Invalidity Risk When Using A New SPV In An Asset Or Share Acquisition Deal

Parties of an asset or share purchase agreement are often not aware of an inherent legal risk when structuring an acquisition deal specifically in case where a newly established special purpose company is being used as a purchaser for the target assets or shares. This article will discuss a limitation under Article 356 of the Turkish Commercial Code (the "TCC") stipulating special requirements as and when an asset or share acquisition is made by such a newly-incorporated SPV and the adverse consequence of failure to comply with such requirements.

Acquisition Made by a Newly-Incorporated Purchaser

Acquisition or lease of an enterprise or asset may in some cases create a conflict of interest in between different shareholders or shareholders as a group and creditors of a company. A managing shareholder or director may direct the company to pay a consideration exceeding the fair market value for an acquired enterprise or asset (including shares) with the purpose