What Should Investors Do After CMB's Mutual Fund Liquidation Decision?

After the Capital Markets Board (CMB) decided to liquidate some investment funds of 7 portfolio management companies, it became a matter of curiosity what investors who have shares in the said funds should do in the process.

Liquidation of the investment fund means ending the fund's activities, converting the assets in its portfolio into cash, covering the fund's debts and expenses, and distributing the remaining liquidation balance to the investors in proportion to their shares.

THE INVESTOR DOES NOT NEED TO GIVE A SELL ORDER

The investor of a liquidated fund does not need to place a separate sales order.

Within the scope of CMB's regulations regarding the liquidation of investment funds, it is envisaged that the participation shares will be sold during the liquidation process without waiting for the investor's sales order.

Therefore, the investor does not need to try to withdraw his money by creating a sales order after seeing that the fund has been liquidated.

The basic action for the investor in the process is to follow the PDP announcements and investment account of the relevant fund.

WHAT WILL HAPPEN TO THE ASSETS IN THE FUND?

The liquidation decision does not mean that the assets in the fund's portfolio disappear for the investor.

During the liquidation process, stocks, bonds, bonds, foreign currency and other assets in the fund portfolio are converted into cash. The fund's debts, expenses and other obligations to be fulfilled within the scope of liquidation are covered.

After these transactions, the remaining liquidation balance is distributed to fund unit holders in proportion to the shares they own.

For this reason, the final amount that the investor will receive is not considered as an amount determined solely by the fund price on the date the liquidation decision was announced. During the liquidation process, the balance remaining after converting portfolio assets into cash and meeting the fund's liabilities is important.

HOW WILL THE MONEY BE PAID INTO THE INVESTOR'S ACCOUNT?

During the liquidation process, the amounts obtained from the sales made without waiting for the investors to give a sales order are kept in accounts opened in the name of the investors within the framework of the relevant regulations.

CMB's Guide on Investment Funds also includes the principles regarding the accrual of amounts held in accounts opened on behalf of investors during the liquidation process.

The final amount to be distributed to investors after the liquidation process is completed is calculated in proportion to the participation shares held.

CAN FUNDS BE BOUGHT AND SOLD AFTER THE LIQUIDATION DECISION?

With the start of the liquidation process, the fund's normal buying and selling transactions end.

From the moment of liquidation, new participation shares cannot be issued and normal transactions regarding the withdrawal of existing participation shares cannot be carried out.

For this reason, it is not possible for the investor to continue normal fund buying and selling transactions in the fund whose liquidation decision has been announced.

INVESTORS SHOULD FOLLOW KAP

One of the most important sources of information for investors during the liquidation process is the Public Disclosure Platform (KAP).

The stages of the liquidation process, transactions regarding the fund and information for investors are announced to the public via KAP.

For this reason, it is important for investors to follow the PDP page of the fund they invest in. In addition, the fund's prospectus and the provisions in its internal regulations, if any, can also be examined.

HOW DOES THE LIQUIDATION PROCESS WORK?

The liquidation process of a fund generally consists of the following stages:

Liquidation decision: A decision is made to terminate the fund's activities and is announced to the public.

Trading transactions stop: With the start of the liquidation process, the normal trading transactions of the fund end.

The portfolio is liquidated: The assets in the fund's portfolio are converted into cash.

Debts and expenses are covered: The fund's obligations and expenses incurred within the scope of liquidation are paid.

Calculating the remaining balance: After all liabilities are met, the remaining liquidation balance is determined.

Distributed to the investor: The remaining amount is distributed in proportion to the participation shares held by the investors.

WHAT SHOULD THE INVESTOR DO?

The primary things that need to be done in the process for the investor of the liquidated fund are as follows:

No need to give a sales order: During the liquidation process, the sale of shares is carried out without waiting for the investor to give a separate sales order.

Must follow KAP announcements: Announcements regarding the liquidation process of the fund can be followed through KAP.

Investment account should be checked: The reflection of the amount generated on behalf of the investor within the scope of liquidation to the investor's account should be monitored.

LIQUIDATION DOES NOT MEAN DISAPPEARANCE OF INVESTORS' MONEY

Liquidation of the investment fund does not mean that the investor's fund share is automatically eliminated.

During the liquidation process, the assets in the fund's portfolio are converted into cash, liabilities are met, and the remaining amount is distributed to investors in proportion to their shares.

For this reason, the main thing that an investor of a fund whose liquidation decision has been announced is not to give a sales order, but to follow the PDP statements and investment account regarding the liquidation process.

CMB's basic regulations regarding the liquidation of investment funds are included in Article 28 of the Communiqué on Principles Regarding Investment Funds numbered III-52.1. The implementation details of the liquidation process are included in the relevant CMB regulations and the fund's prospectus and internal regulations.