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Türkiye

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Before a Public Takeover Bid
3. Before a Public Takeover Bid

[Last updated: 1 January 2025, unless otherwise noted]

3.1 Shareholding rights and powers

The table below provides an overview of the different rights that are attached to different levels of shareholding within a public company in Türkiye:

Shareholding Rights
One share
  • The right to request information and submit questions to the directors and statutory auditors at general assembly meetings.
  • The right to sue for the liability of the company's directors.
  • The right to dividend payment.
  • The right to participate in liquidation proceeds.
  • The right to participate in the overall management of the company through voting in the board of directors' elections.
  • The right to request special auditors to investigate a particular matter (subject to certain conditions).
  • The right to pre-emptive subscription rights in case of a capital increase (public companies can restrict the pre-emptive subscription rights in certain cases).
  • The right to attend and vote at general assembly meetings in person or by proxy.
  • The right to obtain a copy of the documentation submitted to general assembly meetings.
  • The right to exercise a put option to sell their shares to the company if the general assembly passes a resolution concerning a material transaction, against which they voted.
  • The right to request the nullity of decisions of general assembly meetings which are contradicting with the law, the articles of association of the company or good faith principles.

5% or more, i.e., minority rights
  • The right to request the board of directors to convene a general assembly meeting and the right to apply to court if the request regarding convocation of the general assembly is rejected.
  • The right to put additional items on the agenda of a general shareholders' meeting.
  • The right to initiate a lawsuit for cancellation of a general assembly resolution.
  • The right to request postponement of the negotiations on approval of the company's balance sheet for a period of one month.
  • The right to initiate a lawsuit for the dismissal and replacement of the company's auditor (subject to certain conditions).
  • The right to initiate a lawsuit for dissolution of the company (subject to certain conditions). However, the court may also resolve that the plaintiff's shares should be acquired by the remaining shareholders, instead of dissolution, or resolve to use another equitable remedy.

More than 66.66% (However, if at least 50% of the voting rights of the company (granting a right to vote) are present in a meeting, these decisions can be taken with the majority of such votes, unless a higher quorum is required by the company's articles of association)
  • The right to limit the pre-emptive subscription rights of the shareholders.
  • The right to grant authority to the board of directors to limit pre-emptive subscription rights in companies with a registered share capital system.
  • The right to decrease share capital.
  • The right to resolve on merger or demerger decisions.
  • The right to change the corporate status or to liquidate company.
  • The right to materially change the company's scope of activity.
  • The right to resolve on delisting decisions.
  • The right to create new privileges or change the scope of existing privileges.
  • The right to transfer, establish a right in rem on or rent a material part of the company's assets.
  • The right to resolve on acquisition or lease of a material part of assets from related parties.
  • The right to set off debts of affiliates by proceeds of a share capital increase in case the proceeds of the share capital increase exceeds the current share capital of company.

75% or more

The right to issue any kinds of bonds or authorize the board of directors to issue bonds.

98%

The right to squeeze-out the minority shareholders (in which case the minorities also have a right to put their shares to the majority).

100%
  • The right to move the company’s headquarters abroad.
  • The right to impose additional liabilities on shareholders to recover balance sheet losses.

3.2 Restrictions and careful planning

Turkish law contains a number of rules that already apply before a tender offer (a public takeover bid) is announced. These rules impose restrictions and hurdles in relation to prior stake building by an offeror, announcements of a potential tender offer by an offeror or a target, and prior due diligence by a candidate offeror. The main restrictions and hurdles have been summarized below. Some careful planning is therefore necessary if a candidate offeror or target intends to start up a process that is to lead towards a tender offer.

3.3 Insider trading and market abuse

Before, during and after a tender offer, the normal rules regarding insider dealing and market abuse remain applicable. For further information on the rules on insider trading and market abuse, see 6.2 below. The rules include, amongst other things, that manipulation of the target's stock price, e.g., by creating misleading rumors, is prohibited. In addition, the rules on the prohibition of insider trading prevent an offeror that has inside information regarding a target (other than in relation to the actual tender offer) from launching a tender offer.

3.4 Disclosure of shareholdings

The rules regarding the disclosure of shareholdings and transparency apply before, during and after a public takeover bid.

Persons becoming direct or indirect holders of 5%, 10%, 20%, 25%, 33%, 50%, 67% or 100% of the issued share capital of a Turkish company, including a listed company, are required to notify the company of such acquisition and, thereafter, to notify the company of their shares transactions when the total number of shares they hold falls below or exceeds such thresholds, pursuant to the TCC. Information notified to the company must be registered with the relevant trade registry and publicly announced in the Turkish Trade Registry Gazette. The notification is required to be made by the persons whose direct or indirect shareholding exceeds or falls below the foregoing thresholds within 10 days following the acquisition. The notification must be made in Turkish. There is no special form for this notification, which therefore means that it can be made by a simple petition. The relevant trade registry may, however, review and comment on the disclosure.

Under the Disclosure Communiqué, persons who become direct or indirect holders of 5%, 10%, 15%, 20%, 25%, 33%, 50%, 67% or 95% of a listed company's issued share capital or voting rights are required to publicly disclose such event. The same requirement also applies to the shareholders of issuers when the total number of their shares or voting rights falls below or exceeds these thresholds. The disclosure to be made by shareholders is made by the Central Securities Depository (Merkezi Kayıt Kuruluşu). Disclosures of the acquisition of blocks of shares must contain the (i) name of the person, i.e., real person or legal entity, required to make the disclosure; (ii) name of the company that is the subject of the disclosure; (iii) date of the transaction; (iv) number, nominal value of the shares and transaction value; and (v) number of shares and shareholding structure pre- and post-transaction. If there are multiple holders of a share, then disclosure must be made separately for each holder.

When determining whether or not a threshold has been passed, a candidate offeror must also take into account the shares held by the parties with whom it acts in concert or may be deemed to act in concert (see 3.8 below). These may include affiliates. The parties could also include existing shareholders of the target with whom the candidate offeror has entered into specific arrangements (such as call option agreements).

3.5 Disclosures by the target

The target must continue to comply with the general rules regarding disclosure and transparency. These rules include that a company must immediately announce all inside information. For further information on inside information, see 6.1 below. The facts surrounding the preparation of a tender offer may constitute inside information if it is deemed to be of a "precise nature". If so, the target must announce this. However, the board of the target can delay the announcement if it believes that a disclosure would not be in the legitimate interest of the company. For instance, this could be the case if the target's board believes that an early disclosure would prejudice the negotiations regarding an offer. A delay of the announcement, however, is only permitted provided that the non-disclosure does not entail the risk of the investors being misled, that the company can keep the relevant information confidential, and that a corporate procedure is followed. Furthermore, the company is ultimately liable for the delayed disclosures.

3.6 Announcements of a public takeover bid

The acquiring party or the brokerage firm appointed to intermediate the tender offer must immediately disclose the following on the Public Disclosure Platform (the "PDP"). This is the platform on which public companies in Türkiye are required to publish their disclosures) in accordance with the CMB's public disclosure rules:

  • the decision to initiate a VTO;
  • the triggering event to initiate an MTO and whether the acquirer will apply to the CMB for an exemption along with its details, if an MTO is triggered;
  • the offer price or the calculation method to determine the offer price (for MTOs disclosed simultaneously with the occurrence of the MTO requirement or decision to initiate a tender offer);
  • the tender offer or MTO exemption application to the CMB;
  • the CMB's decision regarding a VTO, MTO or an MTO exemption application;
  • the summary or the conclusion of the valuation report, if any;
  • the number, group and nominal value of the shares purchased and the number of investors responding to the tender offer at the end of each day the tender offer remains open;
  • the total number, group and nominal value of the shares purchased, and the total number of shareholders responding to the tender offer, as of the end of the offer period;
  • cancellation of a VTO; and
  • transactions relating to price adjustment.

If the CMB determines that the tender offer application submitted to the CMB includes misrepresentations or omissions, the CMB may suspend or cancel the takeover bid.

3.7 Due diligence

The Turkish public takeover bid rules do not contain specific rules regarding the question of whether a prior due diligence can be organized or how such due diligence is to be organized. Be that as it may, the concept of a prior due diligence or pre-acquisition review by a bidder is generally accepted, and appropriate mechanisms have been developed in practice to organize a due diligence or pre-acquisition review and to cope with potential market abuse and early disclosure concerns. These mechanisms include the use of strict confidentiality procedures and data rooms.

3.8 Acting in concert

For the purpose of the Turkish tender offer rules, persons are "acting in concert" if they collaborate with the offeror, the target or with any other person on the basis of an express or implied, oral or written, agreement, aimed at acquiring the management control over the target or frustrating the success of a tender offer.

Furthermore, under the Tender Offer Communiqué, individuals and/or entities are deemed to be "acting in concert" with the following:

  • other companies in which the management control is exercised by such individual and/or legal entity shareholders of the target; and
  • individuals and/or legal entities exercising management control of the legal entity shareholders of the target and other companies in which the control is exercised by such individual and/or legal entity, i.e., individuals and/or legal entities exercising management control of legal entity shareholders of the target.

The concept of persons acting in concert is very broad and, in practice, many issues can arise in determining whether or not persons act in concert. This is especially relevant in relation to MTOs. Under the Capital Markets Law and Tender Offer Communiqué, "management control" means directly or indirectly holding more than 50% of a public company's voting rights, individually or jointly along with the persons acting together, or holding privileged shares with a right to appoint the simple majority of the board of directors or nominate the same in the general assembly. Accordingly, if one or more persons in a group of persons acting in concert acquire the management control of a public company, the members of the group will have a joint obligation to carry out an MTO together.

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