fees parallel to the CMB and the ISE reductions. On the other hand, while companies traded on the SM are charged on the basis of their total capital amounts by the ISE, ECM fees are charged only on the basis of the amount of shares on the ECM Directory. The ECM also offers the most advantageous structure for companies in terms of access to the capital markets and maintenance costs.

Sales Methods
In order to be traded on the Stock Market, company shares must be sold by a public offering, as required by the CMB regulations and the ISE admission requirements. The ISE also demands that the shares are sold to a minimum of 250 investors in public offerings. Shares sold by a private placement are also admitted to the ECM Directory along with publicly offered shares, and the minimum number of investors criterion is not sought. The ECM offers lower cost alternative sales methods for companies to access the capital markets.

Prospectus Issuing Requirement
It is mandatory to issue prospectus and circular at public offerings, but private placement sales of shares issued by a capital increase is also possible on the ECM, and according to the CMB regulations, there is no obligation to issue prospectus and circular at private placements.

Independent Audit Requirement
For public offerings outside the ECM, the ISE and the CMB require independent audit reports for the financial reports of the latest 3 years, and limited audit reports for the 6 or 9 months interim financial reports, depending on the offer date. On the other hand, for trading on the ECM, only an independent audit report for the latest year and, if 9 months has elapsed since the date of such report as of the issue date, 6 months interim audit report is required. Furthermore, companies traded on the ISE, with the exception of the ECM, must get their semiannual financial reports independently audited as well as their annual financial statements. ECM traded companies must get only their annual financial statements independently audited.

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