97 CAPITAL MARKETS LAW Portfolio Management Agreements At the basis of the portfolio management contract, or the contract of mandate for the portfolio management, lies the trust of the investor in the PMC that undertakes the management. For this reason, portfolio management is deemed as a fiduciary assignment in terms of its legal nature. Simply, the portfolio management agreement is a written agreement that includes the management of the portfolio, which the client has transferred to the PMC, to be managed with the duty of care and loyalty.3 The subject of the portfolio management agreement is the management of the client’s money and the capital market instruments that have been bought and sold on behalf of the client for their benefit, and the payments to be made by the client in return. There are various opinions on the legal nature of the portfolio management agreement. One opinion considers the portfolio management company as a mixed contract.4 Another opinion considers this agreement as a “performance contract based on proxy”.5 According to the declarations of the Board, whereas the PMC provides for the management of the customer’s assets and consulting for profitable investments, the portfolio management agreement may be accepted as a contract of mandate. In order to overcome the problems encountered during the pandemic, Article 42 (Principles Regarding Financial Liability Limits and Employees and To Be Concluded with Customers Contracts) of the CML has been amended to allow the execution of the agreements between the PMC and its customers as a written or distance contract by using remote communication instruments, or by methods that the Board determines such method may replace the written form, and which will be carried out over an information/electronic communication device, and that may verify the customer identity. With regard to individual portfolio management, an expediency test shall be applied to the clients and the compatibility between their investment purpose and financial status, as well as their knowledge 3 https://spk.gov.tr/Sayfa/AltSayfa/447 (Access date: 23.01.2022). 4 Yıldırım, Ayşe Hümay: Portföy Yönetim Sözleşmesi, İstanbul, 2008, p. 35. 5 Yıldırım, p. 46.
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