Disclosure Requirement of Public Joint Stock Company
To provide accurate information for investors operating in Turkey, public disclosure of the necessary information has a great importance for the continuation of the functioning of the capital market in a fair and competitive environment. Thus, the procedures and principles regarding Public Disclosure of Publicly-Held Joint Stock Companies are regulated in detail in both Article 460 of the Turkish Commercial Code No. 6102 (“TCC”) and Article 15 of Turkish Capital Markets Law No. 6361 (“CML”).
Although there is no definition of the Public Disclosure principle according to TCC and CML, it is possible to say that the legislator does not limit this principle and paves the way for the principle to adapt to the changes.
The principle of public disclosure aims to protect both the small investor trading in the securities and to ensure fair order in the market with the access of equal information to the small investor. In this way, the reliability of the market shall be increased and the information which cannot be reached by small investor, will be provided and all kinds of investors in the market will be able to make a reliable evaluation within the framework of the presented information. In this context, investors shall evaluate the publicly held partnership and make their decisions according to this evaluation and investors shall shape their investment decisions according to the information they have acquired. For instance, as a result of the decisions which is taken by a joint-stock company, the investor who thinks that his investment may affect the future of the corporation will be able to dispose of his share in the corporation through the stock exchange and turn to capital market instruments. This situation has a great importance in terms of gaining the trust of the financial institutions by the public disclosure of investors operating in sectors such as pharmaceuticals and automotive, where financing is needed due to innovation and R & D. 
C. THE PRINCIPLE OF PUBLIC DISCLOSURE AND SHAREHOLDERS ‘RIGHT TO DEMAND INFORMATION WITH IN THE SCOPE OF TCC
The right to information and inspection of shareholders; individual, acquired and independent nature, usually complementary or affirming each other. Even if the right to information and inspection is exercised, it is not possible to cancelled or limited by the articles of association or a resolution passed by an organ of the company according to Article 437 of TCC. Pursuant to Article 447 of TCC, general assembly resolutions shall be null if they restrict a shareholder’s right to information, inspection and control beyond the legally permissible degree. Within the scope of this right granted to shareholders can request to information and inspection about the following;
- Financial statements and consolidated financial statements,
- Annual activity report of the board
- Income statement and balance sheet,
- The Audit reports,
- Profit distribution proposal of the board,
- Corporate’s actions, inspection method and results,
- The commercial books and communications of the company.
In addition, for the previous fiscal year, the board shall prepare and submit to the general assembly, the financial statements stipulated in the Accounting Standards of Turkey, attachments thereto and an annual activity report within 3 (three) months of the fiscal year that follows the balance sheet date. The financial statements, consolidated financial statements, annual activity report of board, equity capital statements, annexes, audit reports and profit distribution proposal of the board which is prepared and submitted must be made available to the information and examination of the shareholders at the headquarters and branches of the company at least 15 (fifteen) days before the general assembly meeting. It is also possible for the shareholders to obtain a copy of the income statement and balance sheet as a result of the right to inspection.
In addition, these statements shall be kept open for a period of one years in order to enable shareholders to obtain information as a result of their own inspection in headquarters and branches. In addition to the right to information about the Corporate action, it is also possible for the shareholders to obtain information from the board about the manner and results of the audit.
In this direction, it shall not mean that the auditor who is not within the company and appointed by the external auditor has no obligation to provide information. According to this rule, the board of directors and the auditors are obliged to inform the shareholders by a careful manner in accordance with the principles of accountability, truth and honesty. It is important to note that if any of the shareholders have been informed about any matter other than the general assembly, upon request, the same information must be provided to the other shareholders in the same scope and detail, even if not on the agenda, in accordance with the principle of equal treatment. The right to information and inspection includes the right of inspect to commercial books and communications of the company. In this case, if the shareholder makes a request in the general assembly regarding his request to inspect the commercial books and communications of the company, this shall form an exception to the principle of subservience agenda.
However, in any case, the permission of the general assembly shall be required for the right to information to be transformed into right to an inspection. After approval by the General Assembly, the inspection of the commercial books and communications of the company by the expert shall also be deemed to have been approved. Although the right to information has been defined as an acquired to shareholders, certain restrictions shall be required if such right exists as a trade secret or company interests that need to be protected. As follows, If the information requested by the shareholders is within the scope of the trade secret, it will be evaluated within the scope of the restriction if there is any information that competitor companies do not know, don’t need to learn and that can be used for the loss of the company. However, these limitations cannot be restricted without asserting that only company or trade secrets or other company interests that shall be protected may be compromised. The right to information can only be restricted by explaining and justifying “why the trade secrets and interests endanger the company”.
If a shareholder could not obtain information since his request for information or inspection have remained unanswered or denied or delayed unjustly, he may apply to the commercial court of the company’s domicile, within 10 (ten) days after the denial or, in other circumstances, within a reasonable time. In practice, as a result of the transformation of companies into an aggregate corporation and go public, the scope of disclosure requirement expanded while the scope of shareholders’ right to information was narrowed.
Along with the principle of public disclosure, it is not possible to disclose any information that the shareholder wishes to reach. In this context, information which is only related to the interests of the shareholder and which is not included in the scope of public disclosure is acquired by the shareholder under the name of right to information and right to inspection.
Therefore, the right to information set out in Article 437 of the TCC and the principle of public disclosure are similar. Both the right to information and the principle of public disclosure provide information to the shareholder about the activities, operation and economic status of the partnership. However, instead of providing information flow to the shareholders, the principle of public disclosure provides information flow to a group of current and potential shareholders, employees and government.
There are also some differences between the principle of public disclosure and the right to information in terms of the interest it is intended to protect. For example, the principle of public disclosure aims to protect the future shareholders against fraudulent and bad intention, while preserving the interests of the current shareholder, ensuring the balance of in-partnership interests and thus protecting minority interest shareholders. 
D. PERMANENT PUBLIC DISCLOSURE WITHIN THE SCOPE OF PUBLICLY-HELD JOINT-STOCK COMPANIES FINANCIAL STATEMENTS
With the Communiqué on the Amendment to the Communiqué on Principles Regarding Financial Reporting in the Capital Market (II-14.1.a) (“Communiqué”) which was published in the Official Gazette dated 03.02.2017 and numbered 29968, certain criteria have been introduced regarding the disclosures of financial statements and reports of companies. Pursuant to the Communiqué, the Company’s annual financial statements and reports, annual activity reports and audit reports of the Board of Directors are announced by the Company on both the Public Disclosure Platform (“PDP”) and the Company’s own website. Pursuant to Article 5 of the Communiqué, annual financial statements shall be prepared by companies based on the TAS / TFSR issued by the Public Oversight, Accounting and Auditing Standards Authority (“POAASA”). In addition, Article 64 of the TCC provides for the preparation of annual financial statements. In this context, in publicly-held joint stock companies, an obligation has been imposed on both preparing financial statements in accordance with TAS and preparing commercial books and records in accordance with TCC.
Preparation of financial statements in the group of companies
Consolidated Financial Statements are described in Article 4 of the Communiqué on Turkey Financial Reporting Standards According to this article, if the parent is a subsidiary of another parent, there is no need to prepare consolidated financial statements. In addition, the consolidated financial statements of the parent companies, individual financial statements are required to prepare.
Annual and interim financial reports:
Since the information to be shared in the annual financial report shall belong to the previous period, an interim financial report is required for investors to obtain more up-to-date information. Pursuant to Article 7 of the Communiqué, interim financial reports are obliged to issue interim financial reports for the capital market instruments issued on the stock exchange, investment companies, portfolio management companies, mortgage financing institutions and leasing companies.
Annual and interim activity reports of the Board of Directors:
Pursuant to Article 8 of the Communiqué, the limits of authority of the members of the board of directors and senior executives, term of office, collective bargaining, rights and benefits provided to personnel and workers, the sectors in which the entity operates, sales amounts, general explanations on prices, productivity rates and reasons for significant changes in these compared to previous years, incentives, changes in the articles of association during the period, compliance reports, mandatory information to be submitted to the shareholders and other issues that are not included in the financial statements but shall be included in the report.
The Board of Directors who prepare an annual activity report, prepare an interim activity report for 3-month interim periods. If the financial information to be disclosed in the interim report is a trade secret, such information shall not be included in the report. However, once the trade secret nature has disappeared, this information should be included in the report.
Companies listed on the stock exchange shall disclose audit reports together with financial reports to the public. Pursuant to Article 394 of the TCC, the enterprises and mutual funds and asset financing funds determined by the decision of the Council of Ministers are obliged to subject their annual financial reports to independent audit. Companies which are not traded on the stock exchange but are listed under the CML are subject to independent audit. In order to be subject to auditing of listed companies, total assets: TL 15,000,000 (fifteen million), annual net sales revenue of TL 29,000,000 (twenty-twenty million), and number of employees of 50 (fifty) must exceed at least two criteria.
Pursuant to Article 9 of the Communiqué, the entity and its board members are responsible for the preparation and accuracy of the tables and reports described above. The statements of responsibility of the members of the board of directors and the general manager or managers are disclosed to the public together with the annual and interim activity reports. Enterprise whose capital market instruments are traded in the stock market or in other market places are obliged to disclose the above-mentioned reports to the public within 60 (sixty) days following the end of the accounting periods and to the public within 70 (seventy) days when there is no obligation to prepare financial statements.
Stay out of these enterprises are obliged to disclose their annual financial reports to the public three weeks before the date of the general assembly and in any case until the end of the third month following the end of the relevant accounting period.
Within this period, the reports are sent to PDP by the enterprises. After the financial reports are disclosed to the public, the companies publish the reports on their websites and keep the reports on the website for 5 years.
E. PUBLIC DISCLOSURE OF SPECIAL SITUATIONS
As regards disclosure of material events to the public, the CML differentiated between companies whose shares are traded and not traded. As a matter of fact, pursuant to Article 2 of the Communiqué on Special Situations (II-15.1) (“CSS”), the Company has been obliged to publicly disclose its special circumstances to publicly traded companies whose shares are traded on the stock exchange. According to Article 16 of CML, companies whose shares are traded on stock Exchange and joint stock companies whose shareholder number is over 500 (fivehundred) are deemed to be a publicly held company.
The information to be disclosed to the public should be insider information. According to Article 4 of the CSS, insider information is defined as information that may affect the value, price or investment decisions of the capital market instruments but not yet disclosed to the public.
At the same time, this information needs to be specific and precise. In this context, it is required that the impact of investors on investment decisions is sufficiently specific to assess.  Otherwise, the uncertainty of the information acquired by investors shall affect their investment decisions and weaken the confidence in the capital market. Another criterion is that insider information is not disclosed to the public. Information disclosed to the public loses the quality of insider information and becomes the information that the investor takes into account when making an investment decision. In order for the insider information to be disclosed to the public in our country, it must be published in PDP. Partnerships do not get rid of these obligations by claiming that they have disclosed the information to the public by means of a press release or their own web sites outside the PDP.
For example, a partnership operating in an industrial sector is obliged to inform the PDP immediately of this special event after it wins the tender. A press release by the CEO of the Company in this respect does not mean that the information is disclosed to the public. Another important element in terms of insider information is that the disclosure of the information to the public is expected to have an impact on the investment decision of the reasonable investor and have a potential impact on the value of the capital market instrument.
There is no explicit criterion for price effect in Turkish Law and it is evaluated according to every concrete case. For example, the fact that a mining company has a new mineral deposit or that a company is included in another company is considered as information that may affect the price. In terms of the obligation to public disclosures the changes that directly affect the company activities, financial structure, financial fixed assets such as financial assets and the damages of the company assets as a result of natural disasters should be disclosed to the public.
Unless otherwise in CSS, material event disclosures shall be announced to the Public Disclosure Platform at the latest until the 3 (third) working day following the date when the situation arises. Pursuant to Article 24 of the CSS, the issuers are required to announce the insider information disclosed to the public on their website at the latest within the working day after the public disclosure and keep this disclosure on their website for 5 years. Pursuant to Article 5 of the CSS, the decision of the board of directors regarding the date, place and agenda of the general assembly meeting, the decision of the board of directors or the general assembly regarding the distribution of profit, the exercise of the right to acquire new shares, and the decisions of the board of directors regarding the capital increase shall be announced to the public.
F. LIABILITY FOR PUBLIC DISCLOSURE
The responsibility arising from the wrong, misleading or incomplete information in the public disclosure documents is the responsibility arising from tort. For this reason, it is necessary to identify the elements of tort that are regulated in Article 49 of the Turkish Code of Obligations (“TCO”).
This loss must occur in the assets of investors. In addition, according to Article 32, paragraph 5 of the CML, there must be a causal relation between unlawful information disclosed to the public and the investor’s decision.
Pursuant to Article 112 of the CML, it has been found that those issuing financial statements and reports in a non-reflective manner and members of the board of directors have committed the crime of fraud of special document pursuant to Article 207 of the Turkish Criminal Law (“TCL”). In addition, it is regulated that persons who prevent the Capital Markets Board from performing their duties will be punished from 6 months to 2 years according to Article 111 of the CML.
With the principle of public disclosure, it is aimed that publicly-traded companies, whose shares are traded on the stock exchange, disclose general and private information to the public, thereby protecting the small investor trading in the securities market and bringing the small savings owners into the economy with equal information.
Thanks to the public disclosure obligation, the capital market is ensured to be reliable, equal and fair. The investor who thinks that the financial statements of the companies and the public disclosure of special circumstances may affect the future of his investment may divest his share in the company through the stock exchange and turn to capital market instruments.
Öykü Kurt, Associate
 İhtiyar, Mustafa, P. 95.
 Ferrell, Allen, The Case of Mandotory Disclosure in Securities Regulation Around the World, Harvard John M. Olin Discussion Paper Series, Discussion Paper No.492, Hardvard Law School, 09/2004, P. 13 ff.
Dolu, Murat, P. 62, ff. Kaya, Arslan, P. 72, ff. Poroy, Tekinalp, Çamoğlu, P. 648, ff. The Nullity of Board Decision Within the Scope of Protection of Shareholder Rights, Ankara 2015, P. 179.
 The Article 514 of Turkish Commercial Code No: 6102.
 Pulaşlı, Hasan , Caution, P. 1484 ff.
 Pulaşlı, Hasan, Caution, P. 1496 ff., Dolu, Murat, P. 124 ff.
 Kaya, Arslan, P. 31.
 Hansen, Jesper Lau, Say When: When Must an Issuer Disclose Inside Information? 19.09.2016, Nordic & Europen Company Law Working Paper No.16-03; University of Copenhagen Faculty of Law Research Paper No:2016-28.
 CSS P. 4