131 Funds in Liquidation: Why Investors in the Same Fund May Have Different Legal Positions – Pending redemption orders, payment priority and what investors need to do now

Summary

By Bulletin No. 2026/60 of 17 September 2026, the Capital Markets Board (the “CMB” or the “Board”) suspended subscriptions and redemptions on TEFAS in all funds of seven portfolio management companies (Tera, Pusula, Hedef, Atlas, A1 Capital, Pardus and Bulls Portföy) and, by Bulletin No. 2026/61 issued the same day, set out the procedures and principles for the liquidation of 131 of those funds – not all of the funds of the seven companies. By Bulletin No. 2026/62 of 20 September 2026, the Board further resolved to extend the three-month period provided in paragraph (A/8) of the liquidation procedures to six months, having regard to the portfolio structures of the funds in liquidation and market developments. This article addresses the legal position of investors, which varies according to their fund and order status, and the steps to be taken in the coming period.

• The liquidation will be conducted not by the founders but by two banks appointed by the Board: T. İş Bankası for the Tera Portföy funds and T.C. Ziraat Bankası for the funds of the other six founders.

• The liquidation period is a maximum of six months. Cash will be distributed not in a single payment but in tranches determined by the banks, pro rata to unit holdings.

• Investors in the same fund are not necessarily in the same position. Investors who placed redemption orders on TEFAS before those orders became subject to the liquidation principles under A/6, and whose orders remained unexecuted, will have the relevant redemption amount booked as a debt of the fund. In our current assessment, these claims should, as a rule, rank among themselves according to the date and time at which the orders were entered into the system, and will be paid out of the cash generated by asset sales in priority to other liquidation distributions. Investors who placed no order will share in the liquidation proceeds pro rata.

• In funds that have been suspended from trading but are not on the liquidation list, investors currently cannot exit through any channel; the fate of these funds remains uncertain.

• As a rule, the Investor Compensation Center (ICC) is not triggered by the liquidation as such; it may, however, come into play in exceptional cases.

• Time is critical for investors who placed orders before the liquidation decision but whose orders were cancelled without their consent: the reconciliation of unexecuted orders between Merkezi Kayıt Kuruluşu (MKK), the Central Securities Depository of Türkiye, and the banks will be completed within two business days.

• The most important task at this stage is to preserve every record that determines the investor's legal position, to leave pending orders in place, and to reserve all rights in writing vis-à-vis the relevant institutions.

About the assessments in this article

The Board's decisions do not expressly regulate certain legal and operational consequences addressed in this article. The views expressed below as “our current assessment” reflect our current legal opinion, based on an analogous application of the Capital Markets Law No. 6362 (“CML”), the relevant Board regulations, the Investment Funds Guide, the ordinary accounting and settlement mechanics of fund transactions, and established practice in ordinary fund liquidations. There is no Board precedent squarely on point. These assessments may need to be updated in light of the practice of the liquidating banks and any further announcements or regulations by the Board.

1. Background

The decision follows sharp price movements in certain shares, redemption and liquidity problems in some funds, and the Board's broader review of the portfolio structure and transactions of the funds concerned. In its statement of 18 September 2026, the Board noted that certain hedge funds and money market funds had driven price increases in low free-float shares that could not be explained by fundamentals, that unsecured borrowings had been made between related parties, and that this structure created systemic risk; it also noted that the Financial Stability Committee had earlier recommended macroprudential measures on the matter. Some portfolio management companies, for their part, have publicly stated that they have no liquidity problem and could meet redemption requests if permitted to do so.

2. How Will the Liquidation Work? (Bulletin No. 2026/61)

The Board has departed from the ordinary procedure. Under the Communiqué on Principles Regarding Investment Funds (III-52.1) and Article 11(f) of the Investment Funds Guide, a fund is ordinarily liquidated by its founder; here, the founders have been removed from the conduct of the liquidation, and the banks appointed as portfolio custodians have been vested with the founder's powers. The main points of the Bulletin are as follows:

Appointed banks (A/1)

For the acts and transactions necessary for the liquidation, the banks will exercise the powers conferred on the fund founder by legislation. The Bulletin expressly preserves the banks' duties and liabilities as portfolio custodians; their control and oversight obligations under Article 56 of the CML and the Portfolio Custody Communiqué (III-56.1) continue to apply during the liquidation.

Reconciliation, transfer and expenses (A/2–A/4)

Within two business days, MKK and the banks will reconcile each fund's units in circulation, investors' holdings in individual custody accounts, pledges, attachments and injunctions, and unexecuted orders. Receivables and payables arising from repo, deposit, credit and similar transactions, together with fund expenses, will be reconciled within ten business days. The existing management fee will continue to accrue for the benefit of the liquidating bank; the distributable amount will be determined after deduction of these items.

Realisation and distribution (A/5)

Fund assets will be sold at a frequency determined by the bank, having regard to investors' interests, market depth and liquidity conditions; cash will be distributed pro rata to unit holdings in tranches determined by the banks. Given that the positions held by the liquidated funds in certain shares exceed half of the free float, sales are likely to be spread over time and to weigh on prices.

Pending redemption orders and payment priority (A/6)

This is the provision of greatest importance to investors, and it contains two rules:

First, redemption instructions submitted after 13:30 on 17 September 2026 in notice-based funds, or after the end-of-day value-date cut-off stated in the prospectus in money market funds, are subject to the liquidation principles; such instructions will be treated not as redemption instructions but as requests to share in the liquidation proceeds.

Second, in the funds ordered to be liquidated, the amount corresponding to redemption orders placed on TEFAS and not executed will be booked as a debt of the fund and paid, in priority to other liquidation distributions, out of the cash generated by the sale of fund assets.

This gives the investors concerned payment priority over unit holders sharing in the liquidation proceeds. This distinction is deliberate: in an ordinary fund liquidation, an investor who has not given an exit instruction remains a unit holder and receives the value of their units out of the liquidation proceeds; A/6 separates investors who have expressed the intention to exit from those proceeds and places them in the position of a creditor of the fund. The Bulletin leaves three questions open:

Which price? The Bulletin does not expressly state the unit price at which the amount to be booked as a debt of the fund will be determined. Our current assessment is that the amount should be determined not by reference to the price at which fund assets are actually realised during the liquidation, but by reference to the unit price with which the redemption instruction would ordinarily have been matched under the transaction rules applicable to it. This reading is consistent with the Guide's framework for pricing redemption instructions and for booking the priced redemption amount as a fund liability before payment; the wording of A/6 (“the resulting amount is accrued as a debt of the fund”) reflects the same established accounting logic. However, as the Bulletin does not separately define a pricing date for this special liquidation regime, the point will be settled by the banks' practice or by further Board guidance.

Ranking among priority claims? While the Bulletin expressly establishes the priority of A/6 claims over other liquidation distributions, it contains no specific provision on the ranking among those claims. That said, since the special liquidation regime contains nothing that displaces the general fund and TEFAS transaction rules on this point, we consider that those general rules continue to apply on a supplementary basis. In the ordinary operation of TEFAS, priority among transactions is determined, fund by fund, by the time at which the instruction was entered into the system. Our current assessment is therefore that, as a rule, the ranking among A/6 priority claims should likewise be determined by the date and time at which the instructions were entered into the system. Nevertheless, if at the end of the liquidation the fund's assets do not cover all claims of the same rank, it can also be argued that investors in the same legal position should share pro rata; nor should the possibility be disregarded that the Board, in order to protect investors, will determine a different method of distribution that departs from the general rules.

Orders in notice-based funds placed before 13:30 on 17 September but after the change in redemption terms? Some founders moved their funds to a notice-based redemption regime on 16 September. Since the Board's Guide update of 28 August 2026 allows such changes to take effect without the usual waiting period for the purpose of liquidity risk management, the 16 September changes cannot be said to be unlawful merely because they took immediate effect. On the other hand, for notice-based funds A/6 subjects only instructions submitted after 13:30 on 17 September to the liquidation principles. Our current assessment is that all redemption instructions submitted to TEFAS before 13:30 on 17 September and still unexecuted at the liquidation date should benefit from the fund liability and priority payment regime under the second sentence of A/6, even if placed after the switch to the notice-based regime. Which pricing schedule (daily or monthly) applies to those orders is a separate question on which the Bulletin gives no detail; the priority question and the price question must be kept apart.

Duration and non-TEFAS channels (A/7–A/9, B)

The liquidation ends on the first business day following the expiry of a maximum period of six months from the announcement date; this period was set at three months in Bulletin No. 2026/61 and extended to six months by Bulletin No. 2026/62. In suspended funds, no redemptions will be processed through the founder or other distributors outside TEFAS either; in the liquidated funds, no subscriptions or redemptions will be processed through any channel from 17 September 2026. Matters not addressed in the Bulletin are governed by Article 11(f) of the Guide and the Board's other fund regulations.

3. Legal Framework: Five Points to Know

Fund assets are segregated. An investment fund is a pool of assets without legal personality, managed by the founder on behalf of investors on a fiduciary basis (CML Art. 52). Fund assets are separate from those of the founder, manager and custodian; they cannot be attached for the debts of those institutions or included in their bankruptcy estate (CML Art. 53). Whatever the financial condition of the founder companies, the portfolio assets belong to the investors; the transfer of the liquidation to the banks is an application of this principle.

The founder and manager must manage the fund in the investors' interest. The founder is responsible for representing, managing and supervising the fund in a manner that protects unit holders' rights; fund assets must be managed in the investors' interest and in accordance with the fund rules and prospectus (III-52.1 Arts. 5 and 9). The exemption of hedge funds from portfolio limits (III-52.1 Art. 25) does not remove this obligation.

The custodian does more than hold assets. The portfolio custodian must verify compliance with legislation and the fund rules, the valuation principles and the correct calculation of the unit price; demand the correction of breaches; and, where necessary, notify the Board (CML Art. 56; III-56.1 Arts. 5 and 7). It is liable for losses caused to unit holders by its failure to perform these duties, and this liability cannot be narrowed by contract (III-56.1 Art. 11).

Distributors also have obligations. Banks and brokerage firms offering fund units to investors must carry out appropriateness assessments and disclose risks. Selling hedge fund units to persons who are not qualified investors is contrary to the regulations. Given that the great majority of the funds on the liquidation list are hedge funds, practices at the distribution stage are a separate matter for assessment.

The ICC does not apply at this stage. The Investor Compensation Center regime under Article 82 et seq. of the CML is intended to address an investment firm's failure to perform cash-payment or capital-market-instrument delivery obligations arising from investment services and activities. The liquidation of a fund, a shortfall in the liquidation proceeds or the fund's inability to satisfy its redemption liabilities in full does not, of itself, trigger ICC compensation. The ICC may become relevant only where the unpaid claim constitutes an investment firm's own cash-payment or delivery obligation arising from investment services or activities and the Board issues a compensation decision in respect of that investment firm under Article 82 of the CML. Accordingly, in the case of redemption amounts that have been priced or have fallen due but remain wholly or partly unpaid, the availability of ICC protection must be assessed separately by reference to the legal nature of the claim and the identity of the obligor.

4. Where Do You Stand? The Investor's Legal Position

The position of two investors in the same fund may differ according to the existence or timing of a single order. The main situations encountered in practice are summarised below.

For the purposes of this section, the “cut-off” means 13:30 on 17 September 2026 for notice-based funds and, for money market funds, the end-of-day value-date cut-off stated in the prospectus (Bulletin A/6).

5. Roadmap

For all investors

• Preserve your records. Order entry screens (showing date and time), order statuses, TEFAS reference numbers, unit prices on the relevant dates, account statements, the fund's prospectus and rules, and KAP announcements should be kept in chronological order. This also includes the prospectus, unit price and portfolio report as at the date the units were purchased; it may later be necessary to show what information the investment decision was based on.

• Do not cancel pending orders. If the order status is changed by the distributor or the system, ask in writing who made the change and on what basis.

• Apply in writing to the distributor. Written confirmation of the orders' TEFAS reference numbers, submission times, the unit price applied and their pending status should be requested. As oral information may be insufficient as evidence, written confirmation should be obtained.

• Apply in writing to the liquidating bank. Investors in Scenario A should request confirmation that their instructions have been recorded as unexecuted orders in the A/2 reconciliation, that the relevant amount has been accrued as a debt of the fund, and of the unit price applied. Investors in Scenario D should instead request written confirmation that the priced and due redemption amount has been included in the fund's payables reconciliation, together with the amount of the claim and its ranking for payment. The application should be made through a channel that provides proof of date (registered electronic mail (KEP), notary, registered mail with return receipt).

• Reserve your rights. Every communication should expressly state that, in addition to payments from the fund assets, all claims and rights of action against the founder, portfolio manager, custodian and distributors are reserved.

• Monitor KAP. The banks' payment plans, distribution periods and reconciliation results will be published on the funds' KAP pages. Any extension of the period, additions to the list and decisions on suspended funds should be followed through the same channel.

• Consider the tax dimension. The withholding tax applicable to redemptions and liquidation distributions, and whether the tax advantage specific to equity-intensive funds is preserved in a liquidation, should be discussed with a tax adviser.

6. A Brief Note on Loss and Liability

If the amount paid to the investor at the end of the liquidation falls short of the pre-liquidation value of the units, an economic loss may result. Whether this constitutes a legally recoverable loss depends on whether it stems from market movements or from breaches of regulation or contract in the management, custody, valuation or distribution of the fund. The fact that the Board has taken measures under Article 96 of the CML does not of itself prove a breach; however, the findings in the Board's statement of 18 September, the results of its examinations, administrative sanctions and criminal complaints will be important foundations for future liability assessments.

Where the loss results from unlawful transactions, liability may arise, depending on the circumstances, on the part of the fund founder and its managers (III-52.1; including liability for the prospectus and public disclosure documents under Articles 10 and 32 of the CML), the portfolio custodian (CML Art. 56; III-56.1) and the distributors (investment services regulations). In particular, the concentration and liquidity structure of the fund portfolio, related-party transactions, valuation and unit price controls, the custodian's oversight duties, the investor's qualified investor status (and, where investors were moved to qualified investor status without their consent, documentation of that fact) and the risk disclosures made at the distribution stage must be assessed separately for each investor. We plan to address this subject, together with the potentially liable parties, legal bases, evidence and procedural dimensions, in a separate article.

7. Developments to Watch

• The basis for calculating the amount to be booked as a debt for pending redemption instructions, and the ranking among priority payments.

• The pricing schedule applicable to orders placed after the 16 September change in redemption terms but before 13:30 on 17 September in the funds concerned.

• How orders cancelled without the investor's consent will be treated in the reconciliation.

• The Board's decision on funds that are suspended from trading but not liquidated.

• The sale and payment plans to be announced by the banks; the date of the first distribution.

• The Board's examinations of founders, managers and custodians and any administrative sanctions; the course of the criminal investigations.

• Whether further funds will be added to the list.

Conclusion

By taking the liquidation process out of the hands of the fund founders and entrusting it to the banks, Bulletin No. 2026/61 has taken an important step towards protecting investors' assets and ensuring that distributions are made properly, and has granted payment priority to investors who expressed the intention to exit before the liquidation decision. Uncertainties nevertheless remain as to the distributable amount, the distribution timetable and the fate of the suspended funds. At this stage, investors' correct identification of their own position, complete preservation of their records and written reservation of their rights will be decisive both for maximising their recovery in the liquidation process and for the sound assertion of any future claims.

KECOS is following the process closely and will keep you informed as developments unfold.