Capital Increases and Dilution in Turkish Listed Companies: Registered Capital, Pre-emption Rights, Rights Issues and Bonus Shares

Capital increases are where minority shareholders in Turkish listed companies are most easily diluted. Most listed companies use the registered capital system, under which the board, authorised by the articles of association, can increase capital up to a ceiling without a general meeting (Capital Markets Law Art. 18(2)). The board can restrict shareholders’ pre-emption rights only if the articles expressly authorise it, and that power may not be used in a way that creates inequality among shareholders (Art. 18(5)). Board decisions under the system can be challenged by shareholders whose rights are violated within thirty days of their announcement, in the commercial court at the company’s seat (Art. 18(6)), and SPK can bring the same action and ask for a stay without security (Art. 93). SPK’s Share Communiqué adds specific protections: cash contributions cannot be satisfied by offsetting debts arising from non-cash asset transfers, a capital increase used to repay such debts to related parties can trigger an exit right, and the company must report on how the proceeds were actually used (Communiqué VII-128.1 Arts. 12 and 33). This guide explains these rules, how rights issues, private placements and bonus issues work, and the remedies open to a foreign institutional investor. It reflects the legislation in force as at 25 October 2026.

Why capital increases matter to minority holders

A capital increase changes the distribution of ownership. If new shares are offered to all shareholders pro rata and at a fair price, each holder can protect its position by subscribing. If pre-emption rights are restricted, if shares are issued to selected investors at a low price, or if the money raised flows back to the controlling shareholder, minority holders lose value without any change in the company’s business. Bonus issues, by contrast, add no value at all, although they are often treated by the market as good news.

These issues become sharper in a crisis. Companies under financial pressure need capital; controlling shareholders may be tempted to use capital increases to repay themselves; and announcements of bonus or rights issues can become tools of share price promotion. The 2026 fund and market manipulation cases raise all three concerns. The overview of the 2026 cases and the full series of guides is in the legal guide to Turkey’s 2026 fund and market manipulation crisis.

The legal framework

Three layers of rules apply. The Turkish Commercial Code sets general company law rules on capital increases and pre-emption rights. The Capital Markets Law adapts them for public companies, in particular through the registered capital system (Art. 18), bonus share distribution (Art. 19(4)) and the voting majorities in Art. 29(6). SPK’s communiqués supply the procedure: the Registered Capital System Communiqué No. II-18.1 (Official Gazette 25 December 2013, No. 28862) and the Share Communiqué No. VII-128.1 (Official Gazette 22 June 2013, No. 28685), the latter as last amended in the Official Gazette of 18 May 2023.

The registered capital system

Public companies, and companies that have applied to SPK to offer their shares to the public, may adopt the registered capital system with SPK’s permission (Capital Markets Law Art. 18(1)). In this system, the board may increase capital up to the registered ceiling in the articles of association without following the Commercial Code’s rules on increasing capital, but this authority may be granted by the general meeting for at most five years, renewable by general meeting resolution for further periods of up to five years (Art. 18(2)). Registered capital is the maximum amount, registered and announced in the trade registry, up to which the company may issue shares by board decision (Communiqué II-18.1 Art. 4(1)(d)).

The Communiqué limits the system in several ways:

• ▸ Ceiling. The ceiling SPK permits, valid for five years, may not exceed five times the higher of the company’s paid-in or issued capital and its equity, based on the audited or reviewed financial statements closest to the application date (Art. 5(4)).
• ▸ Renewal. If the period ends, the board cannot decide on capital increases until the general meeting, with SPK’s permission, grants a new authority for a new period (Art. 6(2)). SPK may set a shorter period for particular companies or sectors (Art. 6(3)).
• ▸ One issue at a time. No new shares may be issued until the shares already issued have been fully sold and paid for or the unsold shares have been cancelled (Capital Markets Law Art. 18(3); Communiqué Art. 6(5)).
• ▸ No exceeding the ceiling for cash. The ceiling may be exceeded once per ceiling for increases from internal resources and dividends and for mergers, demergers and similar transactions requiring a general meeting resolution, but never by cash capital increases (Art. 6(6)).
• ▸ Removal for abuse. SPK may remove from the system companies found to use it for purposes other than its own, in a way that leads to the exploitation of shareholders and other investors, and companies that lose the other qualities required for entry (Art. 10(2)).

Where a company has privileged shares, general meeting resolutions amending the articles under Art. 18 must be approved by a special meeting of the privileged shareholders under Art. 454 of the Commercial Code; increases within the registered ceiling do not require a separate special meeting (Capital Markets Law Art. 18(4)).

What the board may decide

Certain decisions require express authority in the articles. The board may issue privileged shares or shares above or below nominal value, restrict pre-emption rights, or take decisions restricting the rights of privileged shareholders only if the articles authorise it (Capital Markets Law Art. 18(5); Communiqué II-18.1 Art. 11(1)). The Communiqué requires an explanation of the reasons for these powers when a company applies to enter the system (Art. 7(1)(d)).

A board decision on a capital increase must state the amount of the increase, the nominal value and number of the new shares, whether they are issued at a premium, at a discount or with privileges, the sale price or the basis for determining it, and whether pre-emption rights are restricted, with the conditions and period for exercising them (Art. 11(4)). Decisions to raise the ceiling, extend the authority, increase capital and decisions under Art. 11 are disclosed under SPK’s special situations rules, and decisions under Art. 11 are registered with the trade registry within ten business days (Art. 12(1)). The board’s decisions under the system are also disclosed as SPK determines (Capital Markets Law Art. 18(8)).

Pre-emption rights

Every shareholder has the right to take up newly issued shares in proportion to its existing holding (Commercial Code Art. 461(1)). The right is transferable (Art. 461(4)). For public companies, the Capital Markets Law replaces the Commercial Code’s detailed rules on restricting the right: Art. 461(2) and (3) of the Commercial Code do not apply to public companies (Capital Markets Law Art. 18(5); Communiqué II-18.1 Art. 11(3)). Instead, the following rules apply:

1. 1. Equality. The board’s power to restrict pre-emption rights may not be used in a way that creates inequality among shareholders (Capital Markets Law Art. 18(5)).
2. 2. Qualified majority. Resolutions restricting pre-emption rights, authorising the board to restrict them under the registered capital system, and reducing capital require, unless the articles set a higher majority expressly stated as a ratio, two-thirds of the votes present without any attendance quorum; if at least half of the voting capital is present, a majority of the votes present suffices. Articles that lower these majorities are invalid (Art. 29(6); Communiqué II-18.1 Art. 9(2)).
3. 3. Express statement and reasons. If pre-emption rights are to be restricted in whole or in part, this must be stated expressly in the board decision under the registered capital system, or in the general meeting resolution otherwise. At the general meeting, the restriction must be on the agenda and the board must inform shareholders of the reasons. Under the registered capital system, the board’s decision to restrict is announced under SPK’s rules (Communiqué VII-128.1 Art. 12(1)(c)).

The equality principle is the main substantive limit. A restriction that, for example, allows a controlling shareholder or a related party to acquire new shares at a price that transfers value from other shareholders is open to challenge on that ground.

How a rights issue works

A rights issue by a public company follows a fixed sequence under the Share Communiqué:

During the rights period, shareholders may pay for the new shares or transfer their rights, with or without consideration (Art. 22(4)). If the prospectus says so, shares remaining after the rights period may be sold without a public offering (Art. 22(5)). Where the company is not under the registered capital system, an underwriting commitment for unsold shares is mandatory (Art. 12(3)).

The cash contribution must actually be paid in cash. Debts arising only from funds contributed in cash, and established as such by a certified public accountant’s report, may be offset against the contribution obligation if they are due; but the cash contribution obligation cannot be satisfied by offsetting it against debts arising from the transfer of non-cash assets to the company (Art. 12(4)). SPK’s powers are reserved where a rights issue is found to circumvent these rules (Art. 12(8)).

Private placements without pre-emption

Shares issued in a capital increase may also be sold without a public offering, either as an allocated sale to specific persons or as a sale to qualified investors (Communiqué VII-128.1 Art. 13(1)). The safeguards are:

• ▸ Prior restriction of pre-emption rights. Shares can be sold without a public offering only if pre-emption rights have been restricted in whole or in part by the general meeting, or, under the registered capital system, by the board if the articles authorise it (Art. 13(3)).
• ▸ Sale on the exchange. For companies whose shares trade on the exchange, such sales must take place in the relevant market of the exchange (Art. 13(4)).
• ▸ Price under exchange rules. The sale price is determined under the exchange’s rules; a different price is possible only if SPK finds it appropriate (Art. 13(5)).
• ▸ Valuation for unlisted companies. For public companies whose shares do not trade on the exchange, a price determination report by an authorised institution is required (Art. 13(6)).
• ▸ Same cash and related-party rules. The cash contribution rule and the related-party rule described below apply by analogy to these sales (Art. 12(9)).

An application to SPK for approval of the issue document must be made within thirty days of the corporate decision (Art. 13(1)). For a minority shareholder, the key questions are who receives the shares, at what price relative to the market and to the company’s value, and whether the restriction of pre-emption rights is consistent with the equality principle in Art. 18(5) of the Capital Markets Law.

Capital increases that repay related parties

The Share Communiqué contains a rule aimed directly at value transfers to controlling shareholders. If the funds to be raised exceed the company’s existing capital and are to be used, in whole or in part, to pay debts owed to related parties, as defined in SPK’s rules, that arise from the transfer of non-cash assets to the company, the capital increase is treated as a significant transaction under Art. 23 of the Capital Markets Law. In that case, before the SPK-approved prospectus is delivered to the issuer, shareholders must be given an exit right under Art. 24 of the Law and the related procedures must be completed (Communiqué VII-128.1 Art. 12(6)).

The exit right allows shareholders who attend the general meeting on a significant transaction, vote against and have their dissent recorded in the minutes to sell their shares to the company at a fair price determined under SPK’s rules (Capital Markets Law Art. 24(1)). If a shareholder was unjustly prevented from attending or voting, or the meeting was not properly called or the agenda not properly announced, the requirement to vote against and record dissent does not apply (Art. 24(2)).

The underlying concern is concealed profit transfer: a related party transfers an asset to the company, the company becomes indebted to it, and new money from all shareholders is then used to pay that debt. Public companies may not transfer profits or assets through transactions with related parties on terms inconsistent with arm’s-length conditions, market practice or commercial prudence and honesty (Capital Markets Law Art. 21). These rules are explained in the guide to concealed profit transfer and controlling shareholder liability.

Reporting on the use of proceeds

For rights issues by listed companies, and for initial public offerings through a capital increase, the company must prepare a report on the purposes for which the funds will be used, approve it by board decision, submit it with the application to SPK and disclose it publicly (Communiqué VII-128.1 Art. 33(1)).

After the issue, the company must prepare a report on whether the funds were used as stated. For listed companies, the report is prepared within ten business days after the publication of the first two financial statements disclosed after completion of the capital increase that include its results, and published on the company’s website and on KAP. The audit committee is responsible for the report; where no audit committee is required, the board is responsible (Art. 33(1)). If the funds are used after those dates, a special situation disclosure must be made within ten business days after the date on which all of the funds have been used (Art. 33(2)).

The two reports form a chain of evidence. A discrepancy between the stated purposes and the actual use, especially payments to related parties or loans to the controlling group, is a starting point for claims. Special situation disclosures and financial reports are public disclosure documents for which signatories are jointly liable if they contain false, misleading or incomplete information (Capital Markets Law Art. 32(1)).

Bonus issues

A bonus issue converts internal resources or dividends into share capital. It does not bring any money into the company, and each shareholder’s proportional stake is unchanged. In public companies, bonus shares are distributed to the existing shares at the date of the increase (Capital Markets Law Art. 19(4)).

The Share Communiqué limits the resources that may be used:

• ▸ Statutory books must match. Internal resources in the financial statements prepared under capital markets rules can be added to capital only if there is no legal obstacle and they also have a counterpart in the statutory books; if the two differ, the lower amount is used (Communiqué VII-128.1 Art. 16(1)).
• ▸ Excluded items. Revaluation surpluses and similar funds from measuring assets at fair value, profits for interim periods, and funds and reserves that the relevant legislation does not allow to be added to capital cannot be added (Art. 16(2)).
• ▸ Losses first. Subject to exceptions, prior years’ losses must be offset against internal resources, or a board decision to offset them at the general meeting must be submitted to SPK, before a bonus issue from internal resources (Art. 16(3)).
• ▸ Low-price threshold. SPK does not process applications by listed companies to add internal resources (excluding the period’s profit) to capital where, calculated on the average weighted prices in the thirty days before the decision was disclosed, the adjusted share price would fall below a threshold set in the Communiqué (Art. 16(8)).

Because a bonus issue creates no value, its announcement should not change the value of the company. Where announcements, rumours or promotions about bonus issues are used to move the price, the information-based manipulation offence in Art. 107(2) of the Capital Markets Law and the issuer’s duty to respond to rumours under Communiqué II-15.1 become relevant. These rules are explained in the guides to social media manipulation and continuous disclosure.

Challenging a board decision

Board decisions under the registered capital system can be challenged directly. Board members and shareholders whose rights are violated may bring an annulment action against them, under the Commercial Code’s rules on the annulment of general meeting resolutions, within thirty days of the announcement of the decision, in the commercial court at the company’s seat (Capital Markets Law Art. 18(6); Communiqué II-18.1 Art. 13(1)). Matters not regulated in the Communiqué are governed by the Commercial Code (Art. 13(3)).

The procedure around the action matters as much as the action itself:

1. 1. Notification to SPK. The company must notify SPK within five business days of learning that the action has been filed, and must disclose the action publicly (Communiqué II-18.1 Arts. 14(1) and 14(4)).
2. 2. The process continues unless stayed. Unless the court stays execution of the board decision or annuls it, applications to SPK for the capital increase continue (Art. 14(1)). A stay is therefore the practical way to stop an issue.
3. 3. Stay of execution. Under the Commercial Code rules that apply, the court may stay execution of the challenged resolution after hearing the board members (Commercial Code Art. 449). If a stay is granted, the parties must notify SPK within five business days of learning of it (Communiqué II-18.1 Art. 14(1)).
4. 4. After judgment. The company notifies SPK within five business days of service of the judgment; once an annulment becomes final, the board must delete the decision from its decision book within five business days and have this registered and announced (Art. 14(2)–(3)).

The thirty-day period is short and runs from the announcement, not from the moment a foreign holder learns of the decision through its custodian. Monitoring KAP for board decisions on capital increases is the only reliable way to keep the option open.

Challenging a general meeting resolution

General meeting resolutions on capital increases outside the registered capital system, on authorising the board to restrict pre-emption rights, and on renewing the board’s authority can be challenged under the Commercial Code. Resolutions contrary to the law, the articles or in particular the principle of good faith may be annulled on an action brought within three months of the resolution in the commercial court at the company’s seat (Commercial Code Art. 445). The plaintiffs may include shareholders who attended, voted against and had their dissent recorded in the minutes, and shareholders who claim that irregularities in the calling of the meeting, the announcement of the agenda or participation affected the resolution (Art. 446(1)(a)–(b)). Resolutions that, among other things, violate the rules protecting capital are null (Art. 447(1)(c)).

For a foreign institution voting through a custodian or a proxy, the practical step is to ensure that a vote against is actually cast and that dissent is recorded in the minutes. Without that, the institution may lose standing under Art. 446(1)(a) and, where the matter is a significant transaction, the exit right under Art. 24 of the Capital Markets Law. Voting through custodians, and the conduct of annulment cases, are explained in the guide to shareholder rights in Turkish listed companies.

SPK’s powers

SPK has its own tools against abusive capital increases. It may bring an annulment action against board decisions taken under the registered capital system within thirty days of their public announcement, in the commercial court at the company’s seat, and request a stay of execution without providing security (Capital Markets Law Art. 93). It may remove from the system companies that use it to exploit shareholders and other investors (Communiqué II-18.1 Art. 10(2)). And its powers are reserved where a rights issue is carried out by circumventing the rules of the Share Communiqué (Communiqué VII-128.1 Art. 12(8)).

These powers matter to a minority shareholder because they can be prompted. A complaint that sets out the facts, the provisions breached and the time limit can lead SPK to use its own standing, which does not depend on the complainant’s ability to sue, and to request a stay without security.

Damages claims

Where a capital increase has already been completed, the remedy is usually damages. The main routes are:

Loss from dilution is often measured as the difference between the value of the holding before and after the increase, adjusted for any rights the holder could have used. How loss is calculated and how interest runs is explained in the guide to calculating damages in Turkish securities claims.

Points for institutional investors

• ▸ Know the articles. For each holding, note whether the company is in the registered capital system, the ceiling, the expiry of the board’s authority and whether the board may restrict pre-emption rights.
• ▸ Vote on authorisations. Renewals of the board’s five-year authority and authorisations to restrict pre-emption rights pass through the general meeting under the majorities in Art. 29(6). These are the points at which minority votes count.
• ▸ Watch the thirty-day window. Board decisions on capital increases can be challenged only within thirty days of announcement. Set KAP alerts for each holding.
• ▸ Read the use-of-proceeds report. Compare it with the prospectus and, later, with the report on actual use published after the first two financial statements.
• ▸ Instruct on rights. Rights periods for listed companies are fifteen to sixty days. Custodians need timely instructions to subscribe, sell or transfer rights.
• ▸ Treat bonus issue news with caution. A bonus issue adds no value. Sharp price movements on bonus issue news, especially in thinly traded shares, warrant attention.
• ▸ Use SPK. SPK can sue and request a stay without security. A well-documented complaint within its thirty-day window may achieve more than a private action.

Action plan

1. 1. Read the decision. On the KAP announcement, identify the type of increase, the amount, the price, whether pre-emption rights are restricted and who receives the shares.
2. 2. Check authority. Confirm that the articles authorise the board, that the five-year authority has not expired and that the ceiling is respected.
3. 3. Check the use of proceeds. Look for repayments to related parties and for debts arising from non-cash asset transfers.
4. 4. Decide within thirty days. If the decision is abusive, file an annulment action with a request for a stay, or complain to SPK so that it can act under Art. 93, within the thirty-day period.
5. 5. Protect the holding. If the issue goes ahead, instruct the custodian on subscribing or selling rights within the rights period.
6. 6. Follow up. Check the report on actual use of proceeds after the first two financial statements and compare it with the original report.
7. 7. Preserve claims. Where disclosures prove misleading, observe the six-month period for claims based on public disclosure documents.

Time limits

Frequently asked questions

Can the board of a Turkish listed company increase capital without a shareholder vote?

Yes, under the registered capital system, up to the ceiling in the articles, with authority granted by the general meeting for at most five years at a time (Capital Markets Law Art. 18(2)).

How high can the registered capital ceiling be?

Not more than five times the higher of the company’s paid-in or issued capital and its equity (Communiqué II-18.1 Art. 5(4)).

Can the board take away pre-emption rights?

Only if the articles expressly authorise it, and the power may not be used to create inequality among shareholders (Capital Markets Law Art. 18(5)).

What majority is needed to authorise the board to restrict pre-emption rights?

Two-thirds of the votes present, or a majority of the votes present if at least half of the voting capital attends, unless the articles set a higher majority (Capital Markets Law Art. 29(6)).

How long do shareholders have to exercise rights in a listed company’s rights issue?

Between fifteen and sixty days, as set in the prospectus, starting within ten days of its publication (Communiqué VII-128.1 Art. 22).

Can a controlling shareholder pay for new shares by cancelling debts the company owes it?

Only debts arising from funds contributed in cash, established by an accountant’s report and due, can be offset; debts arising from transfers of non-cash assets cannot (Communiqué VII-128.1 Art. 12(4)).

When does a capital increase give an exit right?

When the funds exceed existing capital and are to be used to repay related-party debts arising from non-cash asset transfers, the increase is a significant transaction and an exit right must be given (Communiqué VII-128.1 Art. 12(6); Capital Markets Law Art. 24).

Must a listed company say how it will use the money?

Yes. It must disclose a use-of-proceeds report before the issue and publish a report on actual use after the first two financial statements following completion (Communiqué VII-128.1 Art. 33).

Can new shares be sold to selected investors without a public offering?

Yes, after pre-emption rights are restricted; for listed companies the sale must take place on the exchange at a price set under exchange rules unless SPK permits otherwise (Communiqué VII-128.1 Art. 13).

Do bonus shares increase the value of my holding?

No. They convert internal resources or dividends into capital and are distributed to existing shares at the date of the increase (Capital Markets Law Art. 19(4)).

Which resources cannot be used for a bonus issue?

Fair value revaluation surpluses, interim period profits and funds the legislation does not allow to be added to capital (Communiqué VII-128.1 Art. 16(2)).

How do I challenge a board decision on a capital increase?

By an annulment action within thirty days of the decision’s announcement, in the commercial court at the company’s seat (Capital Markets Law Art. 18(6)).

Does filing an action stop the capital increase?

Not by itself; the SPK process continues unless the court stays execution or annuls the decision (Communiqué II-18.1 Art. 14(1)).

Can SPK stop an abusive capital increase?

SPK may sue to annul the board decision within thirty days of its announcement and request a stay without security (Capital Markets Law Art. 93), and may remove a company from the registered capital system for abuse (Communiqué II-18.1 Art. 10(2)).

How long do I have to challenge a general meeting resolution?

Three months from the resolution (Commercial Code Art. 445).

Related guides

• Turkey’s 2026 Fund and Market Manipulation Crisis: Legal Guide for Foreign Institutional Investors — the entry point to this series
• Mergers, Asset Sales and Exit Rights in Turkish Listed Companies
• Corporate Governance in Turkish Listed Companies
• Share Buy-Backs in Turkey
• Shareholder Rights in Turkish Listed Companies
• Concealed Profit Transfer in Turkey
• Mandatory Tender Offers in Turkey
• Prospectus and Disclosure Liability in Turkey
• Directors’ and Auditors’ Liability in Turkish Listed Companies
• Continuous Disclosure in Turkey: Communiqué II-15.1
• Social Media Manipulation and Unlicensed Investment Advice in Turkey
• Calculating Damages in Turkish Securities Claims
• Trading Halts, Watchlist Market and Delisting on Borsa Istanbul