Mergers and acquisitions (M&A) have become integral components of the corporate landscape, enabling businesses to achieve growth, diversification, and enhanced market positioning.
M&A transactions involve complex legal processes and regulatory considerations, making a deep understanding of Mergers and Acquisitions Law essential for successful business transformations.
In this dynamic and competitive business environment, navigating Mergers and Acquisitions Law is critical for companies seeking strategic partnerships and growth opportunities. Turkish Mergers and Acquisitions Law In the fast-paced world of business, mergers and acquisitions (M&A) have become common strategies for companies to expand their market share, enhance their competitive advantage, and achieve rapid growth.
Turkey, as a dynamic and promising market, has also witnessed a surge in M&A activities in recent years. To facilitate and regulate these transactions, the Turkish Mergers and Acquisitions Law plays a crucial role.
What is the Law of Mergers and Acquisitions (M&A)?
Mergers and Acquisitions Law refers to the legal framework that governs the consolidation, amalgamation, or takeover of companies. It outlines the procedures, requirements, and limitations involved in such corporate transactions.
The primary goal of this law is to ensure transparency, protect the interests of stakeholders, and promote healthy competition in the market.
What is the Mergers and Acquisitions Law in The Turkey?
Turkish Law contains provisions for the protection of third parties regarding Mergers and Acquisitions. The vulnerable third parties in question are creditors and employees.There are many regulations and rules governing mergers and acquisitions in Turkey. On the other hand, the main rules are the Turkish Commercial Code No. 6102. In addition, Turkish Tax Laws, Law No. 4054 on the Protection of Competition and Capital Market are among the other rules to be applied.There are many legal provisions that must be applied in M&A transactions. In this regard, it should not be forgotten that before proceeding with the transactions, it is necessary to obtain expert service from law firms.
M&A Of Different Types Of Companies
Mergers and Acquisitions vary across different types of companies. According to Article 124 of the Turkish Commercial Code, commercial companies are listed as follows:
- Incorporated company
- Limited company
- Limited Partnership – Limited Partnership
- Collective Company
It is then divided into two, and these are seen as joint stock companies and private ownership. Within the scope of joint stock company; Joint stock companies, limited companies or limited liability companies divided by shares are seen.Private ownership consists of sole proprietorships, limited liability partnerships or collective companies. TCC evaluates mergers and determines the rules under which companies will merge with others, depending on the type of companies involved in the merger. For example, provided that joint stock companies are transferred companies:
- joint stock companies
- Collective or cooperative companies
Private properties can merge with private companies, with joint stock companies provided that the private property is taken over, and with cooperative companies, provided that the private property is taken over.
M&A Procedures in Turkey
Documentation of merger and acquisition transactions typically begins with a letter of intent, which often fails to commit the parties to a transaction. However, in order for the transaction to be evaluated through the due diligence process, the parties may bind it to confidentiality and exclusivity obligations.After the offer is approved by the purchasing company, the due diligence phase begins. Detailed analysis of operations such as target assets, customers, and human resources is carried out. It allows the buyer to re-evaluate their initial assessment of the target’s value. Determining the situation is seen as a concrete step that does not cause concerns or problems in the future.After the determination, the parties can proceed to a definitive contract arrangement according to the transaction structure, and this is also known by names such as merger agreement, share purchase agreement.
What Does Turkish Mergers and Acquisitions Law Cover?
Turkish Mergers and Acquisitions Law covers a wide range of aspects related to M&A activities in the country.
This includes the establishment of rules and regulations for:
- Pre-Transaction Due Diligence: Before proceeding with an M&A deal, parties involved must conduct comprehensive due diligence to assess the legal, financial, and operational aspects of the target company. The law ensures that this process is conducted thoroughly and by legal standards.
- Transaction Structure: Turkish Mergers and Acquisitions Law defines various methods through which M&A deals can be structured. These may include mergers, acquisitions, share purchases, asset transfers, and joint ventures.
- Regulatory Approvals: Depending on the nature and size of the M&A transaction, regulatory approvals may be required from governmental authorities. The law establishes the criteria for obtaining these approvals.
- Protection of Minority Shareholders: The law safeguards the rights and interests of minority shareholders during mergers and acquisitions to prevent any potential abuse by majority shareholders.
- Antitrust and Competition Rules: To ensure fair competition and prevent monopolistic practices, the Turkish Mergers and Acquisitions Law incorporates antitrust regulations that scrutinize large-scale transactions.
How Are Merger and Acquisition Types Structured Under Turkish Legislation?
Under Turkish Legislation, mergers and acquisitions can be structured in various ways, each with its implications:
- Mergers: In a merger, two or more companies combine to form a new entity. The original companies cease to exist as separate entities, and all their rights and obligations are transferred to the newly formed company.
- Acquisitions: In an acquisition, one company acquires the shares or assets of another company. The acquired company maintains its legal existence, but ownership and control change hands.
- Share Purchases: This type of acquisition involves purchasing a significant number of shares in a target company, providing the acquirer with a controlling interest.
- Asset Transfers: In asset transfers, a company sells or transfers specific assets or business units to another entity, while retaining its legal entity status.
- Joint Ventures: Two or more companies collaborate and create a new entity for a specific business purpose. Each party contributes assets, resources, and expertise, sharing both risks and rewards.
Which Mergers Are Valid Under Turkish Legislation?
In Turkish Mergers and Acquisitions Law, mergers are classified into two categories: simple and complex mergers.
- Simple Mergers: Simple mergers involve companies where at least one of the companies holds 100% of the shares and voting rights of the other company. These mergers are relatively straightforward and require less regulatory approval.
- Complex Mergers: Complex mergers, on the other hand, involve companies where none of them hold 100% of the shares and voting rights of the other. These transactions require more stringent regulatory scrutiny.
English-Speaking Turkish Mergers and Acquisitions Lawyers
Navigating through the intricacies of Turkish Mergers and Acquisitions Law can be challenging, especially for international investors and businesses.
To ensure smooth and successful transactions, it is crucial to seek assistance from qualified and experienced English-speaking Turkish Mergers and Acquisitions Lawyers. These legal professionals possess the necessary expertise to provide valuable insights and legal representation throughout the M&A process. Turkish Mergers and Acquisitions Law Firm in Turkey, Istanbul In Turkey, Istanbul stands as the financial hub and a focal point for numerous M&A deals. To access top-tier legal services and guidance, companies often turn to reputable Turkish Mergers and Acquisitions Law Firms based in Istanbul.
These firms offer comprehensive support, combining their in-depth knowledge of local regulations with international perspectives to facilitate seamless cross-border transactions.
In conclusion, the Turkish Mergers and Acquisitions Law sets the foundation for transparent and efficient M&A activities within the country. With the assistance of experienced legal professionals, businesses can navigate the complexities of M&A transactions, unlocking new growth opportunities and achieving their strategic objectives.