One of the most important methods companies use to achieve their sustainable growth goals, strengthen their corporate identity, and meet their financing needs is the initial public offering process. An initial public offering is the process of offering a company’s shares to investors on Borsa Istanbul for the first time or again. This process is not only an economic step, but also a serious legal process.
Therefore, when making initial public offering preparations, it is of great importance for the process to be managed by a lawyer specialized in capital markets law in order to protect the company’s interests.
What Is an Initial Public Offering?
An initial public offering means that joint stock companies offer their shares to investors at a certain price in order to increase their capital or to make existing shareholders’ shares available to the public. The funds obtained by the company through this method are used to finance new investments, repay debts, or support growth plans.
This step also enables the company to undergo a significant transformation in terms of transparency, reliability, and institutionalization. A company that has gone public is now obliged to consider the interests of not only its shareholders, but also thousands of investors.
How Does the IPO Process Work?
Initial public offering transactions consist of certain legal and financial stages. Each step must be carried out in accordance with CMB regulations and Borsa Istanbul criteria.
1. Decision to Go Public
The first stage is the company’s board of directors deciding on the initial public offering. This decision is usually finalized with general assembly approval, and the IPO preparation process begins.
2. Legal and Financial Review (Due Diligence)
Prior to the IPO, the company’s current status is comprehensively reviewed.
During this process, evaluations are carried out by IPO lawyers in the following areas:
The company’s trade registry records and articles of association,
Shareholding structure and share distributions,
Existing contracts and legal obligations,
Ongoing lawsuits or potential risks,
Intellectual property rights, licenses, and immovable assets.
Any deficiencies identified as a result of this review must be remedied prior to the IPO. Otherwise, the CMB prospectus approval process may be prolonged or the application may be rejected.
3. Selection of the Intermediary Institution
Initial public offering transactions may only be carried out through intermediary institutions authorized by the CMB.
The intermediary institution determines the offering price of the shares, conducts the book-building process, and ensures that the company is listed on Borsa Istanbul.
4. Preparation of the Prospectus
The prospectus is the most critical document of the IPO process. All information regarding the company’s field of activity, financial status, risk factors, shareholding structure, and the shares to be offered to the public are included in this document.
When preparing the prospectus, the following points should be taken into consideration:
Information must be complete, accurate, and up to date.
Any misleading or incomplete statement may lead to legal sanctions.
An IPO cannot be carried out without obtaining prospectus approval from the CMB.
At this stage, consultancy provided by a lawyer specialized in capital markets law ensures that the company is protected against both administrative and criminal risks.
5. CMB Approval and Application to Borsa Istanbul
After obtaining prospectus approval, the company applies to Borsa Istanbul to determine the market on which its shares will be traded. Borsa Istanbul determines the appropriate market (Star Market, Main Market, etc.) based on the company’s size, financial strength, and free float ratio.
At this stage, compliance with CMB and stock exchange regulations is of critical importance. With the approval of both institutions, the company gains the status of a publicly traded joint stock company.
6. Book-Building and Sale
The intermediary institution collects demand from investors within the determined price range. Once the book-building process is completed, shares are allocated to investors and the IPO is effectively completed.
Advantages of an IPO for Companies
Initial public offering transactions are not merely financial operations, but strategic moves. The main advantages they offer to companies are as follows:
New Financing Sources: The company raises funds through capital increase without resorting to bank loans.
Increase in Brand Value: Being traded on the stock exchange enhances the company’s public reputation.
Institutionalization and Professional Management: Accountability is strengthened, and boards of directors become more transparent.
Liquidity Opportunity: Company shareholders may sell their shares on the stock exchange at any time.
Investor Confidence: Thanks to CMB regulations, the company’s activities are regularly audited, increasing investor confidence.
However, along with these advantages, obligations such as public disclosure, independent auditing, and corporate governance principles also begin after the IPO. Therefore, proper planning of the process is extremely important.
Legal Obligations of the Company After the IPO
After the IPO, the company’s status changes and it becomes a publicly traded joint stock company.
This entails the following legal obligations:
Public Disclosure: The company must regularly disclose activity reports and financial statements through the Public Disclosure Platform (KAP).
Independent Audit: Financial statements must be reviewed by independent audit firms authorized by the CMB.
Compliance with Corporate Governance Principles: Independent board members must be appointed and internal control mechanisms must be established.
The Importance of Legal Consultancy in IPO Transactions
IPO transactions are complex processes both technically and legally. Therefore, working with a lawyer well-versed in capital markets legislation is critical to protecting the company’s interests. The lawyer not only prepares application files, but also ensures full compliance with legislation at every stage of the IPO process, including prospectus approval, listing on Borsa Istanbul, investor disclosures, and share sale procedures.
Thanks to this comprehensive support, the company is protected from legal risks and presents a transparent and reliable corporate stance to investors and the public.
Conclusion
An IPO is not merely an economic choice in a company’s financial growth journey, but also a chain of serious legal responsibilities. Companies aiming for a successful IPO must proceed with the right strategy, full regulatory compliance, and expert legal support.
IPO transactions carried out under the guidance of a lawyer experienced in capital markets law ensure the company’s legal security and create a strong foundation for long-term corporate stability and investor confidence.
