Company Mergers and Acquisitions
If the merger of two or more companies results with termination of the assets of one of these companies and the unification of these companies into a whole, this is called the merger of companies. Section 137 et seq. of Turkish Commercial Code Number 6102 contain regulations for company mergers and acquisitions.
Mergers and acquisitions have many benefits for the companies involved in this transaction. An example of these benefits is the loss of their legal personality without entering the liquidation process. After the termination of the legal entity, they can merge within the framework of a new legal entity or within an already existing legal entity.
Necessary Conditions for Company Mergers:
In order for company mergers to be considered valid, some limitations are included in the law. According to these limitations in Section 137 of the Turkish Commercial Code; capital companies can only merge with capital companies and cooperatives. As an exception to this situation, in cases where they are in the position of the transferee company, they may also merge with collective and limited liability companies.
It is possible for sole proprietorships to merge with sole proprietorships. In addition, it is possible for sole proprietorships to merge with capital companies and cooperatives in accordance with the law, provided that they are the one that is transferred.
It is possible for cooperatives to merge with cooperatives and capital companies. Besides, if they are on the transferee side, this merger will be valid in accordance with the law if they merge with their sole proprietorships.
In accordance with the Turkish Commercial Code, it is possible for liquidated companies to participate in the merger. According to the regulation in Section 138 of the Turkish Commercial Code, it has become possible for companies that are in liquidation but have not yet started to distribute their assets and are on the transferred side to participate in the merger.
Merger Agreements:
The arrangements for the merger agreement to be prepared when company mergers are present are found in Section 145 et seq. of the Turkish Commercial Code. In accordance with the regulations in the law, merger agreements must be made in writing. This agreement, which is prepared in writing, is signed by the governing bodies of the companies where the merger takes place and approved by the general assemblies.
The regulation regarding some elements that must be included in the merger agreement is included in Section 146 of the Turkish Commercial Code. Examples of mandatory elements that must be included in the agreement in accordance with the relevant regulation are the trade names of the companies in which the merger takes place, the types in legal status, the name of unlimited responsible partners in the companies.
Merger Report:
In the companies where the merger will take place, the governing bodies shall prepare a report about the merger status. This report can be prepared jointly by the companies to be merged or it is also possible to prepare it separately.
If the merger will take place through the new establishment method, the Sections of association of the new company must be added to the merger reports prepared by the boards of directors of the companies.
Merger Resolution:
The company’s governing body submits the merger agreement to the general assembly. In order to realize the merger, general assembly must approve this transaction. The details of the quorums sought for taking the resolution are found in 151st Section of Turkish Commercial Code.
Following the merger resolution taken after the necessary quorums are provided at the general assembly, the company’s management bodies apply to the commercial registry for the registration of the merger. With the realization of this registration, the transferred company is officially considered to be insolvent.
Partnership Shares and Rights in Case of Company Mergers:
The Turkish Commercial Code Number 6102 has included some regulations in order to protect the partnership rights of the partners in the transferred company due to this partnership in case of merger. According to these regulations, the shareholders of the transferred company have the right to make claims on the shares and rights of the transferee company in the value corresponding to the existing partnership shares in the company and the rights assigned to these shares.
Various issues are taken into consideration when calculating this claim right granted to the shareholders of the transferred company. Examples of issues to be considered include the values of the assets of the companies participating in the merger and the distribution of voting rights of the shareholders of the company.
During the merger phase, the shareholders of the transferred company may be paid equalization benefits. However, it may be bound to a specific requirement that the partnership shares allocated to the shareholders of the transferred company do not exceed one-tenth of their real value.
It is also possible that there are non-voting shares in the transferred company. In this case, what needs to be done is to give the shareholders new shares with the same value with or without the voting right.
It may be the case that there are privileged rights attached to the shares in the transferred company. In this case, the transferee company must grant rights or an appropriate equivalent that can be considered equal to these privileges.
In the agreement they have drawn up for the merger, the companies may offer the shareholders a choice between acquiring the shares and partnership rights to the transferee company or giving them as a leaving payment.
Processes to be Made:
In cases where companies prefer to merge through acquisition, the transferee company is required to increase its capital. The purpose of this is to ensure the protection of shareholders’ rights of the transferred company.
In cases where the time interval between the date of signing of the merger agreement and the balance sheet preparation date is more than 6 months, the companies participating in the merger must issue an interim balance sheet.
In the interim balance sheet to be issued, only the accepted values in the last balance sheet are changed by taking into account the commercial books. In addition, there is no need to make a physical inventory.
Legal Consequences of Mergers and Acquisitions:
The acquisition of another company by a company must be registered in order to be valid. After the completion of the registration procedures, the merger transaction becomes legally valid. After the registration, the assets of the transferred company pass to the transferee company without any need for an additional process. The transferred assets include all assets and liabilities.
All partners in the transferred company become partners of the transferee company by registration. In this case, the transferred company is defunct.
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Lawyers employed by Gulis Law and Counseling Office are definitely not responsible for the accuracy or completeness of the information given here. Given that information, laws and stare decisis may abruptly change, the information given here may not be undertaken or guaranteed to be current. You are recommended not to make a business decision based on any part of the information given here, and to buy professional legal service for each case depending on its peculiar circumstances.
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