Turkey updates

Arbitration & ADR

Unbreakable deadlock in consumer disputes: mandatory mediation and solution proposals
Gün + Partners
  • Turkey
  • 11 June 2020

Bill 2/2735, which has been presented to the president of the Grand National Assembly, proposes that actions filed directly before the consumer courts be subject to mandatory mediation before proceeding to court adjudication. This article examines Turkey's success with regard to the fair and swift resolution of consumer disputes and explores how the bill can add to this success.

One last step before litigating your commercial receivables: mandatory mediation
Gün + Partners
  • Turkey
  • 07 February 2019

Mandatory mediation for commercial disputes was recently introduced by the Law on Legal Procedures to Initiate Proceedings for Monetary Receivables arising out of Subscription Agreements. As a result, an application for mediation is a condition for bringing a legal action before the courts, and a case will be dismissed on procedural grounds if the claimant in a commercial action fails to fulfil this obligation.

Banking & Financial Services

Contributed by Selvi & Ertekin
Attachment of debts arising from letters of guarantee
  • Turkey
  • 19 June 2020

Letters of guarantee are an instrument under which a bank guarantees the payment of a certain amount to a beneficiary on request if an obligation undertaken by the applicant against such beneficiary is unfulfilled. In practice, a debtor's creditors are often willing to directly levy an attachment on a letter of guarantee. This article outlines letters of guarantee in the Turkish banking sector.

Communique on banking fees and commissions published
  • Turkey
  • 03 April 2020

The Communique on Procedures and Principles Regarding Fees to be Collected from Commercial Customers by Banks was published on 10 February 2020. The communique aims to determine the type, quality and maximum amount or rate of fees to be collected for providing products and services, ensure the accuracy of concepts and terms, prevent overpricing and increase the predictability and transparency of transactions conducted between Turkish banks and their commercial customers.

Communique on compliance with principles and standards of interest-free banking
  • Turkey
  • 10 January 2020

The Communique on Compliance with Principles and Standards of Interest-Free Banking entered into force in September 2019. The communique aims to regulate the procedures and principles regarding the structures and processes to be established by participation banks and development and investment banks which finance their clients in accordance with the Regulation on Financing Transactions of Banks.

Representation by proxy in suretyship agreements
  • Turkey
  • 07 June 2019

Suretyships are a kind of security commonly used in loan transactions which provide personal security to lenders if a borrower fails to fulfil its payment obligation. The Code of Obligations sets out certain requirements regarding the validity of suretyship agreements and enacting a suretyship agreement by proxy. This article examines these requirements in detail.

Amendments to decree protecting value of Turkish currency in relation to foreign currency loans
  • Turkey
  • 16 November 2018

The Council of Ministers recently amended Decree 32 on the Protection of the Value of Turkish Currency. The amending decree introduced strict restrictions on foreign currency loans obtained from overseas or in Turkey. The provision of foreign currency indexed loans to legal entities or real persons is now forbidden. However, legal entities which generate no foreign currency income but have credit exposure equal to or above $15 million may obtain foreign currency loans without limitation.

Competition & Antitrust

Contributed by ELIG Gurkaynak Attorneys-at-Law
Administrative court's Enerjisa decisions: 'anti-competitive effects' redefined?
  • Turkey
  • 12 November 2020

In 2018 the Competition Board imposed administrative fines amounting to TL143 million on three retail electricity sales companies (RESCs) and one electricity distribution company for abusing their dominant positions in various markets. In three separate decisions regarding the appeal of the fines, the Ankara 13th Administrative Court rejected all of the claims raised by the RESCs and upheld the board's decision. The decisions may have significant consequences with respect to anti-competitive effects.

Competition Board concludes preliminary investigation highlighting its approach to online sales
  • Turkey
  • 24 September 2020

The Competition Board recently published its reasoned decision following a preliminary investigation based on allegations that two companies had violated Article 4 of Law 4054 on the Protection of Competition by determining dealers' resale prices, fixing discount rates and limiting the payment methods of their dealers.

Recent amendments to law on protection of competition
  • Turkey
  • 02 July 2020

After rounds of revisions and failed enactment attempts over a span of several years, the proposal for amendments to Law 4054 on the Protection of Competition has finally been approved by Parliament. According to the proposal's recital, the amendments to Law 4054 aim to embody the Turkish Competition Authority's 20-plus years' enforcement experience and bring Turkish competition law closer to EU competition law.

COVID-19: TCA announces zero-tolerance policy towards excessive price increases
  • Turkey
  • 09 April 2020

The Turkish Competition Authority (TCA) recently issued a series of public announcements emphasising that it has observed excessive price increases in the food sector – particularly for fresh fruit and vegetables – during the COVID-19 pandemic. Further, to protect consumers, the TCA has stressed that it will continue to monitor these price increases and the market players that have contributed thereto.

Competition aspects of merger control: 2019 M&A status report
  • Turkey
  • 13 February 2020

The Competition Board recently published its annual M&A status report, which outlines statistics on merger control decisions with regard to the number of transactions, the parties' country of origin, economic activities and transaction values. The board reviewed a total of 208 mergers and acquisitions in 2019, a 7% reduction compared with 2018.

Corporate & Commercial

What are your duties as a director of a joint stock company?
Kayum & Demir
  • Turkey
  • 04 November 2019

Boards of directors are the administrative and representative bodies of joint stock companies. This article examines the general duties of directors in Turkey under the Commercial Code and the liability regime for directors, including social security-related liability, tax liabilities and potential exemptions to liability.

Shareholders' agreements – enforceability issues
Kayum & Demir
  • Turkey
  • 12 August 2019

The enforceability of share options is one of the most controversial issues in the context of shareholders' agreements. There are a number of widely used solutions to improve the enforceability of share options in this regard, including inserting share options provisions into articles of association, establishing a holding company outside Turkey and inserting a statement on registered share certificates that shares are subject to transfer restrictions.

Central Bank announces 2019 default interest rate for commercial agreements
  • Turkey
  • 21 January 2019

Each January, the Central Bank determines and announces the default interest to be applied where parties fail to agree on such interest or when their agreement is or becomes invalid. According to the Central Bank's recent announcement in the Official Gazette, default interest has been set at 21.25% as of 1 January 2019, compared with 10.75% in 2018.

Corporate Finance/M&A

Contributed by Kayum & Demir
Impact of COVID-19 on mergers and acquisitions
  • Turkey
  • 22 April 2020

The COVID-19 pandemic is affecting not only public health, but also global business operations and the economic sector. In light of reports that mergers and acquisitions are being delayed, it is important to determine the impact of COVID-19 on M&A transactions and implement measures to mitigate the risks associated therewith. To that end, this article addresses whether COVID-19 qualifies as force majeure or hardship for contractual purposes and its impact on parties' mutual obligations.

Common pitfalls in M&A deals and how to avoid them
  • Turkey
  • 19 February 2020

This article examines some of the key considerations for buyers and sellers when entering into an M&A transaction and how best to navigate deal-related risks. For example, in Turkey, M&A deals are generally not subject to regulatory approval. However, depending on the turnovers of the buyer, seller and target, a proposed transaction may be subject to Competition Board approval. Further, M&A deals in some regulated sectors (eg, energy and telecoms) must be approved by the governmental authorities.

Leverage buyouts – an overview
  • Turkey
  • 29 May 2019

A leveraged buyout (LBO) is a term used for a variety of transactions in which buyers (usually private equity firms) use leverage to acquire a company's shares. However, it is impossible to fully mitigate the risk that a target is deemed to provide financial assistance for the purchase of its own shares if the acquirer uses an LBO and the target provides guarantees or securities over its own assets due to a lack of established precedents. This uncertainty means that a diligent analysis is required for each transaction.

Squeeze-out mergers in Turkey – an overview
  • Turkey
  • 20 March 2019

Squeeze-outs in Turkey are regulated under the Commercial Code where they concern private companies and the Capital Markets Law where they concern publicly held companies. This article examines the different processes for carrying out squeeze-outs at private and publicly held companies, as well as the squeeze-out rights available to controlling shareholders and the squeeze-out merger process.