Category: Turkiye

Turunc, working with Travers Smith, Slaughter & May, and Fried Frank, has advised Ascential on the sale of its WGSN global consumer trends forecasting and product design business to funds advised by Apax Partners for a total enterprise value of up to GBP 700 million. Reportedly, August Debouzy, Bowman Gilfillan, Chiomenti, Clayton Utz, FCR Law, Gomez-Acebo & Pombo, Howse Williams, Latham & Watkins, and Noerr advised Ascential as well. Allen & Overy and Kirkland & Ellis reportedly advised Apax Partners.

Ascential is a specialist information, data, and analytics company listed on the London Stock Exchange and part of the FTSE 250 Index.

Apax Partners is a UK-based global private equity firm. It has raised and advised funds with aggregate commitments of over USD 65 billion.

The Turunc team included Founding Partner Noyan Turunc, Managing Partner Kerem Turunc, Partners Iltem Dokurlar and Esin Camlibel, and Associates Naz Esen, Beste Yildizili Ergul, and Ovgu Kopal.

Allen & Overy and its Turkish affiliate Gedik & Eraksoy have advised MUFG Securities, Mitsubishi UFJ Investor Services & Banking, and UK Export Finance on the EUR 1.247 billion financing for the Turkish Ministry of Treasury and Finance regarding a 140-kilometer segment of high-speed, low-carbon electric railway between Yerkoy and Kayseri, in the Ankara region of Turkiye.

MUFG Securities EMEA was the sole mandated lead arranger, coordinator, structure, and agent bank.

According to Allen & Overy, “the financing package consists of loans guaranteed by UK Export Finance, reinsurance cover provided by ECAs in Italy, Poland, and Austria (SACE, KUKE, and OeKB, respectively), as well as a separate commercial facility supported in part by the Islamic Corporation for the Insurance of Investment and Export Credit. The financing was structured so as to allow institutional investors to participate alongside commercial banks.”

The Gedik & Eraksoy team included Partner Umut Gurgey and Lawyers Burak Ozsoy and Ceren Gurel, with additional Allen & Overy lawyers in London and Luxembourg.

The firms did not respond to our inquiry on the matter.

Paksoy has advised the EBRD on its USD 100 million loan to Enerjisa Enerji as part of its earthquake response package.

According to Paksoy, “the loan will be used to finance the reconstruction and modernization of the electricity distribution infrastructure in six cities affected by the earthquakes that occurred in February last year.”

Back in 2023, Paksoy had also advised the EBRD on its USD 110 million loan to Enerjisa Uretim (as reported by CEE Legal Matters on May 22, 2023).

The Paksoy team included Partner Sera Somay, Counsel Zekican Samli, and Associate Muhammed Tosun.

Turunc has advised Gelecek Etki Fonu on its investment in the UK’s OctaiPipe, in a round that included SuperSeed, Forward Partners, D2, Atlas Ventures, Martlet Capital, and Deeptech Labs. Goodwin Procter and Oury Clark Solicitors reportedly advised OctaiPipe.

OctaiPipe is a UK-based end-to-end Edge AI platform optimized for creating, deploying, and managing machine learning solutions for industrial IoT.

According to Turunc, Gelecek Etki Fonu (the Future Impact Fund) is a capital markets board-regulated venture capital fund managed jointly by Tacirler Asset Management, an asset management company, and Vestel Ventures, the corporate venture capital arm of Vestel, one of the largest home appliances companies in Turkiye and a group company of Zorlu Holding, a Turkish conglomerate.

The Turunc team included Managing Partner Kerem Turunc, Partner Esin Camlibel, and Associate Naz Esen.

According to the Provisional Article 1, that is added to the Turkish Code of Obligations with the 4th article of the “Law on Amendments to the Lawyers’ Code and the Turkish Code of Obligations” numbered 7409, which was published in the Official Gazette on 11.06.2022 and is valid as of that day residential rent agreements regarding the rental fee to be applied in the renewed rental periods between the date of entry into force of this article and 01.07.2023 (including these dates) are valid, provided that they do not exceed twenty-five percent of the rental fee of the previous rental year. In other words, contracts containing more than a twenty-five percent increase in housing rent compared to the previous year were deemed invalid in terms of the excess amount. 

The legislator also stated the purpose of the article and made a regulation that is more favorable to the tenant by saying that if the twelve-month change rate of the Turkish Code of Obligations’ general rent increase regulation system, that is, the CPI, is less than twenty-five percent, that rate is valid. Even though the legislator was aware of the difficulty of realizing this wish due to economic reasons in the inflationary period, he did a highly protective regulation on behalf of tenants

1. Rental Price Evaluation in the Context of Article 344 of the Turkish Code of Obligations 

Article 344 of the Turkish Code of Obligations No. 6098 is important in determining the rental price. By the aforementioned provision, the agreements made by the parties regarding the rental fee that will be valid in the renewed lease period will be valid provided that it does not exceed the rate of change in the consumer price index according to the twelve-month averages in the previous lease period. It should be considered that this provision will also apply to lease agreements with a term longer than one year. Likewise, if the parties do not arrange in the lease agreement in terms of determining the rent increase rate, it is determined by the judge on an equitable basis, if it does not exceed the rate of change in the consumer price index according to the twelve-month averages in the previous rental period, as stated in this provision.

The legislator also stated the purpose of the article and made a regulation that is more favorable to the tenant by saying that if the twelve-month change rate of the Turkish Code of Obligations’ general rent increase regulation system, that is, the CPI, is less than twenty-five percent, that rate is valid. Even though the legislator was aware of the difficulty of realizing this wish due to economic reasons in the inflationary period, he did not hesitate to make a highly protective regulation.

It should be noted that it is also possible to determine the rental fee in foreign currency in the rental agreement. In such kinds of contracts, unless five years have passed, it is not possible to make changes to the rental fee, without prejudice to the provisions of the “Law on the Protection of the Value of Turkish Currency” dated 20.02.1930 and numbered 1567. Another exception at this point is the situation of extreme difficulty in performance, which is expressed in Article 138 of the Turkish Code of Obligations. After five years, the rental fee is determined as in the case of five-year or longer lease agreements, considering the changes in the value of foreign currency.

2. Housing Rent Increase Rate and 25% Limitation under Law No. 7409

As explained above, agreements regarding the rental fee to be applied in renewed rental periods between the date of entry into force of this article and July 1, 2023, according to Provisional article I of Turkish Code of Obligations shall not exceed 25% of the rental fee of the previous rental year. It is valid provided that the change rate is valid if the change rate in the CPI index of the previous rental year compared to the twelve-month averages is below 25%. The said provision also applies to lease agreements with a term longer than one year. It should be noted that increase rate made contrary to the said provision, that is, exceeding the 25% limit, will be invalid in terms of excess amount.

In the last sentence of the relevant provisional article, the legislator has foreseen the preservation of this twenty-five percent limit by not allowing the fairness assessment that the judge can use in accordance with Paragraph 2 of Article 344 of the Code of Obligations. Accordingly, if any agreements are made regarding the rental increase rate by the parties, this twenty-five percent limit should be preserved in the case of the determination of the rental increase rate by the judge. 

3. Thoughts and Criticisms Regarding the Amendment

According to the TSI’s data, published by the CBRT, the CPI in the second half of 2022 -which is the period of 25% rent price proportion increasing limitation- was identified annually 78,62%, twelve-month average 44,54%, and monthly 4,95% in June 2022.

As can be seen from the data, the economic crise has causes negative impacts not only on landlords but also on tenants. Thanks to the choice of the legislator, the property owners -landlords- facing grave breach of their rights to property which are under the protection of Article 35 of the Turkish Constitution, the title line is “Right to property”, and the first article of Protocol No.1 to the ECHR. In fact, even though to the landlord, as a consumer, was imposed 78,62% CPI, he could only reflect 25% of this increase to his tenant. The provisional article interfered to the landlord by causing more than 50% and irreversible loss.

Hereby interference to landlords made the way to set off the rent price very high when parties having an agreement for the first time due to the knowledge of the landlord will not be able to increase the rent price on his own will or in a logical amount in the next renewal period. This situation caused problems contradicts to the act of law “The State shall take measures to meet the need for housing…” which is regulated of Article 57 of the Turkish Constitution, the title line is “Right to housing”. Essentially, the legislator was a part of the violation of the landlord’s right to property and tenant’s right to housing instead of protecting their rights at the end of the day.

Because of the Turkey’s current economic situation, legislator had to regulate another provisional article, the second one titled “Provisional article 2”, under the same part of the Turkish Code of Obligations. Rent price proportion increasing restriction period’s time has been extended to 01.07.2024 (including this date) by Law No. 7456 with almost the same regulation as the “Provisional article 1”. The month of “Provisional article 2” entry into force and repeal of the “Provisional article 1” is July 2023 and the annually CPI is 47,83%, twelve-month average 57,45% monthly 9,49% in this month.

4. Conclusion

Taking every data into consideration, because of and considering the unfavourable economic conditions, the legislators’ choice will not bring the desired benefits in the long term, and it causes grave violations of the right to housing and right to property. It seems that the legislator aims to protect tenants’ right to housing with this regulation. However, it must be considered that this regulation can cause grave violations of the landlords’ right to property. The necessity of a balance in law and regulating system is beyond dispute. Therefore, it is imperative to create a balance in terms of both landlords and tenants.

By Semanur Gelturan and Serkan Demir, Trainees, KP Law

The World Economic Forum established the AI Governance Alliance, bringing together leaders from diverse sectors such as industry, government, academia and civil society to support the responsible global development and use of transparent and inclusive AI systems.

Key Goals of the AI Governance Alliance

1. Building Secure Systems and Technologies: In this area, scientists and AI manufacturers will collaborate to develop and standardize technical safeguards in the field of innovative AI in order to create a consensus on the measures that should be taken during the development phase. This includes setting clear boundaries for AI development and use, standardizing terminology, aligning AI systems with human values and ethical principles, increasing transparency to foster accountability and trust, and establishing robust methods for assessing the safety and performance of innovative AI technologies.
2. Resilient Governance and Regulation: The AI Governance Alliance focuses on bringing together public sector officials and regulators to create robust governance and institutions that can oversee innovative AI for years to come. In this framework, it is aimed to develop public sector solutions and infrastructures that can respond to the challenges posed by innovative artificial intelligence systems. Thus, the complexities that may arise in the future scenario where the public and private sectors collaborate will be foreseen in advance. Key focal points in setting this goal include fostering innovation, better understanding the specific needs of various sectors and regions and ensuring that technology functions as a positive force for humanity.
3. Responsible Practices and Transformation: Leaders from the private and public sectors, civil society and academia will collaborate to illuminate how innovative AI is being applied in organizations by assessing the opportunities and risks associated with its adoption.

Conclusion

Artificial intelligence is becoming more and more important in our daily lives. The AI Governance Alliance, which was created to minimize the risks that may arise in the face of this rapid development of artificial intelligence by taking the necessary precautions and to publish the responsible use of innovative artificial intelligence applications, is of great importance as it both brings together leaders from various sectors such as government, academia and civil society and as it is the first major initiative in the world to ensure the safety of innovative artificial intelligence systems.

By Yasemin Keskin, Senior Associate, and Vildan Defne Soylemezoglu, Associate, Guleryuz Partners

Turunc, working with Reed Smith, has advised Sphera on its acquisition of SupplyShift. Simpson Thacher & Bartlett reportedly advised Sphera parent company Blackstone. The VLP Law Group reportedly advised SupplyShift.

Sphera is a provider of environmental, social, and governance performance and risk management software, data, and consulting services with a focus on environment, health, safety & sustainability, operational risk management, and product stewardship. It is a portfolio company of Blackstone, an alternative asset manager.

SupplyShift is an end-to-end supply chain data management, sustainability, responsible sourcing, and supplier engagement platform.

The Turunc team included Founding Partner Noyan Turunc, Managing Partner Kerem Turunc, and Associates Beste Yildizili Ergul and Canberk Taze.

Kumkumoglu Ergun Cin Ozdogan has advised the Yildirim Family on its exit from Kleemann Asansor. Akbal reportedly advised the counterparty.

Kleemann is a lift company established in 1983 in Kilkis, Greece. It offers lifts for residential and commercial use, for persons or freight, as well as lifting systems, escalators and moving walks, marine lifts, and other lifts of special requirements.

Kleemann Asansor was established in Istanbul in 2001, having been present in the Turkish market since 1988. It has facilities of 6.470 square meters in Istanbul, including a special assembly line and logistics center.

The KECO Legal team included Partners Ozkan Ozdogan and Ece Ergun, Senior Associate Cenk Civan, and Trainee Associate Ahsen Ebru Karadayi.

With the decision published in the Capital Markets Board Bulletin dated 29.12.2023 and numbered 2023/82 [“Decision“], the amounts subject to revaluation in the Capital Markets Law No. 6362 and related regulations and other regulations were determined for the year 2024.

Implications of the Regulation

According to the Decision, the increased amounts will be applicable in all applications made after December 31, 2023. The main ones to be applied especially in the initial public offering of non-public companies are as follows:

1. If the market value of the shares to be offered to the public in the IPO is less than 400 million Turkish liras, all of the unsold shares, and if the market value of the shares to be offered to the public is between 400 million Turkish liras and 800 million Turkish liras, all of the unsold shares up to 400 million Turkish liras and half of the shares exceeding 400 million Turkish liras will be purchased by the intermediary institutions at the public offering price. In 2023, these limits were applied as 150 million Turkish liras and 250 million Turkish liras.
2. If the market value of the shares offered to the public in the IPO is below 500 million Turkish liras, 25 per cent of these shares will be kept ready for sale by restricting the shareholders’ right to acquire shares. In 2023, this limit was applied as approximately 232 million Turkish liras.
3. The asset and sales revenue amounts required in the financial statements of the companies to be offered to public for the last two years have been increased. In this context, companies to be offered to public will have to meet the criteria of 450 million Turkish liras in total assets and 270 million Turkish liras in net sales revenue in 2022; and 1.5 billion Turkish liras in total assets and 750 million Turkish liras in net sales revenue in 2023.

Conclusion

The increase of the monetary limits concerning IPOs, especially the total assets and net sales revenue requirements, even above the official inflation rates announced by the Central Bank, will mean that only companies of a certain size will be able to enter the capital markets in an environment where the interest of retail investors in IPOs is increasing. Thus, it is expected that the demand for public offerings will decrease and the confidence in publicly offered companies will increase.

Therefore, it can be said that the increased amounts within the scope of the reassessment take into account the objective of protecting and balancing the interests of retail investors and institutional investors, which was also aimed with the rules previously introduced regarding the distribution of shares.

By Zahide Altunbas Sancak, Partner, and Aziz Can Cengiz, Attorney, Guleryuz Partners

Lexist, working with Mayer Brown, has advised AGM on its acquisition of Oppo’s operations in Turkiye, including its manufacturing plant in Tuzla, Istanbul.

Oppo is a Chinese technology products conglomerate with an estimated global smartphone market share of 10%, according to Lexist. It has been active in the Turkish market since 2020.

According to the firm, “with this acquisition, AGM will have the sole and exclusive sub-license to manufacture, market, distribute, sell, and provide after-sales services in relation to Oppo products in Turkiye.”

The Lexist team included Partner Mesut Kaya, Senior Associate Kadir Ozdemir, and Associate Yigit Kocer.