Category: Turkiye

Turunc has advised Bogazici Ventures on its investment in Buddy Performance. SCH Legal advised Buddy Performance.

Buddy Performance is a real-time feedback tool to measure employee loyalty and company performance.

Bogazici Ventures is a Turkish Capital Markets Board-regulated venture capital fund focused primarily on financial, health, and retail technologies as well as gaming.

The Turunc team included Managing Partner Kerem Turunc, Partner Yasemin Erden, and Associates Beste Yildizili Ergul, Naz Esen, Ovgu Kopal, and Baran Ezeli.

The SCH Legal team included Partners Cansu Aras, Senior Associate Mehmet Ali Begdes, and Associate Ahmet Sefa Yildirim.

Following the Constitutional Court’s (“TCC”) decision annulling the monetary limits for appeal in administrative jurisdiction, the TCC has annulled the regulation that no appeal can be filed against decisions on cases of tax and full remedy and actions of annulment of administrative acts, the subject matter of which does not exceed five thousand liras, as well as the regulation regarding the revaluation of monetary limits. The decision will enter into force on September 21, 2024, nine months after its publication in the Official Gazette.

Annulled Provisions

Turkish Code of Administrative Procedure – Article 45 – (Amended: 18/6/2014-6545/19 Art.)

Against the decisions of administrative and tax courts, even if a different legal remedy is stipulated in other laws, an appeal may be filed to the regional administrative court in the judicial circuit where the court is located, within thirty days from the notification of the decision. However, the decisions of the administrative and tax courts on tax and full remedy cases and annulment cases against administrative acts the value of which do not exceed five thousand Turkish Liras are final and cannot be appealed against.

Turkish Code of Administrative Procedure Additional Article 1 – (Additional: 5/4/1990-3622/26 Art.; Amended: 8/6/2000-4577/9 Art.)^:

The monetary thresholds determined in this Law shall be applied by increasing the monetary thresholds applied in the previous year by the revaluation rate determined and announced annually by the Ministry of Finance pursuant to the provisions of the repeated Article 298 of the Tax Procedure Law No. 213 for that year, with effect from the beginning of each calendar year. The parts of the limits determined in this way that do not exceed one thousand Turkish Liras shall not be taken into consideration.

Summary of the Application

2^nd Tax Chamber of the Samsun Regional Administrative Court, within the scope of complaint regarding the cancellation of the payment order issued for non-payment of the court fee incurred in accordance with the court decision within the scope of file numbered E.2023/81, and Istanbul 13^th Administrative Court, upon the complaint regarding the administrative fine imposed by the Social Security Institution within the scope of file numbered E.2023/114, concluded that the challenged regulations are contrary to the Turkish Constitution on the following grounds and applied to the TCC for the annulment of the relevant provisions;

• The monetary limits regarding the legal remedy, which are increased according to the revaluation rate every year, may change between the dates when the lawsuit is filed and the dispute is decided, and in this respect, the possibility of applying for appeal may disappear by the date of the decision.
• It is not clear in the rule whether the date of filing the lawsuit or the date of the judgement will be taken as the basis for determining the monetary limits for appeal.
• Considering that the courts may finalise the cases in different periods of time, the case that was filed on the same date but concluded earlier than the other case may be subject to appeal, and the case with a long judicial process may not be appealed as a result of revaluation of the limits.
• In light of the foregoing, the relevant provisions contradict the right of access to the court, the right to request the judgement to be reviewed, the principles of legal judge, legal certainty, predictability and equality.

Grounds for Annulment

The TCC stated that Article 45 of the Turkish Code of Administrative Procedure (“TCAP”), which is the first provision to be annulled, restricts the right to review the judgement for cases with a subject matter of less than five thousand Turkish Liras. Therefore, the TCC concluded that the relevant provision is contrary to Article 36 of the Constitution.

The TCC emphasised that the limitations imposed on fundamental rights and freedoms must be made by law, must be in accordance with the reason for limitation stipulated in the Constitution and must be proportionate pursuant to Article 13 of the Constitution, and concluded that the fact that the monetary limit for the determination of the decisions subject to appeal is revaluated every year and the date on which the monetary limit will be set is not clear, the limitation in Article 45 of the TCAP constitutes a violation of Article 13.

In conclusion, the TCC stated that the provisions of the law sought to be annulled are contrary to Articles 13 and 36 of the Constitution and decided to annul the relevant provisions.

The Decree shall enter into force nine months after its publication in the Official Gazette on December 21, 2023.

Conclusion

In the decision, the TCC addressed the request for annulment especially in the context of the “principle of legality” and concluded that even if a limitation can be imposed on the “right to request the review of the judgement”, which is a fundamental right and freedom, this limitation must comply with the conditions set out in Article 13 of the Constitution, as stated above, otherwise it would be contrary to the Constitution, and concluded that the provisions subject to the request for annulment should be annulled on the grounds that they do not comply with the conditions for limiting the right.

In its recent decision numbered E. 2023/36, K. 2023/142, which is similar to the decision subject to this article, the Court annulled the regulation on the monetary limits for appeals before Council of State on the grounds that it contradicts with the “principle of control of the provision” by evaluating it in the context of the “principle of proportionality” and therefore it is unconstitutional (you may read our article on the matter here). In both decisions, the TCC emphasised that the “disproportionate” limitation of the right requires the annulment of the provision imposing the limitation and that the limitations to be imposed on fundamental rights and freedoms must comply with the conditions set out in the Constitution.

Since the decision cancelling the regulation on the monetary limits for appeal will enter into force as of July 13, 2024, it can be foreseen that the legislative body will make a new regulation until this date, which will eliminate the contradictions in terms of “proportionality” and “certainty” common to both decisions.

By Tarik Guleriuz, Partner, and Selin Nacar Ozturk, Associate, Guleryuz & Partners

Linklaters has advised Turkiye Ihracat Kredi Bankasi on its equity investment in the Africa Finance Corporation, the pan-African infrastructure-focused multilateral financial institution.

According to Linklaters, “the investment by Turk Eximbank, AFC’s first non-African sovereign shareholder, aligns with the Republic of Turkiye’s strategic vision of fostering resilient and sustainable growth in Africa. The transaction will result in strengthened ties for Turkiye’s exporters and contractors on the continent, particularly within the 42 member countries of the AFC.”

The Linklaters team included Partners Daniel Cousens and Simon Few, Managing Associates Mikhail Fufaev and James Bowen, and Associate Nikolay Altukhov.

The Regulation Amending the Regulation on Principles and Rules to be Applied in Retail Trade (“Amending Regulation”) published in the Official Gazette dated December 14, 2023, and numbered 32399, introduced certain amendments to the Regulation on Principles and Rules to be Applied in Retail Trade published in the Official Gazette dated 06.08.2016 and numbered 29793. These mainly cover (i) unfair commercial practices in the supply chain and (ii) payments related to commercial activities between the producer, supplier, and retail business.

The Amending Regulation redefines the unfair commercial practices in commercial relations between producers, suppliers and retail businesses and sets forth regulations in parallel with the unfair commercial practices regulated under the Law No. 6585 on the Regulation of Retail Trade. In addition to these regulations, commercial enterprises are also defined according to their size.

Regulations Introduced by the Regulation on Unfair Commercial Practices in the Supply Chain

The Regulation defines unfair commercial practices as “practices that disrupt the balance in commercial relations between producers, suppliers and retail businesses and create unfair results”. The Regulation specifies “practices that are considered unfair commercial practices in all cases” and then enumerates various activities as examples of unfair commercial practices.

Practices Considered Unfair Commercial Practices in All Cases:

• To force the procurement of goods or services from any real or legal person, except for the conditions such as product content and technology to be used in the contract to ensure quality standards.
• Reflecting the cost of the campaign to the party that does not want to make campaign sales.
• Failure to determine the terms of the commercial relationship in the supply of agricultural and food products by written contract or by e-mail, fax or other written means in electronic media that can show the agreement between the parties.
• Including provisions in the contract that authorise unilateral changes to the detriment of the other party or that are not clear and understandable in essential matters such as maturity, return and campaign conditions.
• To receive premiums and fees even though it does not provide any service that directly affects the product demand such as promotional services in the form of activities, advertisements, magazines, announcements and similar forms or special positioning services in display units and does not specify the type, duration and/or number of services provided and the amount or rate of the service fee in the contract, or to receive premiums and fees under the names of store opening and renovation, turnover deficit, bank and credit card participation fee and other names.
• To cancel orders for agricultural and food products that are perishable within thirty days from the date of production, within thirty days prior to the delivery date of the product, except in cases caused by the fault of the other party.
• To reflect the costs of spoilage or loss after delivery or transfer of ownership of agricultural and food products that are perishable within thirty days from the date of production, except in cases caused by the fault of the other party. 

Activities Specified as Examples of Unfair Commercial Practice:

• To reflect the costs related to administrative and criminal sanctions or customer complaints, except in cases arising from the fault of the counterparty.
• To take commercial reprisals such as removing products from the list, reducing the amount of products ordered, stopping marketing or campaign-like services related to these products or imposing financial obligations on the grounds that the provisions to be applied in cases of non-compliance based on objective criteria such as failure to comply with the agreed delivery date, failure to meet the product quality and storage conditions are not included in the contract or on the grounds that an application has been made to public institutions or judicial authorities.
• Causing damage to the counterparty by making untrue or misleading statements or notifications regarding the scale of the enterprise and its products and activities.
• To return agricultural and food products that are perishable within 30 days from the date of production, except for fast-moving consumer goods specified in the first paragraph of Article 12/C of the Regulation on Principles and Rules to be Applied in Retail Trade, on the grounds that they cannot be sold after delivery or transfer of ownership.

Regulations on Payment Introduced by the Amending Regulation

The Amending Regulation stipulates that payments subject to retail trade must be made within the period stipulated in the contract. It is stated that payments for agricultural and food products may be made in different periods depending on the type of product, and the following distinction is stipulated:

1. For the supply of agricultural and food products that are spoilable within 30 days from the date of production, the payment period may not exceed ‘30 days’ if the creditor is smaller in scale than the debtor, and ‘45 days’ in other cases.
2. For the supply of agricultural and food products that do not spoil within 30 days from the date of production, the payment period is set as ’60 days’ in cases where the creditor is small, the debtor is medium or large scale or the creditor is medium, the debtor is large scale.

Additionally, while calculating the above-mentioned periods, the prior date between the date of delivery and the date of transfer of ownership will be taken as the basis, whereas each delivery date will be taken into account for partial deliveries. If the date of delivery cannot be determined, the date of issuance of the delivery note is essential. The debtor is also obliged to prove that the payment was made on time.

The regulations entered into force on January 1, 2024.

Conclusion

With the Amending Regulation, the Regulation on Principles and Rules to be Applied in Retail Trade dated 06.08.2016 was amended to regulate the activities that will constitute unfair commercial practices in any case, and some activities were exemplified as unfair commercial practice. Accordingly, it is aimed to reduce the disputes that may arise between the parties on payment issues, to decrease the financing costs and prices of the producer or supplier while establishing the final price by shortening the terms, and to ensure a fair balance between the parties.

By Tarik Guleriuz, Partner, and Selin Nacar Ozturk, Associate, Guleryuz & Partners

Lexist, working with King & Spalding, has advised the Aydin Group on the sale of a 20% shareholding in the TOM financial group of companies – including a digital participation bank, licensed e-money and payment services company, and a licensed financing company – to the Dubai Islamic Bank. Norton Rose’s Dubai office and its Turkish affiliate Pekin Bayar Mizrahi reportedly advised the DIB.

The Dubai Islamic Bank is the largest participation bank by asset size in the United Arab Emirates, according to its own website.

According to Lexist, “in Turkiye, a participation bank shares features of an Islamic bank making it an attractive prospect for the DIB. The DIB described its equity investment in TOM as a “landmark regional transaction.”

The Lexist team included Partner Murat Erbilen, Senior Associate Duygu Ozturk Dincer, Associate Meysa Yamakoglu, and Trainee Ulas Candan.

Dentons Turkish affiliate Balcioglu Selcuk Ardiyok Keki has advised Laton Ventures on its investment in Sequel Games. 

Laton Ventures is a venture capital firm. It invests predominantly in early-stage gaming companies.

Sequel Games is a game development company based in Stockholm.

The BASEAK team included Partner Okan Arican and Associate Dilruba Guldogan.

Dentons Turkish affiliate Balcioglu Selcuk Ardiyok Keki has advised Revo Capital on its investment in Roamless.

Revo Capital is a Netherlands-based venture capital fund focusing on early-stage B2B or B2C technology ventures in Turkey, Eastern Europe, and the Baltics.

Roamless is a mobile app that provides global mobile connectivity solutions.

The BASEAK team included Partner Okan Arıcan, Senior Associate Ertugrul Akinci, and Associate Dilruba Guldogan.

Paksoy has acted as transaction counsel on the Borsa Istanbul TRY 5.5 billion IPO of the Avrupakent GYO real estate company.

Avrupakent GYO has operated in the Turkish real estate sector for 46 years.

According to Paksoy, “total funds raised in the public offering amounted to TRY 5.508 billion (approximately USD 190 million), and more than 3.7 million investors placed orders. Book building was based on a fixed price of TRY 55.08, and it was 1.47 times oversubscribed.”

The Paksoy team included Partner Okkes Sahan, Senior Associate Merve Kurdak, and Associates Melis Gencol Ince and Bengisu Yilmaz.

Turunc has advised Gelecek Etki Fonu on its investment in Brandefense in a round that included Sabanci Ventures, AK Portfoy, the Technology Development Foundation of Turkiye, TechOne, and Finberg. Kutadgu & Arsin advised Brandefense. Reportedly, BASEAK and the Diamond Law Group advised Sabanci Ventures, while BTS advised the Technology Development Foundation of Turkiye.

Brandefense is an AI-based proactive digital risk protection solution for organizations. 

According to Turunc, Gelecek Etki Fonu 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.

The Kutadgu & Arsin team included Partners Seren Kutadgu and Cagri Arsin.

Aksan has advised TurkTraktor on its investment in crop monitoring company Agrovisio.

TurkTraktor is an engineering center and production hub for TDD and JX model tractors.

Agrovisio is a start-up company that provides crop monitoring tools to improve agricultural production efficiency and manage risks.

The Aksan team included Partner Alper Onar and Senior Associate Merve Kutukcuoglu Karpuzcu.

Aksan did not respond to our inquiry on the matter.