REGULATION ON PRINCIPLES AND PROCEDURES

OF PROGRESSIVE LIQUIDATION OF INTERMEDIARY INSTITUTIONS

 

adopted and enacted by

the Capital Markets Board

by virtue of

the Law 4487 dated 15.12.1999 and

the Law 2499 dated 28.07.1981 and

published in the Official Gazette 

issue 24439 on June 21, 2001

 

 

PURPOSE AND SCOPE:

 

ARTICLE 1: The purpose of this Regulation is to set down the principles and procedures of liquidation, by the Investors Protection Fund, of the intermediary institutions decided to be progressively liquidated pursuant to the provisions of sub-paragraph (h) of first paragraph of article 46 of the Capital Markets Law 2499 dated 28/07/1981 revised and amended by the Law 4487 dated 15/12/1999, by liquidation of their properties and assets either in kind or by turning them into cash, as the case may be, and by allocating and using the proceeds thereof for settlement of their obligations o f p ayment in cash or delivery of capital market instruments toward their customers arising from their capital market activities and transactions effected within the frame of the Law.

 

LEGAL GROUNDS:

 

ARTICLE 2: This Regulation is adopted and enacted by virtue of article 46/B of the Capital Markets Law 2499 dated 28/07/1981 revised and amended by the Law 4487 dated 15/12/1999 .

 

DEFINITIONS:

 

ARTICLE 3: For the purposes and in the context of this Regulation:

 

"Law" refers to the Capital Markets Law 2499;

 

"Board" refers to the Capital Markets Board;

 

"Fund" refers to the Investors Protection Fund;

 

"CRA" stands for the Central Registry Agency;

 

"Association" refers to the Association of Turkish Capital Markets Intermediary Institutions;

 

"ISE" stands for the Istanbul Stock Exchange; and

"Clearing Bank" refers to ISE Clearing and Safe Custody Bank Co., Inc.

 

PROGRESSIVE LIQUIDATION DECISION AND ITS ADVERTISEMENT:

 

ARTICLE 4: A progressive liquidation decision taken about an intermediary institution shall, in the same day, be notified by the Board to the intermediary institution, CRA, ISE, the Clearing Bank, the Association and the Turkish Bankers' Association and also to the Fund for initiation and conduct of the liquidation procedures.

 

The progressive liquidation decision shall then be advertised and publicized by the Fund in accordance with article 23 of this Regulation so as to ensure that the creditors of the related intermediary institution submit their claims to the Fund with documents and evidences proving their claims and rights. Principles and procedures of application by the creditors to the Fund shall be shown in the advertisement, and it shall also be stated that all payments due and payable to the related intermediary institution must thereafter be paid only to the Fund.

 

PROTECTION OF ASSETS AND PROPERTIES:

 

ARTICLE 5:  The properties and assets of the intermediary institutions whose authorization is permanently withdrawn and cancelled by the Board can in no case be transferred to third parties, or pledged, or shown as collateral or used for securitization, or attached, except for the actions to be taken and the proceedings to be realized by the Fund and the Board as a part of the progressive liquidation process, and all of the pending execution proceedings shall automatically stop and be stayed, during the period from the date of the Board's decision for withdrawal and cancellation of the license to the date of advertisement about completion of the progressive liquidation procedures, or if a bankruptcy petition is filed following completion of the progressive liquidation procedures, to the date of a final court judgment on the merits of the liquidation case.

 

(2^nd paragraph revised and amended by article 1 of the Regulation published in the Official Gazette issue 25151, on 27/6/2003 ) All payments of the intermediary institutions for which are a progressive liquidation decision is made shall be stopped, and all payments which become due and payable to the intermediary institution shall be paid only to the Fund. Any payments, other than the payments to the Fund, do not satisfy and settle the underlying debts. As from the date of the said decision, all properties and assets of the intermediary institution may be used only by the Fund. All and any restrictions imposed upon demand of customers on the customer accounts of the intermediary institution held with the Clearing Bank shall, upon demand of the Fund, be released and removed by the Clearing Bank.

 

The provisions of the Turkish Commercial Code, the Execution and Bankruptcy Code and other relevant laws pertaining to liquidation shall not be applicable on progressive liquidation decisions and procedures.

 

The Fund may, if deemed necessary in its sole discretion, apply to the competent court for appointment of a trustee for protection of the existing properties and assets of the intermediary institution.

 

NOTICE OF PROGRESSIVE LIQUIDATION DECISION TO THE RELATED ENTITIES AND AUTHORITIES:

 

ARTICLE 6: A progressive liquidation decision shall be notified in writing by the Fund to the land registries and traffic registries and departments where the movable and immovable assets or personal and real properties of the intermediary institution are registered, immediately after they come to the knowledge of the Fund, as well as to the banks and other financial institutions where the intermediary institution holds accounts, and if execution proceedings are pending against the intermediary institution, to the execution offices and other related authorities and entities.

 

TRANSFER OF MANAGEMENT OF PORTFOLIOS:

 

ARTICLE 7: Without prejudice to the proviso of sub-paragraph (h) of first paragraph of article 46 of the Law, the Board may decide and order transfer of management o f p ortfolios, including, but not limited to, investment fund (mutual fund) and investment company portfolios, by the intermediary institution to another institution authorized to manage portfolios.

 

LEGAL BODIES:

 

ARTICLE 8: (Revised and amended by article 2 of the Regulation published in the Official Gazette issue 25151, on 27/6/2003) Upon a progressive liquidation decision, all functions, duties and powers of legal bodies of the intermediary institution, such as general assembly of shareholders, board of directors and board of auditors, shall be assumed, performed and used by the Fund in proxy until completion of the liquidation process. In the course of liquidation, no appointment shall be made by the Fund to board of directors or to board of auditors of the intermediary institution, nor shall its general assembly of shareholders be convened during the progressive liquidation process. At the date of advertisement about completion of the progressive liquidation process, all legal bodies of the intermediary institution on duty as of the date of the progressive liquidation decision shall resume their functions, duties and powers, without any further formality or transaction.

 

REPORTING OBLIGATION:

 

ARTICLE 9: The board of directors on duty as of the date of the progressive liquidation decision shall, within 7 days after advertisement of the progressive liquidation decision, be under obligation to prepare and submit to the Fund a complete report showing the existing assets and liabilities and the outstanding debts and obligations of the intermediary institution, and the contracts and the legal disputes to which the intermediary institution is a party, and the then-current situation of the intermediary institution, including all of the existing data and information of every kind and description, whether included in its records or not. The Fund may, if deemed necessary, extend the reporting period with a prior consent of the Board.

 

MANAGEMENT OF PROGRESSIVE LIQUIDATION PROCESS:

 

ARTICLE 10: The progressive liquidation process of intermediary institutions decided to be progressively liquidated shall be carried out and managed by the Fund.

 

If and to the extent needed, the Board, ISE, the Clearing Bank and the Association may, upon demand of the Fund, appoint and assign a sufficient number o f p ersonnel to help and assist in the progressive liquidation procedures. Personnel to be appointed by the said entities cannot be entrusted with any task other than the liquidation procedures, and the Fund shall not pay any separate or additional fee to them.

 

If and to the extent required for and in the course of the progressive liquidation process, the Fund may consult to and make use of services of the specialized persons or entities, and the fees payable to these persons or entities shall be determined and decided by the Fund.

 

(Paragraph added by article 3 of the Regulation published in the Official Gazette issue 25151, on 27/6/2003 ) Unless otherwise decided by the Board, the independent audit obligations and liabilities, arising out of the capital markets legislation, of the intermediary institution decided to be subject to  progressive liquidation shall terminate. Then-current contracts of the intermediary institution relating to the other services requiring specialization and contracts of independent audit shall be terminated and  such termination shall be noticed  to the Board.  New contracts limited by the duration of the progressive liquidation process may be signed by the Fund in the name and on behalf of the intermediary institution solely for the purposes of the progressive liquidation procedures.

(Paragraph revised and amended by article 3 of the Regulation published in the Official Gazette issue 25151, on 27/6/2003 ) Those who are assigned for the liquidation procedures must satisfy the conditions of qualification set forth in sub-paragraph (d) of first paragraph of article 9 of the Communiqué of Principles on Intermediary Activities and Intermediary Institutions, serial V, no. 46, issued and published by the Board in the Official Gazette issue 24163 on 7/9/2000, and must have a minimum experience of 3 years in financial markets. This latter condition of experience shall not be sought for in the personnel of the intermediary institution who are intended to be employed for the progressive liquidation procedures in order to make use of their past experiences. (*)

 

(*) 4^th paragraph of article 10 has been revised and amended by article 3 of the Regulation published in the Official Gazette issue 25151 on 27/06/2003 and has been renumbered as the 5^th paragraph thereof.

 

(6^th paragraph added by article 3 of the Regulation published in the Official Gazette issue 25151, on 27/6/2003 ) Costs and expenses of the progressive liquidation procedures shall be paid directly out of the Fund properties and accounts, regardless of the intermediary institution being a party to the related contracts, and shall be considered and treated as the costs and expenses of the progressive liquidation procedures in determination and calculation of receivables of the Fund for the purpose o f p ayments to the Fund out of the liquidation and winding up balance.

 

DETERMINATION OF PROPERTIES AND ASSETS:

 

ARTICLE 11: The Fund shall determine and identify the assets and liabilities of the intermediary institution as a result of examination of the records kept in head offices, branch offices, agencies and liaison bureaus of the intermediary institution. Out of the obligations of the intermediary institution included in the scope of liquidation, its cash debts and liabilities shall be calculated over the total sum of their principal plus accrued interests as of the date of the progressive liquidation decision, while its obligations of delivery of capital market instruments shall, if and to the extent the capital market instruments cannot be physically delivered, be calculated over their cash value equal to their market value current as of the date of default in delivery, if any, or if not, as of the date of the progressive liquidation decision. The rights and obligations of the intermediary institution which become due and payable after the date of the progressive liquidation decision shall also be determined as of the due dates thereof. Legal default interest shall be accrued over the time bills and deferred debts of the intermediary institution as from the due dates thereof, and over its other debts as from the date of the progressive liquidation decision, at the rate specified in second paragraph of article 2 of the Law on Legal Interests and Default Interests revised and amended by the Law 4489. The guarantees and collaterals given by the intermediary institution in accordance with the applicable laws and regulations shall also be taken into consideration in calculation of its assets.

 

(Paragraph added by article 4 of the Regulation published in the Official Gazette issue 25151, on 27/6/2003 ) Within 10 business days following the progressive liquidation decision, the guarantees and collaterals given by the intermediary institution in accordance with the applicable laws and regulations shall, upon demand of the Fund, be realized and turned into cash by the relevant entity and the proceeds thereof shall be paid to the Fund. Providing, however, that with regard to the pending disputes under investigation pursuant to the current Exchange legislation as of the date of the decision of suspension of activities leading to the progressive liquidation decision, ISE shall block the guarantees and collaterals up to a portion of the disputed customer claims and receivables solely arising out of the capital market activities, to be determined and calculated pursuant to the provisions of article 46/B of the Law pertaining to determination of the obligations and liabilities of intermediary institutions, and the balance of the proceeds of the guarantees and collaterals shall be paid to the Fund.

 

(Paragraph added by article 4 of the Regulation published in the Official Gazette issue 25151, on 27/6/2003 ) The secured claims and receivables of the other ISE members and the customers of the intermediary institution arising out of the transactions executed by the intermediary institution in ISE shall also be paid to the Clearing Bank by ISE out of the guarantees and collaterals held by it. The provisions of the Istanbul Stock Exchange Regulation, published in the Official Gazette issue 22559 on 19/2/1996, which are in conflict with the provisions hereof, shall not be applicable on release and return of the guarantees and collaterals. The payments to be made by ISE out of the proceeds of guarantees and collaterals held by it in accordance with this article shall not constitute and be construed as a breach of second paragraph of article 5 of the Regulation.

 

The provisions of article 21 of the Communiqué on Principles and Rules of Financial Statements and Reports in Capital Markets, serial XI, no. 1, issued and published by the Board in the Official Gazette issue 20064 on 29/1/1989 shall be applicable in calculation of market values of the capital market instruments pursuant to first paragraph of this article.

An application can be made to the competent court or to the assessors (surveyors) listed by the Board for assessment of movable and immovable assets or personal and real properties included in the properties of the intermediary institution.

 

PARTIAL LIST OF CREDITORS AND PARTIAL DISTRIBUTION:

 

ARTICLE 11/A: (Added by article 5 of the Regulation published in the Official Gazette issue 25151, on 27/6/2003) Prior to preparation of a schedule of creditors pursuant to article 13 of this Regulation, if and when continuation of investigation is deemed useless, a partial list of creditors who are identified as creditors by the Fund, whose capital market instruments are being kept in the existing safe custody accounts opened in their own name and who have, in their application to the Fund, raised claims that are partially or fully compliant with the amounts of receivables determined by the Fund, may be prepared and issued. This list shall be publicized in accordance with article 23 of this Regulation. The said capital market instruments shall be distributed to the creditors within 30 days following the advertisement of the list. No payment shall thus be made to the debtors of the intermediary institution. Objections to this list shall be considered and evaluated together with objections to the schedule of creditors to be prepared in accordance with article 13 hereof.

 

IDENTIFICATION OF REAL CREDITORS AND DETERMINATION OF DEBT AMOUNTS:

 

ARTICLE 12: (Revised and amended by article 6 of the Regulation published in the Official Gazette issue 25151, on 27/6/2003) The Fund shall identify real creditors of the intermediary institution and determine and calculate real receivables and payables of the intermediary institution in reliance upon the records of the Board, CRA, the Clearing Bank, the intermediary institution and other relevant public and private entities, and the documents submitted by creditors upon application to the Fund, and other reliable documents and information. Upon occurrence of the events mentioned in articles 278, 279 and 280 of the Execution and Bankruptcy Code, the Fund may bring forward a revocatory action for rescission. 

 

Receivables and payables of the same person in the scope of liquidation hereunder shall be set off, without prejudice to the provisions of article 11/A of this Regulation. Net amount of receivables remaining after set-off shall be taken into consideration in calculation of the advances payable to the creditors.

 

SCHEDULE OF CREDITORS:

 

ARTICLE 13: (Revised and amended by article 7 of the Law published in the Official Gazette issue 25151, on 27/6/2003) For use in cash payments and in delivery of capital market instruments, the Fund shall, within 6 months at the latest following the date of the progressive liquidation decision, prepare and issue a schedule of creditors showing the names of creditors and the amounts of their receivables. This schedule shall also show the names of debtors and the amounts of their debts arising out the capital market transactions executed by the intermediary institution. The period o f p reparation of this schedule of creditors may, if required, be extended upon proposal of the Fund and approval of the Board. All information relating to the places from where the schedule of creditors or the information contained therein may be received, and the period and procedures of objections thereto, and the principles of distribution of the capital market instruments held in the safe custody accounts and the principles of cash payments by the Fund, and the starting dates of distribution and payment, and the principles of debt payments by the debtor customers, shall be advertised and publicized by the Fund in accordance with article 23 of this Regulation.

 

The relevant creditors may file an objection to the Fund for their own receivables shown in the schedule of creditors within 30 days following the date of advertisement thereof.

 

Receivables and claims not included in the schedule of creditors shall be taken into consideration until closing of the progressive liquidation process. Costs caused by delays shall be borne by the creditor. The creditor may be requested to pay such costs in advance. If such claims are justified and found acceptable, the Fund shall correct the schedule of creditors and send a notice thereof to the creditors.

 

DISTRIBUTION OF CAPITAL MARKET INSTRUMENTS HELD IN SAFE CUSTODY ACCOUNTS:

 

ARTICLE 14: (Revised and amended by article 8 of the Regulation published in the Official Gazette issue 25151, on 27/6/2003) Notwithstanding the provisions of article 11/A of this Regulation, as of the 30^th day following the advertisement date of the schedule of creditors, distribution of the capital market instruments kept in safe custody on behalf of the customers shall be started. To this end, the capital market instruments kept in safe custody on behalf of the customers shall be compared and reconciled separately in individual accounts, and as a result, shall be delivered to the rightful owners thereof solely for settlement of the outstanding obligations to those account holders or shall alternatively be transferred to their bank accounts upon and in line with their demands. During this distribution, all of the deficiencies and mistakes in the customer safe custody accounts caused by the operational errors and deficiencies in the period of activity of the intermediary institution shall also be completed or corrected as the case may be.

 

The provisions of article 16 of this Regulation shall be applied on the capital market instruments held in a pool account of the intermediary institution or in safe custody accounts not opened in the name of the real rightful owner thereof, regardless of the sources thereof.

 

With regard to the shares to be delivered in kind pursuant to this article, the bonus shares issued and distributed as a result of capital increase by way of capitalization of retained earnings and reserve funds, and the cash distributions payable as dividends, for the period from the date of the progressive liquidation decision to the date of distribution, shall also be delivered in kind.

 

In the event that the objections of customers who object to the schedule of creditors for their own receivables and claims are found unjustified and unacceptable by the Fund, the capital market instruments that are the subject of such objections and are held in their own safe custody accounts shall be blocked in the same accounts until the end of the fourth month following the advertisement date of the schedule of creditors. Unless it is duly reported to the Fund that legal actions and remedies required for release of the blocked capital market instruments are taken and initiated during this period of time, the provisions of article 16 of this Regulation shall be applicable on the said capital market instruments. If it is reported to the Fund that the said legal actions and remedies are taken and initiated, the block on the subject capital market instruments shall remain in effect until a final court judgment is issued thereon.

 

The period of commencement of distribution may, if required, be extended upon proposal of the Fund and consent of the Board. No distribution shall be made to the debtors of the intermediary institution. A part, sufficient for the debts, of the capital market instruments of the customers who fail to repay their outstanding debts by the end of the period set forth in the advertisement published in accordance with article 13 of this Regulation shall, without any further formality or transaction, be sold out in an order o f p riority to be determined by the Fund. In the event that the relevant debtor timely provides the Fund with an instruction showing the capital market instruments to be sold out, the sales shall be executed in accordance with this instruction. The remainder of the capital market instruments shall be delivered to the related customers or shall alternatively be transferred to their bank account upon and in line with their demands.

 

The Fund shall send a notice by registered mail, return requested, to the creditors who have capital market instruments in their accounts and are named in the schedule of creditors, but fail to apply to the Fund within 30 days following the starting of distribution, with a view to ensuring that they apply to the Fund.

 

PAYMENT OF RECEIVABLES COVERED BY THE FUND:

 

ARTICLE 15: A portion, up to 7 billion 500 million TL, of the total sum of receivables in cash payable to and shares required to be delivered to the safe custody account holders whose account contains no share or does not contain sufficient shares shall be paid by the Fund in advance without waiting for completion of the liquidation process. However, to those who seem as creditors of the same institution and who are, in the opinion of the Fund, acting jointly, payments shall be made only in proportion to their receivables, up to the amount shown above. If the same person holds more than one account in the same intermediary institution, the amount of advances cannot exceed 7 billion 500 million TL. Joint accounts shall also be considered and treated as a single account and shall thus be paid.

 

(2^nd paragraph revised and amended by article 9 of the Regulation published in the Official Gazette issue 25151, on 27/6/2003 ) No advance shall be paid by the Fund to the shareholders, partners, members of board of directors, members of board of auditors, authorized signatories and their spouses and their blood relatives and relatives by marriage including the third degree of relationship, who seem as creditors of an intermediary institution in the progressive liquidation process. Outstanding debts of the customers that are kept out of the scope o f p rogressive liquidation process of the intermediary institution for any reason whatsoever shall be set off from the accrued advances payable to them, and the portion of the accrued advances corresponding to the said outstanding debts shall not be paid and shall be included in the properties of the intermediary institution.

 

Payments shall be started as of the 30^th day following the advertisement date of the schedule of creditors. The period of commencement o f p ayments may, if required, be extended upon proposal of the Fund and consent of the Board.

 

(Paragraph added by article 9 of the Regulation published in the Official Gazette issue 25151, on 27/6/2003 ) The date when the Fund is ready for payments shall be considered and taken as a base in calculation of the advance limits.

The Fund shall send a notice by registered mail, return requested, to the creditors who are named in the schedule of creditors and have unpaid receivables under protection of the Fund, but fail to apply to the Fund within 30 days following the starting o f p ayments, with a view to ensuring that they apply to the Fund.

 

PRINCIPLES OF SALES:

 

ARTICLE 16: Without prejudice to the provisions of article 14 of this Regulation, the capital market instruments included in the properties of the intermediary institution shall, if they are quoted and traded in exchanges or other organized markets, be sold in the relevant exchanges or other organized markets, and if they are not quoted and traded in exchanges or other organized markets, be sold over their current value.

 

Movable and immovable assets or real and personal properties other than the capital market instruments shall be sold by the Fund by sealed tender, auction or private placement methods depending on the results of an evaluation to be conducted by considering the nature thereof. A regulation setting down the principles of sales shall be prepared by the Fund and made effective upon consent of the Board.

 

The Fund may refrain from selling all kinds and types of assets if and to the extent the sale of them not deemed feasible.

 

Notwithstanding the provisions of the related laws and legislation, the personnel of the Board, the Fund, CRA, ISE and the Clearing Bank and their spouses, and blood relatives and relatives by marriage including the third degree of relationship, and the persons directly or indirectly related to them, are not allowed to purchase the properties sold as above, save for the sales in exchanges and other organized markets.

 

COLLECTION OF RECEIVABLES:

 

ARTICLE 17: All legal proceedings for collection of overdue receivables and for realization of mortgages, if any, shall be conducted by the Fund. As a rule, undue receivables shall be kept until the due dates thereof, providing, however, that prepayment of receivables before the due dates thereof may be accepted upon mutual agreement.

 

If and to the extent it is proven that the collection proceedings shall delay the completion of liquidation, the distribution procedures shall be started without waiting for the collections.

 

PRINCIPLES OF DISTRIBUTION OF LIQUIDATION BALANCE:

 

ARTICLE 18: (Revised and amended by article 9 of the Regulation published in the Official Gazette issue 25151, on 27/6/2003 ) After making the advance payments, the Fund shall continue the progressive liquidation of the intermediary institution. The liquidation and winding up balance shall be used to pay the receivables which cannot be fully paid to the creditors in accordance with the intended purposes of liquidation. However, if the liquidation and winding up balance is not sufficient to pay all of these receivables, payments shall be made on a pro rata basis as a result of division of the liquidation and winding up balance by the total sum of these receivables. In the course o f p ayments, only the final court judgments with regard to the receivables in dispute shall be taken into consideration. Providing, however, that for the creditors who have objected to the schedule of creditors, but whose objection is not found acceptable by the Fund, an amount of the pro rata payments corresponding to the total amount of receivables in dispute shall be blocked by the end of fourth month following the advertisement date of the schedule of creditors. Unless it is duly reported to the Fund that legal actions and remedies required for collection of the said receivables are taken and initiated during this period of time, the blocked sums shall be added to the properties of the intermediary institution. If it is reported to the Fund that the said legal actions and remedies are taken and initiated, the block shall remain in effect until a final court judgment is issued thereon.

 

If and to the extent the guarantees and collaterals blocked in accordance with article 11 of this Regulation with regard to the disputes pending in ISE are insufficient, an amount of the pro rata payments corresponding to the amount of the receivables in excess of the guarantees and collaterals shall be blocked until the dispute is resolved. Out of the amount remaining after full payment of these receivables, first, the public debts shall be paid, and out of the balance, the debts owed to the Fund due to the advance payments and the liquidation costs and expenses shall be paid, and the balance if any shall be allocated to the other creditors.

 

If the same person has both receivables and payables, no receivables shall be paid unless the payables are collected.

 

SCHEDULE OF PAYMENTS:

 

ARTICLE 19: After the properties and assets of intermediary institution are turned into cash pursuant to articles 16 and 17 and the schedule of creditors becomes final, the Fund shall prepare and issue a schedule o f p ayments showing the amounts of receivables to be paid. The places from where the copies of this schedule o f p ayments may be obtained, and the principles o f p ayments, and the dates and places o f p ayments shall be advertised and publicized in accordance with article 23 of this Regulation.

 

BANKRUPTCY PETITION:

 

ARTICLE 20: If and to the extent the assets of intermediary institution are not sufficient to pay the receivables of the creditors, and the payments made by and the liquidation costs and expenses incurred by the Fund, in accordance with the intended purposes of liquidation, the Fund may petition for bankruptcy of the intermediary institution with a prior consent of the Board.

 

CLOSING OF PROGRESSIVE LIQUIDATION PROCESS:

 

ARTICLE 21: After completion of all steps of the progressive liquidation process, the Board decides to close the progressive liquidation process upon a notice of the Fund, and closing of the progressive liquidation process is advertised pursuant to article 23 of this Regulation and is separately notified to the entities listed in article 6 hereof.

 

If and when the Board petitions for personal bankruptcy of the shareholders or partners holding more than 10% of capital or the former or present chairmen and members of the board of directors or the authorized signatories of the intermediary institution in accordance with sub-paragraph (k) of first paragraph of article 46 of the Law, then in this case, the progressive liquidation process shall not be closed until the end of the suit for bankruptcy.

 

Upon demand of the creditors named in the schedule of creditors, a certificate showing the results of the progressive liquidation process relating to them shall be given to them by the Fund.

 

 

 

 

 

INTERMEDIARY INSTITUTIONS NOT REQUESTED TO BE ADJUDGED BANKRUPT:

 

ARTICLE 22: Intermediary institutions that are not requested to be adjudged bankrupt are, within three months following the advertisement date of closing of the progressive liquidation process, under obligation to amend all provisions of their articles of association so as to delete the capital market activities from their fields of business. If such required amendments are not made duly, they shall be deemed and treated as bankrupt pursuant to provisions of sub-paragraphs (2) and (6) of first paragraph of article 434 of the Turkish Commercial Code.

 

PRINCIPLES OF ADVERTISEMENT:

 

ARTICLE 23: All advertisements required pursuant to and under this Regulation shall be published by the Fund in the Turkish Trade Registry Gazette and ISE Bulletin and at least 2 daily nationwide newspapers. Format and contents of such advertisements shall be determined by the Fund.

 

(Paragraph added by article 11 of the Law published in the Official Gazette issue 25151, on 27/6/2003 ) Periods referred to in this Regulation shall be counted as from the date of advertisement in the Turkish Trade Registry Gazette.

 

REVALUATION:

 

ARTICLE 24: Amounts referred to in this Regulation shall be revalued and increased by the revaluation coefficient rate announced by the Ministry of Finance every year as from 01/01/2001 .

 

OTHER ACTS GOVERNED BY THE REGULATION:

 

ARTICLE 25: (Revised and amended by article 12 of the Regulation published in the Official Gazette issue 25151, on 27/6/2003) With regard to the intermediary institutions that are not subject to progressive liquidation and are adjudged bankrupt, the Fund shall make payments for the receivables in the order shown in the schedule of order o f p ayments upon approval of the Fund management, to the creditors of unpaid receivables in cash payable to and shares required to be delivered to them, arising out of the share transactions included in the said schedule. With regard to the banks of which banking activities are stopped pursuant to the applicable laws, the real creditors of unpaid receivables in cash payable to and shares required to be delivered to them, arising out of the share transactions, and amounts of such receivables shall be identified and determined by the entity to which the bank management is transferred pursuant to the applicable laws, and such determinations shall be taken into consideration in payments to be made by the Fund upon approval of the Fund management. The date when the Fund is ready for payments shall be considered and taken as a base in calculation of the advance limits in payments to be made pursuant to this article. Following receipt of the schedule of order o f p ayments, the Fund shall prepare a schedule of advance payments which shall then be advertised in accordance with article 23 of this Regulation. Advance payments shall be started as of the thirtieth day following the advertisement date. Payments made by the bankruptcy commissioner prior to the payments by the Fund shall first be applied to the receivables of the creditors that are not covered by the Fund payments. In payments to be made pursuant to this article, the principles of this Regulation pertaining to the payments due to the creditors of intermediary institutions in the progressive liquidation process shall be applied.

 

REPEALED PROVISIONS:

 

ARTICLE 26: The "Regulation on Principles of Progressive Liquidation of Intermediary Institutions", published in the Official Gazette issue 22343 on 14/7/1995 , is hereby repealed and superseded.

 

EFFECTIVE DATE:

 

ARTICLE 27: This Regulation shall become effective as of the date of foundation of the Central Registry Agency pursuant to first paragraph of article 10/A of the Capital Markets Law 2499.

 

ENFORCEMENT:

 

ARTICLE 28: The provisions of this Regulation shall be enforced by the Capital Markets Board.