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Türkiye's parliament has expanded a bill governing the liquidation of troubled investment funds to cover investors whose redemption orders could not be completed because funds defaulted on payments or failed to announce unit prices, bringing previously blocked holdings into the liquidation process.
The amendment, approved by parliament's General Assembly as part of the bill's first section, covers orders submitted to Türkiye's Electronic Fund Trading Platform (TEFAS) on Sept. 17 or earlier that remain uncompleted for either reason.
Investors whose fund units remain in blocked accounts will be treated as fund shareholders under the liquidation rules rather than receiving automatic payouts for their uncompleted sell orders, according to the amendment.
The legislation follows September's market turmoil, which began when several investment funds failed to meet redemption requests on Sept. 15 and Sept. 16. The Capital Markets Board (SPK) ordered the liquidation of 131 funds managed by seven portfolio management companies on Sept. 17, affecting more than 455,000 investors whose funds held an estimated ₺936.3 billion ($19.1 billion) in assets.
Trading in the affected funds was halted that day, and orders submitted on Sept. 17 were canceled. Some earlier sell orders also remained unresolved because funds defaulted on payments or failed to establish a transaction price, leaving investors' fund units blocked despite their instructions to sell.
The amendment brings these uncompleted transactions into the liquidation framework, clarifying that investors with blocked units remain shareholders and can have their holdings considered during the process, ruling Justice and Development Party (AK Party) lawmaker Abdullah Guler explained.
Under the bill, liquidation proceedings for the funds covered by the regulation will take place under the SPK's supervision, with designated institutions carrying out the process.
The regulator will have authority to determine how fund assets are identified, valued and converted into cash, how shareholder stakes are established, and how interim and final payments are distributed. It will also set the order of payments and other procedures governing liquidation.
The legislation also aims to recover assets unlawfully removed from the funds, collect losses from those responsible and distribute recovered value to shareholders. Its provisions will apply only to the funds covered by the specified liquidation decisions and will not create a general or permanent liquidation regime for other investment funds.
Guler outlined a plan to initially pay investors ₺1 million ($20,150) each across 65 investment funds, with further payments to follow as individual fund values are established and assets are converted into cash. The arrangement would allow eligible investors to receive interim payments before the liquidation process is complete, with the SPK responsible for setting the payment procedures.
Treasury and Finance Minister Mehmet Simsek said earlier this week that authorities had completed the regular liquidation of 66 funds managed by three portfolio management companies, whose financial positions were more manageable. The process involves ₺40.8 billion in planned payments to 45,747 investors across those funds.
Simsek also reported that investors in money market funds received an average additional return of 1.4% compared with Sept. 17, while investors in equity-heavy funds recovered about 58% of their portfolios' value on that date.
The bill aims to establish a framework for liquidating the remaining funds, whose financial positions are more complex, Simsek added.
Vice President Cevdet Yilmaz, who chairs the Fund Coordination Board overseeing the process, has said eligible investors will receive interim payments based on the amount they have invested in the funds, if the bill becomes law. The payments are expected to reduce the number of investors still awaiting compensation to fewer than 100,000.
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