Category: Turkiye

Former Toros Tarim Attorney At Law Senay Donmez Gun has moved to Loomis in Turkey as the company’s new Head of Legal Affairs.

Prior to joining Loomis in December 2022, Gun spent over a year and a half with chemical manufacturer Toros Tarim. Before that, she spent nine years with Multi Turkey as a Legal Manager and, earlier, almost four years as a Legal Counsel with Bosch. She started her career as a Legal Counsel for Eroglu Holding, in 2006, where she spent two years. She holds an LLB degree from the University of Marmara and an LLM degree from Bahcesehir University.

Loomis offers integrated solutions for cash handling. These services mainly target banks, multi-location retailers, stores, and other commercial enterprises. The company has operations in the US, Sweden, Norway, Finland, Denmark, the UK, France, Austria, Slovenia, Slovakia, Switzerland, Spain, and Portugal.

Originally reported by CEE In-House Matters.

With the Capital Markets Board Bulletin [“Bulletin”] numbered 2022/74 published by the Capital Markets Board [“CMB”] on December 30, 2022, the monetary amounts stipulated in the capital markets legislation regarding the public offering were increased.

Accordingly, the figures set out in the conditions to be complied with before the initial public offering and the shares kept available for sale through a capital increase in a public offering as per the CMB’s Communiqué on Shares numbered VII-128.1 have been updated. In summary, the criteria for public offerings were significantly increased compared to 2022, making it more difficult to be traded in the stock exchange.

New Thresholds

The public offering amounts subject to revaluation have been updated for 2023 as follows:

(i) For the corporations whose shares will be offered to public initially,

• the market value to be taken as a basis for determining whether the shares to be offered to the public, excluding green shoe option will be made available for sale and whether shares will be issued, became 231,903,983 Turkish Liras. For corporations below this threshold, the pre-emption rights of the existing shareholders are completely restricted in order to keep the shares corresponding to 25% of the nominal value of the shares to be offered to the public available for sale. (The respective value previously was around 105m Turkish Liras.)
• if the market value of the shares to be offered to the public, excluding green shoe option, to be calculated over the public offering price (i) is below 150m Turkish Liras, all of the unsold shares; (ii) is between 150m and 250m Turkish Liras, for all of the unsold shares up to 150m Turkish Liras and half of the portion exceeding this amount, the authorized institutions must underwrite towards the corporation that they will purchase such shares over the public offering price. (Previously, the first threshold was 60m, and the second was between 60m and 100m.)

(ii) To avoid being excluded from the scope of the Capital Markets Law No. 6362, the corporations that have acquired the public corporation status but have not applied to the exchange within two years for their shares to be traded on the exchange,

•  The minimum values of the shares that have been prepared and independently audited in accordance with the CMB regulations are (i) 300m Turkish Liras in total assets and 180m Turkish Liras in net sales revenue for 2021; (ii) 450m Turkish Liras in total assets and at least 270m Turkish Liras in net sales revenue for 2022. (These amounts were previously applied as around 11m and 21m for 2021, and 60m and 100m for 2022, respectively).

(iii) Corporations that will adopt the registered capital system are required to have a minimum paid-in capital of 30m Turkish Liras, which was 10m before the amendment.

Conclusion

With the arrival of 2023, the increased monetary thresholds for the public offering make it significantly more difficult for small and medium-sized companies to go public. In the face of the aggravating conditions, applications to be made within the framework of the Communiqué on the Principles Regarding Companies Whose Shares Will Be Traded on the Venture Capital Market, whose draft version has recently been published and which is expected to enter into force in the near future, may be relatively more in demand. Please see our article regarding the Draft Communiqué.

By Zahide Altunbas Sancak, Partner, and Beliz Boyalikli, Legal Trainee, Guleryuz & Partners

Communiqué on the Default Interest Rate to be applied for Late Payments and the Minimum Expense Amount that can be claimed for the Collection Costs of Receivables in the Supply of Goods and Services (the “Communiqué”) was published in the Official Gazette dated January 2, 2023 numbered 32061 and entered into force on January 1, 2023.

What Does the Communiqué Bring?
The Central Bank of the Republic of Turkey (“TCB”) reduced the default interest rate to be applied in cases where the debtor is in default and the default interest rate is not stipulated in the contract or the default interest provision of the relevant contract is invalid under the 7th paragraph of Article 1530 of the Turkish Commercial Code No. 6102, from 17.25 to 11.75 per annum for the year 2023; and also increased the minimum amount of expenses that can be claimed for the collection costs of the receivable from 555,00 Turkish Lira to 800,00 Turkish Lira.

It is believed that the change made by the TCB to reduce the default rate is intended to prevent the debtor’s default in payment from turning into a financing instrument for the creditor and to reflect the interest rate reduction policy it follows in the policy rate to the inflationary environment where the traders are located.

By Cerensu Cetin Yenigun, Senior Associate, and Deniz Yontuk, Associate, Moral, Kinikoglu, Pamukkale, Kokenek

The Aksan Law Firm has advised venture capital and private equity firm Maxis on its investment in education platform MentalUP.

MentapUP is an education platform that features gamified exercises for children aged four to 13, developed by Turkish software company Ayasis.

Aksan’s team included Partner Alper Onar, Managing Attorney Emre Subasi, and Associate Betul Colak.

Aksan did not respond to our inquiry on the matter.

Turkish law firm Herguner Bilgen Ozeke has announced the change of its name to Herguner Bilgen Ucer, by incorporating the name of Managing Partner Kayra Ucer, in 2023.

Ucer also heads the firm’s M&A and Corporate Support practice groups. He has been with the team for over 22 years, starting in 2000.

According to the firm, it will continue to operate under the “Herguner” brand in 2023 with “more than a law firm” as its motto.

The “Regulation on Electronic Commerce Intermediary Service Providers and Electronic Commerce Service Providers” [“Regulation”] was published in the Official Gazette no. 32058 dated December 29, 2022 and abolished the previous Regulation on Electronic Commerce Service Providers and Intermediary Service Providers published in the Official Gazette dated 26.08.2015 and numbered 29457.

Detailed rules and principles were introduced for the activities of e-commerce service providers [“Service Provider”] and e-commerce intermediary service providers [“Intermediary”] in line with the Law Amending the Law on the Regulation of Electronic Commerce Law no. 7416 [“Law”] published in the Official Gazette dated July 7, 2022. This Regulation aims to prevent unfair practices against sellers operating in the field of e-commerce and to ensure the development of e-commerce by creating an effective and fair competition environment. The Regulation entered into force as of January 1, 2023, apart from some exceptions set out below.
In this article, we will review the significant provisions of the Regulation.

Obligation to Provide Information and Verification

Service Providers are now obliged to keep their full identifying information such as trade name, business name, registered trademark name, KEP address, or tax identification number on the home page of their e-commerce medium and in the area allocated to them by the Intermediary. In addition, Intermediaries are obliged to verify this information through the open-to-access electronic systems of the relevant institutions, or if this is not possible, through the documents obtained from the Service Provider, and not to provide intermediary services if they cannot verify it. This verification will be made within the first 3 months of each calendar year and if it is determined that the information is outdated, the Service Provider will be notified, and the information will be updated within a maximum of 3 business days. Service Providers will also be obliged to make updates regarding the changes in their information and forward them to the relevant Intermediary until the end of the day following the date of the change.

Preventing Unfair Practices and Countering Unlawful Content

The Regulation introduces new obligations for Intermediaries to play a more active role in preventing unlawful content. Accordingly, in order to secure the rights of sellers in e-commerce marketplaces and to prevent them from being subjected to unfair practices, Intermediaries will be obliged to remove such content and to notify the Service Provider and relevant organizations within 48 hours of becoming aware of the unlawful nature of the content.
Complaints regarding infringement of intellectual industrial property rights are also regulated within this scope, and the Intermediary is required to remove the product subject to the complaint from publication within 48 hours from the receipt of the applications made via the “internal communication system”, notary public or KEP. Likewise, the Service Provider affected by the infringement application can object to the application in the same way along with the relevant information mentioned in the Regulation, and if it is justified in its objection, the

Intermediary will re-publish the product subject to the complaint within 24 hours following the objection.

Intermediary Agreement

In order to regulate the commercial relations between Intermediaries and Service Providers, the Regulation sets out the minimum requirements of the intermediary agreement. In the event of an amendment to the agreement, the Intermediary shall notify the Service Provider through its internal communication system and also through its approved electronic communication address, and the amendment shall enter into force within 15 days from the date of notification, unless a longer period is stipulated. As for the amendments that will have unfavorable consequences for the Service Provider, the period foreseen for the implementation of the amendments is set as 30 days, and the Service Provider is entitled to terminate the intermediary agreement without compensation by notifying the Service Provider via the internal communication system before the expiration of the 30-day period in case of such contract amendments.
Moreover, the Regulation gives the Intermediary the right to restrict, suspend or terminate the intermediary agreement only in the presence of objective conditions in the agreement, after requesting a justification from the Service Provider by providing its reasons explicitly, and only if these justifications are insufficient or no explanation is provided. Intermediaries affected by these decisions will be able to continue their activities limited to the existing orders.

Establishment of an Internal Communication System

The Regulation also provides for the establishment of an “internal communication system” to ensure all kinds of communication between Intermediaries and Service Providers in the marketplace. Within the scope of the Regulation, internal communication systems is defined as “the system created by the electronic commerce intermediary service provider to ensure easy and free of charge all kinds of communication with the electronic commerce service providers in the electronic commerce marketplace”, and it is necessary to establish the infrastructure where Service Providers can make all kinds of applications for Intermediaries online. The obligation to establish an internal communication system will enter into force on July 1, 2023 and until that date, communication will be maintained through other means such as e-mail.

Obligation to Assign Contact Persons

With the entry into force of the Regulation, Intermediaries in the e-commerce marketplace will be required to designate at least one real person or legal entity as a point of contact with whom public institutions and organizations can communicate directly.

Data Relocation

As to reduce dependency on electronic commerce marketplaces, intermediaries shall ensure that Service Providers have access to data regarding their sales in the electronic commerce environment free of charge. Intermediaries must fulfill such data-related requests within 15 days. With the entry into force of this provision on January 1, 2024, Service Providers will be able to easily transfer their data to other e-commerce marketplaces. Medium, large and very large-scale Intermediaries will also be obliged to create an application programming interface for the transportation and storage of data.

Restriction on Advertising and Discount Budget

The Regulation defines what is included in advertising, discounts, and related expenditures in line with the Law and sets forth restrictions on advertising and discount budgets for Intermediaries and Service Providers based on the net trading volume. In addition, it is stated that the advertisements made by the Service Provider or third parties in favor of the Intermediaries shall also be considered as advertising expenditures and are subject to restrictions on the advertising budget. These provisions entered into force on January 1, 2023 to be applied to the net trading volumes for the calendar year of 2022.

Provisions in Line with the Law
The concepts of “electronic commerce intermediary service provider” and “electronic commerce service provider”, which were defined for the first time by the Law, are included in the Regulation, and Intermediaries and Service Providers are grouped as medium, large and very large-scale according to the net trading volume in a calendar year.
The Regulation specifies that the licensing and license renewal obligations under the Law will enter into force as of January 1, 2025 and that the license and renewal applications, which will be made through Electronic Commerce Information System (ETBIS), will be concluded within 15 days.

Conclusion

The Regulation aims to prevent unfair commercial practices in electronic commerce, protect the competitive environment and maintain transparent and fair commercial relations between the actors in electronic commerce in the Turkish market by regulating the obligations imposed by the Law in detail.
However, the criticism and concerns that some provisions may make it difficult for new entrants to enter the market such as high license fees, restrictions on discounts and advertisements, and the inability of intermediaries to sell their own brands, which we highlighted in our Article regarding the Law, remain unchanged following the Regulation.

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

Dentons Turkish affiliate Balcioglu Selcuk Ardiyok Keki Attorney Partnership has advised SDT Uzay & Savunma Teknolojileri on its IPO with Info Yatirim.

Turkish SDT Space & Defense Technologies operates as a defense sector company that develops domestic products and capabilities in R&D-based fields. Since its establishment in 2005, it has produced and put into use various defense electronics and software products.

BASEAK’s team included Partners Barlas Balcioglu and Galip Selcuk and Associates Cenk Yilgor, Erkin Tuzcular, and Eda Yilmaz.

The Aksan Law Firm has advised APY Ventures on its TRY 6.7 million investment in Shippn.

APY Ventures is a Turkey-based venture capital firm focused on investing in early-stage technology startups. Shippn is a New Jersey-headquartered community marketplace.

“We have achieved a growth rate of over 500% in a short time,” Shippn CEO Duhan Icoz commented. “We serve our users in more than 60 countries through our host located in 28 countries in total. With this investment tour, we aim to take very important steps in terms of scaling our system and taking Shippn to a very different position in terms of turnover and to embark on a series A investment tour in which we will make our name known in the global ecosystem.”

The Aksan team included Partner Alper Onar, Managing Associate Emre Subasi, and Associate Oguz Madran.

Aksan did not respond to our inquiry on the matter.

Moral, Kinikoglu, Pamukkale, Kokenek has advised Twin Science & Robotics and its shareholders on the company’s pre-series A fundraising.

London-headquartered Twin Science & Robotics is an educational technology company that provides robotics, coding, and artificial intelligence-based educational applications and toys to children in the UK, the US, the Netherlands, Italy, and Germany.

The Moral, Kinikoglu, Pamukkale, Kokenek team included Managing Partner Resat Moral, Senior Partner Sertac Kokenek, and Associate Egemen Akyol.

The 2022 Mergers and Acquisitions (the “M&A”) Outlook Report (the “Report”) drafted by the Turkish Competition Authority’s (the “Authority”) Economic Analysis and Research Department regarding the transactions notified to the Authority in 2022 was published on the Authority’s website on January 6, 2023.

In addition to the M&As reported in 2022, the Report also includes comparative analysis of the transactions examined in previous years, thus it not only outlines the framework of the commercial and economic mobility expected to take place in Turkey in the upcoming days but also sheds light on investors who want to invest in Turkey in the near future. Accordingly, in addition to taking a snapshot of the current situation of M&A and privatization transactions in Turkey on a sectoral basis, the Report also contains clues on how the next period will be shaped. Some of the highlights of the Report are summarized below.

21% Decrease in the Number of Transactions

In 2022, the Authority examined 245 M&As, 7 of which were privatization transactions. It is stated that 82 of these transactions, excluding privatizations, are related to companies with Turkish origin. In other words, target companies controlled within the scope of the said transactions are companies established in Turkey. The number of transactions examined by the Authority in 2021 has been decreased by 21%, from 309 to 245, in 2022. Although the number of transactions realized in 2022 decreased compared to the number of transactions in 2021, it is seen that the total number of transactions is above the average of the last 10 years (219).

Significant Increase in the Value of Transactions

In 2022, it was recorded that the total transaction value of the M&As examined concerning Turkey-based transactions was approximately TRY 86.2 billion, including privatizations. It is seen that the total transaction value of Turkey-based transactions is TRY 72 billion 210 million, excluding privatizations. In this respect, excluding privatizations in 2022, Turkey’s transaction value is above the average of the last decade (TRY 32 billion) and has increased by approximately 70% compared to 2021.

Electricity Sector Ranks First Again

Just like in 2020 and 2021, the highest number of transactions in Turkey-based transactions in 2022 were realized in the field of “generation, transmission, and distribution of electrical energy,” with 8 transactions, and the highest transaction value was realized in the same area with approximately TRY 8.35 billion. Transaction value in this sector corresponds to approximately 11% of the total value of the Turkish transactions reported in 2022 excluding privatizations. According to the classification made in terms of the field of activity / sectors of the 19 target companies subject to the transactions, the first area with the highest transaction volume in terms of transactions deemed to be of Turkish origin is “transportation and storage” with TRY 20.5 billion, following “electricity, gas, steam, and air conditioning production and distribution” with TRY 12.2 billion and “accommodation and food service activities” with TRY 4.7 billion.

Investors From the Netherlands and United Arab Emirates Share the Peak

In 2022, foreign investors invested in Turkish target companies in 36 separate transactions, among which the first place is shared by investors from the Netherlands and the United Arab Emirates, with five transactions each. The investment made by foreign investors in Turkish companies through M&A transactions in 2022 is stated as approximately TRY 43 billion in total.

Sectors Invested Worldwide

In the Report, a total of 181 transactions that foreign investors carried out globally in 2022, 36 of which are in Turkey and 145 abroad, are listed based on transaction value according to their economic fields of activity. Accordingly, among the sectors invested worldwide (i) Wholesale and retail trade and repair of motor vehicles and motorcycles (ii) Programming and broadcasting activities, (iii) Installation and repair of machinery and equipment, (iv) Manufacturing of basic pharmaceutical products, (v) Financial services and (vi) Manufacturing of chemical products sectors stood out the most.

15 Day Review Period

M&As notified to the Authority in 2022 were finalized after an average of 15 days from the date of the last notification without waiting for the statutory period of 30 days. Therefore, this may be taken into consideration in terms of determining the closing dates for M&A transactions planned to be carried out by the companies.

By Serra Haviyo, Partner, Nur Duygu Bozkurt Kadirhan, Senior Associat and Deniz Yontuk, Associate, Moral, Kinikoglu, Pamukkale, Kokenek