BULLETIN ON THE RESCRIPT ON THE PROCEDURES AND PRINCIPLES REGARDING THE COLLATERAL ISSUANCE OF CAPITAL MARKETS INSTRUMENTS
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Rescript on the Procedures and Principles Regarding the Collateral Issuance of Capital Markets Intruments that based on Article 31/B of the Capital Market Law dated 06.12.2012 and numbered 6362, entered into force with its publication in the Official Gazette dated 26 January 2022 and numbered 31731. The Rescript regulates the procedures and principles regarding the guarantees to be given in the issuance of capital market instruments, the collateral management agreement and the collateral manager.
GUARANTEED ISSUES OF CAPITAL MARKETS INSTRUMENTS AND ASSETS SUBJECT TO GUARANTEE
- The Capital Markets Board will examine the issuer or the qualifications of the issuer and will decide whether the guarantee will be required or not. In this respect, it may be required to guarantee the capital market instrument to be issued.
- Issuers will be able to secure the capital market instruments that they will export with assets deemed appropriate by the Capital Markets Board, on the condition of ensuring that the liabilities arising from these instruments are fulfilled in due time. In this context, the ownership of the assets subject to collateral may be transferred to the collateral manager or limited real rights (pledge, mortgage, etc.) can be established on these assets in favor of the collateral manager. Without these transactions, the sale of the collateralized capital market instrument cannot be started.
- Assets that can be used to collateralize capital market instruments are as follows: (i) cash (Turkish Lira/convertible foreign currency) and foreign currency denominated bonds issued by the Ministry of Treasury and Finance, government domestic debt securities, lease certificates (ii) are included in the calculation of equity issued by banks. debt instruments (iii) mutual fund participation shares (iv) receivables of banks and financing companies arising from consumer loans and commercial loans (v) receivables arising from financial leasing contracts (vi) commercial loans and receivables of banks, financial leasing companies and financing companies secured by mortgages in the relevant registry (vii) rights arising from derivative instruments, (viii) shares traded in İstanbul Star Stock Market (ix) standard valuable metals traded in the stock market, and (x) immovable properties that are insured.
- As a rule, the Rescript does not predict re-examination obligation for the assets subject to collateral. However, the Capital Markets Board will be authorized to request; to diversify and/or change of the assets subject to collateral from issuers by taking into account the qualifications, liquidity and similar features of the issuer and the assets subject to collateral, to determine at what rate the assets can be accepted as collateral and/or reexamine of the assets subject to collateral as regular and/or incidental
- At the time of transformation of the assets that are subject to collateral, to the collateral manager, there must be no obligations on the assets.such as restricting the transfer or constraining of limited real rights.
COLLATERAL MANAGEMENT AGREEMENT
- Other conditions where the receivable from the guarantee can be covered will be decided in the collateral management agreement that concluded in writing between the issuer and the collateral manager and these agreed conditions will have the same result as the default,
- The collateral management agreemnt will expire in the following cases: (i) performance of the payment obligation arising from the issuance of capital market instruments (ii) completion of payment transactions by converting the collateral assets into cash (iii) non-compliance of the collateral manager with its obligations (iv) cancellation of the operating license of the collateral manager, permanent or temporary suspension of its activities, the cancellation of the general custody authority (v) failure to rectify the breach within thirty days from the occurrence of the situations that impair the independence of the collateral manager or the situations that impair the independence that are considered by the Board
- Collateral manager; will be authorized to transfer of ownership of collateralized assets, to establish of limited real rights on these assets or to make transactions that will be necessary in this regard, in public and private institutions on its own behalf and on behalf of investors.
- Collateral manager; in the occurence of the default and other situations that have the same result as the default, will be able to convert the amount of the assets that are subject to the guarantee into money and pay the investors without being subject to any preconditions. If the amount obtained is not sufficient to meet the receivables of all investors, the collateral manager will pay the investors on a pro-rata basis.
- Within the scope of the clause on the independence of the colleteral manager of this Rescript, the cover manager and the issuer cannot be related parties.
- With the Rescript, in order to inform the investors about the status of the guarantees, the obligation of public disclosure has been brought to the collateral manager in the specified cases. In this context, the collateral manager will be mandatory to publish the following cases as; (i) making changes in the collateral agreement (ii) affecting independence, (iii) reducing the value of the assets subject to the collateral by 25% or more, (iv) the issuer’s default or breach of defaulted results or non-payment obligations (v) coverage of receivables from collateral (vi) any other circumstances deemed necessary by the Capital Markets Board, on the Public Disclosure Platform.
- The collateral manager will kept a special collateral accounting book for the assets subject to collateral.