ABSTRACT
Capital market transactions have been one of the main elements of modern economy via being so developed and complicated by the effects of today’s technology. They are, along with insurance and banking activities, one of the activities that have been most sought after. In addition to this, capital market transactions have also become the subject of distance contracts, as a result of the developments in information technology. Those distance contracts concerning capital market transactions which are made by using one or more communication devices, have been commonly used especially in internet environment after the developments of information technologies. Furthermore, the electronic environment made this sector more attractive and easier to transact for companies and investors benefiting from financial services. However, these developments in capital market transactions have brought a set of problems along with them.
1. INTRODUCTION
When capital market transactions are examined, it could be realized that purchase and sale of common stocks come into prominence. The transactions of purchase and sale of common stocks cannot be conducted physically in exchanges and to make such transactions, one needs an intermediary firm or an investment account opened in a bank. Even though investors have many different ways to make a purchase/ sale order, they mostly prefer to use internet environment since it is quite easy and quick. Besides, the opportunity to make futures contracts, which oblige its parties to purchase or sale goods, securities or financial indicators having standardized quantity and quality, on a determined future date, for a price and the transactions already agreed on, which are made in accordance with this agreements, in electronic environment has increased. In order to provide the security for law regarding electronic environment, which has gained more importance after starting to make those and many more capital market transactions in electronic environment, some new regulations have been accepted1 .In this regard, in case of having some conditions, capital market transactions made in electronic environment are subjected to the Regulation for Distance Contracts Regarding Financial Services (“the Regulation”) published in Official Gazette numbered 29253 dated January 1st, 2015 and the Regulation brings some new rights and obligations, will be discussed later on, for the parties of aforementioned transactions with it.
2. DISTANCE CONTRACTS REGARDING CAPITAL MARKET TRANSACTIONS AND RELEVANT LEGISLATION
2.1. General
Distance contract is not a sort of agreement such as lease, sale or construction agreement, but it is a notion indicating the structure of agreement. Thereby, all kind of agreements may be made as distance contract provided that obeying general principals. Within this context, the general provisions of the Turkish Code of Obligations (“the Code of Obligations”) are applied for establishing and interpreting of distance contracts. It should be indicated that, if an agreement is a distance contract regarding capital market transactions, it would not bear any different consequences in respect to law of obligations. Also, it is obvious that the general provisions especially concerning capital markets of the Turkish Commercial Code (“the Commercial Code”) would be applicable, to a certain extent, to the distance contracts regarding capital market transactions.
The particular legislations applicable to distance contracts regarding capital market transactions made in electronic environment are the Capital Market Law, the Law Regulating Electronic Commerce and the Regulation for Distance Contracts Regarding Financial Services. The two of those legislations will be explained in this section and the Regulation for Distance Contracts Regarding Financial Services which is the main subject of this article will be examined in detail, in the next section.
2.2. The Capital Market Law
The principal regulation applicable to distance contracts regarding capital market transactions is the Capital Market Law numbered 6362 (“the Law numbered 6362”). According to the Law numbered 6362, both fulfilling the conditions regarding establishment, capital and staff, and obtaining permission from the Capital Markets Board (“the Board”) is required in order to make any capital market transaction. In the paragraph three of the article 99 of the Law numbered 6362, the subject of making capital market transaction on the internet is expressed and according to this provision, the permission of the Board is a must. However, sometimes mentioned activities are made without getting any permission of the Board and so the relevant provision mentioned above is infringed. For this reason, according to the Law numbered 6362 in order to prevent those infringements, the Board has the authority to apply some sanctions to institutions or persons making such unpermitted transactions3 . Pursuant to the relevant provision of the Law numbered 6362, the Board may block off the access of hosting and content providers via courts’ ruling, if they are resident or via the Information Technologies and Communications Authority if they are operated abroad.
2.3. The Law Regulating Electronic Commerce
Another regulation regarding distance contracts, and in this regards capital market transactions might be the subject of it, is the Law Regulating Electronic Commerce Numbered 6563 (“the Law numbered 6563”). The Law numbered 6563 states that under the scope of electronic commerce, parties of the agreements are service providers, intermediary service providers and purchasers. Despite the fact that this article focuses on capital market transactions mainly within the frame of the Regulation, it should be indicated that the base of the Regulation is the Law on the Protection of the Consumers numbered 6502 (“the Law numbered 6502” or “the Law”) and both the Regulation and the Law are applicable only to the cases in which one of the parties is a consumer. On the other hand, the Law numbered 6563 applies all agreements regarding electronic commerce activities; in all cases in which one of the parties is a consumer or not. In this context, one of the general legislations applicable to capital market transactions without considering the parties as to whether one of them is a consumer or not, is the Law numbered 6563.
3. THEREGULATION FOR DISTANCE CONTRACTS REGARDING FINANCIAL SERVICES
The notion of “distance contract” has been introduced in Turkish Law by the Law of the Protection of the Consumers numbered 4822 which has been superseded. Also the Law numbered 6502 embodies the subject of distance contracts afterwards and as it is mentioned above, this notion is not a typical agreement, but it is a way to make it. As indicated above, the Law numbered 6502 is applicable only if one of parties is a consumer. Hence, the Law numbered 6502 does not apply to all capital market transactions, since in capital market transactions, one of the parties is not always a consumer.
According to the Law, not only using a telecommunication device (phone, internet etc.) is required, but also the activities to provide such services should be constant. Accordingly, an agreement does not gain the qualification of being distance contract only by circumstantially or temporarily using a telecommunication device, in other words electronic environment.4
The Regulation for Distance Contracts Regarding Financial Services, the main subject of this article, has been prepared with reference to the articles 49 and 84 of the Law numbered 6502 and been published on the date of 01.31.2015. Thus, the paragraph 7 of the article 49 of the Law numbered 6502 says that distance contracts regarding financial services, and use of communication instruments, and rights and obligations of purchaser and provider shall be determined via regulations. The Regulation adopted in accordance with that, has been entered into force on the date of 04.31.2015, after three months from its publication. In addition to that, because of the fact that the Regulation on Distance Contracts, published on the date of 11.27.2014, does not apply to agreements concerning financial services, the newly enacted legislation; the Regulation for Distance Contracts Regarding Financial Services has filled a crucial legal gap regarding commercial life. Financial services are defined in the Regulation as the services regarding all sorts of banking services, loan, insurance, individual retirement, investment and payment services. Within this framework, the Regulation defines the persons giving services as providers and the persons benefiting from services as consumers. So, the Regulation would be applied to capital market transactions evaluated within the scope of investment services, which is one of the services listed above, if one of the parties has consumer character. It is indicated above that, under the scope of the Regulation, the parties of a distance contract regarding capital market transaction are providers and consumers. Therefore, it is important to know that how the Regulation defines aforementioned parties, for determining the practice area of the Regulation. The article 4 titled “Definitions” of the Regulation defines providers as “legal or real persons, including public corporations, providing services to consumers or acting on behalf of or on account of servicers, with commercial or professional purposes”. In cases of the Regulation is applicable, the other party of a distance contract regarding capital market transaction is the consumer. Consumers are defined in the article 4 titled “Definitions” of the Regulation as “legal or real persons acting with non-commercial and non-professional purposes”. However, it should be noticed that, according to an opinion of doctrine, all activities made by corporate persons are deemed as business transactions, since they do not have ordinary business area. Yet, the legislator does not indicate any ordinary business area for corporate persons in the relevant article 19 of the Commercial Code. Consequently, it is not possible to assume corporate persons as consumer in any of their relations. So, if one of the parties is corporate person intending to make distance contract regarding capital market transaction, the Regulation would not be applied to such relation, since corporate persons cannot possess any characteristic of a consumer. Besides, it is apparent that the Regulation is applicable to distance contracts regarding capital market transactions made by non-commercial legal persons (such as foundations and societies and etc.) and real persons acting with having consumer character.
3.1. The Obligations of Providers under the Regulation
3.1.1. The Obligation of Preliminary Informing
Pursuant to the article 5 of the Regulation, before expressing their intent to make contract regarding a capital market transaction, providers shall state some information in accordance with the used communication device. Within this scope, providers are obliged to predicate their information indicated in the Regulation to the opposite parties acting as consumers in distance contracts regarding capital market transactions. Therefore, when considering the structure of agreement, those provisions of the Regulation become more important because of the fact that by those provisions the consumers obtain all required information concerning providers standing opposite side of distance contracts regarding capital market transactions. The stipulated information listed in the article 5 of the Regulation is as follows: a. Providers’ and if available their representatives’ main subject of activities, MERSIS (the Central Registration System of the Ministry of Customs and Trade) numbers, full address, electronic mail address, telephone numbers and if available other communication information, b. If there is an intermediary between provider and consumer, for providing financial services to consumer; name, title, full address, and information about authority of intermediary for determining his capacity of authorization, c. Information concerning main specifications of financial services, d. Total price, including taxes, of the financial services; if the price cannot be calculated because of its characteristics, its calculation method; if available the expenses regarding performances and if these cannot be calculated in advance, information regarding payable supplementary expenses, e. If financial instruments are used in financial services, information of such financial instruments; bearing some particular risks naturally or based on transactions, or having unstable price beyond control of providers because of financial market turbulences, or having past data which are not deemed as indicator for future values, f. If available, information regarding other taxes and fees should be paid by the consumer, g. If submitted information are valid only for a limited duration, information concerning such duration, h. Information regarding payment and performance, and if available covenants regarding them, i. If the consumer covers some additional expenses regarding use of a telecommunication device, information concerning such expenses, j. Information regarding period, method and usage conditions of the right of withdrawal and if available, method of calculation of the amounts to be paid by consumers pursuant to the article 11 of the Regulation, k. For sending notification of withdrawal to; full address, electronic mail address, telephone number and if available other information of communication, l. In cases of not using the right of withdrawal in accordance with article 13 of the Regulation; information concerning that consumers shall not benefit from the right of withdrawal, or conditions in which they lose their right of withdrawal, m. Information regarding minimum duration of the agreement, if there is a financial service performance repeated in continuous or regular intervals, n. Contract’s conditions concerning unilaterally cancellation of agreement by parties in cases of having justified reasons, and in such cases, if available, information regarding payable penal obligations. Also, in article 6 of the Regulation, the method of informing consumers about the information listed above has been indicated. Accordingly, in accordance with the telecommunication device that is used, consumers should be notified of this information in such a format that is at least twelve point font, clear, simple, understandable and readable, in written or with permanent data register. At this point, attention should be paid to the exemption of the transactions performed by voice communication devices and in similar environments; if the distance contracts regarding financial services are made with a voice communication device or in the environment served with limited space or time, the explanation of the information to be notified specified in the aforementioned articles (c), (d), ( j) and (l) is sufficient. The parties stayed as providers in the distance contracts regarding capital market transactions, have to obey the provisions described above regarding preliminary informing requirements of the Regulation, and they shall pay attention to make it understandable for consumers that the preliminary informing is made for commercial purposes, appropriately with telecommunication device that is used.
3.1.2. Preparing of the Distance Contracts Regarding Financial Services
In the Article 7 of the Regulation, the legislator has stated that in distance contracts related to the financial services and the capital market services, right along with the obligation of preliminary informing some other information shall be notified as well. These are: a. Consumer’s name, last name, full address, if available electronic mail address, telephone number and other contact information, b. The information that they can make an application on consumers’ complaints and objections to the consumer courts or the arbitration committees as consumers, c. If available, the information concerning guarantee funds or other compensation arrangements, d. If available, the information relating to other remedies that consumers may apply and e. If available, the information regarding payment plan. It should be emphasized that the providers are obliged to make an agreement containing all stated information and to forward all the provisions of this agreement on hard copy or with a permanent data register. In other words, the providers of such distance contracts made with regard to capital market services are subject to these specified obligations, and if it is requested by the persons participating in this process as a consumer and during the period of the contract continuing, providers have to send a sample of the contract to the related persons written on paper for free of charge. This obligation must be fulfilled before the declaration of the consumer’s intent for making such contract. However, if the contract is made via distance communication tool which is not suitable to be informed by writing, this must be sent right after the conclusion of contract.
3.1.3. The Obligations Concerning the Right of Withdrawal
The Regulation has examined the right of withdrawal in parallel to the Law, and according to the relevant provisions, the consumers can withdraw from distance contracts regarding capital market services in 14 (fourteen) days without indicating any reason and without paying any payment of penalty. Proving that the consumer is informed about the right of withdrawal is listed among the obligations of providers in the Regulation. When evaluating that consumers have the right to withdraw from contracts without any justification and proving that the consumer is informed about such right is an obligation of providers, it can be understood that the provision is regulated clearly in favor of consumers. In terms of the right of withdrawal, one of the obligations of the provider is also included in the second paragraph of article 9 of the Regulation. According to this, in case of an option regarding the right of withdrawal offered to the consumer via internet, if the consumer requests to withdraw, the provider must promptly send to the consumer confirmation about receiving the request. Furthermore, in case that the consumer exercises its right to withdraw, article 10 of the Regulation enjoins providers to repay all payment excluding the expenses and costs stipulated in the first paragraph of article 11 of the Regulation, in a lump and in accordance with the payment instrument that is used, to the consumer within 30 (thirty) days from the date of exercising the right. At the same time, providers shall take all necessary measures for transmitting the right of withdrawal, and determination or records to be made in electronic or physical environment. Article 12 of the Regulations lays down provisions regarding the effects of exercising the right of withdrawal to subsidiary agreements, and pursuant to this article, in case that the consumer use its right to withdraw, the providers in distance contracts regarding capital market services are obliged to immediately notify this situation to third persons who are parties of the subsidiary agreements, in written or by permanent data registers.
3.2. The Rights and Obligations of Consumers
Demanding a written sample of the agreement without any charges in the period of contractual relationship in respect to the financial service, is one the first rights of the consumers regulated by the Regulation. Further, the Regulation states that if it fits with qualifications of the financial service, the consumers possess the right to change the telecommunication device that is used. To illustrate, a consumer may request getting the service by phone conversations or by electronic mail ways to a proper extent.
Another right of consumers arranged in the Regulation is that they can withdraw from distance contracts regarding financial services within 14 (fourteen) days without any reason and paying any penalty. This right is called the right of withdrawal and it is examined in the Regulation under the scope of some principles clarified below
3.2.1. The Right of Withdrawal and Its Usage
As it is stated above, consumer may withdraw from contracts within 14 (fourteen) days pursuant to the Regulation. According to the second paragraph of article 8 of the Regulation, this time period commences at the date of entering into an agreement. Besides, if such agreement is physically wrote on a paper or gave by a permanent data register to consumer after entering into, the time period of the right of withdrawal starts from the date that the consumer obtains all conditions of the agreement. Consumers may notify providers in respect of exercising the right of withdrawal in written or by permanent data register. About that case, the legislator have been drafted a “sample withdrawal form” as an annex of the Regulation, and if consumers desire to exercise the right, they can either use such form or make an express statement indicating the decision of withdrawal. As it is specified in article 12 of the Regulation, in case that the consumer exercise its right to withdraw, if available, subsidiary agreements shall be terminated without paying any compensation or penalty.
3.2.2. The Obligations of Consumers
Pursuant to article 11 of the Regulation, consumers shall reimburse the price of the service performed in accordance with the agreement and subsidiary agreements, if available, the costs paid to state institutions or organizations, or third parties, and the considerations which must be paid according to the legislation to providers within 30 (thirty) days from notification of withdrawal. Otherwise, it shall be assumed that the consumer would not withdraw from the agreement. In the meantime, according to the same provision, the payable price shall not exceed the amount of the price of performed service and not be deemed as a penalty anyways. It should be noted that, in the second paragraph of article 11, the legislator have referred to the providers’ obligation of preliminary informing. Pursuant thereto, it is emphasized that the provider who cannot prove that the information is given, to the consumer under the scope of the obligation of pre liminary informing, about usage conditions of the right of withdrawal, its time period, its method, if available, the method of calculation for the amount to be paid by the consumer, shall not be able to demand the costs stipulated above. In the directions of the principals stated above, the persons making distance contracts regarding capital market transactions as consumer have the right of withdrawal and the obligations concerning such right. Attention should be paid to that, the legislator have brought some restrictions for use of the right of withdrawal. Article 13 titled “exceptions of the right of withdrawal” of the Regulation has listed a number of agreements, and has indicated that consumers cannot exercise the right of withdrawal in those agreements. The agreements bringing exceptions for the right of withdrawal are;
a. The agreement regarding financial services having a price changing depends on market fluctuations and is out of providers’ control and such changes occur in the period of the right of withdrawal, such as; 1. Foreign currency transactions, 2. Money market instruments, 3. Transferable securities, 4. Investment partnership shares, 5. Futures contracts based on financial assets, and financial instruments based on equivalent cash conciliation, 6. Forward interest rate agreements, 7. Interest, foreign currency and share swaps, 8. Option transactions and financial instruments based on equivalent cash conciliation.
b. Without prejudice to other legislations’ provisions being in favor of consumers, the agreements concerning voyage and baggage policies having less than one year validity period, or similar short term insurance policies, c. The agreement completely performed by the parties upon the consumer’s express consent, before the right of withdrawal is exercised.
3.3. Other Important Provisions of the Regulation
According to article 14 of the Regulation, sending termination request to the provider or intermediary via any telecommunication device is enough for consumer to terminate the distance contract regarding financial service. Furthermore, consumers shall not be obliged to use a method, having more difficult circumstances than they use during entering into the contract, to terminate the contract. In distance contracts regarding financial services, providers have to reserve the information and documents 3 (three) years round, in regard to that they have performed their obligations concerning the right of withdrawal, informing and other subjects. Because of the fact that pursuant to the provisions of the Regulation, the party with burden of proof is provider; it will be profitable to save all information and documents, along the specified time period, including the distance contract regarding the service accepted by the consumer, in order to decrease the risks of future dispute at a minimum and within the scope of duty of care, by the providers who are a party to a distance contract regarding financial services. Another provision laid down in respect to the providers takes part in article 16 of the Regulation. According to this article, if a provider assigns a phone line to a consumer in order to contact about the agreement that they entered into, the provider shall not choose a higher price list than usual price list, relating to such phone line.
4. CONCLUSION
By force of today’s technology, making financial transactions in electronic environment particularly in internet environment bring about some new regulations. Also capital market activities which constitute an important part of financial transactions have been transported into electronic environment and the providers of capital mar ket services and the beneficiaries of such services make their transactions practical and fast by taking advantages of internet, telephone and similar devices. General principals and other regulations are applicable to an appropriate extent to capital market transactions made in electronic environment, and the core regulation shall be applied for such transactions is the Capital Market Law, Numbered 6362. The Law numbered 6502 is an instructive regulation for evaluating the transactions made in electronic environment in respect to consumers, in consequence of providing regulations regarding distance contracts. Also having regulations concerning distance contracts regarding financial transactions in the Law numbered 6502 makes it easier to determine the rights and obligations of consumers in banking, insurance and investment sectors. Capital market activities constituting an important part of the investment services are mostly made in form of distance contracts and in cases of the conditions indicated in the Law numbered 6502 occur, capital market activities are subject to the regulations concerning distance contracts regarding financial services of this law. It is important to note that, in order to apply the Law numbered 6502 and the Regulation, which is enacted pursuant to this law, for the distance contracts regarding capital market transactions, one of the parties of such transactions shall be consumer. Thereby, those distance contracts regarding capital market transactions in which one of the parties is consumer, shall be subjected to the Regulation for Distance Contracts Regarding Financial Services which is newly enacted into Turkish legislation and parties of the agreement, providers and consumers, shall have the rights and obligations stipulated above.
BIBLIOGRAPHY
Çetin, Nusret. Töremiş Hatice Ebru ve Cantimur, Zeynep. 6362 sayılı Sermaye Piyasası Kanunu’nun Sistematik Analizi. Ankara: Yetkin, 2014.
Demir, Mehmet. Mesafeli Sözleşmelerin İnternet Üzerinden Kurulması. Ankara: Turhan, 2004.
Gündoğdu, Aysel. Türkiye’de Sermaye Piyasasının Değişen Yüzü. Ankara: Seçkin, 2015.
Kocayusufpaşaoğlu, Necip. Borçlar Hukukuna Giriş, Hukuki İşlem, Sözleşme. İstanbul: Filiz, 2008.
Yıldırım, Abdulkerim. Mesafeli Sözleşmelerde Tüketicinin Korunması. İstanbul: XII Levha, 2009.
FOOTNOTE
1 Mehmet Demir, Mesafeli sözleşmelerin İnternet Üzerinden Kurulması, (Ankara: Turhan, 2004), 68.
2 Necip Kocayusufpaşaoğlu, Borçlar Hukukuna Giriş Hukuki İşlem Sözleşme, (İstanbul: Filiz, 2008), 225.
3 Nusret Çetin, Hatice Ebru Töremiş ve Zeynep Cantimur, 6362 sayılı Sermaye Piyasası Kanunu’nun Sistematik Analizi, (Ankara; Yetkin, 2014), 217.
4 Necip Kocayusufpaşaoğlu, Borçlar Hukukuna Giriş Hukuki İşlem Sözleşme, (İstanbul: Filiz, 2008), 213.
