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REGULATION ON
INVESTORS PROTECTION FUND 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 PURPOSE
AND SCOPE: ARTICLE 1: The
purpose of this Regulation is to set down the principles of management,
operations and supervision of the Investors Protection Fund, and the principles
and methods of use of the assets of the Fund, founded as a separate legal
entity, for payment of the liquidation costs and expenses and for performance of
the duties and functions referred to in article 46/B of the Law and for
performance of the obligations o LEGAL GROUNDS: ARTICLE 2: This
Regulation is adopted and enacted by virtue of article 46/A of the Capital
Markets Law 2499 dated 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 "Intermediary
Institution" refers
to the intermediary institutions and the banks governed by and subject to the
Law. COVERAGE OF
PROTECTION: ARTICLE 4: The
obligations of the intermediary institutions to be paid and settled by the Fund
within the frame of this Regulation are comprised of the shares that are
delivered by a natural or legal person investor to the intermediary institution
or are bought by the intermediary institution upon an order of its customer for
sale, safe custody, management, transfer to another account, borrowing purposes
or other reasons as a result of share transactions in the course of capital
market activities and transactions, and of the cash paid by the investor to the
intermediary institution for purchase of shares or for payment o Shares
and cash proceeds arising out of the financial rights associated to shares, such
as dividends, bonus shares and preemption rights on newly issued shares, as well
as the documents or certificates that may be issued by the issuers in place of
shares shall also be in the coverage o Cash
proceeds covered by this article shall be excluded from the coverage o The
provisions of articles 11 and 25 of the Regulation on Principles and Procedures
of Progresive Liquidation of Intermediary Institutions shall be applied in
calculation of cash payments required to be made and in determination of the
number of shares required to be delivered for settlement of share transactions
in the coverage o PARTICIPATION IN THE
FUND: ARTICLE 5: All
intermediary institutions are obliged to participate in the Fund. FUND MANAGEMENT: ARTICLE 6: The
Fund shall be headquartered in The
Fund-related activities and transactions shall be managed and executed by a
separate unit to be organized in CRA. REVENUES OF THE FUND: ARTICLE 7: Revenues
of the Fund are: a)
yearly subscriptions payable by the intermediary institutions; b)
administrative fines inflicted by the Board and the Association and the
exchanges where securities are traded; c)
temporary subscriptions in an amount to be determined by the Board; d)
proceeds of the Fund assets and properties; and e)
other revenues and earnings. Yearly
subscriptions are required to be deposited in the Fund account by the end of the
second month of the year following the relevant year, while temporary
subscriptions are required to be deposited in the Fund account by the end of the
period to be determined by the Board. Subscriptions not deposited in a timely
manner shall be subject to default interests for each month of delay at a rate
to be determined by the Board up to three times the rate of increase in the
Consumer Prices Index of the previous month as published by the State Statistics
Institute. Yearly
and temporary subscriptions and administrative fines shall be deposited in an
account to be opened in the state-owned banks in the name of the Fund. YEARLY SUBSCRIPTIONS: ARTICLE 8: Yearly
subscriptions to be deposited by the intermediary institutions in the Fund
account shall be calculated in accordance with the following principles
separately for each intermediary institution and bank. If
the yearly average of the ratio to be calculated by dividing the Capital
Adequacy Base of an intermediary institution calculated monthly pursuant to the
Communiqué of Principles on Capital and Capital Adequacy of Intermediary
Institutions, serial V, no. 34, issued by the Board, by the Required Minimum
Equity or the Risk Provisions or the Operating Expenses of Recent Three Months,
whichever is the greatest, is: a)
less than 1 fold, the intermediary institution shall be liable to deposit
a yearly subscription equal to 100 per million of yearly average of its daily
share safe deposit balances, and to 10 per million of its yearly share
transaction volume; or b)
between 1 fold and 2 folds (excluding 2 folds), the intermediary
institution shall be liable to deposit a yearly subscription equal to 90 per
million of yearly average of its daily share safe deposit balances, and to 7.5
per million of its yearly share transaction volume; or c)
between 2 folds and 3 folds (excluding 3 folds), the intermediary
institution shall be liable to deposit a yearly subscription equal to 85 per
million of yearly average of its daily share safe deposit balances, and to 5 per
million of its yearly share transaction volume; or d)
3 folds or more, the intermediary institution shall be liable to deposit
a yearly subscription equal to 80 per million of yearly average of its daily
share safe deposit balances, and to 2.5 per million of its yearly share
transaction volume. These
rates may be increased by the Board if and when deemed necessary by considering
the existing or foreseeable risks. Within
the frame of the principles stipulated above, banks are liable to deposit yearly
subscriptions over the rates to be determined by the Board for the yearly
average of daily share safe deposit balances and for the yearly share
transaction volumes on the basis of the saving deposits insurance premiums
tariff issued pursuant to sub-paragraph (a) of sixth paragraph of article 15 of
the Banks Law 4389 revised and amended by the Law 4491; providing, however, that
these rates cannot be less than the rates of minimum yearly subscriptions to be
determined for intermediary institutions. Rates
of yearly subscriptions to be paid over the yearly average of daily share safe
deposit balances and the yearly share transaction volume by the banks that do
not accept and collect deposits shall be determined by the Board between the
minimum and maximum rates that are determined for other banks. Intermediary
institutions are under obligation to report to the Fund, by the 15th
day of January every year, their share transaction volumes separately as
transaction volume in exchanges and transaction volume in the over-the-counter
market for calculation of yearly subscriptions. CRA shall be authorized to
request all kinds of information and documents with regard to the said
transaction volumes from intermediary institutions and other relevant entities
and authorities, and to conduct inspections in intermediary institutions in
connection therewith. For
the purpose of calculation of yearly subscriptions, the share safe deposit
amounts shall be determined and calculated by ISE Clearing and Safe Custody Bank
Co., Inc. by using the daily weighted average prices of shares separately for
each intermediary institution and be reported to the Fund by the 15th
day of January every year. In
calculation of share safe deposit balances, the average daily investor blockings
imposed by the investors on their accounts in the year immediately before the
current year shall be deducted from yearly average of daily share certificate
safe deposit balances. The
intermediary institutions which were not active in the year immediately before
the current year shall, within 5 business days following receipt of an operation
license from the Board, deposit in the Fund account a yearly subscription equal
to average of the yearly subscriptions deposited by the intermediary
institutions in the current year. If the authorization is granted before the end
of the second month of the current year, the intermediary institution shall pay
its yearly subscription within the period mentioned in second paragraph of
article 7 hereof. The banks which have received a banking license and are going
to deal with the capital market activities and transactions in accordance with
the applicable laws shall, within 5 business days following start of capital
market activities, deposit in the Fund account a yearly subscription equal to
average of the yearly subscriptions deposited by the banks in the current year.
If the capital market activities are started before the end of the second month
of the current year, the bank shall pay its yearly subscription within the
period mentioned in second paragraph of article 7 hereof. TEMPORARY
SUBSCRIPTIONS, AND ADVANCE PAYMENTS BY ISE TO THE FUND: ARTICLE 9: Where
the Fund's assets and properties are not sufficient for its payments and costs,
the intermediary institutions may be charged with a temporary subscription at a
rate to be determined by the Board within the frame of the principles set forth
in article 8 above. Temporary
subscriptions shall be set off from the yearly subscriptions payable by the
intermediary institutions in the first year after they are not needed any more.
The rate of interest to be applied on the temporary subscriptions received in
the previous years shall be determined by the Board. If
temporary subscriptions received from the intermediary institutions are also not
sufficient for payments and costs of the Fund, ISE shall pay advances to the
Fund. Amount, maturity, interest rate, repayment and other conditions of
advances shall, upon proposals of CRA, be determined by the Board in due
consultation with ISE. COLLECTION OF FINES: ARTICLE 10: The
administrative fines inflicted by the Board and the Association shall be
deposited by the relevant entity to the Fund account within 30 days after
receipt of the notice thereof. The
administrative fines inflicted by the Board and the Association shall be
reported to the Fund at the same time with delivery of the notice thereof to the
relevant entity. If
and to the extent not paid to the Fund within 30 days after receipt of the
notice by the relevant entity, these fines shall be prosecuted and collected by
the Fund and credited to the Fund account in accordance with the proviso of the
Law on Collection Procedures of Public Receivables, no. 6183. The
administrative fines inflicted by the exchanges where securities are traded
shall be prosecuted and collected by the relevant exchanges in accordance with
their own special laws and regulations, and shall be deposited in the Fund
account in two business days after collection. METHODS AND
PRINCIPLES OF USE OF THE FUND PROPERTIES: ARTICLE 11: The
Fund properties and assets shall be invested in state bonds, treasury bonds or
deposits or in reverse repurchase agreements in the state-owned banks. The
Fund properties and assets cannot be pledged, shown or used as collateral, or
attached by third parties. EXPENSES: ARTICLE 12: The
costs and expenses incurred by the Fund for performance of its duties vested by
the Law and this Regulation shall be paid by the Fund in accordance with the
principles to be determined by CRA and approved by the Board. SUPERVISION
OF THE FUND: ARTICLE 13: The
Board is authorized to inspect and audit the accounts and transactions of the
Fund and to request all kinds of information and documents from the Fund in
relation therewith. Depending on the results of inspection and audit, the Board
may request the Fund to take certain actions, and if required, may demand the
Minister, to whom the Board reports, to transfer the Fund management to the
Board. The
Fund shall be audited by the Supreme Court of Accounts. FINANCIAL STATEMENTS
AND REPORTS: ARTICLE 14: Accounting
period of the Fund is a calendar year. The Fund shall prepare an activity report
containing its yearly balance and income statement and its activities in the
past accounting period and its comments and suggestions on the next accounting
period and the actions required to be taken, and shall submit its report to the
Board by the end of January every year. BOOKS, RECORDS AND
DOCUMENTS OF THE FUND: ARTICLE 15: Principles
on books and records of the Fund shall become effective upon approval of the
Board. The
Fund-related documents and correspondences shall be duly and separately filed
and kept. INFORMATION TO
INVESTORS; BAN ON ADVERTISEMENTS: ARTICLE 16: During
their capital market activities related to the share transactions, the
intermediary institutions are under obligation to give sufficient data and
information to the investors about the Fund and the coverage o The
intermediary institutions cannot use for advertisement purposes the protection
coverage provided by the Fund to the investors. REPORTING TO THE
BOARD: ARTICLE 17: The
Fund shall prepare and issue monthly reports containing a detailed breakdown of
the Fund properties and assets by types thereof, and information about
intermediary institutions in liquidation process and the collections and
payments in connection therewith, and shall submit these monthly reports to the
Board by the end of the 5th business day of the following month. EXCEPTIONS AND
EXEMPTIONS: ARTICLE 18: The
Fund is not subject to and governed by the 2886 State Bid Tenders Law and the
provisions of the General Accounting Law no. 1050 and the Supreme Court of
Accounts Law no. 832 in terms of visa and registration requirements. The
Fund is exempted from all types of taxes, imposts and duties. OTHER PROVISIONS: ARTICLE 19: The
Board shall be authorized to interpret the provisions of this Regulation, and to
take decisions and to regulate and direct the implementation on the matters on
which this Regulation remains silent or contains gaps, by also considering the
general law provisions. TEMPORARY ARTICLE 1: The
subscriptions required to be paid by the intermediary institutions over the
monetary value of their transaction volumes in years 1998 and 1999 pursuant to
temporary article 9 of the Law shall be deposited in the Fund account within 1
month after the effective date of this Regulation, over the rates to be
determined by the Board within the frame o EFFECTIVE DATE: ARTICLE 20: 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 21: The
provisions of this Regulation shall be enforced by the Capital Markets Board.
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