Share purchase agreements (SPAs) represent one of the most critical legal instruments in Turkey’s dynamic business landscape. As mergers and acquisitions continue to flourish in the Turkish market, understanding the intricacies of these agreements becomes essential for both domestic and international investors.
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The acquisition of a company’s shares is a pivotal transaction in the corporate world, offering a direct route to gaining control and integrating new businesses. In Turkey, navigating the intricacies of a Share Purchase Agreement (SPA) demands precise legal understanding.
Akkas & Associates Law Firm, a leading full-service law firm in Istanbul since 1992, provides comprehensive guidance for both domestic and international clients engaging in such vital transactions. This article delves into the core aspects of SPAs in Turkey, offering crucial insights for successful deal-making in 2025.
What is a Share Purchase Agreement in Turkey?
A share purchase agreement is a legally binding contract that governs the transfer of shares from a seller to a buyer in a Turkish company. This comprehensive document outlines the terms, conditions, and obligations of both parties throughout the transaction process. In Turkey’s robust corporate environment, SPAs serve as the cornerstone of successful business acquisitions and strategic investments.
The Turkish Commercial Code (TCC) provides the fundamental legal framework for share transactions, ensuring transparency and protection for all parties involved. These agreements must comply with specific regulatory requirements while addressing complex commercial considerations unique to each transaction.
Key Elements of a Robust Turkish SPA
A well-drafted SPA is the bedrock of a secure share acquisition in Turkey. It typically includes several essential clauses:
1. Parties and Shares Subject to Sale
This section clearly identifies the buyer(s) and seller(s) and meticulously describes the shares being transferred, including their class, nominal value, and the percentage of the company’s capital they represent. Precision here prevents future disputes regarding the scope of the transaction.
2. Purchase Price and Payment Terms
The SPA specifies the agreed-upon purchase price for the shares. It also details the payment structure, which can range from an upfront lump sum to deferred payments, earn-outs, or even payment in kind. Payment mechanisms, including potential escrow arrangements, are crucial for securing the transaction for both parties.
3. Representations and Warranties
This is a cornerstone of any SPA. Sellers provide a series of factual statements (representations) about the target company’s financial, legal, operational, and environmental status. They also offer assurances (warranties) that these statements are true and accurate.
Common warranties cover aspects like valid corporate existence, ownership of assets, compliance with laws, litigation status, and financial health. In Turkey, the scope and nature of these warranties are often heavily negotiated, reflecting the findings of the due diligence process.
4. Covenants and Conditions Precedent
Covenants are promises made by both parties to perform or refrain from certain actions before or after the closing of the deal. Conditions precedent are specific requirements that must be met before the transaction can be completed.
These often include obtaining regulatory approvals, shareholder consents, or the resolution of outstanding legal issues. For example, specific approvals might be needed for certain sectors like banking or energy, as detailed in our guide on Mergers and Acquisitions in Turkey.
5. Indemnification Provisions
Indemnification clauses protect the buyer from losses arising from breaches of the seller’s representations and warranties or from specific, pre-identified liabilities. This mechanism is vital for risk allocation. It outlines how and when a seller will compensate a buyer for any unforeseen issues that emerge post-acquisition.
6. Governing Law and Dispute Resolution
While parties may agree on a foreign governing law if there’s a “foreign element” to the transaction, Turkish law often governs SPAs involving Turkish entities. The dispute resolution clause specifies how disagreements will be settled, commonly through litigation in Turkish courts or through arbitration, which can offer a faster and more confidential process.
The Critical Role of Due Diligence
Before signing any SPA, thorough legal due diligence is paramount. This involves a comprehensive review of the target company’s legal, financial, tax, and operational affairs. Our team at Akkas & Associates conducts in-depth legal audits, examining corporate documents, contracts, permits, litigation records, and more.
This process identifies potential risks, hidden liabilities, and compliance issues, informing the negotiation of the SPA’s terms, particularly the representations, warranties, and indemnities. For more information on this crucial step, you can review our insights on Turkish Company Setup.
The Closing Process in Turkey
The closing of a share purchase transaction in Turkey involves several key steps to ensure the legal transfer of shares. For limited liability companies (Ltd. Şti.), a notarized share transfer agreement is typically required, followed by registration with the relevant trade registry.
For joint-stock companies (A.Ş.), the process might involve endorsement of share certificates (if issued), board of directors’ approval of the transfer, and updating the company’s share ledger. Depending on the company type and share structure, notification to the Central Securities Depository (CSD) may also be necessary.
Evolving Landscape: 2025 Trends in Turkish SPAs
In 2025, the Turkish M&A landscape continues to be dynamic. Economic stabilization and growing foreign investor interest are driving deal flow, particularly in sectors like technology, logistics, and renewable energy.
We are observing an increasing focus on robust environmental, social, and governance (ESG) clauses within SPAs, as both domestic and international investors prioritize sustainable practices. Furthermore, the emphasis on data protection and cybersecurity warranties is growing, reflecting the increasing digital transformation of businesses.
FAQs on Share Purchase Agreements in Turkey
Q1: What is the primary difference between a share purchase and an asset purchase in Turkey? A1: A share purchase involves acquiring the ownership of a company by buying its shares, meaning the buyer takes on all existing assets and liabilities. An asset purchase, conversely, involves acquiring specific assets (e.g., machinery, intellectual property) without assuming all of the seller’s liabilities.
Q2: Is notarization required for all share transfers in Turkey? A2: For limited liability companies (Ltd. Şti.), the share transfer agreement (SPA) must be notarized to be valid. For joint-stock companies (A.Ş.), while the SPA itself may not always require notarization, the endorsement of physical share certificates (if issued) and subsequent company ledger updates are critical for perfecting the transfer.
Q3: What role does the Turkish Commercial Code (TCC) play in SPAs? A3: The Turkish Commercial Code (Law No. 6102) is the primary legislation governing company formations, share transfers, and M&A activities in Turkey. It provides the fundamental legal framework and sets out mandatory provisions that an SPA must adhere to.
Q4: Can foreign law govern a Share Purchase Agreement in Turkey? A4: Yes, if there is a “foreign element” to the transaction (e.g., one of the parties is foreign), the parties can agree to have a foreign law govern the SPA. However, certain aspects related to the transfer of shares of a Turkish company will still be subject to mandatory Turkish legal provisions.
Q5: How important are representations and warranties in a Turkish SPA? A5: Representations and warranties are extremely important. They provide the buyer with a legal basis for recourse if the seller’s statements about the target company prove to be untrue, offering protection against unforeseen liabilities and risks identified during due diligence.
Contact us for Share Purchase Agreements in Turkey
Navigating share purchase agreements in Turkey requires specialized expertise in Turkish commercial law, regulatory compliance, and cross-border transaction structuring. Whether you’re acquiring a Turkish company, selling your business, or structuring a complex M&A transaction, professional legal guidance ensures successful completion while protecting your interests.
Contact Akkas & Associates Law Firm today for comprehensive share purchase agreement services in Turkey. Our experienced team has been providing exceptional legal services since 1992, helping clients successfully complete complex transactions while ensuring full compliance with Turkish law and regulatory requirements.
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