Law No. 7596 on Certain Investment Funds Ordered to Be Liquidated (the “Law”), published in Official Gazette No. 33413 on 27 October 2026, entered into force with effect from 17 September 2026. On the same day, the Capital Markets Board of Türkiye (“CMB”) published Decision No. 76/1903 in Bulletin No. 2026/76, specifying the liquidating banks, conditions for interim and final payments, payment priorities and allocation principles for the general share return account. This note first addresses the statutory regime and changes from the bill, followed by the CMB’s implementing procedures.
The Statutory Liquidation and Recovery Regime
Conduct of liquidation and asset sales: Designated entities will conduct liquidation under CMB supervision. The CMB may determine valuation, realisation, payment and distribution procedures. Liquidating entities must exercise due care to obtain the highest possible economic value in investors’ common interests. Where the CMB determines that exchange prices do not reflect actual value or would delay liquidation, it may authorise methods such as buybacks, a right to sell to the controlling shareholder, block sales, negotiated trade reporting and temporary alternative price margins. It may also approve off-exchange sales upon request. Restrictions in investment fund regulations will not apply to these sales, and purchasers may be prohibited for a specified period from selling on the exchange or undertaking transactions producing that result. Relevant institutions must promptly provide information and documents requested by the CMB, ICC or SDIF and may not refuse on confidentiality or secrecy grounds.
Net investment amount: Where distributable cash is insufficient to cover the total calculated using the closing unit price on the day preceding the liquidation decision and the units eligible for payment, the net investment amount will be taken into account in distributions. Merkezi Kayıt Kuruluşu AŞ (“MKK”) will index actual cash inflows and outflows up to the liquidation date, pro rata temporis, using the arithmetic average of changes in the consumer price index (“CPI”) and domestic producer price index (“D-PPI”) published by the Turkish Statistical Institute. Where inflows exceed outflows, outflows will be deducted on a first-in, first-out basis. This calculation does not guarantee full repayment.
Interim payments and set-off: For funds designated by the CMB, an investor in each relevant fund may receive an interim payment equal to the unindexed net investment amount if below TRY 1 million, or up to TRY 1 million if at or above that amount. Except for money market funds, payment may not exceed the value of the investor’s units at the close of the day preceding the calculation. Takasbank will calculate that price using information from the liquidating entities. Where cash is insufficient, the CMB may prioritise investors with the lowest net investment amounts and/or set a common minimum interim payment amount. Payments may not exceed the applicable statutory net investment and entitlement limits or the TRY 1 million ceiling. Units will not be redeemed against interim payments, but on final liquidation payment, against which interim payments will be set off.
Unlawfully diverted assets: The Law covers assets removed for the benefit of related parties, controlling shareholders, managers, persons under their control or third parties through gratuitous or simulated transactions in breach of legislation or, even if formally compliant, without a genuine economic purpose serving the fund’s interests. Money, capital markets instruments, property, rights and receivables transferred through loans, advances, security arrangements, assignments, purchases, sales or similar transactions, together with substitute assets and proceeds derived from them, are treated as unlawfully diverted and the fund is deemed to have suffered loss.
Scope and eligibility: The Law applies only to funds ordered to be liquidated by CMB decisions dated 17 September 2026 whose liquidation remained incomplete on 27 October 2026. It does not create a general or permanent liquidation and liability regime for other funds. Eligibility will be determined by the liquidating entities through reconciliation with MKK records on a fund-by-fund and account-by-account basis. Investors whose units were blocked under instructions submitted to TEFAS on or before 17 September 2026 but not executed due to the fund’s default and/or the absence of an announced unit price will also fall within the regime. Where acts under Articles 104, 106 or 107 of the Capital Markets Law were committed by these funds, in concert with them or with their participation, persons and entities identified by the CMB as having committed those acts or acted in concert with those committing them will receive no payment from the liquidation or recovery account.
Voluntary returns: Persons who received payment by redeeming units up to the liquidation date may voluntarily return gains exceeding their inflows indexed to the liquidation date, pro rata temporis, using the arithmetic average of changes in CPI and D-PPI, to accounts announced by the CMB. Persons who gained from shares held in the funds’ assets and identified by the CMB as subject to Articles 104, 106 and 107 of the Capital Markets Law may also voluntarily return the portion of their gains exceeding the statutory indexation calculation relating to the holding period and acquisition cost to the general share return account. The CMB will determine the calculation period, methodology and other implementing procedures.
What changed from the bill? The bill dated 9 October based the definition of a fund unitholder on reconciliation of records held by MKK, Takasbank, TEFAS, custodians, distributors and the liquidating entity. Article 2(c) of the Law instead refers to reconciliation of MKK and liquidating entity records. Eligibility determination likewise shifted from multi-institution reconciliation to reconciliation with MKK records, with express inclusion of persons whose units were blocked under instructions submitted on or before 17 September 2026 but not executed for the specified reasons. For voluntary returns, the benchmark based on the annual average return of funds in the same investment strategy category was replaced by indexation using the arithmetic average of changes in CPI and D-PPI. The calculation benchmark therefore shifted from comparable fund performance to inflation indices.
Liability and Compensation for Losses
Primary liability rests with the portfolio management company that is the founder and/or manager of the fund. If the amount cannot be recovered from that company in whole or in part, or it is clearly evident that recovery will not be possible, natural and legal persons whose responsibility is determined by the CMB, and those found to have acted in concert with them, will be personally liable. Leaving office does not extinguish liability for transactions and decisions during the period of office, management or control.
- Collection and criminal proceedings: Outside cases governed by Article 6, the CMB will determine each fund’s loss, the liable persons and their respective liability amounts and notify the Savings Deposit Insurance Fund (“SDIF”). The SDIF will initiate enforcement and collection under Law No. 6183 and may exercise the Banking Law powers specified in the Law. Istanbul administrative courts have jurisdiction over proceedings in this context. Seized money and capital markets instruments that can lawfully be returned directly may be returned to the relevant fund or recovery account by a prosecutor, judge or court. If appointed as trustee over assets that cannot be transferred to the fund, the SDIF will sell or liquidate them immediately without awaiting the outcome of proceedings. Confiscated assets judicially identified as originating from the fund or corresponding to its loss will be transferred to the fund, or to the recovery account if liquidation is complete, rather than recorded as Treasury revenue.
- Recovery account and distributions: Amounts will be held by the SDIF in separate sub-accounts for each fund, segregated from the SDIF’s own assets. They may only be used for the relevant fund’s liquidation and payments to investors, cannot be pledged, and are protected against attachment, including for public receivables, and against interim injunctions or attachment. After mandatory expenses, amounts will be transferred to the liquidating entity while liquidation continues, or, once complete, to the Investor Compensation Centre (“ICC”) for payment to beneficiaries notified by the CMB. The ICC will distribute amounts in proportion to participation unit holdings. Except for the final distribution, amounts below the minimum payment threshold set by the CMB with regard to transaction and transfer costs will accumulate for each investor until that threshold is reached. Final payments will be reduced by amounts previously paid from liquidation assets, the recovery account or through other legal remedies.
CMB Bulletin of 27 October 2026: Implementing Procedures
By Decision No. 76/1903 dated 27 October 2026, published in Bulletin No. 2026/76, the CMB established implementation procedures. Liquidation will commence for the funds within scope founded by Tera Portföy Yönetimi AŞ, Pusula Portföy Yönetimi AŞ and Atlas Portföy Yönetimi AŞ. T.C. Ziraat Bankası AŞ will conduct the liquidation of the Pusula and Atlas funds, while Türkiye İş Bankası AŞ will conduct that of the Tera funds.
Interim or final payment? Interim payments will be made under Articles 4(2) or 4(3) of the Law and the CMB decisions of 30 September and 15 October 2026. However, where distributable cash covers the total payment amount calculated using the unit price at the close of the day preceding the liquidation decision, a final payment will be made instead. Units will not be redeemed for interim payments; redemption will take place upon final liquidation payment, against which interim payments will be set off.
Interim payment caps and fund priority: The interim payment to each investor in each relevant fund may not exceed the net investment amount calculated by MKK without indexation or TRY 1 million. Where cash is insufficient under Article 4(3), payment may not exceed the lowest of the net investment amount calculated by MKK, the applicable closing value and TRY 1 million. The closing value is determined as of 16 September 2026 for funds with “money market” in their name, and the day preceding the interim payment calculation for other funds. Interim payments will begin with funds with “money market” in their name. Other funds will be ranked in descending order of the ratio of distributable cash to total interim payment obligations. For equal or similar ratios, the banks will determine priority by reference to the fund with the largest number of investors whose interim payments can be covered by available cash.
Where cash is insufficient, investors within a fund may be ranked from the lowest calculated interim payment amount upwards and/or the CMB may approve payments up to a common minimum interim payment amount, based on the liquidating banks’ fund-level analysis. Accordingly, TRY 1 million is a ceiling, not an automatic or unconditional entitlement.
General share return account: Amounts in this account will first be allocated to money market funds, prioritising those with the lowest interim payment coverage ratio and the largest number of investors with net investments below TRY 1 million, so as to enable interim payments to the greatest possible number of investors. Any balance will be allocated to other funds on the same basis. This priority differs from the ordinary payment order for other funds, which starts with the highest coverage ratio.
