Turkey's Sovereign Wealth Fund bill approved by Parliament


Legislation to establish a management company for a Sovereign Wealth Fund (SWF), as well as amendments to various laws, was approved by the Parliamentary Planning and Budget Commission late on Tuesday.

The legislative proposal calls for the fund to be established to contribute to instrumental diversity and depth in capital markets, the main activity areas of which are to find and manage funds under the Prime Ministry, draw domestic public assets into the economy, procure external sources and join strategic and large-scale investments. An SWF management company will be established to establish and manage the SWF and subsidiary funds.

As soon as the regulation comes into effect, the company will be officially registered by the Trade Registry office. On behalf of the SWF, the company will be in charge of transactions with respect to stocks of domestic and foreign companies; the shares of Turkey-based issuers, including those which are included in the privatization scope and program; namely, tradeable public and private foreign instruments, public debt instruments, issuer shares, time deposits, participation accounts, deposit certificates for immovable Treasury properties and gold and other precious metals, as well as capital market instruments which are exported on the basis of these metals.

The company will carry out transactions regarding fund shares, repos and reverse repos, lease certificates, real estate certificates, warrants and certificates, settlement and custody bank money market operations, cash collateral and premiums of derivative financial operations, specially-designed foreign investment instruments and loan participation notes, national investments and participation in international investments with other countries and foreign companies.

The company's initial capital of TL 50 million will be covered by the Privatization Fund. The SWF's resources will consist of institutions and assets which are taken into the scope of the privatization program by the High Board of Privatization, as well as cash surpluses which will be transferred to the SWF from the Privatization Fund.

The company and various others to be established, as well as the SWF and subsidiary funds, will be independently supervised. The company will comply with institutional management regulations under the Capital Market Law. Annual accounts and activities will be audited by a minimum of three specialists who will be assigned by Prime Minister Binali Yıldırım in the areas of capital markets, finance, economy, banking and development, within the framework of independent audit standards. Audit reports will be offered to the cabinet of ministers each year at the end of June. The companies will be exempt from income and corporate taxes. This exemption will apply to tax deductions made on other income and earnings from companies, in accordance with revenue and corporate tax laws.