The legal protection of debt instrument holders

This study examines the legal mechanisms which are significant for the protection of debt instrument holders under Turkish law. In this thesis, the terminology problem regarding debt instruments, and the legal and economic nature of debt instruments is revealed. The fundamental basis of the debt relationship that arises between the issuer and the holders of debt instruments is an abstract acknowledgement of debt. Joint-stock company is the primary issuer of debt instruments, and the issuance process is completed with the necessary procedures being carried out within the issue limit and the issue ceiling based on the decision to be taken by the competent body. The mechanisms serving to protect debt instrument holders are essentially the tools for bringing the risk-return balance to the desired level by adjusting the risk. Approached in this way, the legal institutions protecting debt instrument holders can be examined in two groups: contractual and non-contractual. BASK, which serves as the collective decision-making mechanism of debt instrument holders on certain matters, and BAST, which serves as their collective representative, are non-contractual protection mechanisms that have been examined in detail in the study. Article 31/B of the Capital Market Law foresee a unique collateral system to ensure the full and timely fulfillment of obligations arising from debt instruments. The real collateral structure that emerges through providing the subjects of collateral to the collateral manager within the scope of the Collateral Management Contract, which is a contract for the benefit of third party, can be considered as a trust. In addition, covenants and other contractual protections that allow for the differentiation of risks have also been scrutinized.