Category: Turkiye

Dentons’ Turkey affiliate Balcioglu Selcuk Ardiyok Keki Attorney Partnership has advised on Suwen Tekstil’s TRY 425.5 million IPO.

Turkiye Sinai Kalkinma Bankasi, Yatirim Finansman, and Gedik Yatirim Menkul Degerler A.S. facilitated the IPO.

Suwen Tekstil is a clothing company.

According to BASEAK, “the IPO enjoyed 4.4 times oversubscription by Turkish retail investors and 2.6 times by Turkish institutional investors and 2.9 times by foreign institutional investors.”

BASEAK’s team included Managing Partner Galip Selcuk, Partner Barlas Balcioglu, and Associates Cenk Yilgor, Erkin Tuzcular, Eda Yilmaz, Ceren Koksoy, and Merve Colak.

Turunc has advised Wellbees on its recent 212 VC-led funding round. Moroglu Arseven advised 212 VC on the deal.

Wellbees is a corporate well-being platform. 212 invests in growth-stage tech companies across Turkey, CEE, and MENA.

Turunc’s team included Managing Partner Kerem Turunc and Attorneys Gozde Kiran and Beste Ergul.

Moroglu Arseven’s team was led by Partner Burcu Ersin and included Senior Associate Basak Acar.

The Law on the Amendment to the Consumer Protection and Property Ownership Law numbered 7392 [“Amendment Law”] was published in the Official Gazette on April 1, 2022. Most changes will enter into force six months later, i.e., as of September 1, 2022. In this article, we will explain the significant amendments introduced to the Consumer Protection Law No. 6502 [“CPL”] as per the Amendment Law [available in Turkish only].

Amendments in Consumer Loans and Housing Finance

The banks required insurance in loans requested by consumers, and they usually accordingly imposed an insurance policy on the consumers along with the loan agreement. With the amendment, it is now mandatory to provide a loan package that does not include an insurance contract to the consumer. This amendment is intended to prohibit banks from requiring insurance while providing loans.

This amendment has also been implemented in terms of housing finance contracts, with the goal of protecting consumers from ancillary financial products and services, which are a significant cost factor.

Delivery Period of Prepaid Housing Sales Extended

In prepaid house transactions, the maximum transfer or delivery period was increased from 36 months to 48 months from the contract date. As a result, the contractor companies’ project completion period is now 48 months.

New Liabilities for E-Commerce Platforms

The Amendment Law regulates the liabilities in distance contracts in which intermediary service providers, such as e-commerce platforms, are parties and in which they are jointly and severally liable with the seller or provider. In this respect, for instance, e-commerce platforms are now jointly and severally liable for confirming and proving to provide preliminary information to the consumer with the seller or provider. Also, intermediary service providers must implement a continuous system to ensure the communication and follow-up of consumer demands regarding the issues set forth in the relevant regulations.

Amendments in After-Sales Services

Manufacturers and importers’ liability for after-sales services will no longer be restricted to the warranty period, but rather to the product’s expected life period as determined by the Ministry of Trade of the Republic of Turkey. Otherwise, manufacturers and importers will be required to reimburse consumers for their losses. As a result, manufacturers and importers will be jointly liable for any product defects that arise after the expiration of the warranty period.

The Authority of Consumer Arbitral Tribunals Was Expanded

The monetary limit for applications to consumer arbitration committees has been increased by the Amendment Law, and it has been regulated that disputes up to 30,000.00 TRY will be heard in consumer arbitration committees in 2022. Another amendment in favor of the consumer is that if an existing information or document that has not been submitted to the consumer arbitration tribunal is submitted to the consumer court by the objecting party and the decision of the said committee is annulled, no litigation expenses and attorney’s fees will be imposed against the consumer.

Refurbished Products Will Have a 1 Year Warranty

With the Amendment Law, unity has been achieved between the CPL and the Regulation on the Sale of Refurbished Products, and accordingly, it is now mandatory to provide a guarantee of at least one year from the date of delivery to the consumer for products that were refurbished by improving their hardware, software, or physical features and offered for sale.

Penalties are Now More Deterrent

Administrative fines for sellers, manufacturers, importers, and intermediary service providers have been increased, and the penalty of imprisonment has been instituted for breaches of liabilities regarding timeshare vacations. On the other hand, the Board of Advertisement can now decide to block access to content in CPL violations committed by online advertisers.

By Baris Ulker, Senior Associate, and Beliz Boyalikli, Legal Trainee, Guleryuz & Partners

Former Ata Holding Legal Counsel Yasemin Erden has returned to private practice as a Partner at Turunc.

Erden had been with her company since 2014. Prior to that, she worked as a Senior Associate for Guner Law Office and as a Turkey Legal Counsel for Ashmore Private Equity. Earlier still, she worked for Pekin & Bayar, first as an Associate between 2002 and 2004 and then as a Senior Associate between 2004 and 2007.

Turunc describes her as “an M&A expert with many years of experience in cross-border and domestic transactions involving multination companies, Turkish conglomerates, and Turkish and international investment funds.”

Originally reported by CEE In-House Matters.

On March 4, 2022 the Turkish Competition Authority (“Authority”) published the Communiqué No. 2022/2 on the Amendment of Communiqué No. 2010/4 on the Mergers and Acquisitions Subject to the Approval of the Competition Board (the “Amendment Communiqué”). The Amendment Communiqué introduced certain new rules concerning the Turkish merger control regime, which fundamentally affect merger control notifications submitted to the Authority.

Pursuant to Article 7 of the Amendment Communiqué, the changes introduced by the Amendment Communiqué became effective as of May 4, 2022. One of the most significant developments that the Amendment Communiqué entails, inter alia, is the increase of the applicable turnover thresholds for the concentrations that require mandatory merger control filing before the Authority and the introduction of threshold exemption for undertakings active in certain markets/sectors.

New Thresholds Introduced by the Amendment Communique

Further to the Amendment Communiqué, as of May 4, 2022, a transaction will be required to be notified before the Authority; if one of the following increased turnover thresholds is met:

The aggregate Turkish turnover of the transaction parties exceeding TL 750 million (approx. EUR 71.9 million or USD 84.9 million) and the Turkish turnover of at least two of the transaction parties each exceeding TL 250 million (approx. EUR 23.9 million or USD 28.3 million), OR

(i) The Turkish turnover of the transferred assets or businesses in acquisitions exceeding TL 250 million (approx. EUR 23.9 million or USD 28.3 million) and the worldwide turnover of at least one of the other parties to the transaction exceeds TL 3 billion (approx. EUR 287.9 million or USD 339.7 million), or (ii) the Turkish turnover of any of the parties in mergers exceeding TL 250 million (approx. EUR 23.9 million or USD 28.3 million) and the worldwide turnover of at least one of the other parties to the transaction exceeds TL 3 billion (approx. EUR 287.9 million and USD 339.7 million).

Accordingly, the Amendment Communiqué increased the previous turnover thresholds of (i) 30 million Turkish Liras (approx. EUR 2.8 million or USD 3.3 million) to 250 million Turkish Liras (approx. EUR 23.9 million or USD 28.3 million), (ii) 100 million Turkish Liras (approx. EUR 9.5 million or USD 11.3 million) to 750 million Turkish Liras (approx. EUR 71.9 million or USD 84.9 million), and (iii) 500 million Turkish Liras (approx. EUR 47.9 million or USD 56.6 million) to 3 billion Turkish Liras (approx. EUR 287.9 million or USD 339.7 million).

Furthermore, the Amendment Communiqué introduced a threshold exemption for the undertakings active in certain markets/sectors. Pursuant to the Amendment Communiqué, “the TL 250 million Turkish turnover thresholds” mentioned above will not be sought for the acquired undertakings active in or assets related to the fields of digital platforms, software or gaming software, financial technologies, biotechnology, pharmacology, agricultural chemicals and health technologies (“Target Company(ies)”), if they (i) operate in the Turkish geographical market or (ii) conduct research and development activities in the Turkish geographical market or (iii) provide services to the users in the Turkish geographical market.

It is also noteworthy that the Amendment Communiqué does not seek a Turkish nexus in terms of the activities which render the threshold exemption. In other words, it would be sufficient for the Target Company to be active in the fields of digital platforms, software or gaming software, financial technologies, biotechnology, pharmacology, agricultural chemicals and health technologies anywhere in the world for the threshold exemption to become applicable, provided that the Target Company (a) generates revenue from customers located in Turkey OR (b) conducts R&D activities in Turkey OR (c) provides services to the Turkish users in any fields other than abovementioned ones. Accordingly, the Amendment Communiqué does not require (a) generating revenue from customers located in Turkey OR (b) conducting R&D activities in Turkey OR (c) providing services to the Turkish users concerning the fields listed above for the exemption on the local turnover thresholds to become applicable.

The Sectors Exempted from the Use of Local Turnover Thresholds

To clarify the meaning and the scope of these sectors exempted from the use of local turnover thresholds, a non-exhaustive list of activities which correspond to the sectors referred to in the definition of the Amendment Communiqué is provided below. The below list reflects a mere effort to provide insight and guidance in identifying this scope, thus the list is not exhaustive:

Digital platforms: Digital platforms are systems and interfaces that form a commercial network or market facilitating business-to-business (B2B), business-to-customer (B2C) or even customer-to-customer (C2C) transactions. Digital platforms include but are not limited to social media platforms, knowledge sharing platforms, media sharing platforms, service-oriented platforms, online marketplaces and digital content aggregators.

Software and gaming software: Software relates to a set of instructions, data or programs used to operate computers and execute specific tasks, while gaming software concerns software customised for gaming. Software and gaming software include but are not limited to the activities below.

• writing and publishing of software and gaming software (including publishing of computer games) (NACE Rev. 2: 58.2)
• wholesale, retail sale, distribution and marketing of software (both customised and non-customised) and gaming software (NACE Rev. 2: 46.51, 47.41)
• reproduction from master copies of software (NACE Rev. 2: 18.2)
• manufacture of electronic games with fixed (non-replaceable) software (NACE Rev. 2: 32.40)
• translation or adaptation of software and gaming software (NACE Rev. 2: 58.29)
• computer programming activities (designing the structure and content of, and/or writing the computer code necessary to create and implement systems software (including updates and patches), software applications (including updates and patches), databases, web pages, customising of software (NACE Rev. 2: 62.01)
• software installation services (NACE Rev. 2: 62.09)

Financial technologies: Financial technologies refer to technology-enabled innovation in financial services. Undertakings which sit at the crossroads of financial services and technology fall into the scope of this definition. In brief, the term “financial technologies” is used to define software and other technology aiming to modify, enhance or automate financial services for businesses or consumers. Financial technologies include but are not limited to technologies and software developed for the following fields:

• financial services activities (monetary intermediation, financial leasing, other credit granting) (NACE Rev. 2: 64.1, 64.9)
• insurance, reinsurance, pension funding (NACE Rev. 2: 65)
• activities auxiliary to financial services, insurance and pension funding (administration of financial markets (futures commodity contracts exchanges, securities exchanges, stock exchanges, stock or commodity options exchanges), security and commodity contracts brokerage (dealing in financial markets on behalf of others (e.g. stock broking) and related activities, securities brokerage, commodity contracts brokerage, activities of bureaux de change etc.), risk and damage evaluation, activities of insurance agents and brokers, fund management activities, financial transaction processing and settlement, investment advisory activities, activities of mortgage advisers and brokers (NACE Rev. 2: 66)
• accounting, bookkeeping and auditing activities, tax consultancy (recording of commercial transactions from businesses or others, preparation or auditing of financial accounts, examination of accounts and certification of their accuracy, preparation of personal and business income tax returns, advisory activities and representation on behalf of clients before tax authorities) (NACE Rev. 2: 69.2)
• digital lending, payments, block chain and digital wealth management.

Biotechnology: Biotechnology refers to the technology that utilizes biological systems, living organisms or parts of this to develop or create different products. The sector includes but is not limited to the activities below:

• research and experimental development on biotechnology (NACE Rev. 2: 72.11)
• DNA/RNA (genomics, pharmacogenomics, gene probes, genetic engineering, DNA/RNA sequencing/synthesis/amplification, gene expression profiling, and use of antisense technology)
• proteins and other molecules (sequencing/synthesis/engineering of proteins and peptides (including large molecule hormones); improved delivery methods for large molecule drugs; proteomics, protein isolation and purification, signalling, identification of cell receptors)
• cell and tissue culture and engineering (cell/tissue culture, tissue engineering (including tissue scaffolds and biomedical engineering), cellular fusion, vaccine/immune stimulants, embryo manipulation
• process biotechnology techniques (fermentation using bioreactors, bioprocessing, bioleaching, biopulping, biobleaching, biodesulphurisation, bioremediation, biofiltration and phytoremediation
• gene and RNA vectors: gene therapy, viral vectors)
• bioinformatics (construction of databases on genomes, protein sequences, modelling complex biological processes, including systems biology)
• nanobiotechnology (applies the tools and processes of nano/microfabrication to build devices for studying biosystems and applications in drug delivery, diagnostics etc.)
• manufacture of biotech pharmaceuticals such as plasma derivatives (NACE Rev. 2: 21.20)

Pharmacology: Pharmacology, a biomedical science, deals with the research, discovery, and characterization of chemicals which show biological effects and the elucidation of cellular and organismal function in relation to these chemicals. In other words, pharmacology refers to the science of how drugs act on biological systems and how the body responds to the drug. The study of pharmacology encompasses the sources, chemical properties, biological effects and therapeutic uses of drugs. Pharmacology includes but is not limited to the biomedical studies and R&D activities conducted in the areas below:

• Pharmacodynamics (relationship of drug concentration and the biologic effect (physiological or biochemical)
• Pharmacokinetics (interrelationship of the absorption, distribution, binding, biotransformation, and excretion of a drug and its concentration at its locus of action)
• Clinical Pharmacology and Therapeutics (understanding what a drug is doing to the body, what happens to a drug in the body, and how drugs work in terms of treating a particular disease)
• Pharmacotherapy (treatment of a disorder or disease with medication)
• Neuropharmacology (understanding how drugs affect cellular function in the nervous system)
• Pyscopharmacology (use of medications in treating mental disorders)
• Cardiovascular pharmacology (understanding how drugs influence the heart and vascular system)
• Molecular pharmacology (investigates the molecular mode of action of drugs, among others using genetic and molecular biology methods)
• Radiopharmacology (study and preparation of radioactive pharmaceuticals),

Manufacture and R&D of pharmaceuticals (antisera and other blood fractions, vaccines, diverse medicaments, including homeopathic preparations), pharmaceutical preparations and medicinal chemicals (manufacture of medicinal active substances to be used for their pharmacological properties in the manufacture of medicaments: antibiotics, basic vitamins, salicylic and O-acetylsalicylic acids etc.); wholesale, retail sale, distribution and marketing of pharmaceuticals, pharmaceutical preparations and medicinal chemicals; growing of drug and narcotic crops (NACE Rev. 2: 21.1 and 21.2)

Agricultural chemicals: Agricultural chemicals refer to chemicals used in agriculture to control pests and disease or control and promote growth; such as pesticides, herbicides, fungicides, insecticides, and fertilizers. The sector includes but is not limited to the activities below:

• mining of chemical and fertiliser minerals (NACE Rev. 2: 08.91)
• support activities for other mining and quarrying (where it relates to agricultural chemicals and fertilizers) (NACE Rev. 2: 09.90)
• manufacture of fertilisers (straight or complex nitrogenous, phosphatic or potassic fertilisers; urea, crude natural phosphates and crude natural potassium salts), nitrogen compounds (nitric and sulphonitric acids, ammonia, ammonium chloride, ammonium carbonate, nitrites and nitrates of potassium) (NACE Rev. 2: 20.15)
• manufacture of organic and inorganic basic chemicals (where it relates to agricultural chemicals and fertilizers) (NACE Rev. 2: 20.13, 20.14)
• manufacture of pesticides and other agrochemical products (manufacture of insecticides, rodenticides, fungicides, herbicides, acaricides, molluscicides, biocides, manufacture of anti-sprouting products, plant growth regulators, manufacture of disinfectants (for agricultural and other use) (NACE Rev. 2: 20.2)
• wholesale, retail sale, distribution and marketing of fertilisers and agrochemical products (NACE Rev. 2: 46.75)

Health technologies: Health technologies are the application of organized knowledge and skills in the form of medicines, medical devices, vaccines, procedures and systems developed to solve a health problem and improve quality of life. They refer to any technology, including medical devices, IT systems, algorithms, artificial intelligence (AI), cloud and block chain, designed to support healthcare organizations and patients. Health technologies include but are not limited to technologies and software developed or being developed for the following fields:

• human health activities (hospital activities, medical (medical consultation and treatment) and dental practice activities (dentistry, endodontic and paediatric dentistry; oral pathology, orthodontic activities) (NACE Rev. 2: 86)
• residential healthcare activities (residential nursing care activities, residential care activities for mental retardation, mental health and substance abuse, residential care activities for the elderly and disabled) (NACE Rev. 2: 87)
• manufacture of medical and dental instruments (e.g. operating tables, examination tables, hospital beds with mechanical fittings, dentists’ chairs, surgical appliances) (NACE Rev. 2: 32.5)

If the Target Company’s activities fall into the above markets/sectors, the thresholds that would be applicable would be: “The aggregate Turkish turnover of the transaction parties exceeding TL 750 million (approx. EUR 71.9 million or USD 84.9 million)” or “the worldwide turnover of at least one of the other parties to the transaction exceeding TL 3 billion (approx. EUR 287.9 million or USD 339.7 million)”. Accordingly, when an undertaking that falls within the definition and criteria above is being acquired, the transaction would be notifiable if the aggregate Turkish turnover of the Target Company and the acquirer exceeds TL 750 million or the worldwide turnover of the acquirer exceeds TL 3 billion.

Conclusion

The increased turnover thresholds and the exemption on the local turnover threshold mechanism introduced by the Amendment Communiqué alter the scope of the transactions that are notifiable to the Authority. On that note, the concentrations related to the fields of digital platforms, software or gaming software, financial technologies, biotechnology, pharmacology, agricultural chemicals and health technologies, will be scrutinized by the Authority.

By Gonenc Gurkaynak, Partner, ELIG Gürkaynak Attorneys-at-Law

The Communiqué No. 2008-32/34 on the Protection of the Value of Turkish Currency was amended by Communiqué No.2022-32/66, and accordingly, a new prohibition has been introduced regarding foreign currency transactions. Pursuant to the amendment, the contract price will have to be paid in Turkish Lira in sale of goods contracts, other than those for vehicles. The new regulation expanded the scope of the prohibition on foreign currency transactions and became effective as of its publishment in the Official Gazette, i.e., on April 19, 2022. “Goods” in contracts for the sale of goods are defined as any kind of goods that do not fall under the definition of immovable goods.

Implications of the New Regulation

Before the amendment, it was possible to pay the contract price in foreign currency in the sale of goods contracts concluded between residents of Turkey. However, from now on, the price agreed in such contracts can only be paid in local currency.

However, the amendment does not prevent the parties from setting the purchase price in foreign currency or indexed to foreign currency. In other words, the parties to a sale of goods contract may agree on their payment obligation in foreign currency or indexed to foreign currency, but those amounts must be paid in Turkish Lira on the payment date.

It should be emphasized that the ban in question only applies to the contracts between Turkish residents. As such, payments under a sale of goods contract between a Turkish resident and a foreign resident can be made in foreign currency.

Application of FX Ban on Negotiable Instruments

According to the statement [available in Turkish] published by the Ministry of Treasury and Finance of the Republic of Turkey regarding the new regulation, it will no longer be allowed to use negotiable instruments issued in foreign currency for the payment of the price in the sale of goods contracts as of April 19, 2022. Yet, the prohibition is not applicable to negotiable instruments issued in foreign currency and entered into circulation before April 19, 2022. That is to say, it is allowed to pay for a FX-negotiable instrument in the same currency so long as it was issued and circulated before the amendment.

Penalties for Non-Compliance with the FX Ban 

Those who breach the above-mentioned ban on foreign currency transactions may face administrative fines ranging from 14,200 TRY to 118,500 TRY, imposed separately for each party to the sale of goods contract. If the parties fail to comply with the ban for a second time, the fines will be doubled.

Review

As of April 19, 2022, payments can only be made in Turkish Lira in contracts for all goods that do not fall within the category of immovable goods, and even if the contract price is stipulated in foreign currency or indexed to foreign currency, debtors must pay in Turkish Lira and creditors cannot accept payments in foreign currency. The new regulation ban is only applicable to the contracts between two Turkish residents. To avoid any potential conflicts that may arise as a result of the ban, it would be advised that the foreign currency denominated price specified in current contracts be fixed at the exchange rate on the date agreed by the parties. It should be added that invoices issued before April 19, 2022 are not subject to the new rule and can be paid in foreign currency.

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

Turunc has advised Bogazici Ventures on leading a USD 500,000 investment round into Kavaken. Ozbek Attorney Partnership reportedly advised Kavaken. 

Re-Pie Asset Management participated in the round. Kavaken is an AI-based energy sector-specialized customer data and asset performance management company.

Turunc’s team included Managing Partner Kerem Turunc and Attorney Gozde Kiran.

Editor’s Note: After this article was published, Ozbek Attorney Partnership confirmed its involvement to CEE Legal Matters. The firm’s team included Partner Atahan Sevimli and Managing Associate Ece Ersoy.

Consulturk has advised Dalsan Alci on its joint venture with Saint-Gobain Rigips in Turkey. Gide’s Turkish affiliate Ozdirekcan Dundar Senocak reportedly advised Saint Gobain.

The transaction remains contingent on regulatory approval.

According to Consulturk, Dalsan and Saint-Gobain will merge their plaster and plasterboard activities in Turkey. 

Established in 1932, Dalsan is a Turkish manufacturer and exporter of materials including plasters, mortars and silo systems, plasterboards, exterior sheathing boards, flooring, roofing, and steel framing.

Saint-Gobain designs, manufactures, and distributes materials and services for the construction and industrial markets.

Consulturk’s team included Partner Kadir Cevikbas.

Editor’s Note: After this article was published, Gide announced that its Turkey-based affiliated law firm Ozdirekcan Dundar Senocak advised Saint Gobain on the deal. The firm’s team included Partner Bulent Ozdirekcan, Senior Associate Mehmet Kosoglu, and Associates Nil Duman and Mustafa Karadas.

Dentons’ Turkish affiliate Balcioglu Selcuk Ardiyok Keki Attorney Partnership has advised Layer as well as the investors on Layer’s latest investment round.

The investors included Hummingbird Ventures, 500 Istanbul, and FJ Labs among others. According to BASEAK, “Layer is building the Declarative MLOps platform to help data teams across all companies to produce machine learning applications based on code in small and safe increments that can be reproduced, tested, and reliably released at any time, in short adaptation cycles.”

BASEAK’s team included Partner Selahattin Kaya and Associate Denizhan Uslu.

Turkish lawyer Sinem Ugur has joined Metro AG in Dusseldorf as the company’s Head of Competition & Compliance.

Prior to her move, Ugur was a Counsel with ELIG Gurkaynak Attorneys-at-Law. She first joined the firm in 2016 as a Senior Associate and was promoted to Counsel in January 2022. She worked for the same firm between 2012 and 2013 as an Attorney-at-Law with her having served as a Legal Consultant with Actecon between her two tenures.

“I am happy and excited about my new role at Metro AG as the Head of Competition and Compliance,” commented Ugur. “This is a great opportunity to tackle new challenges and enjoy new experiences from the aspect of an in-house counsel while having the comfort of being surrounded with sophisticated team members. It is a pleasure to add value to a company with a highly professional corporate culture and contribute to its efforts in preserving legal compliance at a worldwide level.”

Originally reported by CEE In-House Matters.