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February 21, 2024

Preparation And Application Process For Initial Public Offering


Corporations offer their shares to the public for various reasons, primarily to meet their financing needs. The public offering has several advantages, including promoting the company through introductions and advertisements, enhancing credibility with financial institutions, institutionalizing as a result of the obligation to comply with corporate governance principles in capital market regulations, and various tax advantages.

Corporations can offer their shares to the public at the establishment, or through capital increase after establishment or listing of the existing shares of the shareholders on the stock market. In practice, such public offerings are referred as “initial public offerings”, and this article covers the preparation for the public offering and the procedures that are carried out before the Capital Markets Board (“Board”) and Borsa Istanbul A.Ş. (“BIST”), also known as Istanbul Stock Exchange.


In the case of a corporation to be publicly offered for the first time, it is necessary to meet specific prerequisite conditions before the public offering. In this context, the company must be a joint-stock company and its entire capital must be fully paid. Additionally, these corporations may not contain revaluation surplus funds or similar other funds arising out of the carriage of assets to fair value within 2 years prior to the date of application, exceptions aside. Furthermore, it is a requirement to achieve a certain total asset and net sales revenue based on audited financial statements for the past 2 years. Certain thresholds are also stipulated for receivables from related parties.

It should be emphasized that, in order to ensure the free circulation of shares traded on the stock exchange, it is prohibited to have any restrictions, such as pledges, given as a security, or restrictions on transfer or circulation thereof or use of rights thereon by shareholders. However, there is no such requirement for shares that will not be listed on the stock exchange.


The preparations that companies should make before applying to the Board and BIST are as follows:

B.1. Selection of Intermediary Institution and Consultant

The applicant company is required to sign a public offering agreement with an authorized intermediary institution or consortium for the initial public offering. Through the public offering agreement, the intermediary institution commits to serve as an intermediary in the sale of shares to investors for a fee or commission. Where the market value of the shares of corporation shares of which will be offered to the public for the first time, except for the green shoe option, the intermediary institution is required to fully or partially underwrite, depending on the market value calculated regarding the initial public offering price.

B.2. Preparation of Financial Statements and Independent Audit

The financial statements of the corporation for the last 3 years and if applicable the relevant interim period shall be prepared in accordance with capital market regulations and independently audited. The financial statements to be included in the prospectus are regulated in the Communiqué on Prospectus and Issue Document numbered II-5.1.

B.3. Independent Legal Expert Report

A “legal report” should be prepared by a lawyer not having any direct or indirect relationship with the corporation. Including but limited to the corporation’s registry records, commercial books covering the last 3 years, contracts, licenses and permits, assets, criminal records of the shareholders, and managers, and significant legal disputes are required to be examined and documented by a legal report. Additionally, the applicable legislation governing the corporation shall be identified, and any breaches are explicitly stated.

B.4. Preparation of the Prospectus

The prospectus is a public disclosure document issued for the purpose of providing information to the investors about the corporation, providing details on the financial and legal situation, prospects, and characteristics of shares to be traded on the stock exchange, as well as rights and risks, for conscious assessment and choice of investors. The corporation intending to go public prepares the prospectus following the financial audit and legal examination processes. Standards for the preparation of the prospectus are regulated by the Board.

B.5. Amendment of the Articles of Corporation and General Assembly Decision

The corporation’s board of directors prepares an amendment proposal of the articles of association for compliance with the regulations of the Board and capital market legislation. The amendment proposal, accompanied by additional information and documents regarding the legal and financial situation of the corporation shall be submitted for approval to the Board. For corporations which are in the authorized capital system, an application needed to be made to the Ministry of Trade for a permit upon the Board’s approval.

The general assembly of the corporation decides the amendment of the articles of association within a maximum of 6 months from the date of the Board’s approval.

B.6. Determination of Price

In order to determine the public offering price, the intermediary institution prepares a valuation report for the valuation of the shareholding. The valuation report shall be published together with the prospectus and neither the Board nor BIST intervene in this process


The public offering process is subject to the permit of the Board while the process of being traded on the stock exchange is subject to the approval of BIST and applications shall be made within this scope.

C.1. Application to the Board and BIST

The corporation applies to the Board for the approval of the prospectus. The prospectus submitted for the approval of the Board shall be announced on the website of the corporation, and in case the corporation is a member of the Public Disclosure Platform (“PDP”) on the PDP and the website of the authorised institution if applicable. A decision regarding the application for approval of the prospectus is taken by the Board within 20 business days for the initial public offering of shares. The approved prospectus shall be published on the corporation’s website within 15 business days, on PDP if the corporation is a member and on the website of the authorized institution if applicable.

The corporation or intermediary institution, in addition to applying to the Board for the approval of the prospectus, also applies to BIST for listing on the stock exchange. The application includes the draft prospectus and the underlying financial statements. The decision is made within 20 business days from the complete submission of the requested information and documents by BIST. Shares of corporations initially listed on the exchange can be traded on the BIST Star, BIST Main, BIST SubMarket, or Venture Capital Market. The market on which the corporation’s shares will be traded is determined by BIST in accordance with the Borsa İstanbul A.Ş. Listing Directive.

C.2. Other Applications 

The corporation whose shares will be offered to the public for the first time;

  • Makes an application to the Settlement and Custody Bank (TAKASBANK) and ensures that an ISIN code is defined for the shares to be traded in the Stock Exchange.
  • Applies for membership to the Central Registry Agency.
  • Completes membership procedures on PDP.

C.3. Notice of Sale for Investors

Companies intending to go public offering through a capital increase and the sale of existing shares prepare a notice of sale for the shares to be publicly offered to investors and submit it to the approval of the Board. The notice of sale is required to be announced on the same day as the expiration of the exercise period for the pre-emptive rights or, after the announcement of the prospectus if pre-emptive rights are not allowed to be exercised on the company’s website, and if the company is a member of the PDP and it is also announced through PDP and on the website of the authorized institution.


The shares of the corporation shall be going public in accordance with the prospectus, notice of sale, and the regulations of the Board. The results of the public offering are announced through PDP and reported to the Board and BIST. BIST evaluates the sale results and if the conditions are met, the shares are listed on the stock exchange and trading begins.


The public offering is a process originating from the capital market law, which is executed by the corporation, intermediary institutions, and consultants before the Board and BIST, together with the preparation of the amendment of the articles of association upon the decision of the corporation. During this process, numerous information about the corporation is disclosed to the public, and organizational changes are made within the corporation to comply with corporate governance principles. For a successful public offering, corporations planning to make a public offering need to work with intermediary institutions, independent auditors, financial advisors, and legal professionals. In this context, our experiences in public offering processes show that the strategic aspects of the public offering process, the preparation, and the public offering stages needed to be well-planned and intensively processed, and the necessary planning and preparations need to begin well in advance.


Gökçe Ergün

Gökçe Ergün


Elif Kalebek

Elif Kalebek


Elif Ezgi Mavi

Elif Ezgi Mavi