M&A in Turkey - Legal Advice for Investors
Mergers and Acquisitions in TurkeyUpdated on Saturday 17th December 2022
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Investors who want to explore various investment opportunities in Turkey can opt for a company merger or acquisition. These are two methods of uniting two or more companies and growing a business.
Foreign investments in Turkey have increased over the past years and have also been encouraged by an evolving regulatory regime. A foreign corporation can buy existing Turkish companies and the total investment volume resulted from these types or transactions is an important part of the total foreign investments in the country. Find out from our Turkish lawyers about the M&A in Turkey.
Law for mergers and acquisitions in Turkey
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. At least one of the companies is transferred with all its rights, obligations and assets and the company or companies being merged will be dissolved after the completion of the process.
According to the Turkish Commercial Code, mergers can take place after one company has bought the other (and assimilates it) or when two companies form a new legal entity.
Interested in residency in Turkey? We advise you to contact our lawyers and benefit from the legal services offered. there are a number of formalities to be respected, and among them, are those related to documents. Thus, a valid passport, proof of accommodation in Turkey, proof of personal income, and a clear criminal record will be needed. It is good to know that such a residence permit can be issued in approximately 3 months from the date of application if all documents are verified and accepted.
Options for investors in Turkey
Investors who are interested in M&A in Turkey must make the distinction between the two processes. The acquisition is essentially the purchase of another company when typically a larger one buys a smaller company. After the transaction is complete, the assimilated corporation will cease to exist. The investor has an option to keep all or some of the employees and hire them in the remaining (or newly formed) company.
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.
Legislation overseeing M&A in Turkey
Although there is no specific set of laws governing mergers and acquisitions in Turkey, such transactions must comply with the basic law, including the following:
- Turkish Commercial Code.
- Corporate Tax Law.
- Capital Markets Law.
- Foreign Direct Investment Law.
- Trade Registry Regulation.
- Turkish Commercial Code.
These are just some of the legislation sets that must be respected when setting up a company in Turkey. In addition, the procedures related to the Istanbul Stock Exchange when it comes to M&A in Turkey must be taken into account. You can discuss more about such transactions with our lawyers in Turkey.
What does it take to start the M&A process in Turkey?
First of all, any type of transaction requires specialized legal advice, offered by an expert in the field. It can initiate a series of financial checks, usually called operational investigations, which involve a series of documents such as:
- Insurance policies for each company.
- Documents related to a company's loans, if any.
- Information about company assets.
- Copyright and trademark details.
- Employee contracts.
- Information on ongoing litigation, if any.
Therefore, there are a number of documents that require verification before any type of transaction, and in addition to the help provided by a specialized lawyer, there is also a need for the services offered by expert accountants. Feel free to talk to our lawyers in Turkey to find out more about the documents required for M&A in Turkey.
Key facts about mergers in Turkey
In order to better understand the implications of the merger, we invite you to discover the following:
- It takes two companies to consolidate a new entity.
- The new company will need new management that can be composed of those of the merged companies.
- You don't need money to be able to merge with a company.
- The merger between companies is usually chosen in order to reduce certain costs in the company and to access new financial markets.
- Normally, the merger takes place between companies that have approximately the same status and the same objectives.
Key facts about acquisitions in Turkey
Acquisition of companies is common in the business environment. But it is good to know that it differs from fusion. Here are some basics about acquisitions:
- Usually, large companies are the ones that can buy smaller companies. The latter is obliged to cease their activity.
- Unlike mergers, acquisitions are often seen as negative actions, although the opposite is true. Buying another company means taking control and developing existing or new activities on the market.
- The one who buys a company must know from the beginning what its price is. The financial transaction will take place when the terms of sale-purchase are established.
- Acquisitions in Turkey are beneficial for reducing production costs, introducing new products to the market, making them more technologically efficient, among other things.
Because mergers are actions that don't happen so often, and acquisitions are perceived negatively, these terms are used together, M&A. If you want to know more about this subject, you are invited to talk to our lawyers in Turkey. We are here to help you register a business in Turkey and even a bank account so that we can guarantee that you will not encounter any problems.
Turkey is always a top destination for foreign investors
Located on two continents, Europe and Asia, Turkey is the best destination for international players interested in import and export activities, logistics, and manufacturing, among others. The geographical positioning of Turkey, with access by air, land, and sea from all over the world, but also very well developed infrastructure are important advantages for foreign investors in Turkey. The following statistics highlight the economic direction of Turkey several times:
- About USD 212 billion was the total FDI for Turkey in 2020.
- Energy and manufacturing are the sectors that attract the most foreign investment in Turkey.
- According to the 2020 Doing Business report, Turkey ranked 33rd out of 190 world economies in terms of business conditions in this country.
- In 2020, the Netherlands was the largest foreign investor in Turkey, with about 18% of the total investment coming from this country.
Our lawyers in Turkey can give you more details regarding the company law and options available to foreign investors. You can also contact us if you are interested in opening a company in Turkey.