Corporate bonds

How to Issue Corporate Bonds in Turkey – Company Law/Commercial Law

Corporate bonds as a fundraising method

Within the complex structure of capital market instruments, issuing corporate bonds appears to be an effective method of raising new funds for companies. Allowing companies to quickly access new funds can support new hiring practices and benefit the economy, so the practice of issuing corporate bonds can enable companies to make new investments to expand the company, which in turn can have a positive impact on the support of the labor market .

Although not as developed as in the EU or the US, an increasing number of companies are choosing to issue corporate bonds in Turkey for the same purpose. However, the complex legal framework applicable to corporate bonds in Turkey can sometimes make this task quite difficult.

Legal framework applicable to corporate bonds

The main legislation applicable to corporate bonds in Turkey is the Capital Markets Law No. 6362 (CML). Although the CML does not directly refer to “bonds” or “corporate bonds“, Article 3.1-o/2 of the CML defines “securities” as “debt securities or debt securities on securitized assets and income as well as representative certificates linked to these securities”.

The key term here is “debt instruments”, as a secondary regulation defines corporate bonds as a type of debt instrument. Article 31 of the CML further establishes limits and restrictions on the issuance of debt securities by specifying Capital Markets Board (the Board) is empowered to set thresholds for the issuance of debt securities.

Although Article 31 of the CML provides that the issuance of debt securities is subject to certain limits, it does not define the actual thresholds of these issuance limits, but refers them to the College. Prior to 2013, these emission ceilings were set by decision of the Board, subject to article 11 of press release no. II-5.2. However, this Communiqué No. II-5.2 was superseded with the implementation of Debt Instruments Communiqué No. VII-128.8 (“the Communiqué”) in 2013, which established new rules for issuance limits and new principles for debt instruments.

As briefly noted above, Section 3.1-c of the release establishes an expanded definition of “debt instruments”, which includes “bonds” in the definition. This definition then classifies bonds as debt instruments and allows Article 31 of the CML to govern the issuance of corporate bonds.

Corporate Bond Issuance Limits

Since corporate bonds are classified as debt securities and, by virtue of this title, as capital market instruments, they are highly regulated in Turkey. The main regulations and restrictions are imposed by the provisions of the communiqué and the council acts as a regulator ensuring that legal entities comply with the rules.

Given the globalization of the economy and the accessibility of international markets, the Communiqué made sure to define the parameters of its applicability and enforceability to the different types of bond issues, both local and international.

Accordingly, the CML and the Communiqué set forth several restrictions and requirements for legal persons in issuing corporate bonds. The main requirement is that any legal entity, whether publicly listed or not, wishing to issue a corporate bond, whether locally or internationally, must first apply to the Board of Directors for an issue cap. ‘obligations.

This issue ceiling is also subject to separate rules, where a limit threshold is set, depending on the own funds of the issuer, as mentioned above, which therefore means that the entity will be limited with the thresholds emission limits provided for in Article 9 of the Communiqué. This Article 9 stipulates that the issue limit for corporate bonds of listed partnerships cannot exceed five times the amount of equity, whereas this limit is set at three times the amount of equity for non-public partnerships.

Exceptions to emission limits

Although the restriction on emission limits and emission caps are quite strict, the press release provides exceptions for certain entities, allowing them to issue bonds without being subject to these emission limits. However, these exceptions are very circumstantial and fairly narrow in scope and, as such, due diligence should be exercised in determining whether a proposed issuer would qualify for any of the exceptions and/or exemptions provided by the legislation. .


Corporate bonds issued by private companies/legal persons are classified as debt securities and are therefore subject to the rules and regulations set out in the Capital Markets Act and its secondary regulations. Since it is a regulated market, there are strict procedures and requirements for private companies in Turkey to issue corporate bonds.

Given these rules and regulations, as briefly mentioned above, companies incorporated in Turkey will need to meet capital requirements to be able to issue bonds, which means that a company can only issue bonds in the emission limits, i.e. five times or three times its equity (respectively for public and non-public companies), unless it can benefit from one of the exceptions and/or exemptions provided for by the legislation.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.