TerraLex Cross-Border Guide to Cross-Border Merger & Acquisition Guide

In general, there are no restrictions on foreign ownership or investment. Exceptions exist for specific sectors, including but not limited to media and aviation.

Through the amendment to Article 4 (Foreign Currency) of Decree No. 32 regarding the Protection of the Value of the Turkish Currency, certain restrictions have been introduced on the Turkish residents’ entitlement to determine contract prices and other payment obligations in foreign currency, or indexed to a foreign currency, in the contracts for the sale, purchase, and lease of movable and immovable properties, employment contracts, contracts of service, and independent contractor contracts. The restriction only applies to the foregoing contracts to be entered into amongst Turkish residents, and is subject to extensive exemptions. With an amendment dated 06.03.2025 introduced by Communiqué No. 2025-32/72, it is possible to determine the payment obligations in foreign currency or indexed to foreign currency in movable sales contracts other than vehicle sales contracts.

Therefore, before entering such contracts it is recommendable to obtain legal advice.

Apart from that, there are no exchange control or currency regulations, except for those relating to money laundering.

There is a wide range of grants available for foreign and domestic investors. These are basically financial and tax incentives (for example start-up businesses, renewable energy, research and development). One of many, is the Law on Foreign Direct Investments numbered 4875, which aims at promoting foreign direct investments and protecting the foreign investors.

Parties are not obliged to consult employees or their representatives in relation to corporate transactions. However, although the corporate transaction itself is not deemed as a material amendment on the seller side employees’ working conditions, according to Article 22 of the Labor Law, any material amendments can be made on the working conditions constituted by the employment contracts or the personnel regulation in the nature of its attachment and similar sources or practices of working place, only by informing the employees in writing of the situation. Any amendments, which are not made in compliance with such form and which are not accepted in writing by the employees within six business days, shall not be binding upon such employees. Moreover, under Article 178 of the Turkish Commercial Code numbered 6102, the transferred employees may object to the transfer in spin-off transactions. In this case the contract will terminate at the end of the time period which is determined under the Labor Law (the legal layoff period).

In general, the employment contracts of the seller are automatically transferred to the buyer along with all rights and obligations. The transfer is not accepted as a just cause for the termination of the employment contracts. If the buyer terminates the received employment contracts, employees may demand notice and severance payments.

Separately, an employment contract can be terminated by serving a notice period immediately with payment in lieu of notice together with the relevant indemnification. The duration of the notice periods varies as per the length of service of the employee. However, unless the parties agreed otherwise, fixed-term employment contracts can be terminated without giving a notice period.

According to Labor Law numbered 4857 (“Labor Law”) Article 18, “In work places, where 30 or more employees are employed, the employer, who terminates the open-ended employment contract of an employee having at least six months of experience, is required to have a valid ground before termination”. The employee must not have the status of an employer representative or employer assistant managing the entire enterprise to be able to benefit from job security provisions.

According to Labor Law Article 20, “The employee, whose employment contract is terminated, may file a lawsuit before the Labour Court within one month from the receipt of the termination notification, with the claims of lack of ground for termination”. If the Court rules in favour of the employee, the employer is required to re-employ the employee within one month. If the employer fails to re-employ the employee, the employer shall be liable to pay compensation to the employee, amounting to a minimum of four months’ salary and a maximum of eight months’ salary.

In the case of the existence of certain material reasons that make the continuation of the employment relationship difficult, which are explicitly set out in the Turkish Labour Law, the parties may terminate the contract without adhering to the notice periods or before the expiration thereof, irrespective of whether the contract is open ended or entered into for a certain period. The Labour Law refers to such right as “immediate termination on just grounds”.

According to Article 29 of the Labor Law, "If the employer plans a mass dismissal/redundancy due to economic, technological, structural, or similar other needs or requirements of the enterprise, workplace, or the business, the employer is obliged to send a written notice at least 30 days prior to the intended dismissal to the union representatives at the workplace, the relevant regional directorate, and the Turkish Labour Organisation to ensure that redundancy dismissals are fair.

A collective dismissal occurs where:

• ten employees are dismissed in a workplace employing between 20 and 100 employees; or
• 10% of the employees are dismissed in a workplace employing between 101 and 300; or
• a minimum 30 workers are dismissed in a workplace employing 301 or more employees, within a period of one month.

In line with the foregoing, collective dismissal provisions shall apply to all work places employing more than 20 employees. The notice which must be submitted to the relevant authorities shall contain information regarding the reasons of dismissal, the number and categories of employees to be affected, and the time period within which the dismissal is anticipated to take place. The employer shall also consult with the union representatives about the measures that can be taken to avert or reduce the number of terminations. If within six months of the finalization of the collective dismissal the employer wishes to employ employees for a job of the same kind, he should first offer the position to former employees with the relevant qualifications.

Papers prepared for share transfer/sale of joint stock companies are exempt from stamp tax. Seventy-five percent of the capital gains derived from the sale of participation shares held by fully liable legal entities are exempt from corporate tax provided that the conditions stipulated under Corporate Tax Code no. 5520 are met. The remaining 25% portion of the capital gains would be subject to corporate tax at the rate of 22%. Capital gains derived from the sale of share certificates held by a fully liable real person for at least two years are exempt from income tax. If the shares are not bound to share certificates or interim certificates, the sale of the shares by fully liable real persons will be subject to income tax. In principle, the income tax rate varies between 15%-35% depending on the cumulative income tax base.

Share transfer/sale to be made by real persons is not subject to VAT regardless of the holding period of the shares. According to Article 17/4-g of the VAT Code no. 3065 (“VAT Code”), the transfer of printed share certificates is exempt from VAT. According to Article 17/4-r of the VAT Code, the transfer of participation shares held for more than two years is exempt from VAT.

There is no applicable tax arising solely from share issuance.

A transaction shall be notified to the Competition Board and cleared in cases where

• total turnovers of the transaction parties in Türkiye exceed TRY 750 million and turnovers of at least two of the transaction parties in Turkey each exceed TRY 250 million, or
• the asset or activity subject to acquisition in acquisition transactions, and at least one of the parties of the transaction in merger transactions have a turnover in Türkiye exceeding TRY 250 million and the other party of the transactions has a global turnover exceeding TRY 3 billion.

The documents most commonly executed at the signing stage include the SPA and its annexes. The closing documents usually include the following: letter stating that the representations and warranties are true, accurate, complete, and not misleading; disclosure letter; board resolutions of the parties approving the transaction and giving authority to enter into the transaction documents; powers of attorney; letters from the authorities indicating that the company has no outstanding debt to these authorities; consents and any written waivers from the third parties and authorities; resignation letters of current board members and acceptance letters and signature specimens of new board members; registration of the shares in the company’s share register in the buyer’s name; and transfer endorsements on the share certificates and their deliveries. Furthermore, transactions that involve shares in limited liability companies need to be notarized.

No – this is a matter for negotiation.

No.

The representatives authorized to sign are listed in the commercial registry. Most commonly, representatives are expected to present a circular of signature, issued by the company presented. Banks require identity cards and specimen signatures alongside with circular of signatures. In addition, execution through a notarised proxy is also possible.

A distinction of written form must also be made between the simple written form and notarial form (such as the sale of shares in a limited liability company) which covers the private agreements with notarised signature and deeds before a notary public. In the last two cases additional execution formalities are required.

In the event of a private agreement with notarised signature, pursuant to Article 91 of Code of Notary numbered 1512 ("Code of Notary"), individuals are requested to sign the agreement before a notary public.

For a deed issued by notary public, pursuant to Article 84 of Code of Notary, the notary drafts a document that contains the content of the legal transaction, which is then to be signed by both the notary public and the parties.

Also, regarding the immovable sale, the deed has to be drafted and signed before the land registry office or notary public. Similarly, transfer of goods subject to public registries, such as motor vehicles or ships, require the deeds be signed before the notary public or at the ship registry.

In principle, the board of directors is responsible for the management and representation of the company. The board of directors appoint the persons who will represent the company and make the necessary registration and announcements. Generally, the articles of association establish in which terms its members are going to represent the company, since they can either execute documents alone or together with another member of the board. In addition, the board of directors can authorise other individuals to represent and bind the company. Based on the articles of association, or a decision passed by the board of directors, the signature circular of the company is issued whereby the the powers and authorized signatories of the company are set forth.

There are no legal formalities regarding the execution of the documents in a share transfer. Notably, the share purchase agreements regarding the transfers in limited liability companies shall be executed before the Turkish notary public.

There are no additional legal formalities regarding the execution of the documents in share transfers by foreign companies.

Notably, since the share purchase agreements in limited liability companies shall be executed before the notary public, the relevant company’s authorized signatory should be in Türkiye or, if the power of attorney is to be issued abroad, the foreign company shall provide a notarized and apostilled power of attorney to the person who is authorised to sign the agreement.

For a sale of shares in a limited liability company, the deed has to be notarized. Shares in joint stock companies or partnerships can be acquired and respectively disposed of without notarial deed. Assets can be sold without notarial involvement, with the exception of lands, ships, trademarks, or motor vehicles inter alia.

A notary cannot change the terms of the transaction.

The notarial fees depend on the value of the transaction and on the type of document. Also whether to charge by a fixed amount or a percentage might vary from the type of notary service. It is not possible to negotiate.

Normally not (provided that all the documentation is complete and the signatories are duly empowered).

Change in the structure of shareholders would not affect the directors per se. In practice, when the majority in a company changes, pursuant to the will of the parties, the board of directors may be dismissed and new board members may be appointed by the general assembly of shareholders (as Article 408(2)(b) of TCC lists appointment and dismissal of board of director members under irrevocable powers of general assembly of shareholders). Pursuant to Article 418 of the same Code, general assembly decisions can be taken by simple majority, if the articles of association do not provide otherwise. Notably, in limited liability companies at least one of the shareholders should be appointed as director (may be real person or legal person). Therefore, the share purchase in limited liability companies may require the director change.

Execution of a notarized share transfer agreement is required.

It is possible to do signing through attorneys with a power of attorney issued by a notary public. However it is more common to conclude signing with the exchange of signed copies of documents by the parties.

Closing is commonly done by way of power of attorney or by naming a proxy, since it is required to be present in person or with a mandate. A notarial deed is required if a party is represented. If the notarization occurs outside of Türkiye, legalization, most commonly an apostille, and the notarized translation will be required.

It should be noted that, both for signing and closing, when an attorney is authorized through the power of attorney, such deed should contain explicit power to buy or sell, and/or transfer or acquire a share or asset.

Generally, this will depend on the terms of the power of attorney. For example, an attorney cannot delegate its powers unless it is expressly authorised to do so under the power. Also, other matters where specially expressed authorization is required in a mandate relationship are listed in Article 504(3) of Turkish Code of Obligations numbered 6098.

Both email and faxed documents would qualify as simple written evidence before the Court. Since they are not listed as final evidence under the Code of Civil Procedure (numbered 6100) articles following Article 199, they can be challenged by the opposite party.

Deeds signed with secured electronic signature qualify as final evidence pursuant to Article 205 of Code of Civil Procedure. Whether an electronic signature is secured or not will be examined ex officio.

Yes. The counterparts will be taken together as evidence of the agreement.

Yes. Such an undertaking will constitute an independent obligation of the seller.

There are no set rules as to how a closing is structured as it all depends on the agreements reached between the parties. A closing can occur unconditionally at the time of signing or, more commonly, conditionally upon fulfillment of certain events that are yet to occur, such as payment of the purchase price, entering into ancillary agreements, and the like.

The main formality is to register the new shareholder(s) under the share ledger of the company, based on the endorsed share certificate. For limited liability companies, in order to register to the share ledger, the consent of the general assembly of shareholders is required (if not agreed otherwise in the articles of association). For joint stock companies, articles of association may require the consent of the company for registration, pursuant to Article 492 of TCC.

This is not common practice in Türkiye. Nevertheless, as transactions often involve international parties, such opinions appear more.

Following closing, certain submissions may need to be made with the Trade Registry. In specific cases, notifications to other relevant authorities may also be required depending on the nature of the transaction.

This entirely depends on the complexity of the transaction. There is no specific difference in timing between an asset and a share deal.

Non-compete clauses are commonly preferred between parties. The Law on Protection of Competition numbered 4054 and the relevant secondary legislation set forth certain provisions on non-compete obligations. Accordingly, to be deemed as an ancillary restraint and gain validity, the non-compete should be compulsory, objective, reasonable, and enforceable for a reasonable period. In general, a three year long non-compete obligation is deemed reasonable. Notably, the concrete facts of the case may require a longer non-compete clause and it can be further analysed.

Aside from competition law perspective, those agreements are enforceable, in terms of compensation claims when breached. The length of a non-compete agreement will be subject to Turkish Civil Code Article 23, if the economic liberty of one party is too restricted.