The Legal 500

This guide provides corporate counsel and international practitioners with a comprehensive worldwide legal analysis of the laws and regulations of mergers and acquisitions. This article appeared in the 2013 edition of The International Comparative Legal Guide to: Mergers & Acquisitions; published by Global Legal Group Ltd, London. www.iclg.co.uk.

Pursuant to the Law of Kazakhstan «Concerning Introduction of Amendments and Modifications in Certain Legislative Acts of the Republic of Kazakhstan Regulating Banking Activity and Financial Organisations with respect to Risk Minimisation» dated 28 December 2011 (the «Law of 28/12/2011») a number of amendments were made to the joint-stock company legislation, including Article 53-1 of the Law of Kazakhstan «On Joint-Stock Companies» (the «JSC Law»), which regulates the creation and proceedings of the committees of the board of directors:

Auditing of companies has become a significant issue in a globalizing world. Auditing is no longer regarded as a matter which can only be subject to domestic law. Independence of auditors, auditing of auditors and preventing auditors to render any other service other than auditing are amongst the hot topics still debated in the European Union (EU). With the entry into force of the Turkish Commercial Code numbered 6102 of 2011 (Code) on 1 July 2012, a salient step was taken for modernizing the auditing system by introducing principles similar to those existing under the EU regulations.

Merger control thresholds revised

Effective February 1, 2013, Communiqué 2012/3 (published in the Official Gazette numbered 28512 and dated 29 December 2012) has brought two significant changes to the rules which determines whether a merger and acquisition transaction is subject to prior approval of the Competition Board by amending Article 7 of the Communiqué Regarding Mergers and Acquisitions Subject to Approval of the Competition Board (No.2010/4).

Communiqué Regarding Increase of Capitals of Joint Stock and Limited Liability Companies up to the New Thresholds and Determination of Companies which are Subject to Permission for Incorporation and Amendment of Articles of Association

The "Communiqué Regarding Increase of Capitals of Joint Stock and Limited Liability Companies up to the New Thresholds and Determination of Companies which are Subject to Permission for Incorporation and Amendment of Articles of Association" was published on November 15, 2012. The Communiqué covers the procedures and principles for mandatory capital increase of capital companies, which had been primarily envisaged under the Turkish Commercial Code. Another aim of the Communiqué is to specify the companies which are subject to the permission of the Ministry of Customs and Trade for incorporation and amendment of their Articles of Association.

Insurance

Amendments to the Regulation on Technical Reserve for Insurance and Reinsurance of the Retirement Companies

Communiqué on Legal Reserves Amended

On 1 July 2012 the New Turkish Commercial Code (TCCN) will replace the current one, which has been in force for more than 50 years. In particular the corporate law is going to face many structural changes. Even if a transition period of about one and a half years is foreseen, companies should familiarise themselves with the TCCN and start to prepare themselves for the changes to come.

The former Turkish Commercial code, numbered 6762 (the ‘former TCC'), was repealed and replaced by the new Turkish Commercial Code numbered 6102 (the ‘New TCC'), on July 1, 2012.

Focus items for this edition: Amendments to Regulation of Private Hospitals, Amendment to Pharmacists and Pharmacies Law.

Focus items for this edition are: Communiqué on Privileges for Joint Stock Companies, Changes to Official Announcement Fees, UNDP-Turkey Treaty.    

between German and Turkish Companies

by Dr. Ayfer Vural

Focus item in this edition is: CE Marking

Provisions of the New Turkish Commercial Code (“New TCC”) concerning the Board of Directors (“BoD”) are found among the provisions that have been significantly modified.

THE ARTICLES OF ASSOCIATION - II

Provisions concerning the amendment of the articles of association (“AoA”) were subject to extensive modifications within the New Turkish Commercial Code (“New TCC”). 

THE AMENDMENTS OF THE ARTICLES OF ASSOCIATION - I

In joint stock companies, amendments of the articles of association (“AoA”) are of significant importance, since they have a direct effect on the rights of shareholders.  

As is known, the New Turkish Commercial Code (“New TCC”) has been accepted by the Grand National Assembly of Turkey on January 14, 2011.

Voting rights in joint stock companies are of significant importance, since they enable shareholders to participate in the management of the company. Shareholders may have a voice in the activities of the company through the exercise of their voting rights, such as appointment of members to corporate boards, supervision of the said members and exercise of minority rights. Privileges such as right of access to information, convocation of the general assembly and right to demand the annulment of the decisions aim to guarantee that the voting right is exercised more efficiently.

Focus items for this edition are: New Communiqué Regarding Corporate Governance Principles, FX Transactions, Sukuk Issuances, Shareholder Benefits, Establishment of a New Deposit Taking Bank, Draft Communiqué Regarding the Extension of Repo Instruments, Changes to ISE Management and A New Classification for Investment Funds

The capital markets legislation in Turkey has seen important changes in the second half of this year. While some of those changes have been initiated by the Turkish Parliament as part of the lawmaking process, the Turkish Capital Markets Board (the “CMB”), the regulatory authority of the capital markets in Turkey, has been the source of other amendments and changes. This article summarizes the new landscape and discusses the impact of the referred new amendments.

Pollution matters are regulated by the Environmental Law numbered 2872 (“Law”) and the other related regulations.

The New Turkish Code of Obligations numbered 6098 (the “New TCO”) and the Application Code of the Turkish Code of Obligations published in the Official Gazette numbered 27836 on 04.02.2011. The New TCO will take the place of the Code of Obligations numbered 818, published in the Official Gazette numbered 359 on 29.04.1926 which is still in use (the “Current TCO”). Article 648 set forts that the New TCO will enter into force as of 01.07.2012.

The New Turkish Code of Obligations numbered 6098 (the “New TCO”) and the Application Code of the Turkish Code of Obligations published in the Official Gazette numbered 27836 on 04.02.2011. The New TCO will take the place of the Code of Obligations numbered 818, published in the Official Gazette numbered 359 on 29.04.1926 which is still in use (the “Current TCO”). Article 648 sets fort that the New TCO will enter into force as of 01.07.2012.

Minority shareholders rights are of significant importance in companies’ constitution, since they provide protection for the value of minority shareholding and the management of company can be apportioned between the majority and minority shareholders by preventing inappropriate exertion of control by majority shareholders.

The Law No. 6215 Amending Several Laws (“Amending Law”), which includes provisions amending the current Turkish Commercial Code No. 6762 (“TCC”), has been published in the Official Gazette dated 12.04.2011. We would like to bring to your attention below, the significant amendment related to restriction of privileged shares in joint stock companies where Government, special provincial administrations, municipalities and other public legal entities, trade unions, associations, foundations, cooperatives and their parents (“Public Legal Entities”) hold shares.

The Draft Turkish Commercial Code (hereinafter referred to as the “New TCC”) replacing the current Turkish Commercial Code (herein after referred to as the “TCC”), which went into force in 1957 and which has been in use for more than fifty years without a structural change, was accepted by Grand National Assembly of Turkey on January 14, 2011.

(1) Amendment to the Public Disclosure Communiqué (2) Draft Amendments by the CMB

An overview of significant legal developments in Turkey within the quarter

An overview of significant legal developments in Turkey within the quarter

The purpose of Incoterms is, as stated by ICC “to provide a set of international rules for the interpretation of the most commonly used trade terms in foreign trade. Thus, the uncertainties of different interpretations of such terms in different countries can be avoided or at least reduced to a considerable degree”.

The latest quarterly Pekin & Pekin Legal Newsletter has been published. Outlining key developments in the past three months, the newsletter is an essential source of concise information for those outside of Turkey keeping track of legislative changes.

Certain provisions of the Regulation Regarding the Implementation of Organized Industrial Zones (published in the Official Gazette dated 22 August 2009 and numbered 27327) were amended on 12 August 2010. According to the amendments, if two-thirds of the total number of enterprises to be established in an Organized Industrial Zone ( “OIZ”) obtain an occupancy permit and at least half of them certify the manufacturing with a business opening certificate, the general assembly process of the OIZ shall be initiated.

The Ministry of Public Works and Settlement has announced the Regulation on the Purchase of Immovables and Limited Rights in rem by Foreign Capital Companies (the “Regulation”) (published in the Official Gazette dated 6 October 2010 and numbered 27721), which abrogates the previous regulation on this matter.

Provisional Article 2 of the Regulation on the Measurement and Assessment of the Liquidity Adequacy of Banks (the “Regulation”) (published in the Official Gazette dated 1 November 2006 and numbered 26333) has been amended to be effective between 16 July 2010 and 31 December 2011.

By means and tools of the global information age, terrorist organizations are broadening their reach in gathering financial resources to fund their operations.

There are different types of commercial companies that are available to establish by investors in Turkey in accordance with the Turkish Commercial Code (TCC).

Outlining key developments in the past three months, the newsletter is an essential source of concise information for those outside of Turkey keeping track of legislative changes.

Dispute resolution and settlement procedures are becoming increasingly important in this time of global financial crisis, particularly in the commercial field. Consequent to the need for specialized legal counsel to prevent further disputes by structuring investments and partnerships appropriately, post-transactional litigation advice and insight into Turkish procedural law applicable to dispute resolution have become more relevant to foreign investors in Turkey. This article provides a general overview of the Turkish judiciary's structure, as well as a summary of the fundamental principles of Turkish civil procedure.

As part of the process of adapting to EU legislation, Turkey made it a national goal to complete harmonization studies with more flexible audiovisual rules by the end of 2009. To this end, the Radio & Television Supreme Council (“RTUK”) prepared a draft broadcasting law (“Draft Law”) to replace the current broadcasting Law on Establishment of Radio and Television Enterprises and Their Broadcasts (“Broadcasting Law”). To a significant extent, the Draft Law was inspired by the EU Audiovisual Media Services Directive 2007/65/EC (“Directive”), a less detailed but more flexible and modernized regulation that covers all audiovisual media services, meaning traditional television (linear service) and video-on-demand (non-linear services). In this regard, the Draft Law introduces new terminology, notions and concepts and revises certain provisions in line with the Directive. It is currently pending before the Turkish Parliament.

Suretyship is a kind of security commonly used in business transactions in order to protect creditors from damages providing that debtor fails to fulfill obligations. It is a unilateral contract by which the surety undertakes the obligation of the debtor for the payment of the debt. According to Turkish law, suretyship contracts are subject to the provisions set out in Articles 483-504 of the Turkish Code of Obligations (“TCO”).

This newsletter covers the following: Banking & Finance - Capital Markets - Corporate - Tax - Dispute Resolution - Telecommunications, Media & Technology

The latest quarterly Pekin & Pekin Legal Newsletter has been published. Outlining key developments in the past three months, the newsletter is an essential source of concise information for those outside of Turkey keeping track of legislative changes. This quarter looks at the new Cheque Law, REITS, new rates of taxation and important regulatory developments in the energy and telecoms sector.

Activities such as production, presentation, sales, insurance, distribution, and payment of goods and services are possible via computer networks with e-commerce. E-Commerce presents major physical differences from conventional commerce, and therefore many arguments have been raised regarding the problems of regulating and taxing e-commerce under the old commercial and tax regimes applicable.

The Capital Market Board of Turkey (hereinafter referred to as the "CMB") has issued a new Communiqué.  The terms and provisions of the new Communiqué  No: 44, Serial No: IV that has been published in the Official Gazette No: 27337 dated September 2, 2009 (hereinafter referred to as "the Communiqué"), govern and regulate the terms for the acquisition of the shares of a publicly held company by making a call to the shareholders (either voluntary or mandatory) and in case of a mandatory call, the conditions for the obligation for the person(s) acquiring shares exceeding certain ratios, to make a call to the other shareholders to purchase the remaining shares.

The Communiqué defines the concept of "call" as a proposal, either mandatory or voluntary, made to the shareholders of a publicly held company to acquire their respective shares in the company.  Therefore, public calls are analyzed under two categories: (i) Mandatory and (ii) voluntary.

An overview of significant legal developments in Turkey within the quarter, Including: Banking & Finance, Capital Markets, Corporate, Competition & Anti-trust, Employment, Intellectual Property, Tax, Dispute Resolution, Energy & Natural Resources, Infrastructure, Telecommunications, Media & Technology, Pharmaceuticals, Real Estate & Construction.

The free trade zones (FTZ’s) of Turkey allow investors to access a broad range of markets, participate in international business, and avoid the impediment of customs and legal restrictions on trade. They are geopolitically part of Turkey, but retain special status as sites beyond the custom borders and the Turkish laws that govern tax, duties, levies and foreign currencies. As small enclaves “abroad,” free trade zones allow foreign companies to participate in all areas of business that private Turkish companies do.

The Capital Markets Board of Turkey (the “CMB”) repealed its communiqué relating to public disclosure of certain events relating to publicly traded companies and replaced it with two new communiqués.

A brand-new provision amended to the Communiqué on Block Exemption regarding Vertical Agreements No. 2002/2 (“Communiqué) has introduced a threshold for the market share, which shall be entitled to benefit from the block exemption under such Communiqué. Prior to the amendment all vertical agreements concluded between two or more undertakings operating at different levels of production or distribution chain with the purpose of purchase, sale or resale of particular goods or services were deemed to benefit from block exemption as per Article 2 of the Communiqué provided that provisions of such vertical agreements fulfill the conditions in the Communiqué. However, the new provision amended under the second paragraph of Article 2 provides that “The exemption provided under this Communiqué shall be applicable provided that the market share of the supplier in the relevant market where it provides goods or services, which are the subject of the vertical agreement, does not exceed 40 %.” This provision is meant to read that suppliers with a market share exceeding 40 % in the relevant market shall not benefit from block exemption even if they fulfill the criteria set forth under the Communiqué.

In parallel with the rapid growth in the Turkish insurance sector, there have been major changes to the Turkish insurance legislation in the last few years.  The Insurance Supervision Law which regulated insurance activities for 47 years has been replaced with Insurance Law No. 5684 (the Insurance Law) in 3 June 2007.  In addition to the Insurance Law, there are specific pieces of legislation regulating the activities of individual professions in insurance industry (e.g. brokers, loss adjusters, etc.) and different types of insurance (e.g. life insurance, reinsurance, etc.).

The Turkish economy entered into a financial crisis in November 2000 and in February 2001 the crisis peaked and triggered a collapse in the value of the Turkish Lira.  Over a few days, the Turkish Lira lost more than 40 percent of its value against the major trading currencies and interest rates rose spectacularly overnight.  As result of this crisis a significant number of Turkish companies became bankrupt.

The majority of Turkey's infrastructure has historically been supplied by public authorities or private entities through a build/operate/transfer model.  In emerging markets like Turkey, lack of capital is a major concern for large scale projects.  Meeting infrastructure needs in emerging markets requires a substantial amount of project finance. Accordingly, both domestic and foreign sources of capital have to be identified and used efficiently for satisfying the infrastructure needs without creating a heavy financial burden on the treasury.

The Draft regarding the amendment of Free Zones Law and the Customs Law is approved by the Turkish Grand National Assembly (TGNA) and became a law numbered 5810 on 12.11.2008 (the "Law"). The Law was sent to the Presidency on 14.11.2008 in order to be announced in the Official Gazette. The 15 days period for either accepting and announcing the Law by the President or returning the same to TGNA to be re-discussed, has started from the date of delivery of the Law to the Presidency which was 14.11.2008.

With the Law; the establishment purposes of the Free Zones have been re-considered by evaluating the activities in those areas within the past twenty years period, and the vision of the Free Zones has been determined as; to encourage investments and production which are export oriented, to speed up the direct foreign investments and technological entree, to encourage the enterprises to export and to develop the international trade.

Apart from loan contracts designated for financial entities, Articles 306 – 312 of the Turkish Code of Obligations (TCO) define money lending contracts (individual loan contracts). Although seemingly unpopular, the contract type for money lending becomes center of attention for shareholder and inter-company loans since that is their only legal ground when inspected thoroughly.

Competition (anti-trust) law was first established with Law No. 4054 titled ‘The Law on the Protection of Competition’ in Turkey. The fourth article of such law titled “Agreements, Concerted Practices and Decisions Limiting Competition” sets different types of principles for purpose.

The Turkish Commercial Code (the "TCC") was enacted in 1956, and governs commercial transactions, as well as the establishment and governance of capital stock companies and sole proprietorships. Therefore, although the legislature has from time to time introduced amendments in response to changed circumstances and urgent needs, it is clear that the TCC is inadequate in meeting the legal and commercial demands of contemporary commercial and corporate life. Accordingly, in order to harmonize Turkish commerce with globalization, the government prepared a draft commercial code (the "Draft") for discussion in 2005. The Draft has been accepted by the Justice Commission and is still pending before the Turkish Grand National Assembly, but may be enacted in 2008.

The latest trend in the Turkish food industry is to attract consumers by adding nutrients to food products and marketing them as quick and easy solutions to health problems such as cholesterol. However, in general the Advertising Board holds such advertisements to be misleading to consumers and often orders that the advertising cease.