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SIMPLIFIED MERGER UNDER TURKISH COMMERCIAL CODE NO.6102

The simplified merger has been brought by the Turkish Commercial Code No. 6102 (“TCC”), which entered into force in 2012. This new procedure allows a merger with easy procedural obligations for intra-group mergers.

Legal Ground

The scope of application and the facilities of simplified merger are regulated under articles 155 and 156 of the TCC which are based on Article 23 and 24 of the Swiss Merger Act.

The said articles read as follows:

“a) Scope of application

ARTICLE 155

Capital companies may merge in accordance with the simplified arrangement in the event that:
(a) the transferee capital company owns all voting shares of the transferred company or
(b) a company or a real person or groups of persons to which there exists an affiliation either by law or contract, own all voting shares of the capital companies participating in the merger.



In the event that the transferee capital company does not own all the shares of the transferred capital company but at least ninety per cent of the voting shares, for the minority shareholders, the merger can be realized by means of the simplified procedure if:
it is proposed that shares corresponding to the mentioned shares are granted in the transferee capital company; that as well as the company’s shares, cash consideration corresponding exactly to the actual value of the company’s shares is given in accordance with Article 141; and
no additional payment obligation or no personal performance obligation or no personal liability has arisen as a result of the merger.
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b) Facilities

ARTICLE 156

Capital companies participating in the merger and complying with the conditions set out in the first paragraph of Article 155 shall include in the merger contract the records set out in sentences (a) and (f) to (i) of the first paragraph of Article 146. Such capital companies shall not be obliged to issue the merger report mentioned in Article 147 nor to grant the right to examine provided for under Article 149 and they may choose not to submit the merger contract for the approval of the general assembly as per Article 151.

Capital companies participating in the merger and complying with the conditions set out in the second paragraph of Article 155 shall include in the merger contract only the records set out in sentences (a), (b) and (f) to (i) of the second paragraph of Article 147. The mentioned companies shall not be obliged to issue the merger report set out in Article 147 nor to submit to the general assembly the merger contract pursuant to Article 151. The right to examine mentioned in Article 149 should be granted thirty days prior to the application made to the Trade Registry for the registration of the merger. “
Application

According to the above, simplified merger may be applied in the below stated situations:

The transferee company holds all of the acquired company’s shares which grant voting right, or

The transferee company holds at least 90% of the acquired company’s shares which grant voting right.

As for the procedure to be applied within the simplified merger, it is regulated under Article 141 et seq. of the TCC.

Procedure

The required documents to be prepared within a merger transaction are particularly stated under Article 144 of the TCC. However, in case of a simplified merger, the transferee and predecessor companies are held exempted from submitting some of the required documents. These exemptions shall differ due to whether the transferee company holds (i) all the acquired company’s shares or (ii) at least 90% of the acquired company’s shares which grant voting right.

Transfer of All Shares

Article 156(1) of the TCC regulates the situation where the transferee company has to hold all of the acquired company’s shares which grant voting right. As per the said article, a merger agreement is valid if it includes the records which are stated under Article 146 (a) and (f) to (i) of the TCC, that regulate the content of a merger agreement.

In the light of the above stated legislation, a merger agreement will be valid if it contains;

the commercial names,

the legal types, and

the headquarters of the merging companies;

in case of merger through establishment of a new company, the legal type, commercial name and headquarter of the new company;

if required, the separation funds in accordance with Article 141,

the date on which the acts and actions of the transferred company will be deemed to have been performed on account of the transferee company;

special benefit granted to management boards and managing partners ;

if necessary, the names of shareholders with unlimited liability.

The facilitation provided for these companies is:

exemption from the obligation to prepare a merger report or

exemption from the obligation to provide a right to audit to the other shareholders and

exemption from the obligation to obtain the approval of the general assembly for the merger agreement.

Transfer of at least 90% of the Shares

Such transfers are subject to Article 156(2) of the TCC. In such case, the merger agreement shall include the records which are stated under Articles 147/21 (a), (b) and (f) to (i) of the TCC. In other words, in addition to the subjects listed in Article 146 of the TCC; the merger agreement should also contain;

the share exchange ratio;

the amount of consideration payment, if stipulated;

explanations of the transferred company’s shareholders with regard to their shares and rights in the transferee company.

Furthermore, merging companies have neither the obligation of preparing a merger report, nor the need to obtain the general assembly approval for the merger agreement; however, in this case, these merging companies are still obliged to provide the right to audit to the minority shareholders.

Conclusion

Simplified merger which has been brought by the TCC grant important facilities to companies, since;

In case of full transfer of the voting rights, the procedure only requires some “cosmetic” content and

In case of transfer of at least 90% of the voting rights, the procedure may be completed within a very short period of time.

As a result of the above described facilities, simplified merger process had become preferable especially for group companies. The ordinary merger process results in unnecessary delays and high costs, whereas simplified merger process is more accelerate and more cost-efficient for group companies.

1 The TCC refers to Article 147/2, however the correct reference should be Article 146/2 of the TCC. In fact, in the Swiss Merger Act, this reference is correctly made to the content of merger agreement and not to merger report.




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