Authors: Capital Markets Law Department, Atty. Mustafa Şahin

The reliable, transparent and efficient functioning of capital markets depends on investors having timely, complete and accurate access to information regarding issuers. Accordingly, for publicly held companies and issuers whose capital market instruments are traded, the public disclosure obligation is not merely a formal notification requirement; it is a fundamental principle that protects equal access to information, market integrity and confidence in capital markets.

In this regard, the Capital Markets Board’s Communiqué No. II-15.1 on Material Events Disclosure (“Communiqué”) regulates the procedures and principles governing the public disclosure of information, events and developments that may affect the value or price of capital market instruments or investors’ investment decisions. The purpose of the Communiqué is to ensure the functioning of the capital markets in a reliable, transparent, efficient, stable, fair and competitive environment by ensuring that investors are informed in a timely, complete and accurate manner.

Material event disclosures are particularly important for the public disclosure of developments that qualify as inside information. However, capital markets legislation also permits the delayed disclosure of inside information under certain circumstances. Therefore, the key issue for issuers is to determine which information must be disclosed immediately, under which circumstances disclosure may be delayed, and how confidentiality must be maintained during the delay period.

I. Concept of Material Event and Inside Information

Pursuant to Article 4 of the Communiqué, “material events” refer to inside or continuous information that may affect the value or price of capital market instruments or investors’ investment decisions. Under the same article, “inside information” is defined as information, events and developments that have not yet been disclosed to the public and that may affect the value or price of capital market instruments or investors’ investment decisions.
Based on this definition, two main elements must coexist for information to qualify as inside information. First, the information must not yet have been disclosed to the public. Secondly, such information must be capable of affecting the value or price of the capital market instrument or investors’ investment decisions.

In this context, developments such as the execution of a significant agreement, merger or acquisition negotiations, a material investment decision, developments affecting the financial structure, transactions that may result in a change of management control, significant effects on operations, or material changes to previously disclosed information may be subject to an inside information assessment.

However, not every commercial development automatically requires a material event disclosure. In assessing whether a disclosure obligation has arisen, the potential effect of the relevant information on investors’ investment decisions, its significance for the issuer’s operations and financial structure, and how the information may be evaluated by a reasonable investor in the market should be taken into account.

II. Public Disclosure of Inside Information

Pursuant to Article 5 of the Communiqué, inside information and changes to previously disclosed matters relating to such information must be publicly disclosed by issuers when they occur or are learned.

This provision makes clear that an issuer may not remain passive in the face of developments qualifying as inside information and that such information must be made equally accessible to investors. For the purposes of the disclosure obligation, the relevant point is the occurrence or learning of the inside information by the issuer. From that moment, the issuer must assess the nature of the information and determine whether a disclosure obligation has arisen.

The Communiqué also imposes a special disclosure obligation where inside information is learned by certain persons other than the issuer. Pursuant to Article 5 of the Communiqué, if inside information is learned, without the issuer’s knowledge, by persons holding certain levels of voting rights or share capital in the issuer, such persons may also be required to make a public disclosure regarding the relevant inside information.

In addition, if inside information is disclosed to third parties by the issuer or by a person acting in the name or on behalf of the issuer in the ordinary course of business or duties, such information must be publicly disclosed by the issuer. However, where the person accessing the inside information is subject to a confidentiality obligation under a legal regulation, the articles of association or a special agreement, the exception provided under the Communiqué may apply.

These rules aim to prevent the circulation of inside information among a limited group of persons from creating information asymmetry among investors.

III. Delayed Disclosure of Inside Information

The general rule under capital markets legislation is the public disclosure of inside information. However, in certain cases, immediate disclosure of information may prejudice the legitimate interests of the issuer. For this reason, Article 6 of the Communiqué permits the delayed disclosure of inside information, provided that certain conditions are met cumulatively.

Pursuant to Article 6 of the Communiqué, an issuer may, under its own responsibility, delay the public disclosure of inside information in order to avoid prejudice to its legitimate interests, provided that such delay does not mislead investors and the issuer is able to ensure the confidentiality of the information.

Accordingly, three main conditions must be satisfied for a delay decision to be lawful. First, immediate disclosure must be capable of prejudicing the issuer’s legitimate interests. Secondly, the delay must not mislead investors. Thirdly, the issuer must be able to maintain the confidentiality of the inside information during the delay period.

Where these conditions are not satisfied cumulatively, delaying the public disclosure of inside information may create legal risk. In particular, where confidentiality cannot be maintained, where the information circulates in the market as news or rumours, or where the delay may cause investors to make an incorrect assessment, the delay mechanism can no longer be maintained.

IV. Adoption and Documentation of the Delay Decision

Delayed disclosure of inside information is not an unrestricted discretionary power that may be used arbitrarily by the issuer. Pursuant to Article 6 of the Communiqué, the effect of the delay on the protection of the issuer’s legitimate interests, the absence of a risk of misleading investors, and the measures taken to ensure the confidentiality of the information during the delay period must be resolved by the board of directors or, if the board has granted authority, approved in writing by the authorised person.

Therefore, a delay decision should be treated not merely as a commercial assessment, but also as a legal and managerial decision. The delay decision should clearly set out the legitimate interest relied upon, why immediate disclosure could harm the issuer, why the delay would not mislead investors, and which measures have been taken to ensure confidentiality.

As soon as the reasons for delay cease to exist, the issuer must publicly disclose the relevant inside information in accordance with the principles set out in the Communiqué. The disclosure must also state the delay decision and the reasons underlying such decision. The Board is authorised to examine whether the reasons for delay are justified, where it deems necessary.

At this point, proper documentation of the delay decision is critical. In any review by the Board, the issuer must be able to demonstrate that the conditions for delay existed and that the necessary confidentiality measures were taken during the delay period.

V. Protection of Confidentiality and List of Persons Having Access to Inside Information

Where disclosure of inside information is delayed, one of the issuer’s most important obligations is to ensure the confidentiality of the information. Pursuant to Article 6 of the Communiqué, issuers are obliged to ensure the confidentiality of inside information whose disclosure has been delayed and to control access to such information. In this context, issuers must establish effective arrangements to prevent access by persons not included in the list of persons having access to inside information, take the necessary measures to ensure that persons having access to inside information acknowledge their obligations under the Capital Markets Law and relevant legislation and are informed of the sanctions relating to the misuse or dissemination of such information, and ensure disclosure of the information if confidentiality can no longer be maintained.

Article 7 of the Communiqué regulates the list of persons having access to inside information. Accordingly, issuers must notify MKK of persons who work for them under an employment contract or otherwise and who have regular access to inside information, and must update such information within two business days in case of any change.

The list of persons having access to inside information must include information such as the person’s name and surname, identification details, the reason for being included in the list, the date on which the list was prepared and updated, and whether the person is among the persons discharging managerial responsibilities. The list must be updated where the reason for a person’s inclusion changes, where a new person must be added, or where a person included in the list no longer has access to inside information.

This list should not be regarded merely as a technical record-keeping obligation. It is an important compliance tool for identifying persons who have access to inside information, controlling information flows, detecting potential information leaks and managing market abuse risks.

VI. News, Rumours and Unusual Price or Volume Movements

During periods in which the disclosure of inside information has been delayed, news published in the media, market rumours and unusual price or volume movements are of particular importance. Such developments may indicate that confidentiality can no longer be maintained or that a risk of misleading investors has arisen.

Pursuant to Article 8 of the Communiqué, where there are changes in the prices or trading volumes of capital market instruments that cannot be explained by ordinary market conditions, issuers must make a public disclosure upon the request of the relevant stock exchange. In such disclosure, the issuer must state whether there are any undisclosed material events.

Article 9 of the Communiqué concerns the verification of news and rumours. Accordingly, where there are news or rumours concerning an issuer, first disclosed to the public through media outlets or other communication channels, which are significant enough to affect the value or price of capital market instruments or investors’ investment decisions, the issuer must make a public disclosure as to whether such news or rumours are accurate or sufficient. This obligation must be fulfilled without waiting for any warning, notification or request from the Board or the relevant stock exchange.

In particular, where such news or rumours relate to information whose public disclosure has been delayed under Article 6 of the Communiqué, the reasons for delay are deemed to have ceased to exist and the issuer must make a public disclosure.

Therefore, once a delay decision has been adopted, it is not sufficient for the issuer merely to operate internal procedures. The issuer must also monitor media outlets, market rumours, social media reflections and price-volume movements, and continuously assess whether the delay remains sustainable.

VII. Forward-Looking Statements

Forward-looking statements are also specifically regulated under the Communiqué. Article 4 of the Communiqué defines forward-looking statements as assessments that include plans and estimates relating to the future which qualify as inside information, or that provide investors with an opinion regarding the issuer’s future activities, financial condition and performance.

Pursuant to Article 10 of the Communiqué, the public disclosure of forward-looking statements is not mandatory. However, where an issuer wishes to publicly disclose forward-looking statements, certain principles must be complied with. In this respect, forward-looking statements may be publicly disclosed only if they are based on a board of directors’ resolution or, where authority has been granted by the board, the written approval of the authorised person. In addition, such statements may, as a rule, be publicly disclosed by the issuer’s management no more than four times in a year.

Where a material change occurs in previously disclosed forward-looking statements, such change must also be publicly disclosed. If there is a material difference between the matters previously disclosed and the actual outcomes, the reasons for such differences must be included in the disclosure.

These rules require issuers to exercise caution when disclosing expectations, targets and forecasts regarding the future. Forward-looking statements may directly affect investors’ investment decisions, and therefore exaggerated, unfounded or misleading statements must be avoided.

VIII. Method of Material Event Disclosures

Pursuant to Article 23 of the Communiqué, disclosures must be made in Turkish. The Board may require disclosures to be made in other languages in addition to Turkish where it deems necessary. For issuers whose capital market instruments are traded on the stock exchange, disclosures within the scope of the Communiqué are made on the Public Disclosure Platform, namely Kamuyu Aydınlatma Platformu (“KAP”), using the relevant form available on KAP.

Unless otherwise provided in the Communiqué, disclosures must be made immediately. The disclosure must include a declaration that the disclosure complies with the principles set out in the Communiqué, fully reflects the information received by the issuer, is consistent with the issuer’s books, records and documents, that all efforts have been made to obtain complete and accurate information on the matter, and that responsibility is assumed for the disclosure.

This declaration demonstrates that material event disclosures constitute a significant area of responsibility for issuers. It is not sufficient for the disclosure merely to be submitted to KAP; its content must be consistent with the issuer’s records, complete, accurate and capable of assisting investors in their decision-making.

Furthermore, the disclosure obligation must be fulfilled in a manner that ensures rapid access to information and does not violate the principle of equal treatment among investors. This principle forms the foundation of the public disclosure regime under capital markets law.

IX. Scope and Characteristics of Disclosures

Pursuant to Article 24 of the Communiqué, disclosures made within the scope of the Communiqué must be timely, accurate, complete, direct, understandable and sufficient to assist investors in making decisions. Where necessary for the proper assessment of the disclosure, the counterparty to whom the disclosed matter relates must be stated; and where changes or effects can be expressed in amount or value, such amount or value must be included in the disclosure.

Subject to Article 6 of the Communiqué, material events that remain uncertain due to an event or circumstances that have not yet become definitive must be publicly disclosed by indicating such uncertainty. In such disclosure, the expected date and necessary conditions for the resolution of the uncertainty must also be stated.

The Communiqué further provides that disclosures may not be false, misleading, baseless, exaggerated or incomplete, and must not be made in a manner that causes investors to form an incorrect impression of the issuer’s current circumstances. Issuers may not use material event disclosures for the marketing or advertising of their activities.

This rule clearly demonstrates the legal nature of material event disclosures. A material event disclosure is not an investor relations or marketing communication tool; it is a public disclosure mechanism aimed at ensuring that information which may affect the value or price of capital market instruments or investors’ decisions is disclosed to the public in an impartial, balanced and accurate manner.

X. Disclosure Policy

For issuers whose shares are traded on the stock exchange, a disclosure policy must be established to ensure the effective fulfilment of public disclosure obligations. Pursuant to Article 17 of the Communiqué, issuers whose shares are traded on the stock exchange must establish and publicly disclose a disclosure policy for informing the public.

The disclosure policy must include, among others, how presentations and reports disclosed at investor information meetings or press conferences may be accessed, the principles regarding the monitoring of news and rumours concerning the issuer in media outlets or on websites and the making of related disclosures, the principles used to identify persons discharging managerial responsibilities, the measures taken to ensure confidentiality until material events are publicly disclosed, and the principles governing the disclosure of forward-looking statements.

In this context, the disclosure policy should not be treated as a static text published on the issuer’s website, but as a corporate compliance document governing the issuer’s public disclosure processes. In particular, the identification of inside information, adoption of delay decisions, implementation of confidentiality measures, monitoring of media and social media, the role of the investor relations unit and disclosure approval processes should be operated in line with the disclosure policy.

XI. Publication and Retention of Disclosures on the Website

Pursuant to Article 24 of the Communiqué, issuers whose capital market instruments are traded on the stock exchange must publish material event disclosures on the website specified in the general information section of KAP no later than the business day following the public disclosure, and must keep such disclosures available on the website for five years. This obligation may also be fulfilled by providing a link on the company’s website to the disclosures available on KAP.

This rule demonstrates that the public disclosure obligation is not limited to KAP notifications; it also requires that disclosures remain accessible to investors afterwards. Therefore, issuers’ website management, investor relations practices and archiving of KAP disclosures are also important from a compliance perspective.

XII. Confidentiality and the Authority of the Board

Pursuant to Article 25 of the Communiqué, persons who have knowledge of material events required to be disclosed under the Communiqué are obliged to maintain the confidentiality of such information until it is disclosed to the public.

This confidentiality obligation is not limited to board members or senior management. Employees, advisers, service providers and other relevant persons who have access to inside information are also obliged to maintain confidentiality until the information is publicly disclosed. Accordingly, issuers must effectively implement mechanisms such as confidentiality agreements, information barriers, access authorisations and insider lists.

Article 26 of the Communiqué regulates the authority of the Board. Accordingly, where it deems necessary, the Board may request issuers or relevant parties to make disclosures in order to ensure timely, complete and accurate public disclosure. The Board may also require that the information submitted be announced through media outlets, including electronic media.

Therefore, the issuer’s discretion in the area of material event disclosures must be considered together with the supervisory and oversight authority of the Board.

XIII. Practical Considerations

The first practical point to be considered in relation to material event disclosures is the timely and accurate assessment of inside information. Not every development occurring within the issuer will require a material event disclosure; however, developments that may affect the value or price of a capital market instrument or investors’ investment decisions must be assessed promptly.

Secondly, delayed disclosure of inside information is an exceptional mechanism that must be used with caution. When adopting a delay decision, the conditions relating to legitimate interest, absence of investor misleading and protection of confidentiality must be assessed concretely. This assessment must be documented through a board of directors’ resolution or the written approval of the authorised person.

Thirdly, confidentiality must be actively protected during the delay period. The list of persons having access to inside information must be kept up to date, access to information must be restricted, employees and advisers must be informed of their confidentiality obligations, and market rumours must be closely monitored.

Fourthly, the language of material event disclosures must be carefully drafted. Disclosures must be clear, sufficient and understandable to assist investors in making decisions; however, they must not serve advertising, marketing or expectation management purposes. Incomplete, exaggerated, baseless or misleading statements must be avoided.

Finally, issuers must establish and effectively implement their disclosure policies and internal procedures in compliance with the Communiqué. Public disclosure processes should not be regarded solely as the responsibility of the investor relations unit; rather, they must be carried out through the coordination of the board of directors, senior management, legal, finance, accounting and relevant operational units.

Conclusion

Material event disclosures and the delayed disclosure of inside information are of fundamental importance under capital markets law for the protection of investors and the maintenance of market integrity. The Communiqué requires issuers to publicly disclose information, events and developments that may affect the value or price of capital market instruments or investors’ investment decisions in a timely, accurate, complete and understandable manner.

At the same time, the Communiqué allows issuers to delay the public disclosure of inside information under certain conditions in order to protect their legitimate interests. However, this possibility does not constitute an unlimited discretion. The delay must not mislead investors, the confidentiality of the information must be capable of being maintained, and the delay decision must be duly documented.

Therefore, for issuers, material event disclosures should not be treated merely as notifications made through KAP. They should be regarded as part of a comprehensive compliance process involving the identification, management and confidentiality of inside information, timing of disclosure, investor relations, disclosure policy and Board supervision. Proper structuring of this process is decisive both for protecting investor confidence and for enabling issuers to effectively fulfil their obligations arising from capital markets legislation.