BY ADMİN     29 MAY 2017

 

“New regulations on “real estate certificates” have been released into capital markets by Decree-Law No. 690 (“DL”) published in the Official Gazette of 29 April 2017 and numbered 30052 (Duplicate). Pursuant thereto, the Article 61/A regarding real estate certificates has been included under the Article 61 of the Capital Markets Law.”

 

 

Deliveli Alp Law & Consultancy

 

What is a real estate certificate?

 

According to the new regulation entered into force via DL, real estate certificates are defined as an instrument of the capital market having equal nominal value and issued by issuers for use in financing of real estate projects to be built or being built, representing certain particular individual sections or a certain area unit of individual sections of a real estate project.

 

Real estate certificates may be issued domestically or in abroad and by means of sale of such certificates to the qualified investors via public or non-public offering. With the issuance of the real estate certificates, it is aimed to sell the real estate certificates to be issued to represent certain square meter to the public via banks or intermediary firms for the purposes of financing real estate projects that are being built or to be built. Thus, the investors who want to invest in real estate but lack sufficient funds to buy a flat by themselves, will be able to become a shareholder in a real estate investment. It is important to note that the investor does not become a shareholder of a company with the real estate certificate but he/she will be an investor in a real estate project.

 

The principles and procedures with regard to the issuance of the real estate certificates shall be determined by the Capital Markets Board (“Board”). The Board may grant an exemption to the principles determined for a specific issuer or may determine different principles other than the principles stipulated thereof.

 

With the second paragraph of the article included with DL, it is determined that;

 

Until a real estate certificate has been redeemed, the fund acquired in consideration of issuance of real estate certificates and individual sections subject to a real estate certificate, even if the management or supervision of the issuer has been transferred to the public authorities, cannot be disposed of for any other purpose,  cannot be used as collateral or be pledged, cannot be attached including for the purpose of collecting public receivables, cannot be included in the bankruptcy estate and cannot be subject to preliminary injunction decision.

 

What happens when a project is delayed or not fullfilled at the due date of the certificate?

 

To protect certificate holders, investors are supported to be the decision makers with regard to the project’s future. Accordingly, save for the obligation of the issuer regarding the real estate certificates, if the obligations cannot be fulfilled or it is understood that the obligations cannot be fulfilled by the end of the due date of the real estate certificate, real estate certificate holders’ meeting can be held to take decisions such as choosing to continue the project or choosing to sell the incomplete part of the project and payment to the certificate holders of the money collected in return for selling along with the money that have not been paid to the issuer yet. The principles with regard to this meeting shall be determined by the Board. Turkish Commercial Code’s provisions regarding the general assembly meetings shall be applied except for those principles determined by the Board.

 

Should you have any queries, please do not hesitate to contact us.

 

 

 

Deliveli Alp Law & Consultancy

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