The Law Proposal, which includes innovations regarding financial markets, was adopted by the General Assembly of the Grand National Assembly of Turkey

The Law Proposal on Amendments to the Banking Law and Certain Laws was adopted by the General Assembly of the Grand National Assembly of Turkey and became law.

According to the law, the signature authorization of bank members who are found to jeopardize the banking system can be temporarily removed.

By ensuring that development and investment banks’ investments in movable, immovable goods and services or profit and loss sharing investments, supply of immovable, equipment or commodities, financing of documents against goods, and joint investments are considered as loans in the application of the law, the BRSA is authorized to consider these methods as loans in case new financing methods emerge under changing conditions.

A bank and its qualified shareholders, members of the bank’s board of directors, general manager, deputy general managers and executives who hold positions equivalent to or higher than these in terms of authority and duties even if they are employed under other titles, and their spouses and children, and the partnerships that they jointly, individually, directly or indirectly control or participate in with unlimited liability or in which they are members of the board of directors or general managers, will constitute the risk group to which the bank belongs.

Each of the banks whose majority of the capital belongs to the Treasury, Privatization Administration, Turkey Wealth Fund Management Joint Stock Company, Turkey Wealth Fund or public administrations within the scope of central government, separately or together, will constitute a separate risk group together with the partnerships they directly or indirectly control.

State-owned enterprises and other public institutions and organizations, the majority of the shares of which are held by the Privatization Administration, Turkey Wealth Fund Management Joint Stock Company, Turkey Wealth Fund, will each constitute a separate risk group together with the subsidiaries, affiliates and establishments whose capital, management and supervision they control.

Transactions with Turkey Wealth Fund Management Inc. or Turkey Wealth Fund will not be subject to the credit limitations of bonds, bills and similar debt instruments issued or guaranteed to be paid by these institutions.

Funds to be provided by development and investment banks from their loan customers, partnerships and partners and funds to be used from banks, money markets, capital markets and organized markets will not be considered as deposits.

Banks designated as “systemically important” by the BRSA will be obliged to prepare a precautionary plan and submit it to the BRSA in order to determine in advance the measures to be taken in the event that any of the situations that will cause deterioration in their financial structure due to non-compliance with the protective provisions in the law and the regulations issued pursuant to the law or otherwise arise or the possibility of occurrence arises.

As a result of the assessments made on a consolidated or unconsolidated basis, these banks will be obliged to take the measures to be applied on a consolidated or unconsolidated basis included in the precaution plan and to inform the BRSA immediately in case any of the situations that will cause deterioration in their financial structure occur or the possibility of occurrence arises.

If, as a result of the audits conducted by the BRSA on a consolidated or unconsolidated basis, it is determined that any of the situations that will cause deterioration in the financial structure have occurred or are likely to occur, the BRSA may request the bank to take one or more of the measures in the precaution plan.

“Customer secret”

Specific to banking activities, the data belonging to natural and legal persons that are created after the establishment of a customer relationship in banks will become “customer secrets”.

Without prejudice to the mandatory provisions of other laws, information that is a “customer secret” will not be shared with or transferred to third parties in Turkey or abroad without a request or instruction from the customer, even if the explicit consent of the customer is obtained in accordance with the Law on the Protection of Personal Data, except for the cases exempted from the obligation to keep secrets.

The BRSA will be authorized to prohibit the sharing or transfer of all kinds of data that are “customer secrets” or “bank secrets” with third parties abroad, as a result of the assessment to be made by the BRSA regarding economic security, and to take a decision to keep the information systems used by banks in carrying out their activities and their backups in the country.

Information in the nature of “customer secret” and “bank secret”, including the information to be shared in cases exempted from the confidentiality obligation, may be shared provided that it is limited to the specified purposes and includes as much data as required by these purposes in accordance with the principle of proportionality.

Transactions and practices carried out by banks to ensure artificial supply, demand or price formation in financial markets, including exchange rates, dissemination of false or misleading information through different means including the internet, directing savers in a false or misleading manner, or carrying out similar transactions and practices to achieve these objectives will be considered as manipulation and misleading transactions in financial markets. Transactions and practices falling within the scope of this article will be determined by the BRSA and published in the Official Gazette.

The BRSA will be authorized to differentiate the standard rates and limits set for the banking system in general for development and investment banks.

Participation and development banks

The BRSA will be authorized to determine the procedures and principles for participation banks and development and investment banks to carry out the activities regulated in the Banking Law through interest-free methods.

The partnerships in which participation banks and development and investment banks participate in order to provide interest-free financing will not be considered within the scope of the risk group to which the bank belongs.

The exemption regarding the shareholding limitations granted to development and investment banks will also be recognized for the partnership shares acquired by participation banks in order to provide interest-free financing, and special provisions may be regulated regarding transactions on real estate and commodities due to the obligations undertaken by participation banks due to the provision of financing through interest-free methods.

The Central Bank of the Republic of Turkey will be authorized to determine the fees, charges and commissions received by banks under any name from all activities such as loans, deposits, foreign trade, transfers, cash management and credit cards.

Administrative fines for market manipulation

Administrative fines will be imposed on those who carry out transactions and practices deemed as manipulation and misleading transactions in financial markets.

The Law on Amendments to the Banking Law and Certain Laws adopted by the General Assembly of the Grand National Assembly of Turkey updates the administrative fines stipulated in the Banking Law, the Law on Bank Cards and Credit Cards, and the Law on Financial Leasing, Factoring and Financing Companies.

Institutions within the scope of the Banking Law will be subject to administrative fines from TRY 100,000 to TRY 200,000 if they open branches and representative offices in violation of the provisions on “opening domestic branches” and “cross-border activities”, upon the Board’s decision and by stating the justification.

In case of violation of some provisions in the acquisition and transfer of shares, from 100 thousand liras to 200 thousand liras, in case of appointments to the positions of bank general manager and deputy general managers in violation of the provisions specified in the law, or in case of employment of persons subject to the prohibition of work and signature authority in prohibited duties, from 100 thousand liras to 500 thousand liras, In case of violation of the provisions on independent audit institutions or valuation and rating agencies or the provisions on the accounting and reporting system, consolidated financial reports, signing, submission, announcement and audit of financial reports or retention of documents, administrative fines from 50 thousand liras to 100 thousand liras will be imposed.

In case of non-compliance with the loan prohibitions within the framework of the risk group included and the conditions for granting loans to members, a fine of not less than 50 thousand liras up to 5 percent of the loan granted, and in case of failure to establish the provisions required to be set aside, a fine of not less than 500 thousand liras up to 5 percent of the amount of the provision required to be set aside, In case of non-compliance with loan limits, a fine of not less than 500 thousand liras and up to 5 percent of the amount in violation, in case of acquisition of partnership shares in violation of the law, a fine of not less than 500 thousand liras and up to 5 percent of the amount in violation, in case of violation of prohibitions and restrictions, a fine of not less than 500 thousand liras and up to 5 percent of the value subject to prohibition and restriction.

The penalty for violating the provisions on transactions related to funds and foundations will be not less than 500 thousand liras and the penalty for non-compliance with donation restrictions will be not less than 500 thousand liras and the penalty will be not less than 500 thousand liras and the penalty will be up to the amount of the violation.

If the foreign branches and partnerships of credit institutions established in Turkey do not carry out the issuance of deposit wallets and documents related to fund collection in the country where they operate, and if deposit wallets and documents related to fund collection are issued in the country on behalf of these branches or partnerships, an administrative fine of 500 thousand liras to 1 million liras will be imposed.

If credit institutions do not classify deposit accounts and participation fund accounts according to the maturity and types to be determined by the Central Bank, and do not separate savings deposits and participation funds belonging to real persons from other accounts, the administrative fine to be imposed will be from 500 thousand liras to 1 million liras.

Penalty up to 1 million liras for violation of customer rights provisions

In case of violation of the provisions on withdrawal of deposits and participation funds and customer rights, an administrative fine from 500 thousand liras to 1 million liras will be imposed.

In cases where amounts or rates are determined by the Central Bank, an administrative fine of up to 10 times the amount in violation of the said amounts and rates, up to 5 percent of the total of interest, dividend income, fees and commissions received and banking service income in the previous year-end financial statements will be imposed on those who carry out transactions and practices that are considered as manipulation and misleading transactions in financial markets, not less than twice the benefit provided in case of benefit.

The Banking Regulation and Supervision Agency (BRSA) will be authorized to aggravate the administrative sanction, taking into account that the violation is committed more than once until the sanction decision is made or the same violation is repeated within 2 years from the imposition of the administrative fine.

The amounts of administrative fines envisaged to be imposed on the relevant real and legal persons under the Banking Law by the BRSA decision and by stating the justification are also being updated.

Instructions issued by the Banking Regulation and Supervision Board and the Banking Regulation and Supervision Agency based on the Banking Law will also be included in the scope of administrative sanctions for violations of the restrictions, decisions and regulations set forth in the Banking Law.

Access to websites will be blocked

In order to prevent irreparable damages, access to websites used in the processing of unauthorized activities will be blocked if the content and hosting providers are located in the country.

Following the criminal complaint filed by the BRSA to the prosecutor’s office, access to the website will be blocked after a judge’s decision. If the content and hosting providers are abroad, the Information and Communication Technologies Authority will be authorized to implement this measure upon the application of the Board.

Excess amount

The provision stipulating that if a bank’s shareholding in a partnership other than credit institutions and financial institutions exceeds 15 percent of its own equity and the total amount of its shareholding in these partnerships exceeds 60 percent of its own equity, the excess amount will be taken into account as a deduction item from tier 1 capital in the calculation of equity. Instead of deducting the excess amount from Tier 1 capital in equity calculation, it will be subject to high risk weighting in accordance with Basel standards.

Until the regulations to be issued according to the amendments to the Banking Law are put into effect, the existing provisions will be applied. The Law authorizes the BRSA to give banks a deadline for the elimination of any excesses that may arise due to the amendments made in the Banking Law regarding compliance with the limitations and ratios specified in the Banking Law.

The Law also amends the Law on Bank Cards and Credit Cards. The Central Bank of the Republic of Turkey will be authorized to determine and announce the maximum contractual and default interest rates.

Penalty of up to 50 thousand liras for increasing the card limit

The amounts of administrative fines under the Law on Bank Cards and Credit Cards are also being updated.

With the decision of the Board and by stating the justification, the institutions within the scope of this law will be imposed administrative fines from 25 thousand liras to 50 thousand liras in case of issuers issuing cards on behalf of persons who have not requested or signed a contract, and from 50 thousand liras to 250 thousand liras in case of violation of the protective provisions.

With the amendment made to the Law on Financial Leasing, Factoring and Financing Companies, the amount of capital to be paid in cash at the establishment of factoring companies will be increased from 20 million liras to 50 million liras in order to strengthen their capital structure and provide them with a more corporate structure.

The BRSA will be authorized to update the amounts of administrative fines in the Law on Financial Leasing, Factoring and Financing Companies and to aggravate the administrative sanctions by taking into account the fact that the violation is committed more than once or the same violation is repeated within two years after the imposition of the administrative fine until the sanction decision is made.

Administrative fines under the Law on Financial Leasing, Factoring and Financing Companies will also be revised.

Factoring companies will increase their minimum paid-in capital to the amount specified in the law within one year from the effective date of the law.

The operating licenses of those that fail to increase their minimum paid-in capital within the stipulated periods will be canceled.

A Debt Instrument Holders Board will be established.

A Debt Securities Holders Board will be established, enabling investors to act collectively according to changing conditions. The “trust” institution, which has found wide application in capital markets abroad, will be introduced to the Turkish capital market as a “Collateral Management Contract”.

With the law adopted at the General Assembly of the Turkish Grand National Assembly, the article of the Capital Markets Law on the “exit right” was amended. Accordingly, shareholders who attend the general assembly meeting regarding significant transactions, vote negatively and record this opposition in the minutes, will have the right to exit by selling their shares to the publicly traded company.

The Capital Markets Board (CMB), depending on the nature of the publicly traded corporation, will determine the principles regarding the exercise of the exit right for the shares held on the date of public disclosure of the material transaction subject to the exit right.

The publicly held corporation will be obliged to purchase these shares upon the request of the shareholder at a fair price in accordance with the principles to be determined by the CMB.

With the Law, the share purchase offer obligation arising in the event of a change in the controlling shareholder in public joint stock companies will be recognized for investors who hold shares on the date the information regarding the acquisition of shares or voting rights is disclosed to the public.

“Debt Securities Holders Board” to be established

A new article will be added to the Capital Markets Law to establish a “Debt Instrument Holders Board”. This will enable investors to act collectively according to changing conditions and enable issuers and investors to reach an agreement to change the terms and conditions of debt instruments.

The “trust” institution, which is widely used in capital markets abroad, will be introduced to the Turkish capital markets as a “Collateral Management Contract” and general principles regarding this institution will be determined.

When the collateral manager ensures the management and administration of the assets subject to collateral, the ownership of which is transferred to it or limited real rights are established in favor of it in order to constitute the collateral of the obligations arising from capital market instruments, and when it is necessary to take legal action, in case of default or to meet the receivable from the collateral for reasons stipulated in the provisions of the law or contract; The collateral manager will be authorized by a collateral management agreement to be concluded in writing with the issuer prior to the issuance to perform all kinds of other works and transactions, including the monetization of the collateral subject to the collateral, the distribution of the sale amount of the collateral subject to the collateral subject to the collateral among the investors, the return of the surplus value to the collateral provider after the investors’ receivables are met, the return of the collateral subject to the collateral to the collateral provider upon the termination of the debt, and the protection of the interests of the investors.

The collateral manager will be authorized to perform on its own behalf and on behalf of the investors all works and transactions regarding the establishment, abandonment, cancellation and termination of the collateral, including the registration and registration of pledges, mortgages or any real rights, annotations, encumbrances, rights and receivables in special registries, including but not limited to land registries, ship registry, vehicle registry and movable pledge registry, and all kinds of transactions required for these.

Assets subject to collateral will be separate from the assets of the collateral manager and will be monitored separately. These assets cannot be seized, pledged, included in the bankruptcy estate, or subjected to precautionary measures and attachments, even for public receivables, due to the debts of the collateral manager.

In the event that the collateral manager uses the assets whose ownership is transferred as collateral for purposes other than savings, the offense of “abuse of trust” under the Turkish Penal Code will be sentenced, and the penalty will not be less than 5 years.

Crowdfunding platforms

The CMB will be able to determine whether crowdfunding activities are carried out by collecting money from the public based on partnership or borrowing. The provisions of the banking legislation will not apply to crowdfunding activities based on borrowing.

Real and legal persons who sign the information form prepared for crowdfunding transactions will be jointly and severally liable for any damages arising from false, misleading or incomplete information in the form.

The ancillary services that investment institutions and portfolio management companies may provide will include the provision of loans or credits and foreign exchange services, without prejudice to foreign exchange regulations, in services and activities to be determined by the CMB, including project financing.

Mutual funds, housing finance funds and asset finance funds, which do not have legal personality, will be deemed to have legal personality in all kinds of registry transactions, including registration, amendment, abandonment and correction requests in the land registry, trade registry and other official registries.

CMB administrative fine for missing documents

In the event that the information and documents requested by the Capital Markets Board (CMB) from real and legal persons are not provided, provided incompletely or provided in a misleading manner, an administrative fine from 20 thousand liras to 250 thousand liras may be imposed.

With the Law on Amendments to the Banking Law and Certain Laws adopted by the General Assembly of the Turkish Grand National Assembly, a paragraph is added to the heading on housing and asset finance funds in the Capital Markets Law.

Accordingly, the fund will be deemed to have legal personality limited to all kinds of registry transactions, including registration, amendment, abandonment and correction requests in the land registry, trade registry and other official registries. Assets and rights, the validity of the transfer of which depends on a title deed or registry record and which are included in the housing or asset finance fund portfolio, will be registered in the name of the fund in the land registry or the relevant registry. Transactions to be made on behalf of the fund in the land registry, trade registry and other official registries will be realized with the joint signatures of an authorized person representing the fund founder and the fund board.

With the amendment regarding lease certificates and asset leasing companies, the issues of project finance, project finance funds and project-based securities are reorganized.

Accordingly, the revenues and other rights of the project subject to project finance will be assigned to the project finance fund. Procedures and principles regarding the assets and rights to be subject to project financing, the founders of the project finance fund, the establishment, operating conditions, management and termination of the fund, and the issuance of project-based securities will be determined by the CMB. The fund will be deemed to be a legal entity limited to all kinds of registry transactions, including registration, amendment, abandonment and correction requests in the land registry, trade registry and other official registries.

Assets and rights, the validity of the transfer of which depends on a title deed or registry record and which are included in the project finance fund portfolio, will be registered in the name of the fund in the title deed registry or the relevant registry. Transactions to be made on behalf of the fund in the land registry, trade registry and other official registries will be realized with the joint signatures of an authorized person representing the project finance fund founder and the fund board.

Until the project-based security is redeemed, the assets and rights included in the portfolio of the project finance fund cannot be disposed of, pledged, pledged as collateral, seized, including for the purpose of collection of public receivables, or included in the bankruptcy estate, except for collateral purposes, even if the management or supervision of the project finance fund founder and the fund user is transferred to public institutions. In addition, precautionary measures and precautionary attachment decisions cannot be taken against them.

The title “Measures to be applied in case of issuances in violation of the law” in the Capital Markets Law is amended as “Measures to be applied in case of issuances in violation of the law and in violation of the information and explanations in the prospectus” and its scope is expanded.

Accordingly, in the event that the commitments and disclosures in the prospectus, which may affect the investment decisions of investors, are violated or the commitments are not fulfilled within a reasonable period of time, the CMB will be authorized to request precautionary measures and precautionary attachment or to take any other measures it may foresee, exempt from all kinds of fees and guarantees, without prejudice to civil and criminal liability.

The Board will also be authorized to file a lawsuit within 3 months from the date of determination, and in any case within 2 years from the date of approval of the prospectus, for the cancellation of the transactions and operations that are determined to result in the use of the amount obtained from the issuance in violation of the prospectus and for the return of the cash and other assets obtained to the partnership or collective investment institution that published the prospectus, for the cancellation of the transaction carried out in violation of the prospectus.

Penalties for those who provide misleading information

The Capital Markets Law adds the imposition of administrative fines on legal entities among the acts that require administrative fines.

Accordingly, legal entities may be imposed an administrative fine up to the higher of 1 percent of their gross sales revenue and 20 percent of their profit before tax in their independently audited annual financial statements, taking into account the severity of the violation and the number of victims affected.

The CMB will impose an administrative fine from TRY 20,000 to TRY 250,000 on real and legal persons who do not provide information, documents, explanations and records within the required time, do not provide them as requested, provide them in an incomplete, untrue or misleading manner, or prevent or make it difficult for those assigned to perform their duties.

Persons who cause unnecessary audits by providing the Board with false or misleading information, documents or explanations will be subject to administrative fines from one thousand liras to 25 thousand liras.

The lower limit of imprisonment will be increased from two to three years

The lower limit of the prison sentence to be imposed on those who make transactions based on information that may directly or indirectly affect the prices and values of capital market instruments or the decisions of investors and that has not yet been publicly disclosed is increased from two to three years.

Likewise, the lower limit of the imprisonment penalty to be imposed on those who make transactions or provide false, inaccurate or misleading information in order to create a false or misleading impression regarding the prices, price changes, supply and demand of capital market instruments is increased from two to three years.

With the new article added to the Law, Article 4 of the Law on Consumer Protection has been amended.

Accordingly, the powers of the Banking Regulation and Supervision Agency to determine the types of fees, commissions and expenses to be received from consumers other than interest and the procedures and principles regarding them were given to the Central Bank.

Source: https://www.aa.com.tr/tr/politika/finansal-piyasalara-iliskin-yenilikler-iceren-kanun-teklifi-tbmm-genel-kurulunda-kabul-edildi/1740188

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