A structured guide to M&A litigation in Turkey

June 2019 – A structured guide to M&A litigation in Turkey. 

Types of shareholders’ claims

Main claims

Identify the main claims shareholders in your jurisdiction may assert against corporations, officers and directors in connection with M&A transactions.

The principal contractual documents in relation to M&A transactions are the share purchase agreement executed between the seller and purchaser in respect of the sale of shares in a target entity, and the shareholders’ agreement executed between the shareholders of the company. Therefore, the main claims shareholders may assert are contractual claims arising from these documents. The main types of claims in this regard may be categorised as follows:

  • claims for breach of representations and warranties or monetary damages or cancellation of transaction in the case of misrepresentation by the sellers;
  • indemnity claims arising from an indemnification clause whereby the sellers undertake to indemnify the buyers against any losses arising from situations identified in the contract (such as tax or regulatory claims);
  • claims regarding post-closing price adjustments; and
  • claims in relation to share option rights.

The relief sought as a result of these claims are usually monetary damages, cancellation of the relevant transaction or declaratory relief in relation to the interpretation of a post-closing price adjustment or option price.

Claims may also be brought by shareholders for breach of the articles of association of a corporation. Depending on the circumstances, such claims may be brought by a shareholder against another shareholder, the corporation itself or the directors for failure to comply with the terms of the articles of association.

While the foregoing claims are the most common claims in practice, the Turkish Commercial Code (TCC) specifically provides that the following claims may also be brought before the courts in relation to a merger process that is conducted in accordance with the provisions of the TCC (pursuant to which two companies are legally merged):

  • a shareholder may request compensation in cases where its shareholding or rights could not be protected in a post-merger structure;
  • shareholders, the target company or its creditors may raise a tortious-style claim against anyone involved in the merger process where there is a loss due to their negligence in the merger process; and
  • shareholders may request cancellation of a merger where it is not conducted properly in accordance with the TCC.

Requirements for successful claims

For each of the most common claims, what must shareholders in your jurisdiction show to bring a successful suit?

To bring a successful suit under Turkish law for damages for breach of contract, the shareholders making the claim will have the burden of proof to set out the basis of their claim with concrete evidence. In this respect, the claims must be systematically explained in detail through the lawsuit documents and would typically be supported by an independent expert report (for example, on a technical matter or for quantum), documents and witnesses or similar evidence to prove (i) there has been a breach or contravention of the relevant contract and (ii) the damages resulting from such breach or contravention. However, where the claim only concerns a demand for payment of an undisputed sum for payment (for example, the purchase price) and the defendant to such claim alleges that it has already paid it, the burden is on the defendant to prove through documents evidencing the payment.

Regarding cancellation requests arising from claims under the TCC in relation to a merger, the shareholders must show that the resolutions and procedures in relation to the transaction are contrary to the articles of association or provisions of the TCC.

In cases where a liability claim is raised against a third party involved in the transaction process (such as accountants or financial advisers), the claimants are required to demonstrate the negligence of the third party and prove the loss to be compensated.

Publicly traded or privately held corporations

Do the types of claims that shareholders can bring differ depending on whether the corporations involved in the M&A transaction are publicly traded or privately held?

Yes. The Turkish capital markets law (the Capital Market Law No. 6362) (the Turkish Capital Market Law) provides a specific exit right to shareholders in case of mergers or acquisitions that result in a change in control of a public company.

As per article 24 of the Turkish Capital Market Law, shareholders who vote against the merger and who record their opposition in the shareholder meeting minutes have a right to exit through selling their shares to the company in consideration for the average of the daily weighted average price per share on the stock exchange over the thirty day period prior to the date when the merger has been disclosed to the public.

As per article 26 of the Turkish Capital Market Law, where the buyer in a takeover of a public company’s shares acquires control of a public company (either through acquisition of over 50 per cent of the shares or board control), the buyer must make a mandatory tender offer to other shareholders to acquire their shares for a price not less than the average of the daily weighted average price per share during the six month period prior to the date of public disclosure of the takeover offer. Where the buyer fails to put a mandatory offer to the remaining shareholders, the shareholders may bring a lawsuit claiming monetary compensation for this amount plus default interest.

Form of transaction

Do the types of claims that shareholders can bring differ depending on the form of the transaction?

Yes. While shareholders can bring contractual claims in relation to transactions (ie, breach of representation and warranties, indemnification claims, claims in relation to price, etc), challenges for cancellation of corporate resolutions are only available for legal merger transactions regulated under the TCC.

A sale of assets that constitutes a significant amount of the value of a target company must be approved by a shareholder general assembly resolution with the affirmative votes of shareholders holding at least 75 per cent of the shares of the target company. Therefore, in such an asset sale, shareholders may challenge the general assembly resolution approving such an asset sale transaction.

In relation to public tender offers or mergers, shareholders may enforce their exit rights pursuant to the Turkish Capital Market Law as mentioned in question 3.

Negotiated or hostile transaction

Do the types of claims differ depending on whether the transaction involves a negotiated transaction versus a hostile or unsolicited offer?

No. The types of claims do not differ depending on whether the transaction involves a negotiated transaction versus a hostile or unsolicited offer. See, nevertheless, question 3 on the entitlement of public shareholders to be bought out in the event of a mandatory tender offer being triggered regardless of whether such shareholders have contractually agreed or not to sell their shares.

Party suffering loss

Do the types of claims differ depending on whether the loss is suffered by the corporation or by the shareholder?

The types of claims would be the same for compensation of losses whether suffered by the corporation or by the shareholder directly. Where the shareholder itself suffers loss, it will be the claimant and may request the loss to be compensated directly to itself or through indemnification of the corporation depending on the nature of the loss. If the loss is suffered directly by the company, either the company may make the claim or the shareholders may request compensation to be paid to the company. If the actual loss is suffered by the corporation, then the shareholders may issue the claim themselves (without joining the corporation to the claim) but any compensation would be paid directly to the corporation.

Collective and derivation litigation

Class or collective actions

Where a loss is suffered directly by individual shareholders in connection with M&A transactions, may they pursue claims on behalf of other similarly situated shareholders?

No. A shareholder may only pursue claims on his or her own behalf and there is no concept of class or collective action through which a selected claimant can effectively pursue a claim on behalf of others. As per Turkish Civil Procedure Law, where claimants have a common claim as a result of losses arising from the same transaction, facts or legal causes, claimants may jointly file a lawsuit against defendants or seek permission from the court for the cases to be joined. However, a shareholder may not represent claims of other persons except where a person has agreed to assign the cause of action (and is permitted to do so) to another shareholder.

In Turkish litigation practice, sometimes shareholders who suffer a loss in connection with a transaction may appoint the same legal counsel to bring a joint claim against the defendant. Even in such cases, this would not constitute a collective action on behalf of other shareholders.

Derivative litigation

Where a loss is suffered by the corporation in connection with an M&A transaction, can shareholders bring derivative litigation on behalf or in the name of the corporation?

Yes. Where a loss is suffered by the corporation, the corporation, its shareholders or its creditors may bring a lawsuit for payment of compensation to the corporation. Such a lawsuit is not brought on behalf of or in the name of the corporation but by the shareholder itself. However, the relief sought by the shareholders may only be in the form of compensation payable to the corporation. The shareholder should follow the standard civil litigation procedure and file lawsuit before the commercial courts of first instance in the defendant’s headquarters or (if it is a real person) place of habitual residence. The relief section of the petition should explicitly state that compensation is sought to be paid to the corporation. There is no requirement under this procedure to join the corporation itself to the proceedings.

Interim relief and early dismissal

Injunctive or other interim relief

What are the bases for a court to award injunctive or other interim relief to prevent the closing of an M&A transaction? May courts in your jurisdiction enjoin M&A transactions or modify deal terms?

As per Turkish Civil Procedure Law, a court may award injunctive or other relief to prevent closing of an M&A transaction if the claimant can satisfy the court that the following alternative conditions are met: (i) it will be significantly harder or impossible for the claimant to be entitled to its rights owing to a change in the current situation (ie, as a result of closing of the transaction) or (ii) significant irreparable damage will occur due to failure to award interim relief. The courts conduct a prima facie examination for injunctive relief requests. In cases of urgency, requests for injunctive relief may be sought ex parte provided that the main claim relating to the dispute is brought within two weeks as of the date of the award of relief. Violation of an award of injunctive relief is subject to punitive sanctions of up to 6 months imprisonment and any transaction violating the injunctive relief may be cancelled by the claimant.

Regarding the second part of the question, the courts have limited powers to enjoin or force parties to close an M&A transaction for example through an order for specific performance. Such a remedy is not recognised in Turkish law specifically in the meaning of the common law equivalent. However, where there is a contractual right to call for the transfer of shares (or a similar right such as a right of first refusal) given in favour of a party to an M&A transaction, such option may be enforceable against the counterparty provided that the shares have not already been sold to a bona fide third party. In this case, the courts may only order compensation to be paid to the holder of the right in accordance with article 49/II of the Turkish Code of Obligations.

Finally, the Turkish courts may issue declaratory relief that the transaction is invalid or void if it breaches the TCC or the articles of association. However, the court may not modify deal terms except under application of the ‘theory of imprevision’ (or onerous circumstances) pursuant to article 138 of the TCC. This enables the court to adapt the provisions of a contract to current circumstances in cases where the terms of a transaction have significantly changed owing to the occurrence of events beyond the control of the parties and such change means that performance of the obligations of either party under the transaction effectively becomes impossible. However, such intervention by the court to modify deal terms is extremely exceptional and highly unlikely to be awarded especially given the emphasis in the TCC and Code of Obligations on freedom of contract and the concept of prudent commercial parties who are taken to understand the risks associated with a commercial transaction. The Turkish courts will generally respect the will of the parties to a transaction provided that it complies with general principles of corporate law, the TCC (and Capital Markets Law where applicable) and the articles of association.

Early dismissal of shareholder complaint

May defendants seek early dismissal of a shareholder complaint prior to disclosure or discovery?

There is not an early dismissal or summary judgment procedure in Turkish civil procedure law such as through a prima facie examination of the facts. However, where a lawsuit does not meet certain formalistic conditions, the courts may dismiss a lawsuit before it examines the merits of the case. These conditions are: (i) jurisdiction, (ii) standing of the claimant, (iii) payment of court fees, (iv) that there is no ongoing lawsuit for the same claim and (v) that a final decision has not already been rendered on the same claim (res judicata). If these conditions are satisfied the court will proceed to examine the merits of a case. However, for instance, if the claim is related to the rights of a shareholder and the claimant is not a shareholder, then the court would dismiss the lawsuit due to lack of standing.

There is no process of disclosure or discovery of documents under the Turkish civil procedure system akin to that in common law jurisdictions. Parties to a dispute will attach to their pleadings the evidence on which they intend to rely. A party would need to make a specific application to court that the opposing party disclose a document or evidence that it holds that a party is aware of and on the grounds that it is relevant to the case during the course of a proceeding.

Advisers and counterparties

Claims against third-party advisers

Can shareholders bring claims against third-party advisers that assist in M&A transactions?

Yes. In principle, shareholders may bring claims against any third party (including advisers) that is involved in an M&A transaction where the shareholder suffers losses arising either from a formal contract (such as an engagement letter) to which the shareholder (or company) is a party or based on the tortious concept of ‘unjust action’ by a third party. Shareholders bringing claims against third-party advisers must prove that the advisers acted negligently or fraudulent in relation to its services and that losses arose as a result of such negligence or fraud. In practice, advisers usually protect themselves from such claims through agreements with express limitations or disclaimers.

Claims against counterparties

Can shareholders in one of the parties bring claims against the counterparties to M&A transactions?

In principle, the shareholder of a party (ie, corporation) to a transaction may only bring a claim against the directors of the company for breach of fiduciary duty. However, for mergers and demergers, as per article 193 of the TCC, any person involved in a merger and demerger processes are liable against the company, its shareholders or creditor where it suffers losses.

Limitations on claims

Limitations of liability in corporation’s constitution documents

What impact do the corporation’s constituting documents have on the extent board members or executives can be held liable in connection with M&A transactions?

The liability of directors is regulated under the TCC. The main basis of a director’s liability is for negligence in the execution of his or her duties of due care and diligence to act for the benefit of the company of which he or she is a director. The term ‘negligence’ is construed very strictly in this context. This is because of the ‘business judgement’ rule that has been introduced through article 369 of the TCC. According to this rule, it is assumed that directors have acted in accordance with the fiduciary standards of loyalty, prudence and care in reaching business decisions. Unless it is apparent that the directors have blatantly violated these rules of conduct, their commercial decisions should not be second-guessed by the court.

As a general principle the statutory duties of directors may not be limited by any of the corporation’s constituting documents including the articles of association. However, shareholders may release directors from their liabilities in relation to a certain period (such as a financial year) through a general assembly resolution following the end of the relevant period (and not before). However, this type of release is limited and would not apply to losses arising out of an action that is not disclosed in the financial statements or that is dishonestly concealed, and would not operate to limit liability to third parties.

Furthermore, as described in question 15, while the general supervisory duty of care of board members may not be limited by the corporation’s constituting documents, it is possible for board members to assign specifically defined roles to defined third parties such as senior managers of the corporation pursuant to the power under article 370/II of the TCC.

Statutory or regulatory limitations on claims

Are there any statutory or regulatory provisions in your jurisdiction that limit shareholders’ ability to bring claims against directors and officers in connection with M&A transactions?

No. Shareholders may bring claims against directors and officers in connection with any transaction in accordance with the principles explained under question 13. Where the directors are released from their liability as a result of a general assembly meeting, the shareholders may not bring any claim against the directors for the period that they are released unless the exceptions referred to above apply.

Common law limitations on claims

Are there common law rules that impair shareholders’ ability to bring claims against board members or executives in connection with M&A transactions?

Turkish law is not based on common law and the liabilities of directors are regulated under the TCC. There are certain rules that impair shareholders’ ability to bring claims against the directors as described in question 13 in relation to the ‘business judgement’ rule of reasoning. Accordingly, the relevant provision in the TCC is designed on the basis that commercial risk is part of the ordinary course of business and courts should not second-guess the appropriateness of commercial decisions by directors.

Additionally, directors are permitted to delegate certain authorities to other persons pursuant to the articles of association. There are certain non-delegable duties such as the overall obligation to supervise the company. However, where certain delegable duties are expressly delegated to defined persons (eg, the CEO to execute a specific type of transaction) the directors may not be held liable for the decisions and actions of these nominated persons provided that the directors can demonstrate their care and diligence in choosing the delegates.

Standard of liability

General standard

What is the standard for determining whether a board member or executive may be held liable to shareholders in connection with an M&A transaction?

As we explained above, the liability of directors are subject to the business judgement rule that enables directors to make commercial decisions without being subject to second-guessing by the court. Whilst there is not a general rule specifically related to M&A transactions, the courts would apply this rule to a specific case considering objectively whether the director breached his fiduciary duty, good faith, obligation to perform his or her duty with diligence and care through wilful misconduct. The court would assess whether the director can be objectively said to have applied the level of care expected of a diligent person in the position of such director.

Type of transaction

Does the standard vary depending on the type of transaction at issue?

No. The basis of liability claims are the general provisions of Turkish corporate law so the court would examine the facts relevant to a specific dispute when applying the standard of care.

Type of consideration

Does the standard vary depending on the type of consideration being paid to the seller’s shareholders?


Potential conflicts of interest

Does the standard vary if one or more directors or officers have potential conflicts of interest in connection with an M&A transaction?

Yes. As per article 396 of the TCC, directors may not engage in any transaction that may compete with the business of the company without obtaining the prior approval of the general assembly of the shareholders. In such circumstances the relevant transaction would be void or invalid if the relevant disclosure is not made or approval is not obtained.

Additionally, as per article 393 of the TCC, the directors may not participate in any negotiation in relation to a transaction that potentially creates conflict of interests between themselves or their relatives and the company. Otherwise, the relevant board of directors resolution approving the transaction would be invalid and the director and other directors who allowed the director to participate in the negotiations would be liable for potential losses incurred by the company.

Controlling shareholders

Does the standard vary if a controlling shareholder is a party to the transaction or is receiving consideration in connection with the transaction that is not shared rateably with all shareholders?

Potentially this may be the case. The standard of liability of directors is general and abstract, and accordingly does not vary depending on specific circumstances. However, of course, the courts would examine the specific transaction brought before it and determine whether the act of the directors would fall under the scope of the business judgement rule or a more specific statutory restriction applies (such as those listed above: restriction against personal benefit from transactions). Where the directors are found to be in breach of that standard, the court may hold them liable for an act that may otherwise appear as an ordinary commercial decision.

If the consideration in connection with a transaction is not shared rateably according to the shareholding and such variation has not already been agreed between the shareholders (for example, through a liquidation preference in the articles of association or shareholders’ agreement or other form of express consent), a shareholder could potentially bring a claim against the directors or the company for inequitable treatment that is a core protection for shareholders under article 357 of the TCC. The claim would need to demonstrate that the difference in allocation of the share price could not be justified on objective grounds, for example, that the shares being sold were all of the same class to which the same rights were attached.


Legal restrictions on indemnities

Does your jurisdiction impose legal restrictions on a company’s ability to indemnify, or advance the legal fees of, its officers and directors named as defendants?

In Turkish law, there is no provision imposing a specific restriction on a company’s ability to indemnify directors or officers named as defendants. However, as per article 395, the directors may not engage in any transaction with the company without the prior approval of the general assembly of shareholders. Indemnification of directors by the company would be considered a ‘transaction’ for the purpose of this article. Shareholders who oppose such approval may request cancellation of the relevant general assembly resolution, for example, where the indemnification is only in favour of shareholder directors who approve the transaction or such indemnification would create inequality between shareholders.

M&A clauses and terms

Challenges to particular terms

Can shareholders challenge particular clauses or terms in M&A transaction documents?

If a shareholder is a party to an M&A transaction document then it may seek to challenge or renegotiate clauses during the course of negotiations.

Where the shareholder is a third party that is not a party to the transaction document itself then it may challenge provisions in an M&A transaction document on the basis that it does not comply with a principles of corporate law, provision of the TCC and the articles of association of the company or (if it is a public company) the Capital Markets Law. The court may either cancel the general assembly resolution that approves the transaction or request the company to remedy the non-compliance. Therefore, if a particular clause of an M&A document that is subject to approval of the general assembly would be challenged by a shareholder who opposes the transaction in the general assembly meeting, for example on the basis that the transaction restricts its rights unequally or violates the Turkish Commercial Code or the articles of association, the court may review the claim and order the company to remedy such violation. However, there is no general right of shareholders to challenge clauses that would preclude third-party bidders and it is a common feature of private and public M&A transactions to agree provisions that tend to give a third-party bidder exclusivity for a defined period and provide compensation in the event of breach of such exclusivity.

In addition, shareholders of public companies who oppose a merger resolution are entitled to exit by selling their shares to the company. In case of change of control in the company, the acquiring third party must make a tender offer to the remaining shareholders and such shareholders may enforce their right to sell.

Pre-litigation tools and procedure in M&A litigation

Shareholder vote

What impact does a shareholder vote have on M&A litigation in your jurisdiction?

A shareholder vote allows shareholders to subsequently challenge an M&A transaction. However note that shareholders who approve or who do not specifically record their opposition to an M&A transaction on a shareholder vote may not bring a claim for cancellation of the transaction.


What role does directors’ and officers’ insurance play in shareholder litigation arising from M&A transactions?

Directors and officers liability insurance is a type of professional liability insurance that directors are permitted to obtain under the Turkish Commercial Code. Where liabilities arising from potential M&A transactions are not exempt from the scope of D&O liability insurance, shareholders may address the claim for compensation of losses to the insurance company. It is a standard provision of insurance policies in the Turkish market that claims brought before a foreign court and arbitration are not covered with such insurance unless otherwise specifically agreed with the insurer.

Burden of proof

Who has the burden of proof in an M&A litigation – the shareholders or the board members and officers? Does the burden ever shift?

The burden of proof in an M&A litigation is not different from the general civil litigation rule: the burden of proof is borne by the party that brings the claim. In this respect each party must prove what it alleges before the court. Similarly, in M&A litigation, the claimants bear the burden of proof to establish the basis of relief sought.

As there is no legal presumption that applies in favour of the shareholder making the claim, such burden generally does not shift in M&A litigations.

Pre-litigation tools

Are there pre-litigation tools that enable shareholders to investigate potential claims against board members or executives?

Yes. One of the statutory shareholder rights that may not be restricted is the right of the shareholder to be informed about the company. As per article 437 of the Turkish Commercial Code, the right to be informed covers rights of access to financial statements, the annual activity report of the board of directors, audit reports and proposals in relation to dividend distribution. These must be kept ready for review by shareholders at least 15 days prior to the proposed general assembly meeting.

Shareholders are also entitled to obtain information from the auditor or the board of directors during the course of the general assembly meeting. In case where the questions raised in the general assembly meetings are not satisfactorily responded to, the shareholder may review the corporate books and correspondences related to such question provided that the general assembly approves this request. Where the general assembly unfairly refuses this request, the shareholder may apply to the court to exercise its right to examine the corporate documents.

The information obtained is often an effective means of enabling shareholders to develop their claims.


Are there jurisdictional or other rules limiting where shareholders can bring M&A litigation?

Yes. In principle, parties may freely choose the jurisdiction of a dispute that may arise from private contracts such as a share purchase agreement. However, forum selection clauses are not permitted in the constitutional documents of a Turkish company such as the articles of association, which are subject to the exclusive jurisdiction of the Turkish courts.

Further, certain types of dispute will be subject to the jurisdiction of the Turkish courts by their nature. Where the relief sought in M&A litigation is the cancellation of the decision of a shareholder or board meeting of a Turkish company, such as an annual general assembly resolution, this must be filed before the Turkish court located within the relevant district of the registered address of the company.

Expedited proceedings and discovery

Does your jurisdiction permit expedited proceedings and discovery in M&A litigation? What are the most common discovery issues that arise?

No. Litigation that is suitable for expedited proceedings are strictly listed pursuant to the Turkish Civil Procedure Law and M&A litigation is not listed in the law as being suitable for expedited litigation process.

Discovery is not permitted under Turkish civil litigation procedure. Parties are not permitted to engage in processes of discovery of the other side’s documentary evidence.

Damages and settlements


How are damages calculated in M&A litigation in your jurisdiction?

There is not a specific method for the calculation of damages arising from an unlawful act of third parties or breach of contract. Turkish courts almost always appoint an expert committee to calculate the damages of the claimant in case of compensation claims. Damages are generally calculated by comparing the value of the asset that the claimant has acquired prior to and after the transaction that is subject to the dispute. The court will distinguish between losses that are directly linked to the transaction or reasonably linked to the transaction if the loss is consequential. The court conducts an objective evaluation and does not take claimant’s subjective plans into account in assessing damages (eg, plans to sell the shares and invest them in a fund with a high rate of return). The principles of equity and fairness are also considered during the calculation of damages to ensure damages are proportionate and linked to the breach that is the subject of the claim.


What are the special issues in your jurisdiction with respect to settling shareholder M&A litigation?

Lawsuits for cancellation of general assembly resolutions are filed against the company, not the other shareholders. Therefore, in case of such lawsuit, the company is not entitled to settle with the claimant by way of agreeing not to implement a resolution on behalf of or instead of the general assembly. The only settlement in such cases may be made if the claimant agrees to withdraw the lawsuit either voluntarily or in return for an agreed sum.

There is no special form for settlement of disputes (such as that it be executed in a particular way or before a notary public). The advantage of executing a settlement before a notary public is that neither party may deny the validity of its signature on the settlement.

Third parties

Third parties preventing transactions

Can third parties bring litigation to break up or stop agreed M&A transactions prior to closing?

Only the parties to a transaction, or its shareholders, may request cancellation of the transaction. Third-party creditors of a company may only have standing to bring a claim based on director negligence and that the losses arising affected the position of creditors. However, such an action would not stop the transaction process and is merely a monetary compensation. Therefore, other third-party buyers would be rather unlikely to have standing to break up or stop agreed M&A transactions.

Third parties supporting transactions

Can third parties in your jurisdiction use litigation to force or pressure corporations to enter into M&A transactions?

The Capital Markets Law and the TCC allow minority shareholders in certain circumstances to sell their shares to the company or to force an acquirer of control over a public corporation to make a tender offer to minority shareholders. However, in the absence of a specific transaction, there is no practice in Turkey of using litigation to force corporations to open themselves up to third-party buyers.

Unsolicited or unwanted proposals

Directors’ duties

What are the duties and responsibilities of directors in your jurisdiction when the corporation receives an unsolicited or unwanted proposal to enter into an M&A transaction?

Directors must carry out their duties transparently and with due care and diligence in the case of an unwanted or unsolicited proposal to enter into an M&A transaction and safeguard the rights of shareholders.

In the case of deals that trigger a mandatory tender offer owing to a change of control, the directors are responsible for compliance with the Capital Markets Law and determining the fair value for the shares (on the calculation basis stipulated in the Capital Markets Law) where it would result in a mandatory tender offer.

Counterparties’ claims

Common types of claim

Shareholders aside, what are the most common types of claims asserted by and against counterparties to an M&A transaction?

The most common type of claims asserted by and against counterparties to an M&A transaction are indemnification or monetary claims due to breach of representation and warranties as well as claims relating to purchase price adjustments or earn-out claims.

Differences from litigation brought by shareholders

How does litigation between the parties to an M&A transaction differ from litigation brought by shareholders?

Litigation between parties to an M&A transaction are generally based on contractually agreed provisions in the transaction documents. These documents often contain arbitration clauses and therefore in cases of dispute the parties to a transaction start proceedings in accordance with the arbitration rules of the relevant body or organisation.

However, where the shareholders are not a party to an M&A transaction, they are not bound with the jurisdiction clause and their most common form of action is usually to challenge the general assembly resolution approving the transaction. Such challenges must be brought before the local courts pursuant to Turkish law.

Updates and trends

Recent developments

What are the most current trends and developments in M&A litigation in your jurisdiction?

Following the establishment of the Istanbul Arbitration Centre (ISTAC), there is an increasing trend to use ISTAC in jurisdiction clauses where one or more of the parties to an M&A transaction is Turkish. While the International Chamber of Commerce is still a preferred arbitration institution in cross-border M&A transactions, the establishment of ISTAC has increased the popularity of arbitration in Turkey by introducing the concept of resolution by way of arbitration to a wider group of Turkish businesses. We expect this trend to continue for the foreseeable future.

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