Asset Purchase Agreement in Turkey: Remarkable Tips
Asset Purchase Agreement Definition
I own a company which sells tires, and I have wanted to sell my company’s stocks to a third party. I live in Turkey and don’t possess the knowledge of rules and regulations that are required to be taken in order to transfer or sell them. Is it possible to do it in a shorter period of time? Or is it a long process? Does the seller or buyer require a specific type of document? What are the essential terms and conditions required for the agreement?
An asset purchase agreement (APA) is a contract between a buyer and a seller that lays out the terms and circumstances for buying and selling a company’s assets. The conditions of the transaction are set forth in this agreement, which includes requirements such as payment of the purchase price. All the business assets, fixtures, furniture, equipment, and the right to be a leaseholder that the seller used in the company operation will be sold to the buyer. Plant, machinery, stocks, goodwill etc. are usually what’s included as assets in the agreement.
Defining and managing conduct is a big part of the asset acquisition agreement. The seller’s claims and warranties include, among other things, that it has the authorization to sell the asset, that the assets are worth the purchase price, and that it is not in serious financial difficulties. In today’s world, asset representation on environmental disposal is frequently a crucial and time-consuming provision. Meanwhile, the buyer certifies that it has the authorization to purchase the assets and that it has revealed all information required to complete the transaction.
APA in Turkey
Turkey is becoming a popular vacation spot due to its vast undeveloped coastline and Mediterranean environment, which provides year-round sunshine. Purchasing assets in Turkey is increasingly viewed as a solid long-term investment, given that Turkey is on the verge of becoming a member of the European Union, and it has one of the world’s fastest-growing developing markets. Under Turkish law, there are both substantive and procedural concerns with asset purchases.
Transactions for the transfer of assets of commercial firms, and commercial enterprises in general, have always been contentious when it comes to Turkey. In this regard, it’s crucial to start with the legal definition of an asset transfer in Turkey. A collection of assets, or the transfer of ownership of an asset, or a company from one natural or legal person to another is known as asset transfer. A transfer of a business entity’s or merchant’s major asset, on the other hand, is regarded as a transfer of a commercial enterprise.
In Section 202, the transfer of assets and business is controlled in part independently. This section requires the transferor of assets or a business to inform creditors or to publish notice of the transfer in a national newspaper (or, in the case of business transfers, in the Turkish trade journal Türkiye Ticaret Sicili Gazetesi). This requirement is in line with Article 11, paragraph 3 of the Turkish Commercial Code, which mandates the recording of business transfers in the commercial register and publication of an announcement in the trade journal. For another two years, the previous debtor is jointly accountable with the new debtor. Other ramifications of transferring assets or a business are analogous to debt assignments.
“The creditors of both enterprises have rights arising from the acquisition of an asset and can take all their receivables from the new enterprise if an enterprise is united with another through mutual acquisition of assets and liabilities or joining one to the other.,” according to article 203 of the same law. The transfer of an enterprise has been restructured particularly in the 11th article of the Turkish Commercial Code, and in the event of an enterprise transfer, the scope and form of this transfer has been stated, and mergers are precisely handled in the articles 134-158 of the code.
The buyer-seller relationship is determined by the contract for the transfer of the enterprise’s assets and liabilities. However, mergers and acquisitions that would create a dominant place in a given market or strengthen an existing dominant position are prohibited under Article 7 of the Law on the Protection of Competition No. 4054, and Transactions over a particular value that may have been included in the scope are also subject to clearance by the Competition Board. The legal authorization of the transfer shall be communicated using the methods specified in the legislation.
The seller agrees to sell, assign, convey, and transfer the assets described in the contract. The assets should be free of liens and liabilities when they are transferred to the buyer. If the buyer agrees to acquire on such conditions, the buyer is responsible for all duties, obligations, and liabilities associated with the assets. Title and risk shall be transferred to the purchaser as agreed in the contract. The royalty fee and all intellectual property associated with the item will likewise be transferred by the seller. In the licensing agreement, this will be indicated.
The purchase price for the assets will be paid in one single payment and will be paid through bank draft or telegraphic transfer. The seller must notify the buyer about the method of price transfer within five days of the agreement’s closure. The sales price may be reduced and set off under this agreement. Aside from the purchase price, the purchaser is not responsible for any additional costs, such as transfer fees or taxes. Furthermore, there will be no rise in the purchasing price. The purchaser is liable for any taxes due after the assets are transferred, and any existing liabilities should be transmitted before the assets are transferred.
Representations & Warranties
The items that either party is counting on as part of the transaction are one of the most key aspects that have to be in an agreement. The majority of them are in the representation and warranties portion, and they include things like product suitability for a certain purpose, condition or quality of the objects being sold, and the legal standing of the parties entering into the contract. A warranty is a type of insurance that protects you if the asset fails to satisfy the agreed-upon specifications. Because the seller must offer the guarantee and essential disclaimers, this typically benefits the buyer.
Depending on the transaction, the circumstances requirements—for the closure to take place may differ. Those criteria often include payment of the purchase price, acceptance of the transaction by any other parties involved, such as public entities, and if the seller is required to make any improvements or repairs prior to the sale. Determine whether closing price modifications are required or not. Interest, balance sheet variances, working capital, depreciation – or when an asset reduces long term value – and the amount of financial assets can all affect these adjustments. Decide who will be in charge of taxes and how the purchase will be classified in terms of properties and so on. Take care of as many details as you can.
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