What is M&A in Turkey?
Mergers and Acquisitions (M&A) in Turkey refer to the process of companies combining their operations or acquiring other businesses to achieve growth, expand market presence, or enter new industries. The legal framework governing M&A transactions in Turkey is primarily set by the Turkish Commercial Code (TCC) No. 6102. A successful M&A transaction requires thorough legal and financial planning to ensure compliance and mitigate risks.
Why Consider M&A in Turkey?
Turkey has recently emerged as a key business hub for global investors, leading to a significant increase in M&A activities in the country. Its strategic location, diverse economy, and growing industries make it an attractive destination for companies looking to expand their footprint. However, navigating Turkey’s regulatory framework and sector-specific requirements is crucial for ensuring a smooth transaction process.
Relevant Authorities and Legal Framework for M&A in Turkey
M&A transactions in Turkey are governed 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
- Merger Decision: The merging companies must formally decide to merge.
- Registration: The merger must be registered with the Trade Registry Office.
- Dissolution of Transferred Company: The acquired company ceases to exist, and its assets and liabilities are transferred to the acquiring company.
- 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. While there are no general restrictions on foreign buyers, certain sectors—such as banking, energy, and telecommunications—require additional regulatory approvals.
Mechanics of Acquisition
There are several ways to conduct acquisitions in Turkey, including:
- Share Purchase: Acquiring shares in a target company.
- Merger or Demerger: Combining companies or separating business units.
Required Documentation for M&A Transactions
Typical documents involved in an M&A transaction include:
- 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 such as:
- No-Shop Clauses: Prevent the target company from negotiating with other buyers.
- Penal Clauses: Impose financial penalties for breaching the agreement.
- Drag-along and Tag-along Rights: Protect the interests of majority and minority shareholders in joint stock companies.
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. Additional 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
🔹 Conduct Thorough Due Diligence: Legal and financial due diligence is essential to identify risks and opportunities.
🔹 Obtain Necessary Regulatory Approvals: Ensure all required approvals are secured to avoid delays.
🔹 Protect Shareholder Rights: Comply with TCC provisions to protect the rights of all stakeholders.
🔹 Plan for Post-Merger Integration: Ensure smooth operational and cultural integration post-merger.
How ÖzbekCPA Can Help with M&A Transactions in Turkey
Navigating M&A transactions in Turkey requires expertise in local laws, regulations, and business practices. At ÖzbekCPA, 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.
With our deep understanding of the Turkish market and strong relationships with legal, financial, and regulatory bodies, we help businesses structure successful M&A deals while minimizing risks.
Contact us today to explore how we can add value to your business with our tailored solutions and strategic insights.