Turkish Parliament approves liquidation law for 131 investment funds; interim payments up to 1 million TL for 455,000 investors

The Grand National Assembly of Turkey approved on October 22 the bill concerning investment funds that the Capital Markets Board (CMB) decided to liquidate on September 17. The law covers 131 funds belonging to 7 portfolio management companies and approximately 455,758 investors.

Under the regulation, interim payments can be made to investors whose net investment amount is below 1 million TL, provided the payment does not exceed their invested amount; investors with 1 million TL or more can receive a maximum of 1 million TL. The CMB will determine the procedures and principles of the payments.

The Deposit Insurance Fund (TMSF) was authorized to recover assets illegally withdrawn from the funds. Primary liability for resulting losses and damages will rest with the portfolio management companies; the regulation explicitly stipulates that no Treasury or other public funds will be used.

Refund requests submitted to the Turkey Electronic Fund Trading Platform (TEFAS) on or before September 17 that could not be completed because the funds failed to meet their payment obligations were also included within the scope of the liquidation.

Treasury and Finance Minister Mehmet Şimşek stated in his October 20 announcement that the normal liquidation process for 66 of the 131 funds had been completed, that liquidation of 3 of the 7 companies had finished, and that total payments of 40.8 billion TL had been made to 45,747 accounts. While the opposition characterized the law as a "cover for plunder," it passed with the votes of the ruling coalition.