Category: Turkiye

Strong investments in the Turkish infrastructure sector have been the driving force behind Turkey’s economic development. In the last decade, several investments referred to as “mega-projects” have gained much attention, such as the completed Eurasian Tunnel in Istanbul, a road transport tunnel running under the Bosphorus to connect the European and Asian sides of Istanbul; the new Istanbul Airport, increasing capacity from over 100 million to over 200 million passengers per year; the third Istanbul Bridge, still one of the largest projects with construction costs of around TRY 4.5 billion (although it fell short of expectations and required USD 2.7 billion in refinancing from ICBC and still could not be executed due to the pandemic). One of the most recent projects is the 1915 Canakkale Bridge and Highway Project.

Most such projects are implemented under the Build-Operate-Transfer model, which is usually the preferred type of PPP in Turkey for such large projects.

1915 Canakkale Bridge and Highway Project

Canakkale, divided by the strait of the Dardanelles, is a city in Western Turkey of great historical importance for Europe. It lies between Europe and Asia and, like Istanbul, connects two continents; but unlike Istanbul, due to the width of the strait, Canakkale has never had a bridge connecting the two separate parts of the city – until now.

The idea of building a bridge across the strait was first raised in the 1980s. In 1994 the bridge project was put back on the political agenda, leading to a tender in 1995. However, the tender winner withdrew from the project due to its infeasibility. On March 3, 2016, Turkey’s Minister of Transport, Maritime Affairs and Communications finally announced that the project would be launched and the name of the bridge would be “1915 Canakkale Bridge,” after the famous Gallipoli campaign of the First World War.

Following this announcement, a tender was launched on January 26, 2017. Four consortia allied with international and Turkish parties submitted bids. The first consortium was Korean-Turkish, involving Daelim (South Korea), Limak (Turkey), SK Engineering & Construction (South Korea), and Yapi Merkezi (Turkey). The proposed project cost was approximately TRY 10.35 billion and the total concession period was 16 years, 2 months, and 12 days, including a construction period of five and a half years.

The second proposal came from a Japanese-Turkish consortium involving IHI (Japan), Itochu (Japan), Makyol (Turkey), Nurol (Turkey), and Japan Expressway. The project cost was around TRY 10.5 billion with a total duration of 17 years, 10 months, and 24 days.

A third proposal was a Chinese-Turkish cooperation between Cengiz Insaat (Turkey), Kolin Insaat (Turkey), and CRBC (China) with a total project cost of approximately TRY 10.3 billion and a total duration of 18 years, 8 months, and 19 days.

The fourth and final proposal was Italian-Turkish, by IC Ictas (Turkey) and Astaldi (Italy), with a total project cost of approximately TRY11.6 billion and a duration of 18 years, 5 months, and 15 days.

The Korean-Turkish consortium was awarded the project and the contract was signed on March 21, 2017, with an effective date of March 16, 2018. The duration of the contract and the total investment costs were as stated in the original bid. The EUR 2.265 billion financing package was also signed on March 16, 2018, with 17 foreign financial institutions providing 70% of the loan amount. The term of the loan is 15 years, with five years repayment-free.

The consortium plans to complete the project by 2022, with an operational date of March 18, 2022. So far, the towers and walkway of the bridge have been completed and construction continues. We understand from clients in the sector that the project is on schedule.

What Happens Next?

According to the forecasts and targets announced by the Ministry of Transport and Infrastructure, Turkey aims to reach a motorway length of more than 8,000 kilometers by 2035. As of 2020, the figure was around 3,500 kilometers. As in previous years, such mega-projects are attracting significant attention, such as the planned Istanbul Canal, nuclear power plants, a production facility for Turkey’s TOGG hybrid vehicle, and the triple-deck tunnel for trains and cars, though not all may be realized. Having said that, more transport infrastructure projects can undoubtedly be expected as the country continues its ambitious economic development.

By Done Yalcin, Partner, and Taner Elmas, Associate, CMS Turkey

This Article was originally published in Issue 8.3 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

The Turunc Law Firm has advised Bogazici Ventures on its USD 1.4 million investment into Tarentum, a developer of machine learning and artificial intelligence technology solutions. The Ozbek law firm advised Tarentum on the deal.

Turunc’s team was led by Partner Kerem Turunc and included Yasemin Kerestecioglu, Nazli Bilhan, Canberk Taze, Selay Turgut, and Beste Yildizili Ergul.

The Ozbek team consisted of Partners Selen Gures and Atahan Sevimli, Senior Associate Ece Ersoy, and Associate Oyku Dalgic.

Former Yazici Attorney Partnership Senior Associate Yunus Emre Bakiler has left the firm to become a Partner at Ozgur & Unuvar in Ankara, which, as a result, has changed its name to the Ozgur Unuvar Bakiler Attorney Partnership.

Bakiler, who spent more than nine years at the Yazici Attorney Partnership, specializes in corporate/M&A and compliance, with a particular emphasis on start-ups. He also represents clients in courts and international arbitration proceedings. He holds a BA in Law from Bilkent University and an LL.M. from the University of Aberdeen.

In line with the Law No. 7262 on Preventing the Proliferation of Financing Weapons of Mass Destruction (“Law No. 7262”), some of the provisions stipulated under the Turkish Commercial Code No. 6102 (“TCC”) were amended. As per the amendments made by the Law No. 7262, new notification requirement was introduced. In line with the amendments, the holders of the bearer share certificates in a joint stock company and the information regarding the shares have to be notified the Central Registry Agency (“CRA”).

The Communiqué on Notification and Registration of Bearer Share Certificates to the Central Registry Agency (“Communiqué”) was published in the Official Gazette dated April 6, 2021 and entered into force on the same day in order to provide further details on the scope of this obligation. The Communiqué regulates the principles and procedures of notification and registration of bearer share certificates to CRA.

General Overview for the Notification and Registration Obligation to CRA

According to Article 7 of the Communiqué, the bearer shareholders and bearer share certificates must be notified and registered to CRA. In case that the bearer shareholders and bearer shares are not notified and recorded to the CRA, bearer shareholders will not be able to exercise their rights attached to the shares, arising from the TCC until the mandatory notification is made to the CRA. Main purpose of this obligation is to create reliable market and to provide transparency.

According to Article 6, authorized representatives of companies must apply to CRA through the online platform of CRA at least 2 (two) days before the general assembly meeting in order to obtain shareholder chart. This chart will be taken into consideration while preparing the list for the ones who can attend the general assembly meeting.

Even though the information on bearer share certificates and their holder will be recorded electronically as per the Communiqué, such records will be confidential and can only be disclosed to authorities designated by applicable law.

Issuance of the Bearer Share Certificates

According to Article 7 of the Communiqué, share bearer certificates will be issued with a resolution taken by the board of directors following the payment of the price of all shares. The resolution of the board of directors must include share number of bearer share certificates, contexture, nominal price, number and amount of represented bearer shares, group, the sequence number given by the company and total number of bearer shares and the total share amount corresponding to these shares. Along with the resolution of the board of directors, information about the bearer shareholder whom each bearer share certificate will be distributed such as name/title, Turkish ID number or passport number/MERSIS number and address and contact information must be notified to the CRA.

Once the required notification is made, share certificate will be issued in the name of the shareholder with a specific number. Following the fulfillment of the notification requirement, the resolution of the board of directors regarding issuance of the bearer share certificates must be registered with the trade registry and announced in the Trade Registry Gazette. For companies who are subject to independent audit, the resolution of the board of directors must also be published on the company’s website.

Issuance of the bearer share certificates, notifying to the CRA and delivering the certificates to the shareholders must be completed within 3 month period from the date of payment of the full share prices.

As per the shareholders holding bearer share certificates on the effective date of the Communiqué will apply to the company who issued the bearer share certificate to be notified to the CRA until December 31, 2021 at the latest. The bearer shareholder must apply to the company by using standard form attached to the Communiqué. Once the application is made, the board of directors of the relevant company must check and confirm the authenticity and validity of the certificates and accuracy of the provided information. Following the confirmation, the company must notify and register the bearer shares to the CRA within 5 (five) working days. In case that the shareholders do not apply to the company, they will not be able to use their rights arising from the bearer share certificates until they make the application.

Transfer of the Bearer Share Certificates

According to Article 5 of the Communiqué, transfer of the bearer share certificates will only be effective once the necessary notification is made to the CRA by the transferee whom actual possession of the bearer share certificate is transferred to. Also, this notification obligation can be fulfilled by the company who issued the bearer share certificates following the application of the holder of the bearer share certificate to the company.

In the notification, information about the transferee must be recorded such as name/title, Turkish ID number or passport number/MERSIS number and tax number, address along with the contact information of the transferee. Also, a copy of the share certificate must be attached to the notification.

As per Article 14 of the Communiqué, transfers based on complete succession (for example; inheritance), the records will be updated by CRA following application of concerned parties together with the document showing the right of ownership of the relevant share.

Cancelation of the Bearer Share Certificates

In case that the share certificate is cancelled due to capital decrease or change in the share certificate, authorized representative of company is obliged to notify CRA regarding cancelled the certificate in order for the records of such certificate to be removed from CRA’s records. 

If a company is deregistered from the trade registry, the records regarding the bearer share certificates will be removed from CRA’s records directly by CRA upon notification or ex officio.

Sanctions

As we explained above, holders of bearer share certificates shall not be able to use their rights attached to the shares in case of nonfulfillment of the notification requirement stipulated under the TCC and the Communiqué.

In addition, administrative fine may be imposed in case of nonfulfillment of this requirement as per the TCC. According to Article 486 of TCC, an administrative fine amounting to TRY 20,000 may be imposed on those who fail to fulfill this notification requirement. Similarly, according to Article 489 of TCC, an administrative amounting to TRY 5,000 may be imposed on those who fail to notify the CRA in case of transfer of bearer share certificates.

By Gonenc Gurkaynak, Partner, Nazli Nil Yukaruc, Partner, and Isil Ertekin Cokca, Associate, ELIG Gürkaynak Attorneys-at-Law

The Regulation on Remote Identification Methods to be used by Banks and the Establishment of Contractual Relationships in Electronic Media (“Regulation”) was published in the Official Gazette dated April 1, 2021 and numbered 31441 and entered into force after one month as of its publication. The Regulation was prepared based on the Draft Communiqué on Remote Identification Methods to be used by Banks, which was published by the Banking Regulatory and Supervisory Authority (“BRSA“) as presented to the public opinion. 

The provisions of the draft communiqué were mainly reflected to the Regulation in terms of the remote identification method that banks may use for new customers and verification of customer identity. Unlike the draft communiqué, the Regulation also regulates the terms regarding the establishment of contractual relationships in electronic media following remote identification. This article will focus on the significant provisions of the Regulation.

General Principles Applied to the Remote Identification 

Remote identification process is carried out between the potential customer and customer representative through online video call and without requiring physical presence of the customer.

Before the implementation of the remote identification process, documents related to the process are created and the effectiveness of the process is tested. The process is not implemented unless the efficiency and competence of the process is ensured. Article 4/8 of the Regulation also obliges banks to review the remote identification process at least twice a year and under certain circumstances, such as detection of security breaches and fraudulent activities.

Under Article 5/1 of the Regulation, the video call phase of the remote identification is carried out by a trained customer representative. It must be ensured that the customer representative learns the characteristics of the documents that can be used for identification and the valid verification methods applied for these documents, and is informed about the actions that may constitute fraud or forgery as well as the obligations contained in the Regulation and other relevant legislation.

 Remote Identification Methods

According to Article 6/1 of the Regulation, the identification process is initiated upon customer completing an electronic form. Risk assessment is performed for the potential customer by using the data obtained and if necessary process is ended before initiating the video call. 

During the remote identification process, customer’s sensitive personal data, other than their biometric data, cannot be processed and customer’s explicit consent must be received for processing such data.

Remote identification via video calls must be made in real time and uninterruptedly. It should also be ensured that the integrity and confidentiality of the audiovisual communication between the customer representative and the potential customer is at an adequate level. For this purpose, the call must be carried out with end-to-end encrypted communication. In addition, banks must adopt certain security measures, such as having sufficient lighting and sending a one-time password delivered through short message service to the customer’s mobile phone for confirmation of the customer’s identity.

Identity Documents and Verification

Identity cards must be used for identification and the bank must verify if the customers’ identity cards have the required security items (i.e. rainbow print, optical variable ink, hidden image, hologram micro lettering), photograph and signature. 

After verifying the identity card, video call phase starts where the potential customer’s liveliness is ensured. Also, customer representative must ensure that the photograph and information on the identity document match with the potential customer. At this stage, the bank must confirm that additional measures are in place to avoid risks related deep-fake technology.

Article 9 of the Regulation states that the remote identification process must be cancelled, if the process is prevented from running as usual due to the issues such as poor lighting conditions or poor image quality, or if any inconsistency, uncertainty or fraud is discovered in the process or in the documents presented by the potential customer. The remote identification process must be recorded and stored, in full and as available for any audits.

Execution of the Banking Agreement Electronically

After completion of the remote identification or face-to-face identification at branches, banks are entitled to execute agreements with the customers electronically, except the ones subject to an official form or special procedural requirement.

In order to enter into a banking agreement electronically, following conditions must be met: (i) all conditions of the banking agreement must be sent to the customer via internet banking or mobile banking in a way that may be read by the relevant customer; (ii) the customer’s declaration of intention related to execution of the electronic banking agreement as well as the agreement itself must be delivered to the bank with a secret encryption key generated for the customer; and (iii) the content of the electronic agreement sent to the customer under the section (i) above and the agreement executed by the customer under the section (ii) above must be the same.

Conclusion

The BRSA has recently published this regulation on remote identification process enabling the bank to verify potential customer’s identity and thereafter entering into electronic banking agreements. These recent technological developments will certainly provide great flexibility for the banking customers on one hand, however, on the other hand puts great responsibility and on the banks to create the bullet-proof identification system.

By Gonenc Gurkaynak, Partner, Nazli Nil Yukaruc, Partner, and Busra Ustuntas, Associate, ELIG Gürkaynak Attorneys-at-Law

On November 11, 2020, CEE Legal Matters reported that Balcioglu Selcuk Ardiyok Keki Attorney Partnership advised Fujitsu Technology Solutions Bilisim on its sale of 100% of shares from shareholders Fujitsu Technology Solutions GmbH and Fujitsu Technology Solutions Holding B.V. CEE In-House Matters spoke with Scott Mortimer, Vice President, Legal Commercial and Compliance at Fujitsu Australia Limited, to learn more about the sale.

CEEIHM: To begin, please tell our readers a bit about your company.

Scott: Fujitsu is the leading Japanese information and communication technology company, offering a full range of technology products, solutions, and services. Approximately 130,000 Fujitsu people support customers in more than 100 countries. Our purpose is to make the world more sustainable by building trust in society through innovation. To achieve our purpose, we deliver value to customers in two business areas. The first area, “For Growth,” contributes to developing customer business through digital transformation and modernization. The second area, “For Stability,” contributes to the stable operation of customers’ businesses through traditional IT services. By creating value in ways unique to Fujitsu in these two business domains, we strive to be our customers’ best partner in digital transformation and achieve their stable growth over the long term. 

CEEIHM: BASEAK recently advised your company on the sale of Fujitsu Technology Solutions to Teknoser in Turkey. What was the reason behind the sale?

Scott: Fujitsu has decided to move to a channel-driven model in Turkey, as part of a wider initiative to improve operational performance and competitiveness in key industries and markets in the EMEA region. Fujitsu’s strong channel partner network is the primary route to market for our product portfolio in the region, and with this step, we are building on longstanding partnerships and investing further in a sophisticated channel ecosystem to strengthen the distribution of Fujitsu products and product-related services.

CEEIHM: What can we expect from your company next, now that the sale is concluded?

Scott: Fujitsu is committed to our partners and to channel-centricity. In Turkey, our services customers will continue to receive attentive, high-quality support as well as continued access to the portfolio of Fujitsu products and solutions they know and trust, now through Hitay and Teknoser or Ingram Micro Turkey. Our Fujitsu SELECT Partners in Turkey will be able to continue accessing our products for their customers via their distribution partner and can expect the same high levels of product service & support, now from the Teknoser or Ingram Micro Turkey team. More broadly, we have very recently announced a new ecosystem platform, designed to help partners succeed in today’s data-driven era. The platform provides a dynamic space where customers and existing and new partners can collaborate, innovate, and generate new business value.

CEEIHM: How was the legal work split up between your in-house team and the BASEAK?

Scott: BASEAK is a long-term legal services supplier to Fujitsu. This successful relationship made them the natural choice to advise on a sensitive and complex transaction involving the sale of Fujitsu’s subsidiary in Turkey to Teknoser. BASEAK provided local legal advice and the in-house team advised on issues outside of Turkey, as well as providing advice on corporate positions for such transactions. In addition, BASEAK’s expert M&A team was able to advise on market conditions in Turkey to optimize the transaction for Fujitsu.

CEEIHM: Finally, what made you choose that firm as your legal advisor?

Scott: As stated above, Baseak’s long relationship with Fujitsu and their knowledge of the business, coupled with their expertise in M&A transactions, made that firm the best choice for Fujitsu.

Originally reported by CEE In-House Matters.

GKC Partners in association with White & Case has advised joint bookrunners UBS and Bank of America Securities on LimakPort’s issuance of USD 370 million senior secured bonds, under Rule 144A / Regulation S due 2036, at a coupon rate of 9.50%. Paksoy advised the issuer.

LimakPort is a multi-purpose integrated facility that can serve project cargo, general cargo, bulk cargo, and livestock ships. The port is located in Iskenderun, Turkey, and has a container handling capacity of one million twenty-foot-equivalent cargo units per year.

According to GKC Partners, this transaction was the first marketed project bond in Turkey done by a Turkish company and the first Turkish corporate bond with a sustainability-linked coupon.

According to Paksoy, the bonds will were admitted to listing on the Singapore Exchange Securities Trading Limited. Furthermore, according to Paksoy, LimakPort will use the proceeds raised by the bond issuance to refinance its existing project loans.  Paksoy reported that the security package includes, among other things, a pledge of all of the shares, movable assets, and a security interest in offshore and onshore accounts of LimakPort. However, the package does not include excluding assets required to satisfy the minimum port capacity.

GKC Partners’ team included Partners Derin Altan and Ates Turnaoglu, Associates Asli Gulum, Can Argon, and Gokcen Durgut, Trainee Lawyer Elif Engin, and Legal Interns Atakan Arslan and Zeynep Ulasan.

Paksoy’s team included Partners Omer Collak and Sera Somay, Senior Associate Nazli Tonuk Capan, and Associate Merve Kurdak Kurtdarcan.

Paksoy has advised Cisco Systems on the acquisition of Socio Labs, a US-based event technology platform that was co-founded by its Turkish CEO, Yarkin Sakucoglu.

The transaction remains contingent on regulatory approval, and is expected to close this year.

Paksoy’s team included Partners Elvan Aziz and Sansal Erbacioglu and Associates Gozde Zorlu and Simge Ergin.

Paksoy did not provide information about counsel for the sellers.

Gide Loyrette Nouel and its associated firm in Turkey, Ozdirekcan Dundar Senocak, both working with lead counsel Chiomenti, have advised Carel on its acquisition of a 51% stake in CFM Sogutma ve Otomasyon A.S. The Esin Attorney Partnership advised the seller on the deal.

CFM is a provider of digital and on-field services and solutions to contractors and end users in the Turkish heating, ventilation, and air conditioning, and refrigeration market.

Carel is a privately-held provider of air-conditioning, refrigeration, and heating systems, as well as systems for humidification and evaporative cooling. The company was founded in 1973 and is headquartered in Brugine, Italy.

Gide and ODS’s team consisted of Partner Arpat Senocak and Associate Iklim Gulsun Aytekin.

Chiomenti’s team included Partner Corrado Canziani and Associates Silvia Colomba and Benedetta Gizzi.

The Esin Attorney Partnership’s team was led by Partner Duygu Turgut and included Associates Serenay Cinki, Erman Ertan, and Sam Gizem Sozer.

GKC Partners in association with White & Case has advised Rollic Games on its acquisition of 100% of the shares of Uncosoft Yazilim.

Rollic Games, a subsidiary of Zynga, is a developer and publisher of games for the Android and iOS platforms. Uncosoft Yazilim is a privately held Turkish developer of mobile games such as “High Heels!” and “9PM Football Managers.”

Previously, GKC Partners advised Zynga on its USD 168 million acquisition of an 80% stake in Rollic Games (as reported by CEE Legal Matters on August 12, 2020).

GKC Partners’ team consisted of Partner Emre Ozsar and Associates Asli Gulum, Selin Kaledelen, Secil Bilgic, and Lidya Ercan. The firm did not reply to an inquiry about the deal.