Mergers andAcquisitions
Legal structuring of company mergers, demergers and share transfers, and assessments under competition legislation.
Mergers and acquisitions cover the merger, demerger and change of legal form of companies, as well as share and asset transfers. In these transactions, commercial law, competition law and capital markets legislation are assessed together.
Scope
Merger and acquisition transactions cover the merger of a company with another company, the demerger of a company, its change of legal form, the transfer of shares or of a business, and other transactions that lead to a significant change in the shareholding structure. Mergers, demergers and changes of legal form are regulated in detail in Turkish Commercial Code No. 6102 (mergers: Art. 134 et seq.; demergers: Art. 159 et seq.; changes of legal form: Art. 180 et seq.). In these transactions, competition law, tax law, employment law and, for listed companies, capital markets legislation are assessed together with commercial law.
The structure of the transaction determines its legal consequences. In a share transfer, the company’s legal personality, contracts and employees remain unchanged; only the shareholding structure changes. In an asset or business transfer, by contrast, the transfer of contracts, licences, receivables and liabilities must each be addressed separately. In a merger, the absorbed company ceases to exist and its assets pass as a whole to the absorbing company; in a demerger, the assets are transferred in part or in full to more than one company. The choice of transaction type is therefore considered from its legal, tax and commercial aspects together.
Frequently encountered matters
- Legal due diligence on the target company and reporting.
- Drafting of share transfer agreements and asset or business transfer agreements.
- Merger and demerger agreements, plans, balance sheets and general assembly resolutions.
- Change of legal form transactions and registration with the trade registry.
- Shareholders’ agreements; pre-emption, tag-along and drag-along rights.
- Assessment of whether notification to and authorisation from the Competition Authority are required.
- Consequences for the transfer of employees, contracts and licences.
- Representations and warranties, indemnity and price adjustment mechanisms.
- Contractual disputes arising after closing.
Process and points to note
Transactions usually begin with a letter of intent or a preliminary agreement recording the parties’ intentions. A legal review is then carried out covering matters such as the target company’s shareholding structure, contracts, permits and licences, employee relations, real estate, intellectual property rights, and litigation and enforcement files. The results of the review affect the transaction structure, the price and the contractual provisions.
Formal requirements differ depending on the type of company. In joint stock companies, registered shares are transferred by endorsement and delivery of the share certificate (for registered shares subject to transfer restrictions, the company’s approval is also required); in limited liability companies, a share transfer requires a written agreement, notarial certification and the approval of the general assembly. In mergers and demergers, the relevant general assembly resolutions, the announcement and security provisions for the protection of creditors, and the trade registry procedures are followed.
Mergers and acquisitions exceeding certain size thresholds may be subject to the authorisation of the Competition Board under Article 7 of Law No. 4054 and the relevant communiqué; where authorisation is required, the transaction does not acquire legal validity until authorisation is obtained. Turnover thresholds are set by communiqué and may change, so the current regulation is checked separately for each transaction. For publicly held companies, the regulations of the Capital Markets Board (SPK), public disclosure obligations and mandatory tender offer rules also come into play. In a transfer of a workplace, employment contracts pass to the transferee, and the transferor and the transferee are jointly liable for employee-related debts arising before the transfer (Art. 6 of Law No. 4857; Art. 428 of the Turkish Code of Obligations).
Our office’s approach
The work consists of determining the transaction structure, preparing the legal due diligence report, drafting the contract documents and keeping negotiation notes. Which risks each party assumes is set out clearly in the documents. For disputes arising after the transaction, the dispute resolution provisions of the agreement are taken as the basis.