Turkey set to ease stock exchange procedures

ANKARA

REUTERS photo

Turkey is set to remove obstacles before companies that cannot trade on Borsa Istanbul due to their inability to generate period profits because of their investment financing expenses, Deputy Prime Minister Mehmet Şimşek has said. 

Şimşek told state-run Anadolu Agency on Aug. 6 that a respective exemption was introduced to companies that cannot post periodic profits for a consecutive two-year period due to their heavy investment plans.

He noted said that the government passed this amendment to provide flexibility for companies with a market value of more than 100 million Turkish Liras, the size needed for the Star Market, to be traded on Borsa Istanbul. 

“Upon the condition that a company posted an operational profit in the previous year and in the semi-periods of that term, the stock exchange will be able to decide for this company, which cannot meet the condition to post periodic profits for a two-year period, to be traded on the Star Market by taking its activities, financing structure and plans how to use its yields from an initial public offering,” he said.
 
The stock exchange will also consider such companies’ amortization and redemption costs, which do not require any cash outflow, in calculating their operational profits, Şimşek added. 

“We want to enable our companies to get rid of high financing costs and turn them into profitable businesses,” he said. 

In line with the vision to turn Istanbul into a financial center, the government aimed to remove obstacles before companies that cannot be traded on Borsa Istanbul because they cannot post periodic profits due to high foreign exchange and interest rate costs, Şimşek said, adding that they are searching for foreign stock exchanges to be traded through this new rule. 

“Through the new regulation, Turkey’s capital structure will strengthen and companies’ profitability will increase. Companies that benefit from this plan will raise their investments and create more jobs,” he said, adding that Borsa Istanbul would also gain more depth thanks to the newly-created liquidity.