Ordinary Merger Procedures

The merger takes place when the shareholders of the transferring company automatically acquire the shares of the acquiring company, according to an exchange ratio, in return for the assets of the transferring company. The merger agreement may also provide for a withdrawal payment within the meaning of the second paragraph of Article 141. Through the merger, the acquiring company takes over the assets of the transferring company as a whole. The transferring company ceases to exist through the merger and is deleted from the trade registry.

There are two types of merger:

1. One commercial company taking over another: "merger by acquisition"
2. Commercial companies coming together in a newly formed company: "merger by formation of a new company"

VALID MERGERS

ARTICLE 137-

(1) Capital companies (limited company, joint stock company, partnership limited by shares with capital divided into shares);

• With capital companies,
• With cooperatives, and
• With general and limited partnerships, provided that they are the acquiring company, may merge.

(2) Partnerships of persons (general partnership and limited partnership);

• With partnerships of persons,
• With capital companies, provided that they are the transferring company,
• With cooperatives, provided that they are the transferring company, may merge.

(3) Cooperatives;

• With cooperatives,
• With capital companies, and
• With partnerships of persons, provided that they are the acquiring company, may merge.

ARTICLE 194/1 A commercial enterprise may merge with a commercial company (general partnership, limited partnership, joint stock company, limited company or cooperative) by being taken over by it. In this case, depending on the type of the acquiring commercial company, the provisions of Articles 138 to 140, 142 to 158 and the provisions of Articles 191 to 193 on common provisions shall apply by analogy.

Trade Registry Regulation Article 126:

1- The transferring company applies to the directorate for registration of the merger with the following documents:

1. Notarized copies of the resolutions approving the merger agreement by the general assemblies of the acquiring (Limited Company / Joint Stock Company) and transferring (Limited Company / Joint Stock Company) companies

   (1 original each) (TSY-126/1-a; TTK-151)

   • List of Attendees (1 original). In single-shareholder companies (Amended phrase: Official Gazette 9/10/2020-31269), it is not mandatory to prepare the list of those entitled to attend the general assembly meeting. (Regulation Article 14)
   • If attendance is by proxy, a notarized power of attorney. In order for company partners to be represented at the meeting through their proxies, the power of attorney must be drawn up in notarized form (Repealed phrase: Official Gazette 9/10/2020-31269) (…). (Regulation Article 18/7)
   • Agenda Resolution for general assemblies held upon invitation (Sample Agenda Resolution for limited companies (1 photocopy))
2. Merger agreement signed by the parties

   (1 original – 1 photocopy) (TSY-126/1-b; TTK – 146)

3. The latest balance sheet approved by the auditor in companies subject to audit, or by the board of directors in other companies, and, where necessary, an interim balance sheet, together with the stamp duty receipt for the balance sheet

   (1 original) (TSY-126/1-c)

4. Where permission or a favorable opinion from a Ministry or other official bodies is required, the letter of permission or favorable opinion

   (TSY-126/1-ç)

5. The merger report prepared separately or jointly by the management bodies of all companies participating in the merger

   (1 original) (TSY-126/7; TTK-147). However, where an SME Report prepared by a sworn-in certified public accountant (YMM) or an independent certified public accountant (SMMM) is approved by all partners, small and medium-sized companies may waive the preparation of a merger report.

6. Notice of invitation to partners (1 original - 1 photocopy)

   The Trade Registry Gazette in which the notice concerning the right of inspection, given to the company's partners 30 days before the general assembly, was published (1 original) (TSY-126/8; TTK-149). However, where an SME Report prepared by a YMM or SMMM is approved by all partners, small and medium-sized companies may waive the exercise of the right of inspection.

7. Notice of invitation to creditors (1 original - 1 photocopy)

   The texts of the notices granting creditors the right to request that their receivables be secured, prepared in accordance with the template, must be submitted to the directorate together with the registration documents so that they are published three times in the registry gazette at intervals of 7 days. The first notices to creditors must be published in the same registry gazette together with the notices concerning the registration of the merger resolution. (TSY-126/9; TTK-157)

8. Petition

2- The acquiring company applies to the directorate for the registration of the merger with the following documents:

1. Notarized copies of the resolutions approving the merger agreement by the general assemblies of the acquiring company (Limited Company / Joint Stock Company) and the transferring company (Limited Company / Joint Stock Company)

   (1 original each) (TSY-126/2-a; TTK-151)

   • List of Attendees (1 original). In single-shareholder companies (Amended phrase: Official Gazette 9/10/2020-31269), it is not mandatory to prepare the list of those entitled to attend the general assembly meeting. (Regulation Article 14)
   • If attendance is by proxy, a notarized power of attorney. In order for company partners to be represented at the meeting through their proxies, the power of attorney must be drawn up in notarized form (Repealed phrase: Official Gazette 9/10/2020-31269) (…). (Regulation Article 18/7)
   • Agenda Resolution for general assemblies held upon invitation (Sample Agenda Resolution for limited companies (1 photocopy))
2. Merger agreement signed by the parties

   (1 original - 1 photocopy) (TSY-126/2-b; TTK-146)

3. Documents required for registration of the capital increase to be made due to the merger

   (TSY-126/2-c) (Amendment Text)

4. Incorporation documents of the new company, where the merger is carried out by way of a new incorporation

   (TSY-126/2-ç)

5. A report by a sworn-in certified public accountant or an independent certified public accountant (SMMM report), or, for companies subject to audit, the auditor's report on these determinations, together with an activity certificate, establishing for each of the merging companies whether its capital has been lost, the company's net assets, and, if the transferring company holds assets registered in the land, ship and intellectual property registries or similar registries, the fair values of such assets; or, for companies subject to audit, the auditor's report on these determinations

   (1 original) (TSY-126/2-d)

6. A declaration containing the list of the transferred company's assets and rights registered in land, ship and intellectual property registries and similar registries, the registries in which they are registered, and information and values relating to the entries of these assets and rights in the relevant registries

   (1 original). (TSY-126/2-e)

7. The latest balance sheet approved by the auditor in companies subject to audit, or by the Board of Directors/Board of Managers in other companies, and, where necessary, an interim balance sheet, together with the stamp duty receipt for the balance sheet

   (1 original) (TSY-126/2-f)

8. Where permission or a favorable opinion from a Ministry or other official bodies is required, the letter of permission or favorable opinion

   (TSY-126/2-g)

9. The merger report prepared separately or jointly by the management bodies of all companies participating in the merger

   (1 original) (TSY-126/2-7; TTK-147). However, where an SME Report prepared by a YMM or SMMM is approved by all partners, small and medium-sized companies may waive the preparation of a merger report.

10. Notice of invitation to partners (1 original - 1 photocopy)

    The Trade Registry Gazette in which the notice concerning the right of inspection, given to the company's partners 30 days before the general assembly, was published (1 original) (TSY-126/2-8; TTK-149). However, where an SME Report prepared by a YMM or SMMM is approved by all partners, small and medium-sized companies may waive the exercise of the right of inspection.

11. Notice calling on creditors (1 original – 1 photocopy)

    The texts of the notices granting creditors the right to request that their receivables be secured, prepared in accordance with the template, must be submitted to the directorate together with the registration documents so that they are published three times in the registry gazette at intervals of 7 days. The first notices to creditors must be published in the same registry gazette together with the notices concerning the registration of the merger resolution. (TSY-126/2-9; TTK-157)

12. Petition

IN THE CASE OF A COMMERCIAL ENTERPRISE PARTICIPATING IN A MERGER

Trade Registry Regulation, Article 132:

In mergers carried out by the takeover of a commercial enterprise by a commercial company, the provisions of Articles 138 to 140, 142 to 158 and 191 to 193 of the Law, and Articles 126 and 127 of the Regulation, shall apply by analogy, according to the type of the acquiring commercial company.

The following documents are submitted to the Directorate together with the merger agreement signed by the parties (1 original - 1 photocopy) (TTK-146).

1. A declaration by the owner of the commercial enterprise showing the complete list of the assets permanently allocated to the commercial enterprise

   (1 original). Information on the registries in which those assets listed in the declaration that are recorded in special registries are registered, and on their entries in the relevant registries

2. A YMM or SMMM Report on the determination of the net assets of the enterprise, prepared so as to show, on the basis of the going concern principle of the commercial enterprise, the fair value of each of the asset items in the list and the enterprise value, or, if the enterprise value has not been taken into account, the reasons for this

   (1 original)

3. Notice of invitation to creditors (1 original - 1 photocopy)

   The texts of the notices granting creditors the right to request that their receivables be secured, prepared in accordance with the template, must be submitted to the directorate together with the registration documents so that they are published three times in the registry gazette at intervals of 7 days. The first notices to creditors must be published in the same registry gazette together with the notices concerning the registration of the merger resolution. (TTK-157)

4. The latest balance sheet approved by the owner of the firm and, where necessary, an interim balance sheet, together with the stamp duty receipt for the balance sheet

   (1 original)

5. The merger report prepared, separately or jointly, by the management bodies of all companies/firms participating in the merger

   (1 original) (TSY-126/7; TTK-147). However, where an SME Report prepared by a YMM or SMMM is approved by all partners, small and medium-sized companies may waive the preparation of a merger report

6. Petition

REGISTRATION

(1) The acquiring company cannot register the merger resolution until the transferring company/firm has registered the merger resolution.

(2) The directorate with which the transferring company/firm is registered shall immediately notify the directorate with which the acquiring company is registered of the registration of the merger.

3- The following facts are registered in respect of the transferring company:

• The resolution of the General Assembly on the merger and its date or, in capital companies merging under the simplified procedure, the resolution of the management body on the merger and its date in their place
• That the transferred company is dissolved as a result of the merger
• The MERSİS number, trade name or business name, and registered head office of the acquiring company

4- The following facts concerning the Acquiring Company are registered:

• The resolution of the General Assembly on the merger and its date or, in capital companies merging under the simplified procedure, the resolution of the management body on the merger and its date in their place
• The MERSİS numbers, trade names, business names and head offices of the companies party to the merger
• Where the acquiring company is required to increase its capital because of the merger, the amendment to the articles of association relating thereto
• In a merger by the formation of a new company, the facts whose registration is mandatory according to the type of the newly established company

WARNINGS

• a) In a merger by the formation of a new company, there must be at least 2 companies. A single company cannot be transferred to a company to be newly established.

• b) A merger agreement must be signed between at least 2 existing companies, and these must be transferred to the company to be newly established.

• c) Each company participating in the merger is obliged to make available for inspection by interested parties the documents specified in Article 149 of the Turkish Commercial Code (TTK) at its head office and branches and, in the case of publicly held joint-stock companies, at the places determined by the Capital Markets Board (SPK), within the 30 days preceding the General Assembly resolution.

• d) In addition, where the documents made available for inspection by each company participating in the merger have been deposited and where they are kept ready for inspection must be announced in the Turkish Trade Registry Gazette and in the newspaper stipulated in the articles of association at least 3 business days before the date of deposit. In this case, the announcement must have been published in the registry gazette at least 33 days before the General Assembly. A photocopy of the registry gazette in which this announcement was published must be submitted for registration with the Trade Registry Directorate.

• e) Companies that are determined by a certified public accountant (SMMM) or sworn-in certified public accountant (YMM) report to meet the criteria of small and medium-sized enterprises may waive the exercise of the right of inspection, by General Assembly resolution and with the approval of all partners.

• f) Article 152, under the heading of provisions on the finalisation of the merger, provides that the transferred company is dissolved upon registration of the merger in the trade registry. Article 157 concerns the announcement to be made in the registry gazette by the companies participating in the merger regarding the securing of receivables. To avoid difficulties in practice, this announcement is taken together with the registration of the merger.

• g) The acquiring company cannot register the merger resolution until the transferred company has registered it. The directorate where the transferred company is registered immediately notifies the registration of the merger to the directorate where the acquiring company is registered. (TSY-127)

• h) The provisions on contributions in kind to capital do not apply to merger transactions.

• ı) If more than 6 months have passed between the date on which the merger agreement was signed and the balance sheet date, or if significant changes have occurred in the assets of the companies participating in the merger after the last balance sheet was prepared, the companies participating in the merger are required to prepare an interim balance sheet in accordance with Article 144, and the YMM or SMMM report on the valuation made according to the interim balance sheet must be submitted to our Directorate.

• i) Pursuant to Article 4 of the "Communiqué on Cooperation between Registries in Structural Changes in Companies and Contributions in Kind to Capital" published in the Official Gazette No. 28453 dated 31 October 2012, the Registry Directorate must make the notification of assets and rights that must be notified to special registries simultaneously with the registration of the merger.

• j) In order for the notification to be made on time, lists containing information on the records of the assets and rights to be notified to the relevant registry, classified according to the special registries to which they are attached, and their actual values determined by a YMM/SMMM report, must be submitted to the Directorate.

• k) With regard to the acquiring company, if the merger is carried out by the formation of a new company, the incorporation documents of the new company,

• l) A company in liquidation may participate in a merger provided that the distribution of its assets has not begun and that it is the transferred company. A report to be prepared by the liquidator stating that the distribution of the assets of the transferred company in liquidation among shareholders has not begun,

• m) No provision may be included in the merger agreement stating that it will be valid before General Assembly approval. The only exception is the merger carried out under the simplified procedure specified in Articles 155 and 156 of the Law.

• n) Where the acquiring company is required to increase its capital because of the merger, the capital increase and the merger resolution are registered simultaneously. In a merger by the formation of a new company, the merger resolution is registered simultaneously with the establishment of the new company. The Trade Registry Directorate carrying out the registration immediately notifies the directorate where the transferred company is registered. Upon this notification, the title of the company dissolved as a result of the merger is deleted ex officio.

• o) The management body of each company party to the merger applies for registration to the directorate where it is registered.

• ö) In a capital increase made because of a merger, since the procedure for amending the articles of association relating to capital increases of joint-stock and limited companies will apply, the documents relating to the capital increase must also be submitted. However, the requirement that the previous capital has been paid in is not sought.

• p) If half of the total of the capital and the statutory reserves of one of the companies party to the merger has been lost through losses, or if that company is over-indebted, a report by a sworn-in certified public accountant or an independent certified public accountant shall be submitted to the directorate. The report must confirm, showing the method of calculation, that the other company party to the merger holds freely disposable equity sufficient to cover the lost capital or the over-indebtedness and must verify the relevant amounts, or must confirm that the stated circumstances do not exist. If the companies being taken over are subject to audit, this report may also be submitted to the directorate by the company auditor (Regulation Article 126/4).

• r) If the company that will be dissolved by being taken over through the merger has a branch or branches registered with our directorate, where its company headquarters is located, or with other Trade Registry Directorates, a signed Branch Information Declaration must be submitted with the documents. If it has no branches, a signed declaration stating that there are none must be submitted.

ANNOUNCEMENT

• a) The merger decision is announced in the Turkish Trade Registry Gazette. (TCC – 154)

• b) The companies participating in the merger shall have published in the Trade Registry Gazette a declaration that the creditors' receivables have been secured, together with a call to creditors, three times at one-week intervals. (TCC-157; this must be done simultaneously with the registration of the merger decision.)

NOTE:

You must submit an electronic application at https://mersis.gtb.gov.tr/.

For Information and Support

Phone:

0 (378) 227 10 46

Extension: 125 E-mail:

info@bartintso.org.tr