BILL REGARDING CERTAIN INVESTMENT FUNDS FOR WHICH A LIQUIDATION DECISION HAS BEEN MADE

The “Bill Regarding Certain Investment Funds for Which a Liquidation Decision Has Been Made” (the “Bill”), which sets out the legal framework specific to the investment funds whose liquidation was decided by the Capital Markets Board (the “CMB” or the “Board”) through its decisions dated September 17, 2026, was submitted to the Presidency of the Grand National Assembly of Turkey (“TBMM”) on October 9, 2026, under docket number 2/3939, with the signatures of AK Party members of parliament. The Bill, consisting of nine articles, has been referred to the Planning and Budget Committee as the primary committee and is expected to be discussed by the Committee on Wednesday, October 14, 2026.

The Bill provides a statutory basis for the process that has so far been carried out through Board decisions with respect to the conduct of the liquidation, interim and final payments to investors, the recovery of assets unlawfully removed from fund assets and the personal liability of those responsible. In this respect, the Bill is not merely a liquidation regulation; it is also a fund-specific recovery and liability regime equipped with public receivables collection tools.

HIGHLIGHTS

• Scope: Only the funds whose liquidation was decided by the Board decisions dated September 17, 2026 and whose liquidation has not been completed as of the effective date of the Law. No general or permanent regime is envisaged.
• Net investment amount: If the cash is insufficient for all unit holders, it will be calculated by the Central Registry Agency (“MKK”) on the basis of inflows and outflows indexed to the average of the CPI and the D-PPI.
• Interim payment: Up to TRY 1,000,000 per investor; no indexation will apply to the interim payment and, except for money market funds, the unit value as of the end of September 16, 2026 will serve as an additional cap.
• Recovery: Liability for assets unlawfully removed from the fund lies first with the portfolio management company; if collection from it is not possible, the persons designated by the Board will be personally liable. Collection will be carried out by the Savings Deposit Insurance Fund (“TMSF”) under Law No. 6183.
• Exclusion from payment: No payment will be made from the liquidation balance or the recovery account to those determined by the Board to have been involved, together with the funds, in acts falling under Articles 104, 106 or 107 of the Capital Markets Law.
• Recovery account: Seized, confiscated and collected assets will be held with the TMSF in separate, unseizable sub-accounts on a fund-by-fund basis and will be distributed only to the unit holders of the relevant fund.

1. SCOPE AND ROLES OF INSTITUTIONS

The Bill covers the investment funds whose liquidation was decided by the Board through its decisions dated September 17, 2026 pursuant to Article 128 of the Capital Markets Law No. 6362 (the “CML”) and whose liquidation has not been completed as of the effective date of the Law (Art. 1/1, Art. 2/1-b). It is expressly stated that the provisions do not create a general or permanent liquidation and liability regime for other investment funds (Art. 1/2).

2. CONDUCT OF THE LIQUIDATION AND ASSET SALE METHODS

The entities in charge of liquidation are obliged to exercise due care to obtain the highest possible economic value, taking into account investor interests, market conditions, fund portfolio structures and the common interest of unit holders (Art. 3/2).

• Off-exchange methods: If the Board determines that the price formed on Borsa Istanbul (the “Exchange”) does not reflect the true value of the asset or would delay the liquidation, it may decide on buy-backs, the right to sell to the controlling shareholder, wholesale transactions, special transaction notifications, temporary different price margins and other methods under the Exchange regulations; sales outside the Exchange may also be approved upon the request of the entity in charge of liquidation.
• Non-application of restrictions and sale prohibition: The restrictions in the Board’s investment fund regulations will not apply to these sales; the Board may decide that purchasers may not sell the assets on the Exchange for a certain period.
• Treatment of collections: Amounts collected during the liquidation will be added to the liquidation assets after deduction of mandatory management and liquidation expenses; amounts collected after the liquidation is completed will be transferred to the recovery account in a manner that does not result in duplicate payments (Art. 3/3).
• Duty to provide information: MKK, Takasbank, Borsa Istanbul, the Banks Association of Turkey, portfolio management companies (“PMCs”), custodians and public institutions must provide the requested information and documents to the Board, the Investor Compensation Center (“YTM”) or the TMSF without delay and may not refrain from doing so by relying on confidentiality provisions (Art. 3/4).
• Determination of unit ownership: Unit ownership will be determined on a fund and account basis by reconciling the records of MKK, Takasbank, TEFAS and the custodian and distributor institutions (Art. 3/5).

3. NET INVESTMENT AMOUNT, INTERIM PAYMENT AND FINAL PAYMENT

The Bill provides a statutory definition for the concept of “net investment amount”, which was used without definition in CMB Bulletin 2026/67, and makes interim payments possible beyond the funds of the four PMCs to which the Board’s decision dated September 30, 2026 and numbered 64/1775 was limited.

Net investment amount (Art. 4/1)

If, once the fund assets are converted into cash, there is not enough cash to pay all unit holders, payments from the liquidation balance will be based on the net investment amount. This amount will be calculated by MKK by indexing each cash inflow made by the investor to the fund and each cash outflow from the fund, up to the liquidation date, by the arithmetic average of the CPI and D-PPI change rates on a pro rata temporis basis; where the inflows exceed the outflows, the outflows will be deducted on a first-in, first-out basis. No net investment amount will arise for investors who have withdrawn more than they invested in the fund.

Interim payment (Art. 4/2-3)

• Amount: Investors whose net investment amount is below TRY 1,000,000 may receive an interim payment equal to that amount, and those whose net investment amount is TRY 1,000,000 or more may receive up to TRY 1,000,000. The interim payment may not exceed the net investment amount, and no indexation will be applied in its calculation.
• Additional cap: Except for money market funds, the interim payment may not exceed the total value, as of the end of the day preceding the liquidation decision (September 16, 2026), of the participation units held in the account on the date of the liquidation decision. For funds that do not announce prices, Takasbank’s valuation for the relevant day will be used.
• Insufficient cash – draft text: The draft dated October 7, 2026 provided for the available cash to be distributed in proportion to the investors’ amounts eligible for interim payment.
• Insufficient cash – submitted text: According to the publicly reported version submitted to TBMM, the Board is authorized, with a view to ensuring that the largest possible number of unit holders benefit in full, to decide to make payments starting from the lowest net investment amount and/or to set a minimum interim payment amount applicable to all unit holders. According to the same text, interim payments will be made in the funds determined by the Board and will be set off against the final payment.
• Limits: Under both texts, no unit holder may receive an interim payment exceeding its net investment amount, the amount of its finalized rights and receivables or the TRY 1,000,000 cap; participation units will not be redeemed in return for the interim payment and will be returned at the time of the final liquidation payment.

Final payment (Art. 4/5)

In the final payment, all payments previously made from the liquidation assets, the recovery account, the voluntary refund accounts or through other legal means will be set off. This provision also covers interim payments made under the Board’s decision numbered 64/1775.

4. VOLUNTARY RETURN OF GAINS DERIVED FROM ARTIFICIALLY FORMED VALUES

The Bill provides a statutory basis for the Voluntary Refund Accounts and the General Share Refund Account opened with Birleşik Fon Bankası in the name of the TMSF as of October 1, 2026 (Art. 2/1-c, Art. 4/4):

• Returns relating to fund units: Persons who, before the liquidation date, redeemed their participation units at artificially formed values and received payment may voluntarily return to the fund the portion exceeding the benchmark return, calculated on the basis of the average annual return of funds in the same investment strategy category, taking into account their actual investment in the fund and the period during which that investment remained in the fund. The returns of the funds under liquidation will not be included in the benchmark calculation.
• Returns relating to shares: Persons who gained from shares in the fund portfolios whose prices the Board has determined to have been formed artificially may voluntarily return the portion exceeding the ordinary return, calculated on the basis of the relevant index or objective criteria to be set by the Board, to the General Share Refund Account.
• The benchmark fund group, period and calculation methods will be determined by the Board.

5. PERSONS EXCLUDED FROM PAYMENT

No payment will be made from the liquidation balance or the recovery account to persons and entities that are determined by the Board to have committed the acts regulated under Articles 104 (market manipulation), 106 (insider trading) or 107 (market fraud) of the CML through the funds under liquidation, in concert with those funds or with the participation of those funds (Art. 3/6). These persons are also excluded from the definition of “fund unit holder” (Art. 2/1-ç). The exclusion is based on a determination by the Board, not on a court decision.

6. UNLAWFULLY REMOVED ASSETS AND PERSONAL LIABILITY

Assets transferred, in breach of the legislation or, even if formally compliant with the legislation, without a genuine economic purpose in the interest of the fund, through loans, debts, advances, collateral, transfers, assignments, purchases and sales, repos, reverse repos and similar transactions to related parties, controlling shareholders, managers, persons controlled by them or third parties, together with any assets substituting them, will be deemed to have been unlawfully removed from the fund assets, and the fund will be deemed to have suffered a loss (Art. 5/1).

• Order of liability: The PMC acting as founder and/or manager of the fund is primarily liable for any damage, loss or shortfall in the liquidation balance. If the amount cannot be collected from the PMC or it is evident that it cannot be collected, the natural and legal persons whose liability is determined by the Board, together with those acting in concert with them, will be personally liable (Art. 5/2).
• Leaving office: Having left office does not remove liability for transactions and decisions made during the term of office or the period of control (Art. 5/2).
• Board determination: Except for seizure and confiscation within the scope of criminal proceedings (Art. 6), the Board will determine, based on the results of the liquidation and audit, the amount of loss for each fund, the liable persons and the amounts for which they are liable, and notify the TMSF (Art. 5/3).
• Collection: The TMSF will initiate proceedings under Law No. 6183 on the Procedure for Collection of Public Receivables and may exercise the powers under Articles 132, 134, 136, 138, 140 and Provisional Article 27 of the Banking Law No. 5411. Istanbul administrative courts have jurisdiction over lawsuits within this scope (Art. 5/4).
• Stay of enforcement proceedings: According to the draft text, until the TMSF proceedings are concluded, no new enforcement proceedings may be initiated under the Enforcement and Bankruptcy Law against the assets of the notified persons, pending proceedings will be stayed, attached assets may not be sold or distributed, and no new interim injunctions or precautionary attachments may be imposed; existing attachments, precautionary attachments and interim injunctions will be lifted automatically (Art. 5/4).
• Compensation under special provisions: Compensation obligations of the persons whose liability has been determined, arising from their own fault and based on special provisions, are reserved (Art. 5/5).

7. SEIZURE, CONFISCATION AND RECOVERY ACCOUNT

• Seizure and return: In investigations related to the funds, seizure may be ordered under Article 128 of the Criminal Procedure Code No. 5271 (the “CPC”); cash and capital market instruments that can be returned directly to the fund will be returned to the relevant fund or to the recovery account under Article 131 of the CPC. The Board’s reports underlying its criminal complaints will be deemed reports on the value derived from the offense within the scope of Article 128 of the CPC (Art. 6/1).
• TMSF as trustee: For assets that cannot be transferred to the fund, the TMSF may be appointed as trustee and may sell or liquidate the assets without awaiting the outcome of the case (Art. 6/2).
• Confiscation: Assets subject to a confiscation order which the court determines to have been removed from the fund assets or to correspond to the fund’s loss will be transferred to the relevant fund or, if the liquidation has been completed, to the recovery account, without being recorded as revenue of the Treasury (Art. 6/3).
• Protection of the account: The recovery account will be held with the TMSF in separate sub-accounts for each fund and kept separate from the TMSF’s own assets; it may be used only for the liquidation of the relevant fund and payments to its unit holders, may not be pledged as collateral, may not be attached even for public receivables, and no interim injunction or precautionary attachment may be imposed on it (Art. 6/4-5).
• Distribution: After deduction of mandatory expenses, the accumulated amounts will be transferred to the entity in charge of liquidation if the liquidation is ongoing, or to YTM if it has been completed, and paid in proportion to unit ownership. Receivables below the minimum payment amount to be set by the Board will be accumulated and paid in subsequent distributions (Art. 6/6). The allocation among funds of amounts linked to more than one fund will be determined by the Board based on criteria such as fund type, liquidity adequacy, unit ownership structure and liquidation ratio (Art. 6/7).

8. OTHER PROVISIONS

• The Board and YTM may procure external legal, accounting and software development services for work, lawsuits and proceedings arising from the implementation of the Law (Art. 7/1).
• The implementing procedures and principles will be determined by the Board, with the opinion of the TMSF on matters within its remit (Art. 7/2).
• In matters not addressed, the provisions of Laws No. 6362, 5271 and 5411 and related legislation that do not conflict with the Bill will apply (Art. 7/3).
• The Law will enter into force on the date of its publication (Art. 8).

9. COMPARATIVE OVERVIEW

10. EVALUATION

For investors

• The Bill largely removes the uncertainty around the “net investment amount”. However, indexation will apply only to the final payment and only where the cash is insufficient for all unit holders; interim payments will be made on a nominal basis.
• Capping the interim payment at the unit value as of September 16, 2026 may result in investors whose fund value has fallen below their investment receiving less than their net investment amount as an interim payment. Money market funds are outside this cap.
• The authority under the submitted text to “start from the lowest net investment” and to set a “minimum interim payment” prioritizes small investors but may delay interim payments for investors with larger amounts. The criteria for exercising this authority will be clarified by Board regulation.
• Scope and completed liquidations: The scope is limited to funds whose liquidation has not been completed as of the effective date of the Law. According to public statements, liquidation has been completed for 17 funds of A1 Capital, Bulls and Pardus, and payments relating to approximately 43,000 investors were transferred to banks on October 8, 2026. The text does not expressly set out the mechanism through which the unit holders of these funds will benefit from amounts recovered in the future; it is important that this be clarified at the committee stage.
• Investors’ individual compensation claims against founders, custodians and distributors appear to be reserved under Art. 5/5. However, since the stay provision (Art. 5/4) will also stay enforcement proceedings initiated by investors against persons notified by the Board to the TMSF, individual enforcement strategies should be reassessed in light of this provision.

For PMCs, managers and related parties

• As the “genuine economic purpose” test also covers transactions that are formally compliant with the legislation, PMC managers, controlling shareholders, related parties and counterparties that entered into repo, loan or collateral relationships with the funds are advised to review their past transactions and the records documenting the economic rationale of those transactions now.
• Determining liability through a Board determination and collecting under Law No. 6183 creates a much faster and more effective enforcement tool than ordinary private law compensation litigation. How administrative objection and defense procedures against Board determinations will be set out in secondary regulations is of critical importance.
• Although the voluntary return mechanism is based on voluntariness, the Bill does not address whether failing to make a return may affect future liability or exclusion-from-payment assessments. Investors who exited the funds before the liquidation are advised to assess their position.

For creditors

• The automatic lifting of existing attachments and interim injunctions and the stay of enforcement proceedings will have significant consequences for banks and other creditors with receivables from the persons to be held liable. The text does not expressly address how pledges and other security interests will be affected by this provision.

Constitutional and procedural issues

• The automatic lifting of existing attachments and the attachment of liability to past transactions may be debated in terms of the right to property (Constitution, Art. 35), the right to legal remedies (Constitution, Art. 36) and the principle of legal certainty (Constitution, Art. 2).
• Basing exclusion from payment on a Board determination rather than a court decision should be assessed in light of the presumption of innocence (Constitution, Art. 38/4) and judicial review of administrative acts (Constitution, Art. 125).

11. TIMELINE AND ITEMS TO MONITOR

• October 14, 2026: Discussion of the Bill in the Planning and Budget Committee; the text and reasoning to be adopted by the Committee.
• Plenary discussions, publication in the Official Gazette and the effective date.
• Procedures and principles to be issued by the Board: funds eligible for interim payment and order of priority, minimum interim payment amount, benchmark return method and liability determination procedure.
• The relationship between the unit holders of funds whose liquidation has been completed and the recovery account.
• As a precaution, November 16, 2026 should be observed as the deadline for filing annulment actions against the Board decisions dated September 17, 2026 (Art. 7 of the Administrative Procedure Law No. 2577).