Recent Development
The Istanbul Financial Center Regulation (the “Regulation”) entered into force through its publication in the Official Gazette on July 7, 2023. The Regulation includes the details reserved for secondary regulations under the Istanbul Finance Center Law (the “Law”), especially the details regarding the conditions and processes for the participation certificate (the “Participation Certificate”) to be issued to entities that may operate in the Istanbul Financial Center (the “IFC”) (a “Participant“).
Our previous legal alerts on the Law are accessible through the links below:
- Istanbul Financial Center is Coming to Life (esin.av.tr)
- Istanbul Financial Center is Established (esin.av.tr)
What Does the Regulation Say?
The Regulation includes provisions on the management and operation of the IFC, the functioning of the one stop bureau, and application, suspension and the cancellation of the Participation Certificate to be issued to the Participants in the IFC following the evaluation of their applications.
One Stop Bureau
A one stop bureau (the “One Stop Bureau“) that will be established, which will expedite processes such as operation permits and similar applications of the Participants and applicants, and approval processes for Participants’ employees. The One Stop Bureau, which will be managed by the Finance Office, will aim to monitor the activities and processes in the IFC from a single location and coordinate the public institutions within the One Stop Bureau.
Services at the One Stop Bureau will be available on the IFC portal. Although requests such as making appointments, tracking applications, and requesting information will be handled through the IFC portal, the main services will be carried out through the information systems of the relevant public institutions. Relevant public institutions will be obliged to assign personnel in sufficient number and qualification to provide the services at the One Stop Bureau. Public institutions already operating in the IFC will not set up a physical service area at the One Stop Bureau.
Participants will apply for services at the One Stop Bureau at their own discretion, and information and referral services will be free of charge.
Management Company
TVF İFM Gayrimenkul İnşaat ve Yönetim Anonim Şirketi (the “Management Company”), established as private law entity by Türkiye Wealth Fund, will be authorized for 20 years for the operation, leasing and all kinds of management activities of the IFC.
The Management Company will be responsible for the management of the IFC.
The Management Company will generate the income required to provide its management services primarily from the management fees to be collected from the Participants, commissions from leases, advertising and sponsorships and revenues from the services to be provided in respect of the common facilities.
Buildings and Leases
Buildings in the IFC will not be used for any purpose other than the purposes specified in the operation project and management plan of the IFC.
The Management Company will be the exclusive competent authority to lease the buildings in the IFC, to prepare and negotiate the relevant lease agreements, to collect the rental fees and collateral and to transfer them to the building owners. The building owners in the IFC will be entitled to allocate offices to their affiliates and shareholders who have applied for the Participation Certificate, public institutions and authorities, or rent their offices at a price to be determined by the Management Company. The owners will notify the Management Company of these office leases and allocations.
Participation Certificate
It will be mandatory to obtain a Participation Certificate in order to operate in the IFC’s offices and to benefit from the exemptions, incentives and exceptions set out in the Law. The evaluation of the Participants’ application processes, the Participation Certificate’s content, suspension or cancellation, and other related processes will be evaluated by the Presidency of the Republic of Türkiye Finance Office (the “Finance Office”). The processes will be handled through the online IFC portal, which will be provided and operated by the Finance Office.
Shopping malls, hotels and similar places within the IFC but outside of the office areas will be qualified as out-of-scope areas and the Participation Certificate will not be required to operate in these areas.
The Law defines financial activities that can be carried out in IFC office areas as banking, pension and private pension, insurance, financial leasing, factoring, savings financing, payment services, electronic money services, and capital markets services. Real persons and legal entities, branches, representation offices, partnerships, liaison offices, regional treasury and financial management centers and sovereign wealth funds that plan to operate in the IFC will apply to the Finance Office to obtain the Participation Certificate.
The operation permit, license and approvals that the Participants must obtain from public institutions pursuant to laws applicable to their activities will need to be separately obtained. Application for a Participation Certificate will not replace these obligations.
Evaluation of Applications
The Finance Office will evaluate the Participation Certificate applications according to the development plan, medium-term and annual programs, sectoral plans, and the objectives of creating the aimed ecosystem in the IFC. The Finance Office will consider the compliance of the applicants with the IFC business strategy and the compatibility of their field of activity and requested office space with the activities of other Participants.
The Finance Office will prioritize candidates who have obtained the necessary authorizations according to applicable laws and are engaged in the financial activities listed in the Regulation, activities in listed value-added sectors, consultancy and support services.
Suspension and Cancellation of the Participation Certificate
The Participation Certificate of the Participants whose operation permits or licenses were suspended by the relevant regulatory authorities in regard to their activities in the IFC, will be temporarily suspended as of the date of the relevant authority’s notification of its decision.
The Finance Office may cancel the Participation Certificate in the following cases:
- Termination of the office allocation or the lease agreement between the Participant and the Management / building owner for any reason.
- Cancellation of permits, licenses or approvals issued by the relevant regulatory authority regarding the activities.
- Subsequent loss of the conditions for obtaining a Participation Certificate, breach of commitments or assessment that the Participation Certificate was obtained with misrepresentation.
- Change of the Participant’s tax identification number (in the event of cancellation for this reason, it will be mandatory to reapply for a Participation Certificate within 30 days of the change).
A Participant whose Participation Certificate has been cancelled may reapply at the earliest after 180 days from the date of the cancellation.
If the Participation Certificate is suspended, the Participant cannot benefit from the incentives, discounts, exemptions and exceptions provided under the Law during the suspension period, and in case of cancellation, from the date of the cancellation.
