Amendments on the Communiqué Concerning the Mergers and Acquisitions Calling for the Authorization of the Competition Board

Certain transactions and documents regarding the M&A transactions that have been stated in the Communiqué shall be disclosed on the Board’s or companies’ website or on the public disclosure platform depending on the company type. For an M&A transaction to be sound, legal, operational and financial due diligences should be conducted. Pursuant to such due diligences, condition precedents should be specified and accordingly share sale agreements and shareholders agreements should be fulfilled and performed in order for an M&A transaction to be materialized. Based on the results of independent reports, 215 M&A transactions have been reported to the Competition Board as of 2014, both parties of 76 transactions were foreign investors. Regarding M&A transactions, foreign investors show interest mostly to financial services, leasing, energy sectors in Turkey. USA, Germany, Holland and Luxembourg have been the first four countries which have realized M&A transactions in Turkey in the year of 2014.

The sale of assets of an entity is subject to corporate tax on the gains realized from the sale of the assets. The Capital Markets Board oversees transactions where at least one of the parties is a publicly held company. The Capital Markets Board is authorised to impose administrative penalties provided that a publicly held company does not comply with the requirements of the Capital Markets Law. The Capital Markets Board is also authorised to oversee the requirement of public disclosure through the Public Disclosure Platform. Additionally, the approval or authorisation of the relevant sectoral authority may be required for regulated sectors. In order to complete a valid acquisition, it is fundamental to comply with the provisions of the related legislation under Turkish law.

Turkey: Mergers & Acquisitions Comparative Guide

The Amendment defines technology entities as entities or assets relating to those operating in the fields of digital platforms, software and gaming software, financial technologies, biotechnology, pharmacology, agricultural chemicals and health technologies. With the Amendment, any transaction involving a technology entity as a target that either operates or carries out R&D activities in Turkey or offers their services to users in Turkey becomes subject to the authorization of the TCA regardless of its turnover generated in Turkey. This means that such companies will have an “additional notification requirement” as the TCA calls it that is, for now, unique to Turkey.

Company mergers are the union of two existing companies that become a single operational legal form. This process is subject to more negotiation between the parties as per the shareholding agreements that will be concluded. Before entering into a company merger, investors are advised to perform a company due diligence in order to determine the true financial and legal situation of the company. The Turkish Commercial Code contains provisions for the merger or acquisition process as well as definitions between the two. According to law, the merger is the establishment of a new commercial company after two or more firms have merged.

Does the authority seek or invite the views of third parties?

However, if this transaction is realised via stock exchanges, an independent valuation will not be necessary. Another important tip is to understand that the Turkish Commercial Code has mandatory rules which do not allow all terms of shareholders’ agreements to be reflected in the articles of association of joint stock companies. This means that the good-faith rights of third parties may be protected only in some instances, and several terms and conditions may not be applicable, which could affect the rights of the shareholders.

Dissolving a company or companies’ partners will become the partners of the new established or transferee company. As a result of the transfer, at least one company in case of an establishment of a new company and at least two companies in Lawyer Turkey case of an acquisition will be dissolved. As a whole, all the businesses and assets of the dissolving company/ies with its/their all the rights and obligations will also be transferred to the transferee or to the new company established.

In practice, documentation requirements for deals that are regulated, deal fatigue, gaps in valuation, currency fluctuations, and the language barrier between a local seller and an international buyer may be considered the main hurdles. The Communiqué also annuls the previous provision stating that turnover thresholds shall be defined by the Board once every two years. Voting rights pertaining to the shares acquired have not yet been exercised or only exercised pursuant to an exception granted by the Board. We listen to our clients and understand their financial, strategic or other objectives clearly to structure smooth deals. Each client and each deal requires different resources and at ADMD we are capable to provide diligent and efficient services. DD Circumstances may dictate that comprehensive DD cannot be conducted prior to a transaction, or there may be obstacles limiting access to information and the scope of the DD process.