Financial Reporting Fraud and Audit Failures in Turkish Listed Companies: Capital Markets Law Articles 14, 63 and 112 and Communiqué II-14.1

Market manipulation schemes often rest on financial statements that make a company look stronger than it is. Turkish law places responsibility for financial statements on the issuer and, according to their fault, on its board members, and requires the board members and managers responsible for financial reporting to sign statements that the reports are true and complete (Capital Markets Law Art. 14(2); Communiqué II-14.1 Art. 9). Listed companies must publish annual financial reports within 60 or 70 days of the year end and interim reports within 30 or 40 days, with extra time where interim statements are reviewed (Communiqué II-14.1 Arts. 10 and 11). Audit firms listed by SPK are liable, together with the auditors who sign the report, for losses caused by audits not carried out in accordance with the rules, and for false, misleading or incomplete information in their reports (Capital Markets Law Art. 63). Preparing financial statements that do not reflect the truth, opening fictitious accounts, accounting fraud and issuing false or misleading audit reports are crimes (Art. 112(2)). An adverse audit opinion forces the board to call a general meeting to elect a new board within four business days (Commercial Code Art. 403(5)). This guide explains these rules and the remedies they give a foreign institutional investor. It reflects the legislation in force as at 25 October 2026.

Why financial reporting rules matter in a manipulation case

Share prices respond to reported earnings, assets and cash flows. Where these are overstated, through fictitious revenue, inflated asset values, undisclosed related-party receivables or concealed liabilities, investors buy at prices that do not reflect the company’s real position. When the truth emerges, often after a qualified audit opinion, a restatement or a regulatory investigation, the price falls. For a foreign institutional investor, the financial reporting rules identify who is responsible, what records exist, which documents are the basis of a claim and what time limits apply.

In the 2026 fund and market manipulation cases, the integrity of financial statements is relevant both to the companies whose shares were traded and to the funds and intermediaries involved. 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

The Capital Markets Law sets the issuer’s duty to prepare financial statements in accordance with Turkish Accounting Standards and SPK’s rules (Art. 14), the role of audit firms (Arts. 62–64) and the criminal offences (Art. 112). SPK’s Communiqué on Financial Reporting in Capital Markets No. II-14.1 (Official Gazette 13 June 2013, No. 28676), as amended in the Official Gazette of 3 February 2017, sets the details. The Commercial Code governs the audit of joint-stock companies, the auditor’s report and opinion, and auditors’ liability (Arts. 397–406 and 554).

Who is responsible for the financial statements

The issuer must prepare and submit the financial statements and reports to be disclosed, or requested by SPK, in accordance with SPK’s rules within the framework of Turkish Accounting Standards, on time, completely and accurately (Capital Markets Law Art. 14(1)). Companies use the Turkish Accounting and Financial Reporting Standards published by the Public Oversight, Accounting and Auditing Standards Authority (KGK), and SPK may take decisions on their application, which companies must follow (Communiqué II-14.1 Art. 5).

Responsibility is allocated as follows:

1. 1. Issuer and board. The issuer and, according to their fault and the circumstances, its board members are responsible for the preparation, presentation, fairness and accuracy of the financial statements and reports. The board must take a separate decision approving them (Capital Markets Law Art. 14(2); Communiqué Art. 9(1)).
2. 2. Designated board members. The board designates the audit committee, or at least one board member if there is none, as responsible for financial reporting; this does not remove the board’s overall responsibility (Communiqué Art. 9(2)).
3. 3. Responsibility statements. The board members responsible for financial reporting and the general manager or the manager responsible for financial reporting attach to each annual and interim report a statement that they have reviewed the financial statements and annual report; that, on the basis of their knowledge, the documents contain no untrue statement or omission that would make them misleading; and that the financial statements fairly present the assets, liabilities, financial position and profit or loss and the annual report fairly presents the development of the business, the financial position and the principal risks and uncertainties (Communiqué Art. 9(3); Capital Markets Law Art. 14(2)).
4. 4. Access to information. The board must ensure that the signatories have access to material information about the company and consolidated entities. The signatories must report their criticisms and suggestions about internal control and their own access to information to the board, the audit committee and the audit firm (Communiqué Art. 9(4)).

The responsibility statements matter in litigation. They identify named individuals who confirmed the accuracy of specific reports, and they bring those individuals within the circle of persons potentially liable for public disclosure documents.

Filing deadlines

SPK may grant extra time where there are reasonable grounds it accepts, on an application by the audit committee or, if there is none, by the board member or general manager responsible for financial reporting (Art. 13(1)). If the last day falls on an official holiday, the deadline moves to the next business day (Arts. 10(3) and 11(3)). Subsidiaries, joint ventures and associates generally file at the same time as, or before, their parent or investor (Art. 12/A(4)).

Missed deadlines and extension requests are signals. A company that cannot finalise its statements, or whose auditor needs more time, may be dealing with issues that later appear in a qualified opinion or a restatement.

Publication and use of financial information

• ▸ KAP and website. Listed companies file their financial reports on KAP for publication (Communiqué II-14.1 Art. 12(1)) and must publish them on their websites after disclosure, keeping them available for at least five years (Art. 14(1)).
• ▸ Shareholder inspection. Annual financial reports and audit reports are available for shareholders’ inspection at least three weeks before the general meeting and must be sent to shareholders who request them (Art. 15(1)).
• ▸ Summary information. Summaries derived from published reports may be disclosed, stating where the full reports can be found; they must not be prepared to achieve a predetermined result and must not be misleading or wrong (Art. 16(1)).
• ▸ Non-compliant figures. Companies may not use, in any public statement, financial reports or data not prepared under the Communiqué; if they do, they are deemed to have given untrue or incomplete information on matters that may affect the value of their securities (Art. 18(1)).
• ▸ Statements under other legislation. Companies may prepare statements required by other legislation, such as tax rules, but financial statements disclosed under capital markets rules must follow the Communiqué; where such other statements are publicly available and no Communiqué-compliant statements have yet been published for the period, the company must disclose them at the same time (Art. 17(1)).

Article 18 is significant for manipulation cases. Promotional figures, “adjusted” results or projections presented as financial data outside the regulated reports may themselves amount to untrue information, which links to the information-based manipulation offence explained in the guide to social media manipulation.

Books and records

Companies must not make new entries in, or change, their statutory books because of calculations made to prepare financial statements under the Communiqué. Instead, they keep a Capital Markets Accounting Book recording all opening and current-period adjustment and reclassification entries that lead from the accounting records to the amounts in the financial statements (Communiqué II-14.1 Art. 19(1)–(3)). The book may be kept electronically or in writing and is retained for the period the Commercial Code sets for commercial books; where it is kept electronically, the board must ensure the information is not altered (Art. 19(4)). Companies must also obtain and retain, linked systematically to that book, the documents needed to support the financial statement items, even where other legislation does not require them (Art. 20(1)).

These records are the evidence trail between the statutory books and the published figures. Intentionally failing to keep required books and records properly, or to retain them for the statutory period, is a crime (Capital Markets Law Art. 112(1)). In civil and criminal proceedings, requests for these records are often central; the routes are explained in the guide to obtaining and preserving evidence.

The independent audit

Issuers must have the financial statements and reports specified by SPK audited by an audit firm on SPK’s list, under Turkish Auditing Standards, for compliance with the principle that the information truly, fairly and honestly reflects the facts, and must obtain an audit report (Capital Markets Law Art. 14(3)). SPK may also require audit reports from parties to public offerings, listing applications and significant transactions, and in relation to events that materially affect a company’s activities and financial position (Art. 14(4)). The audit of financial reports follows SPK’s audit rules, and the parent is responsible for providing the information and documents the auditor needs for consolidated reports (Communiqué II-14.1 Art. 21(1)–(2)).

Under the Commercial Code, financial statements are audited under the Turkish Auditing Standards published by KGK, which are aligned with international standards; the audit also covers whether the financial information in the board’s annual report is consistent with the audited statements and reflects the truth (Commercial Code Art. 397(1); Communiqué II-14.1 Art. 21(3)). Financial statements that are subject to audit but have not been audited are deemed not to have been prepared (Commercial Code Art. 397(2)).

The auditor’s report must state, among other things, whether the bookkeeping and the financial statements comply with the law and the articles, whether the board provided the explanations and documents requested, and whether the statements present a true and fair view of the company’s assets, financial position and profitability under Turkish Accounting Standards (Art. 402(4)–(5)).

Audit opinions and their consequences

The Commercial Code gives the audit opinion legal effects:

Former board members may be re-elected unless the articles provide otherwise (Art. 403(5)). An adverse opinion or disclaimer is therefore not only a signal to the market but a trigger for a board election at which minority shareholders can vote and ask questions. A disclaimer may be given even where the auditor cannot prove its concerns, provided it explains its reasons (Art. 403(4)).

Market consequences of qualified audits

Audit opinions also affect a company’s trading status and corporate transactions:

• ▸ Watchlist Market. An adverse opinion or disclaimer in the audit reports for the last two periods published on KAP is a ground for transferring the shares to Borsa Istanbul’s Watchlist Market (Listing Directive Art. 35(1)(a)).
• ▸ Delisting. An adverse opinion or disclaimer in the audit reports for the last three years is a ground for delisting (Listing Directive Art. 23(1)(g)).
• ▸ Mergers. Financial statements with an adverse or disclaimed audit opinion cannot be used as the basis of a merger or demerger; issues affecting the exchange ratio require corrected statements and a reissued audit report (Merger and Demerger Communiqué II-23.2 Art. 6(3)).

These consequences are explained in the guides to trading halts, the Watchlist Market and delisting and mergers, asset sales and exit rights.

Audit firms: authorisation, oversight and liability

Audit firms are authorised by KGK. SPK sets additional conditions for firms that will audit under the Capital Markets Law and publishes the list of firms meeting them. SPK may remove from the list firms found, in its quality control and inspection work, to have breached standards or legislation, and reports the results of its quality control work to KGK (Capital Markets Law Art. 62(1)).

Audit firms are liable, within the scope of their duties, together with the persons who signed the report, for losses arising because the financial statements and reports they audited were not audited in accordance with the legislation. Audit firms, rating agencies and valuation firms are liable for losses caused by false, misleading or incomplete information in the reports they issue (Art. 63(1)). Persons who prepare reports included in or underlying public disclosure documents, such as audit firms, are also liable under the Law’s disclosure liability provisions (Art. 32(2)). Under the Commercial Code, auditors who act with fault in performing their statutory duties are liable to the company, shareholders and creditors for the loss they cause (Commercial Code Art. 554(1)).

A separate rule requires reporting to SPK, but only in the financial sector. Audit firms and auditors auditing an investment firm or a collective investment institution, or performing other duties under the Law there, must immediately report to SPK any matter they learn of that breaches authorisation and activity conditions, could prevent the continuous and orderly conduct of the company’s activities, or requires an adverse opinion or a disclaimer; such reports do not breach confidentiality and create no civil or criminal liability for the reporter (Capital Markets Law Art. 64). For brokers and funds involved in the 2026 cases, this means that their auditors had a statutory duty to alert SPK to serious problems.

The liability of directors and auditors in investor claims is explained in more detail in the guide to directors’ and auditors’ liability, and claims against brokers and fund managers in the guide to claims against brokers, custodians and portfolio managers.

Corrections and re-audit

Where financial reports already filed are corrected, the rules on filing, board approval and responsibility statements, publication and audit apply again by analogy (Communiqué II-14.1 Art. 12/A(5)). If the general meeting adopts financial reports different from those filed, the reports adopted must be filed and published again, without waiting for a new audit report or responsibility statement, although this may not be used to adopt statements contrary to the Communiqué (Art. 12/A(6)). Under the Commercial Code, if the financial statements or the annual report are changed after the audit report and the change could affect it, they are audited again, and the re-audit and its result are disclosed in the report and reflected in the opinion (Commercial Code Art. 397(3)).

A restatement is often the moment when the true position emerges. Its date is therefore relevant for loss calculation and for the six-month limitation period that applies to claims based on public disclosure documents.

Criminal offences

Article 112 of the Capital Markets Law contains two groups of offences committed intentionally:

1. 1. Bookkeeping offences. Failing to keep the books and records required by law properly, or failing to retain the books and documents for the statutory period, is punishable by six months to two years’ imprisonment and a judicial fine of up to five thousand days (Art. 112(1)).
2. 2. Falsification offences. Preparing financial statements and reports that do not reflect the truth, opening fictitious accounts, committing any kind of accounting fraud in records, and issuing false or misleading audit or valuation reports, together with the responsible board members or managers of issuers who cause such reports to be issued, are punished under the relevant provisions of the Penal Code. For forgery of a private document, use of the forged document is not required (Art. 112(2)).

The Penal Code punishes forgery of a private document, which normally requires both forging and using the document, with one to three years’ imprisonment (Penal Code Art. 207(1)); Art. 112(2) removes the use requirement in this context. For offences punishable by up to five years’ imprisonment, the prosecution is time-barred after eight years (Penal Code Art. 66(1)(e)). An investor can file a complaint and participate in the criminal proceedings to obtain access to the file; the procedure is explained in the guide to joining a criminal case as a foreign investor.

Civil claims

Financial reports are among the public disclosure documents for which their signatories, or the legal entities on whose behalf they are signed, are jointly liable for losses caused by false, misleading or incomplete information (Capital Markets Law Art. 32(1)). Causation is presumed where the securities were bought or sold on the exchange after the misleading document was disclosed and sold or bought after the true information emerged (Art. 32(4)). Persons who prove that they did not know of the defect and that their lack of knowledge was not due to intent or gross negligence are not liable (Art. 32(3)). The claim is time-barred six months after the loss (Art. 32(6)).

Where the misstatement concealed losses or transfers that harmed the company itself, shareholders may also sue directors and auditors for compensation payable to the company (Commercial Code Art. 555(1)). The elements of disclosure liability are explained in the guide to prospectus and disclosure liability, and the measurement of loss in the guide to calculating damages.

Shareholder tools

• ▸ Replacing a partial auditor. At the request of the board or of shareholders holding 5 per cent of the capital of a public company, the commercial court may, after hearing the parties and the elected auditor, appoint another auditor where there is just cause relating to the auditor, in particular suspicion of partiality (Commercial Code Art. 399(4)). The action must be brought within three weeks of the announcement of the auditor’s election in the Trade Registry Gazette; minority shareholders must have voted against the election, had their vote recorded and held shares for at least three months before the meeting (Art. 399(5)).
• ▸ Information at the meeting. Shareholders may ask the board about the company’s affairs and the auditors about how the audit was carried out and its results (Commercial Code Art. 437(2)).
• ▸ Audit committee reports. The audit committee reports in writing to the board on the accuracy of the financial statements, and its activities are described in the annual report (Corporate Governance Communiqué II-17.1, Principle 4.5.9). Questions about these reports can be put to the company. The governance framework is explained in the guide to corporate governance in Turkish listed companies.
• ▸ The board election after an adverse opinion. The general meeting called under Commercial Code Art. 403(5) is an opportunity to vote on the board and require explanations.

Warning signs

• ▸ Qualified, adverse or disclaimed opinions, or audit reports with significant emphasis on going concern or related-party matters.
• ▸ Late filing or extension requests under Communiqué II-14.1 Art. 13.
• ▸ Auditor changes, especially in mid-cycle or after a disagreement.
• ▸ Large non-trade receivables from related parties, which are also a Watchlist and delisting ground when they exceed half of total assets.
• ▸ Wide gaps between statutory and capital markets figures without clear explanation.
• ▸ Corrections of filed reports and differences between filed and general-meeting-approved statements.
• ▸ Promotional figures outside the regulated reports (Communiqué II-14.1 Art. 18).

Points for institutional investors

• ▸ Archive every report. Keep each filed financial report, audit report and responsibility statement with its KAP date; they are the documents on which claims are built.
• ▸ Note the signatories. Record the board members and managers who signed responsibility statements and the audit firm and partners who signed the audit report.
• ▸ Track opinion changes. A move from an unqualified to a qualified opinion, or a change of auditor, is a reason to reassess the holding and evidence.
• ▸ Use the auditor election. Vote on the auditor’s election and, where partiality is suspected, coordinate with others to reach 5 per cent.
• ▸ Mind the six-month period. The disclosure liability period runs from the loss, often triggered by a qualified opinion, a restatement or an SPK announcement.
• ▸ Combine routes. A criminal complaint can unlock the Capital Markets Accounting Book and audit records for use in civil claims.

Action plan

1. 1. Identify the reports. List the financial reports on which the investment decisions relied and the dates they were filed.
2. 2. Identify the revelation. Date the event that revealed the true position: a qualified opinion, a restatement, a regulatory announcement or a criminal investigation.
3. 3. Calculate the loss for each purchase and sale between the misleading report and the revelation.
4. 4. Map the defendants. Issuer, board members, signatories, audit firm and signing auditors, and any persons who used the figures to move the price.
5. 5. Preserve evidence. Request preservation of the Capital Markets Accounting Book, supporting documents and audit records.
6. 6. File in time. Bring disclosure liability claims within six months of the loss and consider a criminal complaint under Art. 112.
7. 7. Use governance tools. Vote at the general meeting called after an adverse opinion and, where justified, seek the appointment of another auditor.

Time limits

Frequently asked questions

Who is responsible for a Turkish listed company’s financial statements?

The issuer and, according to their fault, its board members; the board must approve them by a separate decision (Capital Markets Law Art. 14(2)).

Who signs responsibility statements?

The board members responsible for financial reporting and the general manager or the manager responsible for financial reporting (Communiqué II-14.1 Art. 9(3)).

When must listed companies publish annual results?

Within 60 days of the year end, or 70 days if they prepare consolidated statements (Communiqué II-14.1 Art. 10(1)).

When must interim results be published?

Within 30 days, or 40 days if consolidated, with 10 more days for listed companies whose interim statements are reviewed (Communiqué Art. 11).

Can a company use non-standard figures in announcements?

No. Using financial data not prepared under the Communiqué in public statements is deemed untrue or incomplete information (Communiqué Art. 18(1)).

What happens after an adverse audit opinion?

The board must call a general meeting within four business days, the meeting elects a new board, and compliant statements must be prepared within six months (Commercial Code Art. 403(5)).

Is a disclaimer of opinion treated like an adverse opinion?

Yes. It has the consequences of an adverse opinion (Commercial Code Art. 403(4)).

Can audit firms be held liable to investors?

Yes. They are liable with the signing auditors for audits not carried out under the rules and for false, misleading or incomplete information in their reports (Capital Markets Law Art. 63(1); Commercial Code Art. 554).

Must auditors report problems to SPK?

Auditors of investment firms and collective investment institutions must report certain serious matters to SPK immediately (Capital Markets Law Art. 64); the duty does not extend to audits of other listed companies.

Is preparing false financial statements a crime?

Yes. Preparing untrue financial statements, opening fictitious accounts, accounting fraud and issuing false audit reports are punished under the Penal Code (Capital Markets Law Art. 112(2)).

What is the penalty for improper bookkeeping?

Six months to two years’ imprisonment and a judicial fine of up to five thousand days (Capital Markets Law Art. 112(1)).

How long do I have to sue over misleading financial statements?

Six months from the loss for claims based on public disclosure documents (Capital Markets Law Art. 32(6)).

Can shareholders replace the auditor?

Shareholders holding 5 per cent of a public company can ask the court to appoint another auditor for just cause, within three weeks of the election’s announcement (Commercial Code Art. 399(4)–(5)).

Do adverse audit opinions affect trading?

Two periods of adverse or disclaimed opinions are a Watchlist Market ground, and three years a delisting ground (Listing Directive Arts. 35(1)(a) and 23(1)(g)).

What records link the statutory books to the published figures?

The Capital Markets Accounting Book and its supporting documents (Communiqué II-14.1 Arts. 19–20).

Related guides

• Turkey’s 2026 Fund and Market Manipulation Crisis: Legal Guide for Foreign Institutional Investors — the entry point to this series
• Turkish Investment Fund Rules: Communiqués III-52.1, III-55.1 and III-56.1
• Market-Disrupting Acts in Turkey: Article 104 and Communiqué VI-104.1
• Directors’ and Auditors’ Liability in Turkish Listed Companies
• Prospectus and Disclosure Liability in Turkey
• Continuous Disclosure in Turkey: Communiqué II-15.1
• Corporate Governance in Turkish Listed Companies
• Trading Halts, Watchlist Market and Delisting on Borsa Istanbul
• Obtaining and Preserving Evidence in Turkey for Securities Claims
• Joining a Criminal Case in Turkey as a Foreign Investor
• Calculating Damages in Turkish Securities Claims
• Limitation Periods for Investor Claims in Turkey