Partial Demerger

A demerger is the transfer by a capital company or a cooperative of part or all of its assets to one or more existing or newly established capital companies or cooperatives, in return for the grant of participation shares to itself or to its shareholders.

Partial Demerger; is a demerger in which the real estate and participation shares on the balance sheet of a capital company or cooperative, together with production facilities, service units and all rights and assets attached to them, are transferred at their book values to one or more existing or newly established capital companies or cooperatives, in return for which participation shares representing the capital of the acquiring capital company or cooperative are granted to the shareholders of the transferring company or cooperative, or to the company or cooperative itself.

Demerger;

If the shareholders of the transferring company are granted shares in all the companies participating in the demerger in proportion to their existing shares, it is a demerger in which proportions are preserved.
If the shareholders of the transferring company are granted shares in some or all of the companies participating in the demerger in proportions different from their existing shares, it is a demerger in which proportions are not preserved.

Application and documents

TRADE REGISTRY REGULATION ARTICLE 128 - DOCUMENTS TO BE SUBMITTED TO THE DIRECTORATE IN A PARTIAL DEMERGER

A) By the company undergoing partial demerger;

Notarized copy of the general assembly resolution approving the demerger agreement and/or plan
(1 original – 1 photocopy) (Limited Company)
Demerger agreement and/or plan (TCC 166-167)
(1 original)
Amended articles of association, where the capital of the company undergoing partial demerger is to be reduced
(1 original) (Sample amendment text)
In a partial demerger, a sworn-in certified public accountant (YMM) or independent certified public accountant (SMMM) report determining that the remaining net assets of the demerging company are sufficient to cover the company's debts, or, where no capital reduction is required, also determining that fact
(1 original), or, for companies subject to audit, the auditor's report on these determinations.
Where permission or a favorable opinion from a Ministry or other official bodies is required, the letter of permission or favorable opinion
Demerger report prepared by the management bodies separately or jointly (TCC 169)
(1 original). However, in small and medium-sized companies, if the preparation of a demerger report is waived on the basis of an SME Report prepared by a YMM or SMMM, a document showing that all shareholders have approved this is submitted to the directorate.
Announcement calling shareholders to exercise their right of inspection
The registry gazette in which, two months before the general assembly resolution, it was announced to the company's shareholders that they have a right of inspection, where the documents to be inspected have been deposited and where they are available for inspection (TCC-171). However, in small and medium-sized companies, if the right of inspection is waived on the basis of an SME Report prepared by a YMM or SMMM, a document showing that all shareholders have approved this is submitted to the directorate.
Notice calling on creditors (1 original – 1 photocopy)
One copy each of the registry gazettes in which the announcements to creditors, made three times at seven-day intervals, were published (TCC 174 – 175)

b) By the other companies participating in the partial demerger;

Notarized copy of the general assembly resolution approving the demerger agreement and/or plan
(1 original – 1 photocopy) (Limited Company)
Demerger agreement and/or plan (TCC 166-167)
(1 original)
Incorporation documents in the case of a new establishment
YMM or SMMM report on the determination of the values of the asset portions of the demerging company that are subject to the partial demerger, or, for companies subject to audit, the auditor's report on these determinations
(1 original)
A declaration containing the list of the demerging company's assets and rights subject to the demerger that are recorded in the land registry, ship registry, intellectual property registries and similar registries, the registries in which they are recorded, and information on the entries of those assets and rights in the relevant registries
(1 original)
Documents relating to a capital increase, if any
- Amendment text containing the new form of the capital (1 original) (Sample amendment text)
- YMM or SMMM report on the acquiring company's capital having been fully paid, whether it remains uncovered, the determination of the company's equity, and the amount covered from internal resources actually existing within the company, together with the original of the consultant's certificate of activity, or, for companies subject to audit, the auditor's report on these determinations together with the auditor's certificate
Where permission or a favorable opinion from a Ministry or other official bodies is required, the letter of permission or favorable opinion
Demerger report prepared by the management bodies separately or jointly (TCC 169)
(1 original). However, in small and medium-sized companies, if the preparation of a demerger report is waived on the basis of an SME Report prepared by a YMM or SMMM, a document showing that all shareholders have approved this is submitted to the directorate.
Announcement calling shareholders to exercise their right of inspection
The registry gazette in which, two months before the general assembly resolution, it was announced to the company's shareholders that they have a right of inspection, where the documents to be inspected have been deposited and where they are available for inspection (TCC-171). However, in small and medium-sized companies, if the right of inspection is waived on the basis of an SME Report prepared by a YMM or SMMM, a document showing that all shareholders have approved this is submitted to the directorate.
Announcement calling creditors (1 original - 1 photocopy)
One copy each of the registry gazettes in which the announcements to creditors, made three times at seven-day intervals, were published (TCC 174 – 175)

ADDITIONAL INFORMATION

Application and documents where the reduction and the increase of the capital are carried out simultaneously (Trade Registry Regulation Articles 81 and 98)

If, simultaneously with the capital reduction, it is resolved to increase the capital by an amount equal to or greater than the amount of the reduction, the following documents shall also be submitted to the directorate:

Notarized copy of the general assembly resolution regarding the simultaneous reduction and increase of the capital
(1 original)
In a capital increase made simultaneously with the capital reduction and in the same amount, the increased capital must be paid in full. A bank letter and payment receipts relating to this payment must be presented. If the capital is increased by an amount greater than the reduced capital, a bank letter and payment receipts showing that one quarter of the excess portion has also been paid must be presented. For a capital increase exceeding the reduced capital, only joint stock companies will block one quarter (1/4) of the excess amount; there is no blocking or payment obligation for limited liability companies.
Text of the amended articles of association containing the provisions on the simultaneous reduction and increase of the capital
(1 original) (Sample amendment text)
For companies whose amendment of the articles of association is subject to the permission or favourable opinion of the Ministry or other official institutions, the letter of such permission or favourable opinion
The report of a sworn-in certified public accountant or independent certified public accountant on the payment of the entire capital, whether it has been left unbacked, and the determination of the company's equity, or, for companies subject to audit, the auditor's report on these determinations

Registration

TRADE REGISTRY REGULATION ARTICLE 129-

(1) Registration cannot be made unless all companies participating in the demerger have applied to the relevant registry directorate or directorates for the registration of their demerger resolutions.

(2) Unless the demerging company has registered its demerger resolution, the other companies participating in the demerger cannot register the facts relating to the demerger.

(3) The following facts are registered with the directorate where the demerging company is registered:

The demerger resolution and its date.
Whether the demerger is full or partial.
In the case of a full demerger, that the company has been dissolved without liquidation (infisah).
The MERSİS number, trade name, head office and registering directorate of the other companies participating in the demerger.
Where required, the capital reduction carried out in connection with a partial demerger.

(4) The registry directorate where the company being demerged is registered shall immediately notify the directorate where the other companies participating in the demerger are registered of the registration of the demerger resolution.

(5) The following facts are registered with the directorate where the companies taking over the assets of the demerging company are registered:

The demerger resolution and its date.
The capital increase made in connection with the demerger.
All information required for registering the establishment of the company to be newly established as a result of the demerger.
Whether the shares issued in the capital increase made as a result of a partial demerger are allocated to the demerging company or to its shareholders.
The MERSİS number, trade name, business name (if any) and head office of the company dissolved without liquidation as a result of a full demerger.

(6) The companies taking over the assets of the demerging company shall register the capital increase to be made due to the demerger and the demerger resolution simultaneously. Where the assets of the demerging company are taken over by a newly established company, the demerger resolution is registered simultaneously with the establishment. In the case of a full demerger, the directorate carrying out the registration shall immediately notify the directorate where the demerging company is registered. Upon this notification, the title of the company dissolved due to the full demerger is deleted ex officio.

(7) In order to ensure that the assets and rights taken over by the company registered with them, which are included in the assets of the demerging company and recorded in land, ship and intellectual property registries and similar registries, are registered in the company's name without delay, the directorates where the other participating companies are registered shall immediately notify the relevant registries of the new right holders, simultaneously with the registration of the demerger resolutions.

WARNINGS

a) If a new company is established through the demerger, the articles of association of the company to be established are attached to the demerger plan (TTK 169/3).
b) The companies participating in the demerger are obliged to secure the receivables of creditors who so request within three months from the date of publication of the required announcements.
c) The demerger plan or demerger agreement cannot be submitted to the general assembly for approval before the required security has been provided.
d) The obligation to provide security lapses if it is proven that the creditors' receivables are not endangered by the demerger.
e) Since a call to creditors is made due to the DEMERGER, the provisions on the call-to-creditors announcement otherwise required for capital reduction are not applied.
f) The capital of the acquiring company is increased at a rate that protects the rights of the shareholders of the transferring company.
g) In capital increases and new establishments resulting from a demerger, the provisions of the law on contributions in kind are not applied.
ğ) Even if the acquiring company has adopted the registered capital system and its ceiling is not sufficient, the capital may be increased without changing the ceiling.
h) If a new company or cooperative is established through the demerger, the provisions of the Turkish Commercial Code and the Cooperatives Law relating to establishment are applied.
ı) Each of the companies participating in the demerger shall make the following available for examination by its shareholders two months before the general assembly resolution, at its head office and, in the case of publicly held joint-stock companies, also at the places deemed appropriate by the CMB:
- - The demerger agreement or demerger plan
- - The demerger report
- - The financial statements and annual reports of the last three years and, if any, interim balance sheets
It submits these to its shareholders for examination.
i) In "small and medium-sized" companies, if the right of examination is waived, a document showing that this has been approved by all shareholders must be submitted to the directorate.
j) In "small and medium-sized" companies, if the preparation of the demerger report is waived, a document showing that this has been approved by all shareholders must be submitted to the directorate.
k) Unless the demerging company has registered its demerger resolution, the other companies participating in the demerger cannot register the facts relating to the demerger.
l) The companies taking over the assets of the company demerged by way of demerger shall register the capital increase to be made due to the demerger and the demerger resolution simultaneously.
m) Where the assets of the demerging company are taken over by a newly established company, the demerger resolution is registered simultaneously with the establishment. In the case of a full demerger, the directorate carrying out the registration shall immediately notify the directorate where the demerging company is registered. Upon this notification, the title of the company dissolved due to the full demerger is deleted ex officio.

NOTE:

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

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