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December 21, 2023

Foreing Investment Funds in Turkey


Investment funds enable investors to manage portfolios such as bonds, bills, precious metals, stocks from capital market instruments in return for their participation shares. Foreign investment funds are mutual funds or collective investment institutions established abroad[1]. Issues such as registration, public offering and sale of foreign investment funds with the Capital Markets Board (“Board”) are regulated in detail within the scope of the Communiqué on Foreign Capital Market Instruments and Depositary Certificates and Foreign Investment Fund Shares (VII-128.4) (“Communiqué”).


First of all, it should be noted that foreign investment fund share refers to the capital market instrument issued by the foreign investment fund, which is a collective investment institution established abroad, and considered as other capital market instruments. Shares of foreign investment funds (“Fund”) established abroad can be sold in the Republic of Turkey with or without public offering. The aforementioned transactions are subject to the provisions of the Communiqué, and it is obligatory to apply to the Board in order to carry out these transactions.

Funds whose shares will be sold in Turkey within the scope of registering the Fund shares with the Board and selling the participation shares are required to meet the following conditions:

  1. Fund shares are traded in Turkish Lira or in foreign currencies whose daily trading rates are announced by the Central Bank of the Republic of Turkey (“CBRT”),
  2. Permission has been obtained from the relevant authority regarding the sale of the said shares in the country of the issuer,
  3. At least three years have passed from the date on which the shares began to be sold abroad, and the current value of the shares to be sold must be at least EUR 2,000,000 or equivalent monetary value as of the date of application,
  4. In the country where the founder or manager of the Fund is located, there are no restrictions regarding the sale of the said shares in Turkey and the transactions and payments regarding the financial rights provided in Turkey,
  5. The net asset value of the Fund is at least 11,000,000 Euro or its equivalent monetary value,
  6. Investing at least 80% of the net asset value of the Fund in assets other than money and capital market instruments and transactions of issuers residing in Turkey and Turkish public debt instruments,
  7. If portfolio management service is received from an institution other than the issuer, this institution must have a portfolio management authorization document in the country where it is established,
  8. More than 10% of the fund net asset value should not be invested in money and capital market instruments and transactions of the same institution or partnership, to be applied as a maximum of 35% for money and capital market instruments issued by public institutions,
  9. The Fund alone should not hold more than 10% of the capital or all voting rights in any partnership,
  10. The relevant country regulations regarding the borrowing of the Fund and the lending of its assets are in compliance with the legislation to which mutual funds established in Turkey are subject,
  11. Independent auditing of the financial statements of the Fund are prepared in accordance with international accounting standards, at least once a year,
  12. Submitting a letter of undertaking prepared by the authorized organ of the Fund and addressed to the Board, allowing the submission of all kinds of information and documents requested by the Board, including information and documents regarding public disclosure, allowing the fund to be audited by the persons or institutions to be appointed by the Board, at the expense of the fund and/or representative.

In addition to these, in order for the shares to be offered to the public and sold in Turkey, they must be offered to the public in the country where it is established.

The Board may impose conditions other than those listed above, taking into account the protection of investors or a similar reason. In case the Funds, whose shares will be sold in Turkey, lose any of the conditions in the Communiqué, the sale may be suspended temporarily or permanently by the Board, with justification. If the Board requests that the sale of Fund shares be stopped permanently, it is obligatory for the representative to apply to the Board to have the issue where the prospectus is published from the trade registry.


First of all, it should be noted that Funds wishing to operate in Turkey are required to have a representative in the capacity of a broadly authorized intermediary institution or development or investment bank in Turkey, and to sign a written contract between the Fund and this representative, which includes the minimum specified matters. In other words, it is obligatory to conduct the buying and selling transactions of the Fund’s shares through a representative. Generally, it is seen that the representatives of the Fund are other banks established in Turkey. Purchased Fund shares can only be resold to the Fund or to the representative if authorized by the Fund.

On the other hand, it is obligatory to keep the assets of the Fund in at least one fund custodian approved by the Board.

It is obligatory to apply to the Board by the representative with the request for approval of the Fund prospectus regarding the sale of Fund shares in Turkey, the prospectus, investor information form, application form whose principles are determined by the Board, and other information and documents requested by the Board for the sale of fund shares with or without public offering,

The information in the prospectus should be consistent, understandable and complete in accordance with the prospectus standard determined by the Board. Fund’s prospectus should be prepared in Turkish in detail and clearly reveal other information required by the legislation and the Board regarding the Fund and the sale of shares. It must be signed by the Fund officials, and information and explanations must be documented when necessary.

Fund shares can also be sold on a dedicated basis only to qualified investors in accordance with Article 30 of the Communiqué. In this case, the provisions regarding the allocated sales regulated in the Communiqué shall apply to the applications to be made to the Board.


Within the framework of the decision no. 32 on the Protection of the Value of Turkish Currency and important developments regarding financial institutions and securities experienced in Turkey in recent years, it is observed that the shares of foreign investment funds residing abroad have started to be sold in Turkey in ever-increasing volumes, with the opportunity for residents of Turkey to invest abroad and non-residents in Turkey. Foreign investment funds are available as an option for investment and portfolio since they can be registered with the Board if they meet both tax advantages and certain conditions, and their shares can be sold with or without public offering in Turkey.


Best Regards,

[1] Web, SPK BİED. Sermaye Piyasası Kurulu,


Gülenay Kavcar

Gülenay Kavcar