Authors: Capital Market Department, Atty. Mustafa Şahin
I. Introduction and Legal Basis
With the increasing prevalence of collective investment schemes and the expansion of the institutional investor base in Turkish capital markets, portfolio management companies (“PMCs”) have become one of the core actors of the capital markets system. PMCs are highly regulated institutions operating under strict supervision, whose primary function is to ensure the professional management of investors’ assets through the establishment and management of investment funds and other collective investment undertakings.
The establishment, scope of activities, organizational structure, and supervision of PMCs are comprehensively regulated, primarily under Capital Markets Law No. 6362, the Communiqué on Portfolio Management Companies (III-55.1), and the secondary regulations issued by the Capital Markets Board of Türkiye (the “Board” or the “CMB”). The Board’s regulatory approach to PMCs is based on a stringent institutional adequacy framework that departs from the classical joint-stock company model and prioritizes investor protection and the preservation of market integrity.
II. Scope of Activities
A PMC is a capital markets institution established in the form of a joint-stock company, whose principal activity is the establishment and management of funds, and which is subject to the supervision and oversight of the Board. The management of pension investment funds, as well as the portfolios of foreign collective investment undertakings established abroad that are equivalent in nature, also falls within the core scope of activities of PMCs.
Depending on their establishment purpose, PMCs may be formed exclusively to conduct limited categories of activities. In this context, PMCs may operate solely for the purposes of: (i) establishing and managing foreign collective investment undertakings whose units are marketed exclusively to non-resident investors and providing portfolio management services to non-resident persons; (ii) establishing and managing venture capital investment funds; (iii) establishing and managing real estate investment funds; or (iv) establishing and managing both venture capital investment funds and real estate investment funds.
In addition, subject to obtaining an authorization certificate from the Board, PMCs may engage in portfolio management and investment advisory activities. However, such activities may not be conducted independently from fund establishment and management activities and may only be carried out within the scope and limitations of the authorization granted by the Board.
III. Establishment of PMCs
A. Legal Nature and Formal Requirements
PMCs may only be established as joint-stock companies subject to the registered capital system. The registered capital system allows the determination of a registered capital ceiling that may be increased by a resolution of the board of directors, provided that such ceiling does not exceed five times the paid-in capital of the company.
All shares of a PMC must be registered shares and must be issued in exchange for cash consideration. The prohibition of in-kind capital contributions reflects the Board’s policy objective of ensuring transparency and traceability in the shareholding structure. Furthermore, the articles of association must be drafted in full compliance with the Capital Markets Law and the Board’s regulations, and the shareholding structure must be clear, comprehensible, and capable of effective supervision, all of which constitute essential preconditions for obtaining establishment approval.
The company’s trade name must, in all cases, include the phrase “portfolio management.” Where the PMC is established exclusively for the purpose of establishing and managing venture capital investment funds or real estate investment funds, the corresponding designation must be explicitly reflected in the trade name.
IV. Capital and Shareholding Structure
A. Initial Capital (2025)
Pursuant to the current legislation and established practice of the Board, the minimum initial capital required for PMCs is set at TRY 75,000,000. This threshold is applicable for 2025 and constitutes an indispensable condition for the granting of establishment approval. The initial capital must be fully and effectively paid in cash; capital commitments alone are not deemed sufficient.
B. Minimum Equity Requirements Based on Portfolio Size
The PMC Communiqué provides for a tiered minimum equity requirement depending on the size of the portfolios managed by the company. Accordingly:
These equity thresholds must be maintained throughout the duration of the PMC’s operations, and any loss of compliance with the minimum equity requirement must be promptly reported to the Board.
Considering the Board’s recent regulatory practice and inflation adjustment policies, it is anticipated that, as of 2026, the minimum initial capital requirement may be increased to approximately TRY 100,000,000, while the minimum equity thresholds applicable to medium- and large-scale PMCs may be raised by approximately 30–35%. Such a regulatory update would promote institutionalization within the PMC market and effectively exclude entities with insufficient capital structures from the system.
V. Requirements Applicable to Founding Shareholders and Executives
The PMC Communiqué sets forth highly detailed qualification requirements for founding shareholders. Accordingly, founders must not be bankrupt, must not have declared concordat, must not have been responsible for institutions whose operating licenses have been revoked, must not have been convicted of capital markets offenses or crimes related to the financing of terrorism, must not be subject to trading bans, and must not have any overdue tax liabilities. In addition, founders are required to possess the integrity and reputation necessitated by the business and to have adequate financial capacity.
With respect to PMC executives, the general manager and deputy general managers are required to have at least seven years of professional experience in the field of capital markets and to hold a Capital Markets Activities Level 3 License. The majority of the members of the board of directors must also possess comparable professional experience, while fund managers and specialist personnel must satisfy the relevant licensing requirements.
VI. Organizational Structure and Internal Systems
In order to commence operations, PMCs are required to establish specific organizational units or to procure such services externally in compliance with applicable legislation, with a view to ensuring fair, transparent, and effective service provision. In this context, PMCs are required to implement policies aimed at preventing conflicts of interest, as well as to establish an internal control system, a risk management system, an inspection unit, a fund services unit, and emergency and contingency plans.
The Board places decisive importance on the effective and functional operation of these systems, rather than their mere formal existence. In practice, deficiencies in these areas frequently constitute the primary reason why PMCs are required to submit additional explanations and documentation during the activity license application process.
VII. Activity License
In order to commence portfolio management activities, a PMC must apply to the Board for an activity license within a maximum period of three months following the notification of its establishment approval. For an activity license application to be duly evaluated, the PMC must continue to satisfy all establishment conditions, comply with minimum capital and equity requirements, execute an agreement with a portfolio custodian, and complete its organizational structuring in accordance with the Communiqué.
Conclusion
Portfolio management companies are not merely technical entities engaged in fund management within the Turkish capital markets; they are institutional actors that play a pivotal role in safeguarding investor confidence and maintaining market discipline. The Board’s regulatory approach to PMCs has, in recent years, clearly evolved toward a model that prioritizes qualitative standards and institutional adequacy over mere numerical expansion. In this context, the proper structuring of the establishment and operational framework of PMCs is of critical importance not only for regulatory compliance, but also for long-term sustainability.
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