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The Turkish government has changed the country's currency as part of its economic reform programme following a period of hyperinflation. The new Turkish lira will come into force on January 1 2005, although the old and new currencies will both be valid in 2005 as part of the transition process.
The government has prepared the draft Credit Institutions Act to replace the Banks Act, which is no longer considered capable of meeting the banking sector's requirements. The draft act is intended to modernize the banking sector and improve the regulation of financial institutions.
Throughout late 2003 and early 2004 the Turkish Capital Markets Board (CMB) promulgated a number of new regulatory acts. This update outlines the highlights of the new legislation, including the new Communiqué on the Sale and Registration of Shares with the CMB.
The domestic Capital Markets Board promulgated a number of new regulatory acts towards the end of 2003. The Capital Markets Law authorizes the board to issue regulations on the cumulative voting system with the aim of striking a balance between majority and minority shareholders of publicly held companies, and securing the rights of minority shareholders.
As well as introducing new concepts in Turkish securities regulation to the communiqués which are currently in effect (eg, the shelf registration system), the Capital Markets Board has issued several important new communiqués in the past few months.
The Capital Markets Board has announced its programme for 2003. Highlights include the creation of an arbitration organization in order to enable the efficient resolution of securities disputes, the establishment of a best practice code and the preparation of an amendment to the Turkish Commercial Code permitting joint stock corporations to acquire their own shares.
The legal framework within which foreign foundations, associations and other non-governmental organizations (NGOs) operate in Turkey has been amended and new regulations have been issued within the context of Turkey's efforts to harmonize its legislation with that of the European Union.
The Commercial Code is likely to be updated in the next few years to cope with the changing needs of market players. Internal committees, ethic codes, minimum education levels for board members and similar corporate governance-related concepts are expected to be introduced. Meanwhile, the Capital Markets Board's programme for 2003 includes plans for the introduction of a best practice code.
Including: Competition Authority; Competition Board; Prohibited Activities; Penalties.
The Competition Authority has posted a draft communiqué on its website, which was deemed necessary as a result of the increasing number of complaints made to the board regarding competition infringement and the increasing number of applications for negative clearance/individual exemptions and mergers and acquisitions.
The Turkish government has embarked on a programme of privatization in order to achieve goals set out by the International Monetary Foundation. Fourteen entities have already been privatized and contractual negotiations for the privatization of seven others are ongoing. However, the process for some highly publicized projects has been more complicated than expected.
The recent economic downturn has provided a stimulus for mergers and acquisitions both in Turkey and elsewhere. The domestic Capital Markets Board (CMB) recently issued Communiqué Serial I/31 on Mergers, which applies where at least one of the merging companies is a publicly held company.
Two major developments have taken place in the Turkish energy market: a new draft regulation regarding the electricity market and privatization efforts in the sector. The draft regulation aims to make use of excess electricity and decrease production costs.
The new Petroleum Market Law is intended to create an environment in which commercial petroleum is supplied safely from domestic and external sources to consumers through a transparent and fair market. It provides for the proper regulation and monitoring of the market in order to achieve this aim.
Recently, the Energy Market Regulatory Authority and other governmental authorities have conducted talks about privatizing the electricity distribution sector and reducing the number of electricity distribution districts. The overarching aim of the discussions is to create a liberal and competitive environment in line with the Electricity Market Law.
Recent consultations concerning the liberalization of the domestic petroleum market have resulted in a major legislative change, namely the new Petroleum Market Law, which was enacted on December 4 2003. The law aims to ensure a steady and economically viable supply of petroleum.
The Electricity Market Law and the Natural Gas Market Law aim to establish transparent, competitive markets that operate in accordance with private law principles. To date, the Energy Market Regulatory Authority has passed a number of decisions to expedite the implementation of these laws and related secondary legislation.
Several private sector electricity companies have initiated legal actions against the Energy Market Regulatory Authority (EMRA) following the cancellation of various provisions of the Electricity Market Licensing Regulation. The companies claim that the replacement provisions impose additional liabilities on them or affect their existing agreements.
Long-distance telephone service licences are expected to be issued in the near future. In addition to a clear licensing regime, it is hoped that the Telecommunications Authority will quickly establish an effective system in which prices, terms and conditions of interconnection are all defined.