Category: Turkiye

Akol Law has advised Turkish candy producer Kervan Gida on the initial public offering of its shares and their listing on the Istanbul Stock Exchange. Akol Law also advised Oyak Yatirim, which acted as the broker on the deal. 

According to Akol Law, a total of 51.7 million shares were offered at a price of TL 9 per share, thus valued at TL 465.7 million. The firm reported that Norway’s Sovereign Wealth purchased 7.7% of the offered shares, worth TL 4 million. 

Akol Law’s team consisted of Partners Omer Gokhan Ozmen and Gunes Yalcin, Counsel Handan Bacioglu, Senior Associate Murat Ayyildiz, and Associates Gulmin Cosar and Duygu Sila Gul.

The Regulation on Processing and Privacy of Personal Data in Electronic Communications Sector (“Regulation”) has been published on the Official Gazette of December 4, 2020. The Regulation will enter into force within six (6) months following its publication date (i.e. June 4, 2020). The Regulation revokes the Regulation on Processing and Privacy of Personal Data in Electronic Communications Sector which was published on the Official Gazette of July 24, 2012.

I. Scope of the Regulation

Regulation provides rules and principles applicable to processing and privacy of personal data in electronic communications sector. The rules and principles enacted under the Regulation are applicable to personal data obtained during provision of services by operators which are operating in electronic communications sector, including for legal entity subscribers.

II. Obligations Set Out by the Regulation

(i) Principles

According to the Regulation, personal data must be (i) processed lawfully and fairly, (ii) accurate and where necessary kept up to date, (iii) processed for specified, explicit and legitimate purposes, (iv) relevant, limited and not excessive in relation to the purposes for which they are processed, (v) kept for as long as it is foreseen by relevant legislation or it is necessary for the purposes of processing.

(ii) Obligation to Take Measures

Operators must take technical and administrative measures in line with the Law No. 6698 on Protection of Personal data (“Law No. 6698”), per national and international standards for the security of personal data. These measures must at least contain the following: drafting security policies for processing of personal data, protection of personal data in case of data breaches, ensuring security of applications used for access to personal data. Information Communications and Technologies Authority (“ICTA”) might request information and documents with regards to the security measures, and request modification on them.

(iii) Data Retention Obligation

Operators must retain the records with regards to accesses made to personal data and other related systems for two (2) years.

Besides, for national security purposes, traffic and location data cannot be transferred abroad, in principle (please see section (v) for particular requirements for transfer)

(iv) Obligation to Notify Risks and Breaches

Operators must notify the relevant subscribers and users of any potential security risks. Besides, operators must notify Personal Data Protection Authority and relevant subscribers/users in line with the Law No. 6698 of data breaches. 

(v) Obligation to Inform and Explicit Consent

Operators must comply with the following in case they are required to obtain explicit consents of subscribers and users:

– Explicit consent must be specific to a subject and obtained prior to the relevant transaction

– Explicit consent must be freely given

– Subscribers/users must be informed of the personal data type to be processed, traffic and location data types, scope, processing purposes and periods.

– Consent of the subscriber/user must be obtained in written or electronic media.

– Records of the consents must be kept at least for the periods set forth under the relevant legislation and in any case during the subscription period.

In line with the data protection legislation, explicit consent cannot be a precondition for establishment of the subscription relationship and for provision of the key electronic communication services or devices. That said, the Regulation allows the operators to seek explicit consent in exchange for an additional benefit, such as free minutes, SMS and data.

As indicated, the principle is not to transfer traffic and location data abroad, for national security purposes. If traffic and location data would be transferred to third parties, operators must obtain another explicit consent by informing subscribers/users of scope of the transferred data, name and address of the transferee, transfer purpose and period, transferee country if data would be transferred abroad.

Without prejudice to the Law No. 6698, operators must inform subscribers/users of the processed traffic and location data types, processing purpose and period, in case traffic and location data would be processed.

Explicit consent obtained prior to entrance into force of the Regulation and in accordance with the applicable legislation would be deemed valid. In case of cease of subscription of the parties whose personal data were processed upon their explicit consent prior to the effective date of the Regulation, and their data is processed after cease of subscription without explicit consent, such process must be ceased within one month following the effective date of the Regulation, save for the obligations in the relevant legislation.

(vi)  Obligations on Calls and Detailed Bills

Operators must enable subscribers/users to camouflage their numbers through simple and free methods. Operators must also enable subscribers/users to cease automatic directed calls through simple and free methods. 

Upon request, operators must redact certain digits in telephone numbers included in usage details and detailed bills.

III. Rights of Subscribers/Users

 – Operators must enable subscribers/users to withdraw their explicit consents through a method that is used for obtaining explicit consent or an easier method.

– Operators must notify subscribers/users that their personal data is processing within the scope of their explicit consents, within third quarter of each year.

– Operators must notify disabled subscribers/users in line with ICTA’s regulations and through audio and visual methods.

– Explicit consent is deemed withdrawn when the subscription is terminated/expired, unless otherwise is stated by the subscriber/user.

– All the notifications made under the Regulation must be free. With regards to the notifications and explicit consents required under the Regulation, the burden of proof will be on the operators.

IV. Sanctions

The Regulation refers to Regulation on Information Communications and Technologies Authority Administrative Sanctions if the obligations set forth under the Regulation are not fulfilled, which includes administrative monetary fine up to 3% of the net sales of the previous calendar year, in case of non-compliance with data privacy obligations.

(First published by Mondaq on December 10, 2020)

By Gonenc Gurkaynak, Partner, Ceren Yildiz, Partner, Yasemin Dogan, Associate, and Devlet Cagla Nizam, Associate, ELIG Gürkaynak Attorneys-at-Law

On November 11, 2020, CEE Legal Matters reported that the Apak Uras Law Firm had advised Teknoser on its acquisition of 100% of the shares of Fujitsu Technology Solutions Bilisim from shareholders Fujitsu Technology Solutions GmbH and Fujitsu Technology Solutions Holding B.V. CEEIHM spoke with Doruk Ozdemir, Legal Counsel at Hitay Holdings, to learn more about the deal.

CEEIHM: To start, please tell our readers a few words about Hitay Holding in general and Teknoser in particular.

Doruk: With roots going back to its 1980 founding by Emin Hitay, one of the leading entrepreneurs in Turkey, Hitay Holdings is a major investment group in Turkey, focusing on corporate venture capital. The Hitay portfolio currently includes: Teknoser, a system integration and field services company; DORinsight, the largest online research company; Exim, offering security technologies solutions, and Bilyoner, the first and leading legal online sports gaming company in Turkey. 

The Hitay Foundation, which was established in 2019 to gather Hitay Holding’s corporate social responsibility activities under one roof, supports society in the fields of arts and education.

Teknoser, founded in 1998, is one of the leading system integration and IT field service companies in the information and communication technologies market in Turkey with its 76 service points and over 850 employees. Cloud computing systems, virtualization, security, and hardware and software solutions are all provided by Teknoser’s extensive organization, which helps its clients manage their budget, time, and human resources effectively with its technological expertise of many years. The company is the market leader in field services of POS systems.

CEEIHM: What was the business case behind acquiring 100% of the shares of Fujitsu Technology Solutions Bilisim?

Doruk: It was a horizontal expansion for us, allowing us to reach out to a wider audience on the back of Fujitsu products and services. Along with the transaction, we also became the Tier 1 Channel Partner and local service provider in Turkey to fortify our collaboration. Customers can expect a smooth transition and will continue to have access to Fujitsu Client Computing devices, servers, and storage products, as well as seamless support services through Teknoser. The acquisition will allow us to support and enhance the Fujitsu ecosystem in Turkey. We will have access to more products and enrich our solutions portfolio.

CEEIHM: What would you say was the most complex aspect of the deal from a legal perspective?

Doruk: The current pandemic is unprecedented in its global reach and impact. Lockdowns, business closures, and social distancing cause disruptions in our daily business life. The deal took place under these circumstances and we had to make the most of our meetings online. It was a challenging time for the world but both of the parties managed to deal with this compelling circumstance with their best efforts and make this deal happen.

CEEIHM: How was the legal work split between your in-house legal team and your external legal adviser, Apak Uras?

Doruk: In this deal, the in-house team mainly worked on the future partnership agreements and technical aspects like our Channel Partner Agreement and the service-related issues with the collaboration of our technical and sales team. Apak Uras assisted us with the preparation of transaction documents and during negotiations. They were also there when we asked for their opinions on other deal-related agreements. There was a good work split between us. 

CEEIHM: And, while we’re on the subject, why did you choose Apak Uras in particular to assist on this deal?

Doruk: Apak Uras is a very experienced firm in M&A transactions. The team members assisted the group previously in another deal as well a few years ago. For this reason, they know the group and our needs very well. Due to their previous engagements for the group, we have decided once again to work with them on this deal.

Originally reported by CEE In-House Matters.

Nigar Gokmen, former Senior Associate at the Cakmak Law Firm, has joined the Esin Attorney Partnership to Head the firm’s Energy, Mining, and Infrastructure practice.

According to the Esin Attorney Partnership, “Nigar has a solid record advising local and multinational companies with a special focus on the development of projects in the energy, mining and infrastructure sectors.” In addition, the firm reports, “her practice focuses on regulatory matters, project agreements, construction contracts, operation/service agreements, environmental and permitting matters, and administrative procedures.”

Gokmen received her Bachelor’s degree from the Bilkent University in 2010, after which she joined the Cakmak Law Firm, where she stayed until this month. 

“Nigar brings along a wealth of experience on EMI and PPP matters,” said Ismail Esin, Partner at the Esin Attorney Partnership. “We are convinced that her arrival will further strengthen our presence on the market.”

Paksoy has advised chemical distributor IMCD on its acquisition of the Ejder Kimya Ilac Danismanlik Sanayi ve Ticaret personal care business from Pervin Ejder. Bener reportedly advised the sellers.

The deal is expected to close in January 2021, subject to customary closing conditions and regulatory approval.

Paksoy’s team included Partner Elvan Aziz and Associates Gozde Zorlu and Simge Sengun.

The economic effects of the Covid-19 pandemic continue to resonate in Turkey, says Cetinkaya Partner Altug Ozgun from Istanbul. Ozgun reports that Turkey’s economy has been “shaken because of the reduction in productivity during the lockdown.” In particular, he says, “tourism as a whole was impacted severely … affecting the overall economic condition.” 

President Recep Tayyip Erdogan has recently accepted the resignation of Treasury Finance Minister Berat Albayrak, Ozgun reports, and appointed previous Transportation, Maritime and Infrastructure Minister (from 2013-2015) and Development Minister (from 2016-2018) Lutfi Elvan in his place. According to Ozgun, the government has also recently announced a program to fight inflation by concentrating on the production and agriculture sectors, as well as the exportation of defense technology. 

Despite the economic and political fallout of the pandemic, the Turkish parliament is still active, Ozgun reports, noting that, after the US election, Turkey’s government announced a program of legal and human rights reform. A new law providing for online court proceedings is expected to be passed and implemented soon, he says, and he reports that changes will be coming soon to the country’s criminal law as well. Additionally, at the beginning of 2020 Turkey’s prosecution system adopted a plea bargain system for some specific crimes to reduce court workloads, and Ozgun reports that “we can expect that prosecutors soon will be given the prerogative to offer settlements similar to the deferred prosecution agreements in the UK or the US.” 

The Turkish government has also been active lately enforcing certain laws, and Ozgun explains that, “since the Social Media Law was passed a few months ago, not one of the big companies – Facebook, Twitter, YouTube, and Tiktok – has registered a local representative in Turkey.” To combat the issue, he says, the Turkish Government has fined each of the companies ten million Turkish lira, and given them another 30 days to register. “If they fail to do so,” he says, “they will be fined an additional 30 million lira.”

GKC Partners and White & Case have advised the Qatar Investment Authority on its acquisition of a 10% stake in the Borsa Istanbul stock exchange from the Turkey Wealth Fund, which retains an 80.6% stake. Clifford Chance and the Ciftci Law Firm advised the Turkey Wealth Fund on the transaction.

The MoU was signed by Zafer Sonmez, CEO of the Turkey Wealth Fund, and Mansoor bin Ebrahim Al-Mahmoud, CEO of the Qatar Investment Authority (the sovereign wealth fund of the Gulf state), at the presidential palace in Ankara.

The GKC Partners team was led by Partner Emre Ozsar and included Associates Can Tolga Tezel and Gokcen Durgut.

White & Case’s team included Partner Ashley Ballard and Associate Richard Wilson.

Ciftci’s team included Partner Itir Ciftci, Senior Associate Umut Ozdogan, and Associate Seran Kalyoncu. Clifford Chance’s team, which advised on English law elements of the deal, was led by Prague-based Managing Partner Alex Cook.

Editor’s note: This article was updated to more accurately reflect the composition of GKC’s and White & Case’s teams.

In 2015 the Organization for Economic Cooperation and Development created 15 base erosion and profit shifting (BEPS) action plans to equip governments to address tax avoidance by means of domestic and international rules and instruments. The purpose of the action plans is to ensure that profits are taxed where economic activities generating the profits are performed and where value is created.

In accordance with BEPS Action Plan 13, many countries have made legislative amendments in order to comply with the three-tiered transfer documentation approach, including the preparation of Master File, Local File, and Country-by-Country Reporting (CbCR) by multinational enterprises (MNEs). The CbCR is shared with tax administrations in relevant jurisdictions for the use of high-level transfer pricing and BEPS risk assessments. Therefore, many countries have signed and activated Multilateral Competent Authority Agreements (CbCR MCAA) which enable the automatic exchange of CbCRs between tax authorities. In line with the BEPS Action Plans, a new presidential decree, numbered 2151 (the “Decree”) was published in Turkey’s Official Gazette dated February 25, 2020 making some amendments to transfer pricing documentation obligations. In particular, Master File and CbCR obligations now exist for taxpayers who exceed specified limits. As a result of the new amendments, transfer pricing documentation obligations in Turkey shall cover: (i) Local Files; (ii) Appendix 2 Forms Attached to Corporate Tax Returns; (iii) Master Files; and (iv) Country-by-Country Reports.

Annual transfer pricing report obligations and relevant transfer pricing rules are valid in Turkey as of January 1, 2007 as per Article 13 of Corporate Income Tax Law No. 5520. The local filing requirements are the same as the annual transfer pricing report obligations that were already in force for taxpayers who perform intercompany transactions. The new transfer pricing documentation requirements are presented below:

Master File

Under the Decree, corporate taxpayers with assets in their balance sheet and net sales in the income statement for the fiscal period preceding the current reporting period exceed TRY 500 million are required to prepare a Master File. The Master File will consist of five main categories, including the organizational structure of the multinational group of businesses, the definitions of operating activities, the intangible rights owned, intra-group financial transactions, etc. The file should be prepared before the end of the financial year which follows the period being reported and should be submitted to the tax office or tax auditor upon request. The first financial period for which the Master File should be prepared is 2019 and it should be prepared before the end of 2020.

Country by Country Reports

Pursuant to the Decree, the ultimate parent company resident in Turkey of the MNE with consolidated group revenue exceeding EUR 750 million in the previous fiscal year is required to prepare a CbCR by the end of the year following the period being reported and share it electronically with the Tax Administration. As a rule, the CbCR targets ultimate parent entities and it may not need to be filed by the Turkish subsidiary of a multinational group. However, the Turkish subsidiary can be held responsible for submitting a CbCR to the Turkish tax office if its parent company is not obliged to prepare a CbCR in its resident country or the CbCR MCAA has not been signed by the jurisdiction where the parent entity resides or if there is a systemic error in exchange of information.

Currently, Turkey has no relevant CbCR MCAA with any tax jurisdiction. The first financial period for which a CbCR shall be prepared is 2019. Thus, unless information exchange agreements regarding the CbCR are signed and come into force before the end of 2020, Turkish subsidiaries of the MNEs will be obliged to submit CbCRs to Turkey’s Tax Authority if no time extension is granted.

Summary

From this point on, MNEs must pay attention to substance and economic reality in their group structures since all intercompany transactions of MNEs can be explicitly distinguished when CbCRs and Master Files are reviewed together. Tax authorities will be able to comprehend the “bigger picture” by analysing the MNE’s value chain, identifying if revenues and profits generated are commensurate with substance, and identifying any artificial shifting of substantial amounts of income into tax-advantageous environments. Since Turkey has no CbCR MCAA with any tax jurisdiction and the deadline for submission is the end of 2020, taxpayers do not have sufficient time to make preparations. Secondary legislation regarding transfer pricing documentation is expected to clarify the details for the processes.

By Ersin Nazali, Managing Partner, Nazali Legal-Tax Services

This Article was originally published in Issue 7.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Yigit Issever has joined Bayer as Legal Counsel and Pharmaceuticals and Radiology Business Partner in Istanbul.

Prior to joining Bayer, Issever spent over four years with Yilmaz, Attorneys-at-Law. Earlier still, he was Legal Counsel with Mercedes-Benz Turk. His experience also includes time with Freshfields Bruckhaus Deringer in London and both Selcuk Attorneys at Law and the Herguner Bilgen Ozeke Attorney Partnership in Istanbul.

Issever graduated from the Faculty of Law at the Istanbul University and obtained LL.M. degrees from the University of Galatasaray and Queen Mary, University of London.

“This opportunity allows me to enable my legal, compliance, and data privacy expertise while focusing on life sciences,” commented Issever. “Helping business to overcome unique challenges brought by the Covid-19 pandemic in the pharma sector also drives me during these unprecedented times.”

Originally reported by CEE In-House Matters.

Istanbul’s Durukan+Partners and Skadden Arps have advised LetterOne on the recent restructuring of Turkcell’s shareholding structure. Milbank and Turkey’s Aksu Caliskan Beygo Attorney Partnership advised the Turkey Wealth Fund and Ziraat Bank, Sullivan & Cromwell and Herguner Bilgen Ozeke advised Telia Finland, and White & Case and the Kabine Law Firm advised Cukurova on the deal.

According to Durukan+Partners, the restructuring resulted in: (i) the acquisition by the Turkey Wealth Fund, working through a fully owned subsidiary, of 26.2% of the shares in Turkcell, “for 15% of which certain privileges were established to give the Turkey Wealth Fund management control of Turkcell;” (ii) the acquisition by the Netherlands’ IMTIS Holdings, in which LetterOne holds a 100% economic interest, of a 24.8% stake in Turkcell; and (iii) Alfa Telecom Turkey Limited (a subsidiary of LetterOne), Cukurova, and Telia Finland ceasing to be indirect shareholders in Turkcell. 

According to the Aksu Caliskan Beygo Attorney Partnership, “the amendments to Turkcell’s Articles of Association, under which the Turkey Wealth Fund becomes the company’s controlling shareholder, were approved with a majority of 93% at Turkcell’s Annual General Assembly Meeting held on October 21, 2020. Closing of the transaction occurred on October 22, 2020. Successful closing of the deal resolved over-a-decade-long shareholder disputes, simplified the ownership structure of the company, and accomplished a major loan restructuring.”

The Aksu Caliskan Beygo Attorney Partnership team was led by Founding Partner Okan Beygo and included Partners Ela Sari, Denel Balci Kirali, Ayhan Kilinc, Senior Associate. Gozde Emek, and Associates Beste Bundur, Muhammed Tosun, and Yasemin Sonay.

White & Case’s team was led in London by Partner John Reynolds and Associate Omar Anwar and included Partners Ashley Ballard, Christopher Czarnocki, Charles Balmain, Amanda Cowell, and Associate Richard Coopey.

The Kabine Law Firm team was led by Partner Tuvan Yalim and included Partner Mehmet Karli and Associates Ozgecan Korkmaz, Gulce Keskin, Macit Tolga Bayrak, Deniz Guneri, Lara Oranli, Zeynep Ekinci, Berkay Arslan, and Pinar Ozcan.

Herguner Bilgen Ozeke’s team was led by Partner Kayra Ucer and included Associates Emel Tulun, Hakan Ekim, Turkay Avanas, and Batuhan Kocabas.

Editor’s Note: After this article was published, Durukan+Partners informed CEE Legal Matters that its team had been led by Partner Begum Durukan Ozaydin and included Senior Associate Ibrahim Baysal and Associates Muhammed Kesim and Ilker Demirtas.

Subsequently, Milbank confirmed that it had “acted for the Turkish Wealth Fund … and T.C. Ziraat Bankasi A.S. …. in relation to the restructuring of the holding company shareholder arrangements, the related debt facilities provided by Ziraat Bank, and TWF’s acquisition of 26.2% of the shares of Turkcell Iletisim Hizmetleri A.S.” The firm’s London-based team, which was led by Partner Clive Ransome and Senior Associate Seyda Duman, included Partner Tom Canning, Senior Associates Paul Kinninmont and Andrew Reilly, Special Counsel Chris Taufatofua, and Associates Helen Sutcliffe and Marta Zieba.