In both domestic and international arbitrations in Turkey, parties are, in principle, free to choose their arbitrators. However, there are limits in this regard, including where the parties are of different nationalities. The Court of Appeals recently rendered an important decision in this regard, which provides an objective standard of proof for assessing doubts with regard to the independence and impartiality of arbitrators.
Cryptocurrencies were introduced to the Turkish market in July 2013 under the Law on Payment and Security Settlement Systems, Payment Services and Electronic Money. However, there are no limitations on or controls over cryptocurrencies, which is why many investors choose to invest their money in this area. While the interest in and impact of blockchain and cryptocurrencies are growing daily, the legal risks for blockchain and cryptocurrency platforms have yet to be fully understood.
In an effort to improve collateralisation options and facilitate the access of small and medium-sized businesses to financing, Parliament recently adopted a new law introducing significant changes to pledges over movable assets. The law introduces easier procedures for establishing a pledge over movable assets, such as through registration instead of transferring possession.
The Law on the Amendment of Some Laws to Improve the Investment Environment introduces new provisions regarding the issuance of cheques and bounced cheques. The omnibus act amends the Commercial Code and introduces a serial number issued by the bank and a two-dimensional barcode to the mandatory elements on cheques. Further, banks now have extended obligations regarding the opening of cheque accounts.
Under the Commercial Code 6102, shareholders must contribute capital to commercial companies incorporated by law (the so-called 'contribution obligation'). A contribution obligation mainly arises at the time of the incorporation of or the capital increase in a commercial company. Shareholders generally prefer fulfilling their contribution obligations in cash and their liability is limited to the amount that they subscribed for under a company's articles of association.
Following the entry into force of the Law Introducing Several Amendments in Different Laws to Improve the Investment Environment in August 2016, the Communique Regarding the Signing of the Articles of Association Before the Trade Registries has now taken effect. The communique sets out the procedures to be followed when incorporation documents are signed or executed before the trade registries.
Amendments were recently introduced to the Commercial Code with the aim of fostering investment in Turkey following recent political instability and the resulting uncertainty among investors. The amendments to the Commercial Code seek to expedite incorporation procedures for companies, reduce the relating notary public costs and foster transparency.
Under the Attorneyship Law, joint stock companies with a share capital of TRY250,000 or more must have an attorney; violation of this legal obligation will result in significant administrative fines imposed by public prosecutors. Compliance with the law is recommended not only to avoid administrative fines, but also to ensure that companies and their operations are built on legally supported and evaluated grounds.
Under the Law on the Mandatory Use of the Turkish Language by Commercial Enterprises, transactions, correspondence and agreements executed in Turkey must be in Turkish. While it is common practice to execute transaction documents in foreign languages, the law is still honoured by Turkish courts. Turkish and foreign companies should therefore be aware of the legal consequences of non-compliance.
The Competition Board recently published its reasoned decision on the Tyre Industrialist Association's application for an exemption for its Waste Management Strategies and Implementation Plan for Worn-out Tyres 2016 to 2020. The board decided that the association's proposal would not limit competition in a manner which would violate Law 4054 on the Protection of Competition and granted an individual five-year exemption.
Following an 18-month investigation, the Competition Board recently found that Mey İçki held a dominant position in the vodka and gin markets. However, the board had already examined Mey İçki's alleged practices and imposed penalties in its earlier decision on the raki market. As such, the board accepted the non bis in idem defence and concluded that Mey İçki should not be subject to an administrative fine.
Following a 16-month investigation, the Competition Board recently published the outcome of a high-profile investigation into the ready-mixed concrete market. After evaluating the evidence, written defences and investigation file, the board decided not to render administrative fines, concluding that none of the undertakings had violated Article 4 of Law 4054.
The Competition Board recently published a reasoned decision following its investigation into whether the Pharmacists' Association and the Pharmacists' Association Commercial Enterprise had violated Article 6 of Law 4054 on the Protection of Competition by abusing their dominant position in the market for the supply of pharmaceuticals from abroad through their exclusivity practices and other actions.
The Competition Authority recently published its annual Mergers and Acquisitions Status Report for 2016. The report reveals that the authority reviewed 209 transactions in 2016. Nine of these involved the privatisation of public companies, while 191 were notifiable M&A transactions (excluding privatisations). This marks an increase compared with 2015, when the Competition Authority examined 159 merger control cases, of which 141 were notifiable transactions (excluding privatisations).
Following the completion of an acquisition, the aim of new shareholders – especially private equity investors – is to boost the acquired company's profitable growth in the short term. For this reason, investors often offer the acquired company's key employees' stock option plans in addition to their salaries. A well-structured stock option agreement can ultimately benefit the company and its key employees.
An escrow occasionally provides insufficient protection to its beneficiaries. As a result, M&A practitioners often seek alternative solutions. Representations and warranties insurance has emerged as an alternative option for both sellers and buyers. It provides coverage against the risks associated with breaches of contractual representations and warranties by the seller.
The new Commerical Code has clarified the relationship between dominant and subsidiary companies by introducing the 'group of companies' concept and attributing certain duties to controlling individuals and legal entities. The duties and obligations established by the code have helped to restore the balance between dominant companies and their subsidiaries and the group of companies concept is likely to have a positive impact on subsidiaries operating in Turkey.