1.1. What regulates M&A?

Mergers and acquisitions (M&A) are regulated under the Turkish Commercial Code (TCC) No. 6102. Pursuant to the TCC, companies may be merged in two ways: firstly, the acquisition of a company by another company, technically called a "Merger by Acquisition"; and secondly, the union of multiple companies under a new company, technically called "Merger by Formation of a New Company".

Although mergers and acquisitions in Turkey are subject to the provisions of the TCC, the provisions of other legal regulations such as the Turkish Code of Obligations No. 6098, the Capital Markets Law No. 6362, the Law on the Protection of Competition No. 4054, and the Labor Law No. 4857 shall be taken into consideration during each process of a merger and acquisition. When required in the specific regulations within the scope of the company type and action, permission from institutions such as the Energy Market Regulatory Authority, the Competition Authority, and the Capital Markets Board shall be obtained.

1.2. Are there different rules for different types of company?

Under the Turkish Law, companies are divided into two groups: Stock Company and Private Company. A Stock Company may be a Joint Stock Company or a Limited/Commandite Company. A private company consists of an Ordinary Company, Limited Liability Partnership, or General Partnership. The TCC examines mergers in three categories. Accordingly, the TCC specifies the conditions under which companies may be merged with others. Pursuant to Article 137 of the TCC entitled "Valid Mergers", the following may be merged:

  • Stock Companies with a) Stock Companies, b) Cooperatives and c) Collective or Cooperative Companies on the condition that the company is a transferred company.
  • Private Companies with a) Private Companies, b) Stock Companies on the condition that the Private Company is an acquired company and c) Cooperative Companies on the condition that the Private Company is acquired.
  • Cooperatives with a) Cooperatives, b) Stock Companies and c) Private Companies on the condition that the Cooperative Company is a transferred company.
  • In addition, there are special arrangements within the scope of the publicly held corporation, one of the types of joint stock companies. Namely, except the shareholders whose shares are traded on the stock market and the shareholders who collect money from the public through crowd-funding, the number of shareholders exceeding 500 shares in the joint stock companies are considered to be public offer. In this context, except for those collecting money through crowd-funding platforms, joint stock companies whose shares are publicly offered or considered to be offered publicly, are publicly held companies.

In addition to the TCC regulations for mergers and acquisitions for publicly held corporations, pursuant to Capital Markets Law No. 6362, the Provisions of Communiqué on Merger and Demerger numbered II-23.2, which regulates the procedures and principles to be followed in the merger and division procedures where at least one of the parties is a publicly held cooperation, shall be applied.

It should be noted that the merger process is specified as among one of the important transactions of publicly held companies. In this context, the Communiqué on Common Principles Regarding Significant Transactions and the Retirement Right numbered II-23.1 should be considered.

As mentioned above, transactions carried out for publicly held companies without the relevant requirements shall be abolished by the board. In this context, an administrative fine shall be imposed, and a lawsuit shall be filed within the frame of the provisions on annulment of the resolutions of the general assembly of the TCC.

1.3. Are there special rules for foreign buyers?

In accordance with Foreign Direct Investment Law No. 4875, which regulates the principles for promoting foreign direct investment, there is no special regulation within the scope of specific legislation. For foreign buyers, there are equal opportunities and they have the same rights as domestic buyers.

1.5. What are the principal sources of liability?

The primary liabilities of the transfer of the commercial enterprises are regulated in the Turkish Code of Obligations and the TCC. In accordance with Article 202 of the Turkish Code of Obligations, the legal entity transferring the company and the transferee have joint responsibility for two years together.

Pursuant to Article 153 of the TCC, the merger becomes effective by registering to the trade registry. At the time of registration, all the assets and liabilities of the acquired company pass automatically to the buying company. The partners of the acquired company become the partners of the transferee company. The merger decision is also announced in the Turkish Trade Registry Gazette.

Pursuant to Article 158 of the TCC, the shareholders that are responsible for the debt of the transferred company before the merger have a liability for the same after the merger. The requests for the personal responsibility of the partners arising from the debts of the transferred company are subject to statutory limitation after three years from the date of the announcement of the merger decision. If the assets become due after the date of announcements, the statutory limitation period starts from the due date. This limitation does not apply to the responsibilities of the partners who are personally responsible for the debts of the acquiring company.

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