04 Nov

As the Turkish economy continues to grow and the country transforms itself into a regional economic hub, Turkish companies have already started to invest significant efforts in improving their management structures and strengthening corporate governance. The latter is nothing short of an imperative for companies, due to their increased need for access to foreign funds as the result of high economic growth rates and intensified competition.

CMB initiatives

Turkey already has a strong regulatory framework for corporate governance. However, the reforms that have been implemented by the Capital Markets Board (CMB), in line with the International Monetary Fund’s recommendations and the establishment of strict auditing and accounting standards, are major milestones for better corporate governance in Turkish companies. The CMB’s later requirements for companies have strengthened the oversight functions of company boards. However, in contrast to previous non-binding regulations, the new CMB rules are compulsory. In particular, the compliance report that companies must issue with regard to corporate governance principles is a huge step towards better corporate governance.


The CMB also provides the necessary legal framework for stakeholders to access extensive information about firms. According to the new regulation, which obliges companies to issue a compliance report in line with the CMB corporate governance principles, stakeholders must be informed of company policies and procedures that will affect the protection of stakeholders’ rights, and mechanisms that will provide stakeholders with opportunities to participate in company management must be developed. The compliance report also has a separate section in which it should be stated whether a unit managing relations with stakeholders has been established inside the company. If such a unit has already been established, the names and roles of the staff must be disclosed, as well as the number of explanations that have been given by this unit to the stakeholders. If such a unit has not yet been established, the reasons for such failure must be stated. The report will also include the efforts that have thus far been spent on compliance with the corporate governance principles. If a company fails to comply with the principles adopted by the CMB, it must state the reasons for its non-compliance in the compliance report.


The CMB’s efforts to improve corporate governance standards in Turkey are not confined to better auditing and accounting standards, but also impose higher transparency standards on companies. The CMB has decided to inform investors about the fiscal status of companies and taken the decision to scrutinise the salaries of chief executive officers who are working for companies listed on the Turkish Exchange Market. It will fine companies if they fail to disclose the necessary information to the authorities.

In line with the CMB regulation, the compliance report must include a section on conveying information about the firm to the public. The compliance report obliges the firm to disclose the names and roles of the people in charge of such public information policy. The report also requires companies to state whether they have their own websites and, if not, to state the reasons for such non-existence. The list of people whose activities might be considered insider trading must be disclosed to the public; if this list has already been shared with the public, this must also be stated in the compliance report. If the list of names has not yet been disclosed to the public, the reasons for this non-compliance with the CMB regulation must be stated.

Finally, the compliance report obliges companies to state openly whether the mission objectives and vision of the company have been disclosed to the public, and whether the board members agree with such mission objectives and vision. If this information has not yet been revealed to the public, the reasons for this failure to comply with the CMB compliance report must be stated.

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