Category: Turkiye

Moral & Partners has advised Evam’s shareholders on the sale of a majority stake in the company to Ceecat Capital. Cigdemtekin Cakirca Aranci reportedly advised the buyer.

Evam provides customer engagement tools and systems to connect enterprises to their customers.

Luxembourg-based private equity fund Ceecat Capital focuses on the Emerging Europe and Central Asia markets. The company operates five offices in London, Luxembourg, Bucharest, Istanbul, and Almaty.

“We are proud of the recognition and investment by Ceecat Capital, one of the leading investment funds in Emerging Europe,” Evam CEO Bulent Demirkurt commented. “Since we started this journey six years ago, we aimed to be a global company. We proved our claim with our global offices opening in America, the Netherlands, and Russia in our second year. The agreement we signed today will enable our company to expand its global reach and network.”

“Evam has proven its capabilities and attractiveness in the regional/global arena via acquiring customers in Europe, US, and CIS,” Ceecat Capital Partner Anthony Stalker added. “We would like to enhance the existing strong core management team and invest into the human capital backbone of Evam to catalyze its next phase of growth. Our target is enabling Evam to fulfill its potential to emerge as a regional leader in global emerging markets via a successful shareholder transition.”

The Moral & Partners team was led by Managing Partner Resat Moral and Partner Serkan Pamukkale and included Senior Associates Serra Haviyo and Sinan Sunay, Associates Dilara Kaymaz, Egemen Akyol, and Orcun Turan, and Lawyer Ozgur Aydin.

The Council of Judges and Prosecutors [“CJP”] of Turkey resolved on establishment of six new specialized courts through its decision dated November 21, 2021, published in the Official Gazette on November 30, 2021. The CJP also published an announcement on its website.

Accordingly, the following disputes will be heard in specialized courts as of December 15, 2021:

• Lawsuits and proceedings regulated in the Tax Procedural Code No. 213 and falling under the jurisdiction of the criminal court of first instance
• In places where juvenile heavy penal courts and juvenile courts are not established, cases falling under the jurisdiction of these courts
• IT crimes
• Crimes regulated in the Law No. 6493 on Payment and Securities Congruence Systems, Payment Services and Electronic Money Institutions
• Applications to be made before peace court of criminal jurisdiction against administrative sanctions
• Lawsuits related to financial matters
• Lawsuits regulated in the Law No. 6356 on Unions and Collective Bargaining Agreement
• Lawsuits related to expropriation
• Cases that fall under the jurisdiction of commercial court of first instance in locations where the commercial court of first instance has not been formed or where the jurisdiction is not linked to the locations where these courts are located
• Cases that fall under the jurisdiction of consumer court in locations where the consumer court of has not been formed or where the jurisdiction is not linked to the locations where these courts are located.

By Zahide Altunbas Sancak, Partner, and I. Selin Nacar Ozturk, Associate, Guleryuz & Partners

Former Counsels Eda Duru and Onur Ozgumus have been promoted to Partner at ELIG Gurkaynak in a promotion round that saw five other lawyers promoted to Counsel.

According to ELIG, “Duru has undertaken numerous merger and acquisition filings, competition law compliance matters and investigations conducted by the Turkish Competition Authority and has extensive experience in these areas. She has represented various multinational and national companies before the Turkish Competition Authority in a variety of markets and sectors.”

Duru graduated from Marmara University Faculty of Law in 2005. Before joining ELIG Gurkaynak, she spent almost ten years with the Ismen Gunalcin law firm.

According to the firm, Ozgumus has “experience in all areas of competition law including compliance to competition law rules, cartel agreements, abuse of dominance cases, merger control and investigations. He has represented various multinational and national companies before the Turkish Competition Authority and before administrative courts.”

Ozgumus graduated from Koc University School of Law in 2008. Before joining ELIG Gurkaynak in 2014, he spent two years with Birsel and four years with Aksac.

Regulation on Sharing of Secret Information (“Regulation“) issued by the Banking Regulation and Supervision Agency (“BRSA“) has been published in the Official Gazette numbered 31501 and dated June 4, 2021 and will enter into force on January 1, 2022. The purpose of the Regulation is to determine the scope, form, procedures and principles regarding the sharing and transfer of bank secret and customer secret information, and the Regulation introduces detailed regulations regarding the confidentiality obligation. In this regard, we will focus on the new regulations introduced by the Regulation.

I. What is New?

 A. Confidentiality of “Customer Secret”

The Regulation defines the “customer secret”. As per Article 4/3 of the Regulation, information of a real or legal person, which are collected after establishing a customer relationship with banks specific to banking activities, are defined as customer secrets. Any information showing that a real or legal person is a customer of the bank will also be within the scope of customer secret. In addition, according to the Regulation, obtaining and learning customer secret information held by another bank is also subject to the confidentiality obligation.

Pursuant to Article 4/1 of the Regulation, persons who find out the secrets of banks or their customers due to their titles and duties will not be able to disclose such secrets to anyone other than the authorities expressly authorized by law. Even if a customer relationship has not been established, the confidentiality obligation will continue in case of obtaining and learning the customer secret information held by another bank.

B. Exemptions to the Confidentiality Obligation

The Regulation is in parallel with Article 73/4 of the Banking Law in terms of the exemptions to the confidentiality obligation. As per Article 5/1 of the Regulation, disclosure of secret information to those who are authorized by the law does not result in violation of the confidentiality obligation.

On the other hand, provided that a confidentiality agreement is signed and limited only to the stated purposes, sharing of bank secrets or customer secrets in the following cases will not constitute a violation of the confidentiality obligation:

1. Exchange of information and documents between banks and financial institutions and exchange of information and documents through the Risk Centre or companies established by at least five banks or financial institutions.
2. Providing information and documents to banks’ parent companies, including domestic or foreign credit institutions and financial institutions, which have 10% or more of their capital, within the scope of preparation of consolidated financial statements, risk management and internal audit practices.
3. Providing information and documents to prospective buyers to be used in valuation studies for the purpose of selling shares representing 10% or more of the bank’s capital through direct or indirect ownership, or for the purpose of selling assets including loans or securities based on these assets.
4. Providing information and documents to those who provide this service to be used in valuation, rating, support services and independent audit activities or in transactions for service procurement, provided that the necessary technical and administrative measures are taken.

Provided that the sharing to be made within the scope of subparagraph (b) is limited only to the purposes specified in the aforementioned paragraph, a confidentiality agreement is made and the other party takes the necessary technical and administrative measures with the provisions of the said agreement, concluding a confidentiality agreement with the controlling shareholder or with a group company to be determined by the controlling shareholder/parent company, from which it receives services within the scope of consolidated financial statement preparation or consolidated risk management practices, will not constitute a breach of confidentiality obligation.

According to Article 5/9 of the Regulation, a copy of the confidentiality agreement regarding the shares to be made within the scope of subparagraph (b), the purposes of the sharing, the technical and administrative measures taken by the controlling shareholder/parent company or the parties from which the controlling shareholder/parent company receives services in this context to ensure the confidentiality and security of confidential information and the title and country information of all third parties to whom information in the nature of bank secrets and customer secrets is transferred, is immediately reported to the BRSA in every 6 (six) months and in case of a critical change, in accordance with the format and methods deemed appropriate by the BRSA.

Pursuant to Article 5/5 of the Regulation, sharing information that is not a customer secret, but only a bank secret, through the decision of the bank’s board of directors, does not constitute a violation of the confidentiality obligation.

In addition, provided that the customer’s request or instruction is received to confirm the customer secret information given by the customers to the public institutions and organizations at their own request by the banks, the Risk Center or companies established by at least five banks or financial institutions, responding to the aforementioned public institutions and organizations only as to whether the information in question is correct will not constitute a violation of the confidentiality obligation.

As per Article 5/7 of the Regulation, providing information to the authorities authorized to settle the dispute and their representatives in case of a dispute between the bank and the customer, provided that the customer’s secret and the bank secrets are necessary for the bank to exercise its right of claim and defense and pursuant to Article 5/8 of the Regulation, sharing the information by the financial group affiliates within the group regarding accounts, transactions and customer will also not constitute a violation of the confidentiality obligation.

C. General Principles Regarding Sharing Confidential Information

According to Article 6 of the Regulation, the customer secrets and bank secrets may be shared only for certain purposes and in accordance with the principle of proportionality, provided that they contain as much data as required for these purposes. In this context, with regards to the principle of proportionality, the sharing must contain as much data as required by the purposes, and must be demonstrable as necessary for the realization of the stated purposes. On the other hand, when the data to be shared is aggregated, de-identified or anonymized, if these purposes can still be achieved, these methods should be applied and include minimum data. If the data is related to a natural person, it will be necessary to comply with the general principles in the Law on the Protection of Personal Data.

Information that is a customer secret cannot be shared with third parties in the country or abroad without a request or instruction from the customer, even with the explicit consent of the customer, except for the cases that are exempted from the confidentiality obligation. The customer’s consent or request or instruction to share their information cannot be made a prerequisite for the services to be provided by the bank.

In accordance with Article 6/9 of the Regulation, upon the request of foreign authorities that are equivalent of the Banking Regulation and Supervision Agency, information sharing will be carried out directly by the Agency. If the information available to the Agency is not sufficient, information sharing will be carried out by the banks within the permission given by the Banking Regulation and Supervision Agency.

As per Article 6/11 of the Regulation, as a result of its assessment on economic security, the Board may prohibit the sharing of all kinds of information, which are customer secrets or bank secrets, with third parties abroad, including sharing within the scope of exceptions to the obligation to keep secrets.

D. Information Sharing Committee

Pursuant to Article 7 of the Regulation, banks are required to establish an Information Sharing Committee, whose job descriptions and working principles are approved by the related bank’s board of directors, which is responsible for coordinating the sharing of customer secrets and bank secrets, taking into account the principle of proportionality, and for assessing the appropriateness of incoming sharing requests and recording these evaluations. At a minimum, this committee will consist of representatives of the business line, internal control unit, compliance unit and legal unit and related asset owners who request or are asked to share information.

II. Conclusion

A new regulation about sharing of secret information has been published on the Official Gazette and will enter into force on January 1, 2022. The Regulation on Sharing of Secret Information regulates the confidentiality obligation regarding banks and customer secrets regulated in the Banking Law in detail. With the Regulation, some new regulations have been envisaged regarding confidential information and the sharing of this information. In summary, these regulations are the confidentiality obligation and its exemptions, general principles regarding sharing confidential information and obligation to establish an information sharing committee.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

By Gonenc Gurkaynak, Partner, Nazli Nil Yukaruc, Partner, and Nisa Aybuke Eroglu, Associate, ELIG Gürkaynak Attorneys-at-Law

Bagzibagli Erdem & Sahin has advised Up Capital Management and UAE-based investor group Hawk Invest on an equity investment into CET Composite & Epoxy Technologies.

The investment value was not disclosed but, according to the firm, the company’s valuation, as a result, is over USD 12 million.

According to the firm, CET Composite & Epoxy Technologies was established in 2019 and is a Turkish epoxy company serving the defense, medical, aviation, aerospace, automotive, and marine industries in the region. It produces epoxy-based chemical systems that match the complex composite requirements in these various markets. 

Hawk Invest is a multinational investment group that has invested in strategic projects across the real estate, automotive, agri-food, textile, construction, and chemical industries. Up Capital Management is an independent multidisciplinary company focused on the Euro-Asian market and specializes in designing and managing innovative capital and business strategies for individuals and families.

Bagzibagli Erdem & Sahin’s team was led by Partner Orhan Erdem.

Editorial Note: Initially, this article erroneously reported the investment value to be USD 12 million, rather than the company’s valuation. The text has been amended to correct the error. 

Cakmak has appointed Senior Counsel Elif Demiroz and Counsel Gulsen Engin as Partners.

Demiroz joined the firm in 2012 as an Attorney-at-Law. She was promoted to Litigation Counsel in 2019 and Senior Litigation Counsel in 2020. Before joining Cakmak, Demiroz was an Attorney-at-Law with the Kuseyri Law Office, between 2011 and 2012, a Senior Lawyer with Oz-El Law Office, between 2010 and 2011, and an Attorney-at-Law with Akkurt Law Office, between 2007 and 2009. Demiroz “particularly focuses on dispute resolution and she has been representing foreign and domestic clients in a wide range of legal issues, primarily involving commercial and administrative litigation, tax litigation, and labor disputes for more than fifteen years,” the firm announced.

Engin has been with Cakmak for over eight years. She held the position of Associate, from 2013 to 2020, and was promoted to Counsel in January 2021. Before that, she spent over two years with Noktacom Medya as an Attorney-at-Law, between 2011 and 2013. According to the firm, Engin “has substantial experience in domestic and cross-border M&A, joint ventures, and structured corporate transactions and, for more than eleven years, she has been assisting multinational and Turkish clients in a wide variety of industries. She is also specialized in regulatory, compliance, data privacy, and employment matters.”

“I would like to congratulate our new partners Gulsen Engin and Elif Demiroz for their promotion and joining us,” Cakmak Partner Kemal Aksel commented. “Promoting new partners signifies our commitment to expand our firm and underlines the quality and depth of our team.”

Former Pekin & Pekin Senior Partner Yalcin Ozge Okat has established OkatLaw in Istanbul.

Okat had been with Pekin & Pekin since January 2012. Before that, he worked for one year as a Counsel with the Baker McKenzie affiliated firm Esin Attorney Partnership. Earlier still, he worked for 13 years for the Capital Markets Board of Turkey.

According to Okat, the firm will focus on capital markets, cryptocurrencies, fintech, derivatives, corporate, and banking/finance. Anlam Altay and Hakan Kizilelma, as external consultants, will advise on dispute resolution matters, while tax consultancy will be provided by Murat Bati.

Corporate governance principles are set of rules and practices introduced as preventive measures pursuant to corruptions and bankruptcies of publicly held companies occurred in 1980s, for protection of companies, shareholders and stakeholders and to avoid conflicts of interest. Under Turkish approach, the managing body, i.e. board of directors, is regarded as the pillar of corporate governance given that the problems relate to the management of the companies. Therefore, the principles are focused on the board of directors.

Development of Corporate Governance Principles in Turkey

Following US and European trends, corporate governance principles (“principles”) have been initially published in Turkey by the Turkish Industry and Business Association in 2002, followed by the Capital Markets Board (the “Board”) in 2003. The principles have been incorporated into Turkish Commercial Code No. 6102 (“TCC”). Under Article 1529 of the TCC, the Board is the authorized body regarding determination and application of the principles.

Pursuant to Article 17 of the Capital Markets Law No. 6362 (“CML”) the Board may oblige publicly held companies to comply with the principles, and may set the relevant procedures. The Board is further authorised to decide on the steps for compliance for each company and carry out the relevant actions ex officio including applying for interim injunction and bringing action.

Upon prior approval from the Board, other public bodies and institutions may determine the details of the principles which are applicable only to their field.

The Corporate Governance Communique

Publicly held companies, or companies subject to the same provisions as publicly held companies, are required to comply with the corporate management principles contained in Article 5 of the Corporate Governance Communique II-17.1 (“Communique”). The complete list of the principles has been published as an attachment of the Communique. Although having a statutory basis, some of the principles are merely recommendations with no requirement to comply.

The Communique divides the companies into three groups based on average market value of their floating stocks. Applications of the principles differ depending on the groups.

• First group: companies having average market value over TRY 3 billion and average value of floating stocks over TRY 750 million.
• Second group: companies not falling within first group, having market value over 1 billion Turkish liras and average value of floating stocks over TRY 250 million.
• Third group: companies not falling within first and second groups, having shares traded in National Market, Second National Market and Corporate Products Market.

Corporate Governance Principles

The corporate governance principles are mainly based on the principles of fairness (equality), transparency (public disclosure), responsibility and accountability. More recently, the Communique have been amended to include sustainability matters on a voluntary basis.

The general principles which are required to be complied (if not, explained) are on general assembly and board of directors matters, as briefly set out below. Kindly note that companies that are operating in certain regulated sectors such as banks, would need to considered additional requirements as well.

General Assemblies

Companies are required to announce the date of their general assembly meetings and the documents which will be presented to the shareholders, including (i) current shareholding structure, any existing privileged shares, past and upcoming changes in management and activities of the company and its subsidiaries impacting the activities significantly, and the reasons for such changes, (iii) detailed information about board member candidates, (iv) shareholders’ written requests regarding adding an item to the agenda which are rejected by the board and the reasons for rejection, (v) in case of amendment to articles of association, previous and amended versions of the amendments together with the board of directors’ resolution, on company’s website and public disclosure platform (“KAP”) latest 3 (three) weeks before the general assembly meeting.

The chairman of the general assembly meeting shall explain the items on the agenda clearly, unbiased and in detail, allowing the shareholders to express their opinions and ask questions under equal conditions. All questions raised shall be answered during the meeting or if they are not related to the agenda or require some time, within 15 (fifteen) days at most, in writing. Moreover, all of the questions and answers discussed during the meeting shall be published in the website of the company within 30 (thirty) days.

Transactions where shareholders, board members, executive managers and their relatives carry out transactions potentially resulting in conflicts of interest with the company or its affiliates; or where the company joins another company as shareholder with unlimited liability, such transactions shall be discussed as a separate item.

Moreover, on transactions concerning asset and service purchase and sale, and transfer of obligations which may affect the financial status of the company based on the percentage of the transactions’ value against companies’ value, the companies are required to resolve with affirmative votes of majority of the independent board members and where applicable, publish the dissenting votes on KAP.

Board of Directors

Board of directors of the companies under the Communique are required to consist of minimum 5 (five) members and the majority of the members should not partake in executive matters. The non-executive board members shall involve independent board members who shall be capable of carrying out their duties without any influence. Such independent board members cannot be less than 1/3 of the board members and in any case less than 2 (two). 

The qualifications of independent board members are set forth under Principle 4.3.6. to ensure that they possess the capability carrying out their duties unbiased and with necessary experience and qualities. The election of the independent board members is subject to the Board’s final decision based on the written report of nomination committee and board of directors’ resolution. Once the Board approves the list of candidates, the general assembly elects the board members among the approved list of the candidates.

In the case of an event impacting independence of an independent board member, the board of directors shall be immediately notified and the event shall be announced on KAP. The independent board member is required to resign from his duty where they can no longer be classified as “independent”.

Board of Directors Committees

Under the general principles, board of directors shall include committees of Audit Committee, Early Detection of Risk Committee, Corporate Governance Committee, Nomination Committee, and Fee (Price) Committee. Each committee’s scope of duties, working principles and members are determined by the board of directors and announced on KAP.

Committees are required to consist of minimum 2 (two) members and the majority of the members are required to be non-executive. In addition, CEO/general manager cannot be a member of a committee. Chairman of the committees are elected among independent board members. Persons who are not board members, who are experts in the relevant area, are allowed to be members of committees other than audit committee.

The scopes of committees are summarized below:

• Audit committee: the audit committee oversees company’s accounting system, public disclosure of financial details, independent audit, company’s internal control and internal auditing. The committee is responsible for reviewing and resolving complaints concerning the foregoing matters. The committee is required to convene minimum 4 (four) times a year, once in every three months, and present their resolutions to the board of directors for approval.
• Corporate governance committee: the committee oversees implementation of corporate governance principles and detects conflicts of interest arising from lack of implementation and advises on enhancing corporate governance to the board of directors.
• Nomination committee: the committee is responsible from establishing a transparent method in determining candidates suitable to take on a managing position as member of the board of directors or executive responsibilities, their evaluation and their training and establishes policies and strategies.
• Early Detecting of Risk Committee: the committee detects risks which may jeopardise company’s existence, development and continuity, takes necessary measures to prevent the risks spotted.
• Fee Committee: the committee oversees remuneration of board members and executive managers, setting the principles and criteria.

Conclusion

Corporate governance principles serve an important role in continuity of publicly held companies and enhancing their successes while maintaining integrity. Although implementation of all the principles is not strictly mandatory, the requirement to publish explanations as to non-conformity under “report of compliance with corporate governance principles” in the annual activity reports, which are open to public access, increases the accountability. Moreover, the principles are evolving to reflect societies’ changing values, such as sustainability, pushing large companies to adapt and reform.

(First published by Mondaq on December 2, 2021)

By Gonenc Gurkaynak, Partner, and Irmak Yetim, Associate, ELIG Gürkaynak Attorneys-at-Law

In recent years, the growing concern that employers’ market power in labor markets has led to reduced or suppressed wages and working conditions has heated up the discussions on the competition authorities’ potential interference over competition violations within labor markets. These discussions have not remained theoretical and the competition authorities have started to launch investigations into labor markets. The Turkish Competition Authority (TCA) has kept pace with this global trend. On April 20, 2021, the TCA announced on its official website that it has ex officio launched a full-fledged investigation against 32 companies, mainly active in digital markets, to determine whether they violated the Law on the Protection of Competition through gentlemen’s agreements in labor markets in Turkey.

In the announcement, the TCA emphasized that employers that compete for labor may prevent the transfer of employees among themselves through direct/indirect agreements – depriving employees of job opportunities that offer higher wages and better conditions. It underlined that such agreements might distort the competitive structure in labor markets due to the decrease in the mobility of labor between undertakings and/or the artificial inability to find the real value of the wages in return for the labor. In this respect, the TCA took practices in labor markets into its agenda by considering the benefits of addressing the concerns in labor markets with competition law enforcement to protect the competitive structure of these markets. This approach was supported by the subsequent statements of the President of the Authority on May 5, 2021, where the President provided insights on the competitive concerns in labor markets to state-run news agency Anadolu Agency. The President explicitly noted the TCA’s future enforcement strategy over labor markets by also signaling the issuance of guidelines to reduce the legal uncertainties that employers may face.

The investigation is very thorough and is the first example of labor markets being the sole focus of the TCA. Indeed, in October 2020, it launched an investigation against eight private hospitals based upon allegations regarding the prevention of personnel transfers among themselves through a gentlemen’s agreement, along with the allegation that they have collectively determined the operating room service fees they demand from freelance doctors. Previously, the TCA had closed cases at the preliminary stage, without finding any violations, or rejected the allegations by concluding that the labor market is outside the scope of competition law.

To exemplify from recent cases, in 2019, the TCA examined an ‘atypical’ no-poaching provision in a franchise agreement in the BFIT Decision. The provision envisages that the franchisees require the franchisor’s (BFIT, a gym chain) written consent before employing personnel who are or were working for the franchisor/a franchisee/a competitor. The TCA found this provision within the scope of competition law. It also concluded that the provision does not benefit from individual exemption based on its potential effect of restricting competition in the labor market based on two reasons: (1) the prohibition covers one or two years post-agreement, without any reasonable grounds; and (2) the scope of the franchisor’s consent is unclear. However, the TCA did not find it necessary to launch a full-fledged investigation after considering BFIT’s low market share, the limited potential effects of the violation, and the lack of effects of the provision, while imposing obligations to amend the relevant provision.

In 2020, the Izmir Container Transporters Decision again fired up the discussions on the applicability of the competition law in labor markets. In the decision, the TCA explained that no-poaching or wage-fixing agreements are, in their essence, buying cartels and may violate the competition law by effect or by object. The TCA analyzed the effects of the wage-fixing agreement between the transporters, which contained no-poaching arrangements, and found no anti-competitive effects. Without launching a full-fledged investigation, it decided to send an opinion to the parties to terminate the potential anti-competitive agreements.

The above decisions are in contrast to the TCA’s earlier stance on the issue, such as in the TMMOB Decision in 2013, in which the Board had concluded that the labor market does not fall within the scope of competition law, based on similar wording in the preamble of the law.

All in all, the recent decisional practice and announcements of the TCA show that no-poaching and wage-fixing agreements are on its radar. The result of the investigation and the prospective guidelines are expected to further shed light on the TCA’s stance on labor markets. 

By Hakan Ozgokcen, Partner and Head of Competition, Esin Attorney Partnership

This Article was originally published in Issue 8.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Paksoy has advised Agence Francaise de Developpement on a EUR 125 million credit facility agreement with Izmir Metropolitan Municipality for the financing of the Izmir Buca Metro project.

AFD funds projects focusing on climate, biodiversity, peace, education, urban development, health, and governance. The organization has carried out more than 4,000 projects in France’s overseas departments and territories and another 115 countries.

The Paksoy team was led by Partner Sera Somay and Senior Associate Beril Paksoy.