Relevant Authorities and Legal Framework for M&A in Turkey

M&A transactions are regulated by multiple legal frameworks, with the Turkish Commercial Code (TCC) No. 6102 serving as the primary legislation. Other relevant laws include:

• Turkish Code of Obligations No. 6098
• Capital Markets Law No. 6362
• Law on the Protection of Competition No. 4054
• Labor Law No. 4857

Depending on the industry, additional approvals may be required from regulatory bodies such as the Competition Authority, Energy Market Regulatory Authority, and Banking Regulation and Supervision Agency (BRSA).

Types of Mergers in Turkey

The Turkish Commercial Code outlines two primary types of mergers:

1. Merger by Acquisition

One company acquires another, taking over its assets and liabilities. This is the most common type of merger in Turkey.

2. Merger by Formation of a New Company

Two or more companies unite to create a new entity, pooling their resources and operations.

Key Steps in the M&A Process in Turkey

1. Merger Decision: The merging companies must make a formal decision to merge.
2. Registration: The merger must be registered with the Trade Registry Office.
3. Dissolution of Transferred Company: The acquired company ceases to exist, and its assets and liabilities transfer to the acquiring company.
4. Shareholder Rights: Shareholders of the dissolved company become shareholders in the acquiring company.

Foreign Investment in M&A Transactions

Under the Foreign Direct Investment Law No. 4875, foreign investors have the same rights and obligations as domestic investors. There are no additional restrictions for foreign buyers, but certain sectors—such as banking, energy, and telecommunications—require additional regulatory approvals.

Mechanics of Acquisition

There are several ways to realize acquisitions in Turkey:

• Share Purchase: Acquiring shares in a target company.
• Merger or Demerger: Combining companies or separating business units.

Required Documentation for M&A Transactions

• Letter of Intent
• Share Purchase Agreement (SPA)
• Merger Agreement
• Latest Balance Sheet
• General Assembly Resolutions

Employee Rights During Mergers and Acquisitions

Employees’ rights are protected under Turkish law. Employment contracts automatically transfer to the new employer unless the employee objects. If an employee objects, their contract is terminated with notice.

Deal Protection and Bidder Protection

To safeguard M&A transactions, parties often include protective measures:

• No-Shop Clauses: Prevent the target company from seeking other buyers.
• Penal Clauses: Impose financial penalties for breaching the agreement.

Buyers can take control of a target company by transferring shares. In joint stock companies, share transfers require endorsement and registration in the share ledger.

Key Costs and Approvals for M&A in Turkey

Main Costs:

• Stamp Duty
• VAT on asset transfers
• Income/Corporate Tax
• Consultancy Fees
• Notary and Translation Fees

Regulatory Approvals:

Approval from the Competition Authority is mandatory for mergers that exceed certain turnover thresholds. Sector-specific approvals may also be required.

Information Disclosure Requirements

Publicly held companies must disclose key developments during the M&A process, including:

• Merger Decisions
• Division Plans
• Expert Opinions
• Merger Agreements

These disclosures are published in the Turkish Trade Registry Gazette to protect creditors and third parties.

Simplified Merger Process

The TCC allows for a simplified merger process for capital companies when:

• The acquiring company owns all shares of the transferred company.
• All voting rights are held by a common group of shareholders.

Benefits of Simplified Mergers:

• No merger report required.
• No auditor review necessary.
• General assembly approval is not mandatory if the acquiring company owns at least 90% of the shares.

Key Considerations for Successful M&A in Turkey

1. Conduct Thorough Due Diligence: Legal and financial due diligence is essential to identify risks and opportunities.
2. Obtain Necessary Regulatory Approvals: Ensure all required approvals are secured to avoid delays.
3. Protect Shareholder Rights: Comply with TCC provisions to protect the rights of all stakeholders.
4. Plan for Post-Merger Integration: Ensure smooth operational and cultural integration post-merger.

Updates and Recent Changes in M&A Regulations

Recent updates to the TCC and other relevant laws include:

• Allowing Companies in Liquidation to Merge
• Providing Shareholders with the Option of Monetary Compensation

These changes aim to make M&A processes more efficient and attractive to investors.

How OzbekCPA Can Help with M&A Transactions in Turkey

Navigating M&A transactions in Turkey requires expertise in local laws, regulations, and business practices. At OzbekCPA, we provide comprehensive support for every stage of the M&A process—from initial planning and due diligence to regulatory compliance and post-merger integration.

Contact us today to learn how we can help your business achieve a seamless and successful M&A experience in Turkey