Category: Turkiye

Former Counsels Nazli Bezirci, Nihan Bacanak, and Simel Sarialioglu, and Sansal Erbacioglu have been promoted to Partner at Paksoy.

According to Paksoy, Nazli Bezirci mainly advises on “mergers and acquisitions, corporate restructuring, and corporate and commercial matters, with a special focus on the financial services, insurance and pensions, chemicals, and industrial sectors.” According to the firm, “she also has key expertise in public mergers and acquisitions and the governance of public companies.” She has an LL.B. from Ankara University and an LL.M. from Vrije Universiteit Brussel. Prior to joining Paksoy in 2010, she spent over five years with the Topaloglu Law Firm and half a year with Linklaters.

Nihan Bacanak, according to Paksoy, “specializes in mergers and acquisitions and corporate and commercial matters, with significant experience in the services sector and the manufacturing industry. She leads complex cross-border M&A projects and advises clients on a wide range of corporate and commercial matters. She also has a particular focus on healthcare and pharmaceutical businesses, which she advises on compliance and regulatory matters.” She has an LL.B. from Marmara University and an LL.M. from Georgetown. She spent over two years as an Associate with Paksoy, two and a half years with Pekin & Pekin, and two years in private practice, before rejoining Paksoy in 2012.

According to Paksoy, Simel Sarialioglu “specializes in commercial arbitration and litigation. She acts for clients in a wide range of sectors, including telecom, media, IT, construction, insurance, and pharmaceuticals. She has an LL.B. from Dokuz Eylul University and an LL.M. from the Queen Mary University of London. Prior to joining Paksoy in 2016, she spent a year and a half with Akinci, eight months with Ozbek, and over seven and a half years with DLA Piper.

Sansal Erbacioglu is the Head of Tax and Fiscal Services at Paksoy. According to the firm, “he advises clients on the tax and fiscal aspects of foreign investments, mergers and acquisitions, joint ventures, equity subscriptions, banking and finance, and capital markets transactions. His expertise spans a wide range of taxation matters, including in the real estate, financial services, aviation, and defense industries. He has 15 years of experience in tax and fiscal services, and has worked at Paksoy for nine years.” He has a Master’s degree from the Istanbul Bilgi University. Prior to joining Paksoy in 2012, he spent eight years with PwC.

“We warmly congratulate our new partners, who are a testimony to Paksoy’s strength in these practice areas,” the firm added.

Former Esin Attorney Partnership Partner Birturk Aydin has left that firm — the Turkish member firm of Baker McKenzie International — to become the Head of Legal at Koc University in Istanbul.

Aydin had spent the past 15 years working with Ismail Esin at different firms, the past nine as part of the Esin Attorney Partnership, after that firm’s founding in 2011. He graduated from the Istanbul Bilgi University in 2005.

Aydin described himself as “very enthusiastic about my new role.” According to him, “after spending so many years serving clients, I wanted to be an internal part of their life. I was providing legal advice mostly on large and important projects. After completion of the projects, I was feeling that something was missing. With this idea in mind, I decided to make the leap to corporate life. When I saw Koc University’s Chief Legal Counsel’s position announcement, I thought that it was a great opportunity, as Koc University is one of the top universities in Turkey. It is more than a company — it will also allow me to contribute to the higher education of bright students. Koc University also supports start-ups so I hope to play a role in the development of the start-up habitat of the country.”

In 2019 and 2020, Turkish administrative courts handed down noteworthy judgments concerning two particular decisions of the Turkish Competition Board (“Board”). In both of these cases, namely the (i) Sahibinden Bilgi Teknolojileri Pazarlama ve Tic. A.Ş. (“Sahibinden”) judgment rendered by the Ankara 6^th Administrative Court (“Sahibinden Judgment”) and the (ii) Enerjisa Enerji A.Ş. (“Enerjisa”) judgments rendered by the Ankara 13^th Administrative Court (“Enerjisa Judgments”), the courts have shed light on and set the bar for the “standard of proof” with respect to the Board’s decisions. In both of the judgments, the administrative courts looked for whether the Board decisions had been based on sufficient evidence and analysis to prove the infringement “beyond any doubt”. The Administrative Courts have unequivocally shown that they are expecting the Turkish Competition Authority (“Authority”) and Board to run the extra mile and conduct more research, collect more data and base its analyses on these tangible results, rather than just relying on assumptions and mere observation of the current market status, to reach the decisions.

1. The Sahibinden Judgment

Upon the complaints received from various applicants concerning Sahibinden`s activities, the Authority conducted an investigation against the entity in 2018, to determine whether it had abused its dominant position and violated Article 6 of the Law No. 4054 on Protection of Competition (“Law No. 4054”) through excessive pricing. As a result of its evaluation, the Board found that Sahibinden had abused its dominant position in the (i) “online platform services market for real estate sales/rentals” and in the (ii) “online platform services market for vehicle sales” through excessive pricing, and imposed an administrative monetary fine of approximately TRY 10 million (“Sahibinden Decision”).

Sahibinden objected to this decision and requested its annulment from the Board; however, the Board rejected Sahibinden’s objection and approved the Sahibinden Decision once again. Thereupon, Sahibinden appealed both the initial fine and the subsequent re-affirming decisions, before the administrative courts. Upon its examination of the case, the Ankara 6^th Administrative Court (“6^th Administrative Court”) annulled both, on the basis that the Sahibinden Decision had lacked (i) concrete evidence for the existence of excessive pricing, (ii) an analysis on the market definition, and (iii) cost analysis for the determination of the excessive pricing.

In scope of its assessment on the excessive pricing, the 6^th Administrative Court explained that there are three different tests for the determination of excessive pricing but referred to the “Economic Value Test” set forth under the “United Brands” decision of the Court of Justice of the European Union[5] as the most preferred test when analysing excessive pricing allegations. This Economic Value Test, the court explained, involves the (i) comparison of the total production costs and the price, (ii) comparison of the prices of same or similar products within the relevant market or (iii) comparison of the prices of same or similar products within the neighbouring markets.

The 6^th Administrative Court stated that the Economic Value Test determines whether the profit is high or not, by comparing a product’s cost and its price. Following this examination, a price comparison is made to determine whether the product’s price is unfair on its own or in comparison to the competitors` products/services. However, the 6<sup>th</sup> Administrative Court indicated that in conducting the price/cost comparison there may be certain challenges regarding the benchmark and calculation of the costs, or the assessment of what a reasonable profit margin would be, which may prevent an objective and error-free price/cost comparison. The 6<sup>th</sup> Administrative Court also specified that if the difference between the price and cost determined in the first step of the Economic Value Test is excessive, then the second step of the test should be used, where the comparison can be made either between the entity`s own prices or those prices employed by its competitors in the same or different geographic markets.

Moreover, the 6^th Administrative Court explained that in order for an excessive pricing to be considered as abuse, the mere fact that an entity is in a dominant position in the market would not be sufficient. In addition to dominance, (i) the market should have high and permanent entry barriers, or (ii) the market should be a monopoly or near monopoly, as a result of current or historical exclusive rights or privileges. Even in cases where these conditions exist, it is accepted that competition or other relevant authorities should seek to resolve and remove the relevant entry barriers before assessing these acts within the purview of competition law, and if this is not possible, only then would the competition authorities be able to interfere in pricing.

In line with the above, the 6^th Administrative Court referred to the position of European Commission with regard to the issue and explained that interference in pricing should be reserved for very exceptional cases where there is no other way to protect the consumer, and the pricing should especially not be interfered with, in cases where the market is expected to recover on its own within a short time or in the medium term. Therefore, the 6^th Administrative Court examined that, due to the “exceptional” nature of the abuse through excessive pricing, the infringement should be proven with concrete facts that do not leave room for any doubt; otherwise, the interference may lead to consequences that are incompatible with the market economy and competition law.

The 6^th Administrative Court stated that standard of proof is considered as the minimum standard which the Authority should meet before deciding on a case, and that the Board generally accepts the standard of proof to be “healthy data, sufficient and convincing evidence, clear evidence showing the breach.” However the Board’s precedents do not contain any explanations as to the parameters on how to determine whether an evidence carries the abovementioned qualifications; whereas the Council of State, requires the standard of proof as “clear and concrete evidence beyond any doubt” when reviewing a case on Competition Board’s decisions.

Against this background, the 6^th Administrative Court decided that the Board`s Sahibinden Decision lacked solid basis and analysis, relied on mere observations and assumptions, reached conclusions based on doubt, and thus did not meet the standard of proof with respect to the following points:

• The 6^th Administrative Court stated that although the Authority indicated that Sahibinden`s prices should be compared to its competitors’ prices, its assessment had been, in fact, based on comparisons between different entities in markets that were not pertinent to the one where Sahibinden is active in. Furthermore, the Authority failed to conduct any comparative assessment for other geographical markets, and especially with respect to countries where global players are also active in.
• The 6^th Administrative Court also drew attention to the allegation that the advantage garnered by Sahibinden as a result of its choice of trade name (which means “from the owner”) in terms of consumer preferences, could not be deemed as an indication of its dominance without any tangible market data, but rather an outcome of the commercial foresight of the company.
• The 6^th Administrative Court further scrutinized the lack of evidence regarding the “abuse of dominant position” arguments of the Authority and stated that the Authority had failed to adequately evaluate the case by pointing to the dominant position in the market, and to take into consideration the effect of Sahibinden’s work model on its prices and costs; and had rather just focused on the fact that the entity is active in more than one category of service and how this affected the visitor numbers.
• The 6^th Administrative Court also explained that the Authority did not specifically calculate the margin between prices and costs; which meant that it did not conduct the required cost analysis to determine the existence of excessive pricing and only relied on observations. Regarding the prices, the 6^th Administrative Court also noted that the Authority refrained from analysing the actual prices as opposed to the discounted prices and list prices, because it was a difficult comparison; as a result of which, the analysis failed to meet the standard of proof, as it was merely based on observations rather than concrete data.
• The 6^th Administrative Court explained that it is not clear which tangible data or analysis were used for the assessment on the entry barriers in the market, which could potentially prevent the competitive pressure to a point the markets cannot recover themselves in short or mid-term. According to the 6^th Administrative Court, the analysis on non-existence of “recovery in short or mid-term” is merely an observation and assumption. Additionally, the 6^th Administrative Court stated that there was no solid market research on (i) the growth capacities of the global players in the market, (ii) their current recognition levels in the market, (iii) their growth process in the similar markets in different geographies, and that the evaluations were conducted without collecting any data and merely by observing the current positions of the players especially in short, mid and long term.
• The 6^th Administrative Court also noted that the Board should have proven its allegation on the anti-competitive effects of the excessive pricing and whether this excessive pricing created any barriers of market entry. Accordingly, the 6^th Administrative Court provided that theoretically, Sahibinden being considerably more expensive in its services, would be encouraging for new players to enter the market with very low or even free subscription methods and for the corporate customers to migrate to these platforms. The 6^th Administrative Court also added in order to interfere with an entity’s excessive pricing, the market would need to be closed to new entries, without enough players to create any pressure through their work models and commercial success on the allegedly dominant firm. However, basing the assessment on the commercial activities of a dominant undertaking subject to the success or performance of other undertakings, could not be a legal reasoning for abuse of dominance.

Finally, the 6^th Administrative Court stipulated that the Sahibinden Decision also lacked a full analysis of consumer benefit: Sahibinden has two types of user categories, personal and corporate, however the Board’s analysis focused on only one of them. Therefore, the 6^th Administrative Court pointed out that since the personal users (i.e., the consumers) do not pay any fee whereas corporate users pay a monthly fee, the Authority should have examined whether a decrease in the corporate users’ subscription fee would lead to demanding fees from the personal users as well, and how the welfare of the consumers would be affected in the long run. Thus, it was found that the Sahibinden Decision lacked sufficient analysis as it focused on just one specific consumer group while examining the consumer welfare.

2. Enerjisa Judgments

In 2018, the Board initiated an investigation concerning Enerjisa Enerji A.Ş (“Enerjisa”) and its subsidiaries, all of which were active in the electricity sector in Turkey, on whether they had violated Article 6 of the Law No. 4054 by way of abusing their dominant position through various practices in different relevant product markets.

As a result of its assessments, out of the seven companies investigated, the Board imposed administrative monetary fines amounting to a total of TRY 143 million on four of them: (i) three were retail electricity sales companies (namely Enerjisa Istanbul Anadolu Yakası Elektrik Perakende Satış A.Ş. (“Ayesaş”), Enerjisa Başkent Elektrik Perakende Satış A.Ş. (“Başkent”) and Enerjisa Toroslar Elektrik Perakende Satış A.Ş. (“Toroslar”), (together, the “Retail Electricity Sales Companies” or the “RESCs”) and (ii) one was an electricity distribution company (namely, Istanbul Anadolu Yakası Elektrik Dağıtım A.Ş. (“Ayedaş”)) (“Enerjisa Decision”).

These four subsidiaries all applied for the annulment of the Enerjisa Decision before the administrative courts. Ankara 13^th Administrative Court rendered four separate decisions, one of which annulled the fine imposed on the distributor Ayedaş (“Ayedaş Judgment”) and the other three upholding the fine imposed on the RESCs and rejecting the appeal (“RESCs Judgments”).

General Background of the Board Decision

The Board firstly highlighted the regulatory framework of electricity activities in Turkey. To that end, the Board particularly noted that the distribution of electricity and its retail sales had been severed into two separate activities with a regulation in 2013 and were carried out by separate legal entities since then.

Accordingly, the Board conducted different assessments for the RESCs and the electricity distribution companies, such as Ayedaş: 

• For the retail sale of electricity services, the Board analysed the market in terms of (i) ineligible consumers (those consumers whose total annual consumption remain below the consumer eligibility threshold and therefore precluded from choosing their own providers), and (ii) eligible consumers (those consumers whose consumptions are above the said threshold and thus, able to choose their own providers). To that end, in its assessment concerning the RESCs, the Board held that, the relevant companies which used to hold a legal monopoly for the sale of electricity within their territories, still had exclusivity for the ineligible consumers and used this advantage to hinder the eligible consumers’ switching options to competitors, thereby foreclosing the market to competitors. According to the Board, these RESCs (i) manipulated the customers, who used to be ineligible but who had subsequently passed the thresholds and become “eligible” to purchase electricity from their competitors, by preventing them from changing suppliers via certain practices and (ii) engaged in leveraging practices by way of making certain offers that could not be matched by the competitors.
• As for the electricity distribution activities, the Board defined the market as the “electricity distribution service” in view of the fact that the market is closed to competition and is subject to monopolistic regulations. To that end, the Board indicated that the electricity distribution company Ayedaş had shared competitively sensitive information (e., debt notices) with Ayesaş, the Enerjisa RESC operating in the same territory, thereby providing it a significant cost advantage compared to the other retailers active in the territory and leveraging its monopoly position within the electricity distribution market.
• Ankara 13^th Administrative Court’s Judgments

In terms of the RESCs Judgments, the Ankara 13^th Administrative Court (“13^th Administrative Court”) assessed the actual, potential, and collective effects of unilateral abusive conducts by the undertakings holding dominant position and rejected all of the arguments set forth by the RESCs while upholding the fine imposed on the relevant undertakings.

As for the Ayedaş Judgment, the 13^th Administrative Court pointed out at the outset that, it is possible for an electricity distribution company to provide invoice/payment/debt notice delivery services to an electricity retail sales company within the same economic entity. However, the important point to be scrutinized here should be whether the electricity distribution company’s conduct would constitute a competition-restrictive behavior.

Pursuant to the above line of reasoning, 13^th Administrative Court stated that, in order to establish whether there has been a violation which resulted in the foreclosure of the market to the competitors by way of creating an advantage to the retail company included in the same economic entity, the assessment should clarify (i) whether the distribution company (i.e., Ayedaş) had, in fact, delivered debt notices on behalf of the retail sale company Ayesaş –both part of the same economic unity –  and (ii) whether this service has been provided free of charge.

Furthermore, the 13^th Administrative Court emphasized that the Board’s assessment and therefore the administrative fine imposed to Ayedaş, relies on a single e-mail message extracted from the computer of an Ayedaş employee. In this regard, 13^th Administrative Court put forward that the e-mail message in question does not even indicate whether the notices were actually delivered or what the purpose of the notices had been.

The 13^th Administrative Court also emphasized the fact that, the Board found the e-mail message at hand sufficient to establish an abuse of dominance violation and refused to take into consideration Ayesaş’s defenses indicating that (i) debt notices were actually being delivered to the consumers by a third party (namely, EEDAŞ, which was also another wholly owned subsidiary of Enerjisa), (ii) under a bilateral contract that actually required Ayesaş to pay for this notification service and (iii) any competitor of Ayesaş could also benefit from the same service with equal terms, if they wished to do so.

In light of the foregoing, the 13^th Administrative Court found that the Board had failed to prove “beyond any doubt” that Ayedaş actually leveraged its legal monopoly in the distribution market by way of delivering debt notices to Ayesaş free of charge. It has further emphasized that rather than merely relying on a single e-mail correspondence, the Board should have extended the investigation in order to further assess the alleged conduct on part of Ayedaş. In line with this, it has indicated that the existence of a violation should have been established “beyond any doubt” by further examining the information, documents and evidence collected through this extension.

As a result, the 13^th Administrative Court declared that the Board’s Enerjisa Decision lacks adequate evidence to demonstrate Ayedaş’s alleged anti-competitive conducts and therefore annulled the part of Board’s decision pertaining to Ayedaş.

3. Conclusion

The judgments provided above constitute highly valuable and relevant precedents about legal standards to be applied in abuse of dominance cases, regardless of the type of abuse. In both the Sahibinden Judgment and the Ayedaş Judgment, the Ankara Administrative Courts ruled that, in cases concerning (exclusionary or exploitative) abuse of dominant position, the existence of a violation must be established “beyond any doubt.”

The reference to the standard of proof still varies in judgments of courts for example in 13^th Chamber of the Council of State’s 12 Banks decision, it was referred to as “beyond reasonable doubt” or “clear and precise evidence beyond any doubt” by the Council of State.

However, in Sahibinden and Ayedaş judgments, the administrative courts set forth what is not enough to meet the standard of proof.

The 6^th Administrative Court indicated that in abuse of dominance cases, the applicable legal standard requires the Board to conduct “clear and precise assessments that are beyond any doubt,” and criticized the Sahibinden Decision for relying on “mere observations and assumptions”.  In particular, the 6^th Administrative Court underlined that “forming an opinion based on doubt is not legally sufficient,” and “the requisite legal standard requires the allegation to be proven with concrete evidence, and justifications to establish that the doubt is valid.” Similarly, the 13^th Administrative Court found that the Board had failed to prove “beyond any doubt” that there has been a violation through relying on a single e-mail correspondence, whereas the Board should have extended the investigation in order to further assess whether the alleged conduct actually happened.  

Both judgments focus on the necessity to determine a violation “beyond any doubt”. While they do not provide a new set of standards or pre-determined requirements for the Board to apply, they require the Board to put forward some kind of evidence to illustrate the alleged violation “beyond any doubt”. The judgements also give the Board the assignment to collect additional data, evidence and even conduct market research in order to gather clear evidence of the violation rather than merely relying on observation and statements.

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.

(First published by Mondaq on December 18, 2020)

By Gonenc Gurkaynak, Partner, Ceren Ozkanli Samli, Counsel, Merve Oner Kabadayi, Associate, Busra Kiriscioglu, Associate, and Ece Cebecioglu, Associate, ELIG Gürkaynak Attorneys-at-Law

Paksoy has advised Istanbul Metropolitan Municipality on its USD 580 million bonds issuance.

According to Paksoy, “the bonds [are] due 2025 to international markets, including QIBs in the US under Rule 144A.” The firm reported that, “the net proceeds of issue of the bonds will be used to finance certain projects related to the municipality’s metro railway lines.”  

Paksoy’s team consisted of Partner Omer Collak, Counsel Okkes Sahan, and Associate Merve Kurdak Kurtdarcan.

Paksoy did not reply to an inquiry about the deal.

Ebru Gurdemir has joined Unilever in Istanbul as the General Counsel TUI.

Gurdemir joined the FMCG company from Tetra Pak, where she was the General Counsel, Greater Middle East & Africa. Before joining Tetra Pak as a Lead Legal Counsel for the Greater Middle East Cluster in 2011, Gurdemir was the Legal Director for British American Tobacco between 2010 and 2011. Earlier still, she worked for the Colgate Palmolive Company, first as the Legal Director – Turkey & New Geos between 2001 and 2008 and then in Switzerland as the company’s Legal Director PCP Europe. Gurdemir’s first in-house role was with HP between 1998 and 2001.

Before moving in-house, she worked as an Associate with Herguner Bilgen Ozeke Attorney Partnership in Istanbul and as an Attorney-at-Law with the Postacioglu Law Office in Izmir. 

“I am privileged to have the opportunity to bring my 29 years of professional experience with a fresh perspective from outside to a great company like Unilever,” Gurdemir commented, adding: “Appreciating all the great legal work that is already in place, as a Legal Leader and Board Member, I look forward to further develop the legal contributions to outstanding business Unilever has in Turkey, Central Asia, and Iran.”

Originally reported by CEE In-House Matters.

In principle, shareholders of limited liability companies (“LLC”) have the right to vote on the issues being discussed during the general assembly meetings and such right is indispensable. On the other hand, Turkish Commercial Code No.6102 (“TCC”) sets forth certain limitations on voting rights of the shareholders to prevent any impartiality, especially in cases where certain shareholders may not be able to prioritize the interests of the LLC and may value their own benefit. With this article, we aim to provide the instances where the shareholders of an LLC may be prohibited from using their voting rights.

Limitations on Voting Rights

The general rule under Article 447/1(a) of the TCC is that each shareholder of an LLC has the right to vote and such right cannot be taken away by any means. In this respect, voting rights of the shareholders are calculated in accordance with the nominal value of their share capital and one voting right is equal to TRY25 as per Article 618/1 of the TCC, unless a higher nominal value per share  has been determined in the articles of association.

However, under certain events, shareholders can be prohibited from voting in the general assembly meetings of the LLCs. Such events could be listed as follows:

(i) Participation in the management: According to Article 619/1 of the TCC, any person who has participated in the management of the LLC in any way will not be able to vote on the release of the managers. As per Article 616/1/(f) of the TCC the general assembly can decide on the release of the managers (i) if there is an item on the agenda regarding release or (ii) an item to approve the balance sheet of the LLC as per Article 424 of the TCC. In this respect, simple majority of votes represented in the general assembly meeting will be sufficient for the release of the managers in accordance with Article 620 of the TCC.

Article 619/1 provides a wide definition with respect to the persons who will fall under the scope of this provision by not listing such persons one by one. For this reason, it can be inferred that the managers (legal entity or real person), authorized signatories, commercial agents and shareholders who are also the managers of the LLC will not be able to vote for the release of the managers.  In the event there are shareholders who are unable to vote for the release of the managers, the decision quorum, which is the simple majority of the votes present at the general assembly meeting as per Article 620 of the TCC, will have to be satisfied by the other shareholder(s) present at the general assembly meeting. In another words, share capital of the shareholder who is prohibited from voting will not be taken into consideration when calculating the decision quorum.

(ii) LLC’s acquisition of its own shares: According to Article 619/2 of the TCC, shareholders will not be able vote on the decisions related to LLC’s acquisition of its own shares if they are the transferor. Pursuant to the Article 612 of the TCC, the LLC can acquire its own shares if; (i) it has the necessary equity that can be freely used to purchase such shares and (ii) the nominal value of shares to be purchased does not exceed %10 (ten percent) of the total share capital. Simple majority of the votes will be required for the approval of LLC’s acquisition of its own shares as per Article 620.

(iii) Approval of activities in violation of duty of loyalty and non-compete: According to Article 619/3 of the TCC, shareholders will not be able to vote on the decisions with respect to approval of their activities that are in violation of duty of loyalty or duty to non-compete. Pursuant to Article 613 of the TCC, shareholders are obliged to protect secrets of the LLC and cannot act in a way which will hinder the interests of the LLC. However, shareholders can permit a certain shareholder to perform activities that activities that are in violation of duty of loyalty or duty to non-compete as per Article 613/4 of the TCC. In this regard, the shareholders other than the shareholder who is acting in violation of the said duties can allow such activities through a general assembly meeting, provided that there is a provision in the articles of association. Please note that such resolution can be adopted with at least two-thirds of the votes represented together with the majority of the total basic share capital with voting rights as per Article 621/1(g) of the TCC.

Shareholders will be able to attend to the general assembly meetings even though the matters listed above are to be discussed in the meeting but they will not be able to vote on such issues.

Please also note that any provision in the articles of association removing or changing Article 619 shall be deemed invalid as per Article 579 of the TCC.

Effect of Acting Contrary to Article 619 on the Validity of General Assembly Meeting Resolution

Firstly, it should be determined whether a vote by the shareholder who is prohibited from voting in the general assembly affects the validity of the general assembly meeting resolution. The majority of legal scholars state that voting alone does not constitute a reason for the invalidity of the general assembly meeting resolution; and the general assembly meeting resolution might be cancelled as per Article 445 of the TCC only if such shareholder’s vote has an effect on the decision-making process (i.e. meeting and/or decision quorums).

Secondly, in case the shareholders try to circumvent Article 619 by performing certain transactions such as fiduciary transfer of shares, establishing a usufruct on the shares, voting agreement with a third party, Article 433 of the TCC will be applicable to LLCs with reference of Article 617/3. According to Article 433/1, any share capital transfer aiming to circumvent or neutralize the restrictions on the voting rights will be invalid. For this reason, if a shareholder transfers its shares in order to avoid Article 619 and the buyer participates in a general assembly meeting following share transfer, such participation and voting will be unauthorized since the buyer has not acquired the voting rights as per Article 433/1. In such case, other shareholders will have the right to object to the unauthorized participation in the general assembly as per Article 433/2 of the TCC.

Shareholders will be able to object (i) during the preparation of the list of attendants or (ii) to the chairman of the general assembly meeting and request that such objection is included in the meeting minutes. Additionally, shareholders will be able to file a lawsuit for cancellation of the general assembly resolution in accordance with Article 445 and Article 446/1/(b) of the TCC in the event the shareholders who were prohibited from voting have voted regardless of the objections raised by the other shareholders.

Conclusion

Article 619 of the TCC provides an important protection to the rights and interests of the LLCs through limiting voting in the general assembly meetings where there is a possible conflict between the interests of the shareholders and the LLC. As a result, the said provision ensures that the shareholders act more carefully and prioritize interests of the LLCs.

(First published by Mondaq on December 18, 2020)

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

Cerrahoglu, working alongside lead counsel Gleiss Lutz, has advised Gelita on the acquisition of a 65% stake in SelJel Jelatin Sanayi ve Ticaret A.S, via Gelita Internationale Gelatine GmnH, from Sel Sanayi Urunleri Ticaret ve Pazarlama A.S. Somay reportedly advised the sellers on the deal.

Cerrahoglu’s team included Principals Ozge Esin, Defne Sirakayam Aysegul Gursoy, Secil Abali, Mujdem Aksoy Cevik, and Nergis Kundakcioglu and Associates Kaan Batum and Korhan Kocaeli.

Kinstellar has advised Turkey’s Dogus Holding on the sale of a 30% stake in Istanbul’s Istinye Park shopping mall to Doha-based investment house Qatar Holding LLC, which is part of the Qatar Investment Authority. Linklaters and Paksoy reportedly advised Qatar Holding on the deal.

Kinstellar describes Istinye Park, which opened in 2007, as “one of Istanbul’s most spectacular and diverse shopping centers.” The 90,000 square meter mall features nearly 300 stores and 40 restaurants.

Kinstellar’s team was led by Partner Emre Edmund Ozer.

Editor’s note: After this article was published, Paksoy confirmed its involvement to CEE Legal Matters. The firm’s team included Partner Elvan Aziz, Counsels Serdar Ildirar and Sansal Erbacioglu, and Senior Associate Hazal Korkmaz.

The U.S. Foreign Corrupt Practices Act (“FCPA”) criminalizes the bribery of foreign officials anywhere in the world for the purposes of preventing corruptly influencing of an official governmental decision in order to obtain a business benefit.

The anti-bribery provisions in the FCPA apply to entities covered by it, which include (i) “issuers” – companies that have a class of securities or are required to file periodic reports with the SEC, (ii) “domestic concerns” which are U.S. citizens, nationals, and residents, as well as any business entity that has its principal place of business in the United States or is organized under U.S. laws, and (iii) any other person who acts in furtherance of a corrupt payment while within U.S. territory which can reach foreign entities that operate outside of the United States if they make use of the mails or any means or instrumentality of interstate commerce or engage in any act in furtherance of” a corrupt offer or payment while in the territory of the United States.

For this reason, the U.S. Department of Justice (“DOJ”) and the U.S. Securities and Exchange Commission (“SEC”) have a wide range of jurisdiction in terms of investigating and sanctioning companies, which could result in criminal liability for many U.S. based companies with subsidiaries outside of the U.S. So far in 2020, together the DOJ and the SEC took a total of 27 enforcement actions, some of which were related to U.S. based companies with subsidiaries or clients in Turkey, as briefly explained below.

For instance, in April 2020, the SEC charged Asante K. Berko, a former executive of a foreign-based subsidiary of a U.S. bank holding company, Goldman Sachs, worked with a Ghana-based intermediary to pay bribes to various Ghanaian government officials in order to gain their approval of an electrical power plant project for a Turkish client. It is alleged that from approximately 2015 to 2016, through the Ghana-based intermediary company, Asante K. Berko paid between $3 million to $4.5 million to the government officials for the Turkish Energy Company to win the contract. According to the SEC, Goldman Sachs was not charged on the grounds that it took appropriate steps to prevent the company from participating in the transaction, however Berko was charged in a civil complaint with violating and aiding and abetting violations of the FCPA anti-bribery provisions, for using a United States-based email account to advance the bribery scheme.

In July 2020, Boston-based pharmaceutical company Alexion Pharmaceuticals Inc. (“Alexion”) has agreed to cease and desist and to pay $14,210,194 in disgorgement, $3,766,337 in prejudgment interest, and a $3.5 million penalty to resolve charges that it violated the books and records and internal accounting controls provisions of the FCPA. Among other findings, the SEC order finds that Alexion subsidiaries in Turkey and Russia made payments to foreign government officials to secure favorable treatment for Alexion’s primary drug, “Soliris”.  According to the case file, between 2010 and 2015, Alexion Turkey paid Turkish government officials to improperly influence them to approve patient prescriptions and provide other favorable regulatory treatment for “Soliris”.

There are several preventative measures companies can adopt in order to avoid misconducts that might result in civil or criminal liability originating from the FCPA, one of which is surely the evaluation of inherent risk profiles, which depend mostly on certain key elements that might render them vulnerable to corrupt acts. The most important key elements could be argued to be the geographic location of subsidiaries and the sector in which the company operates. By taking into account these parameters, the first step to be taken by companies could be strengthening of their compliance controls throughout their company structure, in a way to ensure strong, regular control over their subsidiaries.

(First published by Mondaq on December 10, 2020)

By Gonenc Gurkaynak, Partner, Ceren Yildiz, Partner, and Nazli Gurun, Associate, ELIG Gürkaynak Attorneys-at-Law

TOCC Attorney Partnership has advised AKLease, the leasing subsidiary of Turkey’ AKBank, on a USD 25 million loan from Dutch entrepreneurial development bank FMO for the financing of eligible green projects in line with FMO’s Green Principles and Criteria.

TOCC’s team included Partners Tolga Cabakli and Yigit Ornek and Associate Yaren Gurbuz.

TOCC did not reply to our inquiry on the matter.