1-TYPES OF MERGER PURSUANT TO TCC
1.1.Merger By Acquisition
Pursuant to TCC article 136, a merger by acquisition could be defined as a merger in which an existing company acquires one or more companies. In this type of merger, relevant companies or .companies are acquired by another company with their assets and debts.[1] Also, according to article 136 of TCC “In the application of Articles 136 or 158, the company, which accepts the acquisition, is referred to as “the acquiring company” and the company which is being acquired. is referred to as “target company”. In the wake of the merger process entire assets and debts of the target company will belong to the acquiring company and the target company will be dissolved and deregistered from the trade register.[2] In a merger by acquisition, the acquiring company needs to be obliged to make a capital increase due to protect the rights of the shareholders of the target company.[3] Therefore, in the next part of this article capital increase in merger by acquisition will be explained.
1.1.1.Capital Increase
According to article 142 of TCC “In a merger by acquisition, the acquiring company is obliged to increase its capital to the extent necessary to safeguard the rights of the shareholders of the target company”. In other words, the acquiring company must give shares to new shareholders by a capital increase in accordance with the merger agreement which is signed between acquiring company and the target company.[4] This provision also serves to protect the creditors of target companies.[5] The decision to merge does not involve the decision of capital increase, therefore, there also has to be a decision with respect to the capital increase.[6]
The capital increase is solely possible when the merger is realized by acquisition; because in the merger by the formation of a new company, parties establish a new company, therefore there is no need for capital increase.[7] The capital increase is not undertaken by shareholders of the target company, it is directly undertaken by the target company.[8] The relevant capital increase is with respect to increases arising from external sources.[9]
According to article 456/1 of TCC “the capital may not be increased unless prices of the shares are fully paid”. There is a debate among scholars regarding whether article 456/1 of TCC is applicable for mergers or not.[10] According to Yasaman, article 456/1 of TCC is obvious and because of this reason, the capital could not be increased if the prices of relevant shares have not been fully paid.[11] By contrast, other scholars articulate that if article 456/1 of TCC is applicable for mergers, the process will prolong unnecessarily and shareholders who want to pay his/her debt before due date which is determined in the merger agreement, will find themselves in a bad situation.[12] According to my opinion since applying article 456/1 will prolong the process unnecessarily, a second opinion is more acceptable. There is also debate regarding whether companies could make capital increases dependent on conditions or not in mergers; it is mostly accepted that they will not be able to.[13]
When making a capital increase, the acquiring company has to comply with the rule in article 347 of TCC which states that “Shares may not be issued at a price lower that their nominal value. Shares may only be issued at a price higher than nominal value if the articles of association so permit or if a resolution is passed by the general assembly to do so”.
There is also debate in order to protect partners of the target company whether the acquiring company has a chance to make capital increase more than the necessary amount or not.[14] According to Tekinalp, it is not possible.[15] However, according to other scholars, it is possible in case it will comply with the %10 restrictions which is articulated in article 379 of TCC.[16]
Article 142/2 of TCC states that “The provisions regulating contributions in-kind and the provisions regulating public offer of new shares in publicly held joint stock companies (except for the provisions relating to dematerialization by the Capital Market Board) do not apply to merger operations”. According to the preamble of a relevant provision, the merger report makes the application of provisions of contributions in-kind unnecessary.[17] However, it is not necessary to prepare a merger report for small and medium-sized enterprises, in case entire partners approve; also it is not necessary to prepare a merger report in mergers according to article 156; therefore, scholars articulate that article 142/2 of TCC should be interpreted narrowly, and should not be applied in the situations in which a merger report is not prepared.[18]
As a result, the board of the company has to register the decision regarding capital increase to the trade register within 3 months from the decision date, otherwise relevant decision will not be valid.[19]
1.1.2. Situations Where Capital Increase is Not Required
As explained above capital increase is mostly required in mergers by acquisition. However, in some situations, there is no need to make a capital increase. This situation could be exemplified in case acquiring company has its own shares, there may not be a need to make a capital increase; however, since companies do not acquire the amount which exceeds %10 of their own shares as onerous, the applicability of this situation is not possible.[20] However, the relevant situation is applicable to gratuitous acquisitions.[21] In addition to this, in case the target company has its own shares, the acquiring company may not have to make a capital increase.[22]
1.2.Merger By Formation of a New Company
A merger by the formation of a new company could be defined as a merger in which two or more companies transfer their assets to a new company with complete succession.[23]Also, article 136 of TCC states that “companies may merge by joining together under a new company, which technically means “merger by formation of a new company”. In a merger by the formation of a new company, companies that will be terminated, are called “the target company”; however, a company that will be established new is called “ the acquiring company”.[24] Assets of the new company consist of assets of terminated companies.[25] As a rule, shares of the acquiring company will be distributed to the shareholders of target companies or some of the relevant shareholders leave the company by getting a departure compensation in case it is accepted in the merger agreement.[26] As will be explained in the next parts of the article, the new company could be solely a capital company or a cooperative.[27] Article 142/2 of TCC which regulates the applicability of provisions of contributions in-kind is also valid for mergers by the formation of a new company.[28] In mergers by the formation of a new company, provisions regarding a minimum number of shareholders will not be applied.[29] As a result in the wake of the merger process completes, the legal entities of the targeted companies come to an end.[30]
1.3.Parent-Subsidiary Company Merger
This type of merger could be defined as a merger in which a subsidiary company is acquired by the parent company; entire assets and debts of the subsidiary company are directly transferred to the parent company; however, in case a partial share of the subsidiary company belongs to the parent company, relevant shares will be decreased from the amount of capital increase.[31]
1.4.Merger of Sister Companies
Article 155/1-b of TCC states that “Capital companies may merge according to the simplified merger procedure if, a group of people, who are affiliated with each other by law or by a contract, or a company or a real person holds all the voting shares of the merging capital companies”. Mergers according to article 155/1-b of TCC are called mergers of sister companies; simplifications that are determined in article 156 of TCC will be applied to this type of merger.[32]
1.5. Merger By Removing Shareholder
Pursuant to article 141/2 of TCC, in case it is accepted in the merger agreement, some of the shareholders have a chance to leave the company by getting a departure compensation; in the doctrine, it is called “squeeze-out merger, cash-out merger or freeze-out merger”; in case the relevant company is a capital company %90 percent of the voting rates of shareholders is required.[33]
Types of merger pursuant to TCC has been explained in a detailed way above. In the next part valid merger pursuant to TCC will be described.
2.VALID MERGERS PURSUANT TO TCC
2.1.Genarally
According to TCC, valid mergers have been regulated in article 137. The relevant provision states that;
“(1) Capital companies may merge with,
a)Capital companies
b)Cooperatives and
c) General partnerships and limited partnerships(provided that the capital company is the acquiring company).
(2)Personal companies may merge with,
a)Personal companies,
b)Capital companies (provided that the personal company is the target company).
c)Cooperatives (provided that the personal company is the target company).
(3) Cooperatives may merge with,
a)Cooperatives
b)Capital companies, and
c)Personal companies (provided that the cooperative is the acquiring company).
Contrary to article 147 of the former TCC, article 137 of TCC has permitted mergers that are realized between different types of companies, but mergers between different types of companies are not unlimited; however, article 147 of former TCC has solely permitted mergers which are realized between the same type of companies.[34]
2.2. Valid Merges In Terms of Merger By Acquisition
As articulated above valid mergers have been determined in article 137 of TCC as numerous clauses.[35] However, in terms of merger by acquisition capital companies could merge with capital companies and cooperatives as both the target company and the acquiring company; however, capital companies merge with personal companies, in case capital companies will be the acquiring company.[36]
Personal companies could merge with capital companies and cooperatives in case they are the target company.[37] However, this provision is criticized in doctrine. According to the preamble of the relevant provision, the aim of this provision is to protect creditors.[38] By contrast, According to Moroğlu, in case a personal company acquires a capital company, the guarantee of creditors will not decrease, on the contrary, it will increase.[39] Furthermore, according to Kayalı, creditors could also be protected with the guarantee according to article 157 of TCC.; for example, in German and French Law different types of mergers have been permitted; there is no restriction.[40] Lastly, personal companies could merge with personal companies as both the target company and the acquiring company.
Cooperatives could merge with capital companies and cooperatives as both the target company and the acquiring company; however, cooperatives merge with personal companies, in case capital companies will be the acquiring company.[41] In this context, pursuant to article 137 of TCC, it is not important whether partners of the cooperative are limited liable or not; because according to article 8/1 of 1163 numbered Cooperatives Code, acquiring a capital company does not do shareholders of a capital company unlimited liable, approval of shareholders of the capital company is required.[42]
2.3. Valid Merges In Terms of Merger By Formation of a New Company
Capital companies could merge with capital companies under the frame of capital companies or cooperatives; they could merge with cooperatives under the frame of both capital companies or cooperatives; they could also merge with personal companies under the frame of capital companies or cooperatives.[43]
Personal companies could merge with capital companies under the frame of capital companies or cooperatives; they could merge with cooperatives under the frame of both capital companies or cooperatives; they could also merge with personal companies under the frame of capital companies, cooperatives or personal companies.[44]
Cooperatives could merge with capital companies under the frame of capital companies or cooperatives; they could merge with cooperatives under the frame of both capital companies or cooperatives; they could also merge with personal companies under the frame of capital companies or cooperatives.[45]
2.4. Valid Merges In Terms of Merger with a Company in Liquidation
Article 138/1 of TCC states “A company in liquidation may participate in a merger provided that it is the target company, an the process of asset distribution has not started yet”. According to the relevant provision two conditions have to be met by the company in liquidation. First of all, the relevant company must be the target company However, this situation is criticized by Moroğlu; according to Moroğlu, a company in liquidation but the process of asset distribution has not started yet, can change that decision by the decision of the general assembly of the company.[46] Secondly, article 138 states that asset distribution has to have not been started yet. In other words, the company must have a chance to reverse the decision of liquidation.[47] There is one more condition that is not articulated in article 138 of TCC. The decision of liquidation has to be given by the competent authority of the target company; otherwise, a company in liquidation cannot merge in accordance with this provision.[48] According to article 138/2 of TCC, relevant conditions will be proven by the documents which will be submitted to the trade register located in the center of acquiring company.
2.5. Valid Merges In Terms of Merger In Case of Capital Loss or Over-Indeptedness
Article 139/1 of TCC states “A company, which is over-indebted or has lost half of the total of its capital and legal reserves, may merge with a company, which has a freely disposable equity sufficient to cover the capital loss, or, if necesarry to cure the over-indebtedness”. There are two conditions to be met in order to realize a merger in accordance with article 139 of TCC. Firstly, one of the merged companies has to be over-indebted or has lost half of the total of its capital and legal reserves.[49] Secondly, the acquiring company must have free disposable equity which is sufficient to cover relevant capital loss or over-indebtedness.[50] The company which over-indebted or has lost half of the total of its capital and legal reserves could be both the target company or the acquiring company; however, this is criticized in doctrine because, although the lawmaker solely permits the company in liquidation to be the target company, the lawmaker permits the company over-indebted or has lost half of the total of its capital and legal reserves to be both the target company or the acquiring company.[51] Furthermore, according to article 138/2 of TCC, relevant conditions will be proven by the documents which will be submitted to the trade register located in the center of acquiring company.
2.6. Valid Merges In Terms of Merger by Commercial Enterprise
According to article 194 of TCC, commercial enterprise may merge with a capital company, in case relevant commercial enterprise is target company. Lawmaker does not permit a commercial enterprise to be the acquiring company in the merger with capital companies. Also, the relevant provision states that articles 138 to 140, articles 142 to 158, and articles 191-193 of TCC will be applied by analogy in these mergers in case they are appropriate.
CONCLUSION
In conclusion, pursuant to article 136 of TCC, there are 2 types of mergers which are merger by acquisition and merger by formation of a new company. However, in doctrine, 3 types of merger are also accepted which are parent-subsidiary company merger, the merger of sister companies, and merger by removing shareholders. Furthermore, in contrast to article 147 of ancient TCC, article 137 of TCC has allowed mergers that are made between different types of companies, but mergers between different types of companies are not unlimited; however, article 147 of ancient TCC has only allowed mergers which are made between the same type of companies. It is criticized in the doctrine because, in case a personal company acquires a capital company, a guarantee of creditors will not decrease, on the contrary, it will increase. Also, creditors could also be protected with the guarantee according to article 157 of TCC. According to my opinion, if a personal company acquires a capital company, the guarantee of creditors will increase; therefore restrictions should be removed. Furthermore, although the lawmaker solely permits the company in liquidation to be the target company, the lawmaker permits the company over-indebted or has lost half of the total of its capital and legal reserves to be both the target company or the acquiring company. According to my opinion, since the company in liquidation could reserver its decision, a company in liquidation could be both the target company and the acquiring company with the new regulations.
BIBLIOGRAPHY
- Kılıç Şengül Al, Türk Ticaret Kanunu Tasarısına Göre Ticaret Şirketlerinin Birleşmesi, İstanbul: Beta Yayıncılık, 2009.
- Kayalı Ferna İpekel, Türk Ticaret Kanunu’na Göre Birleşmeler, İstanbul: Vedat Yayıncılık, 2014.
- Yavuz Mustafa, “Ticaret Şirketlerinin Birleşme Usulü ve Süreci”, https://dergipark.org.tr/en/download/article-file/1020020 (Accessed at 11.06.2022).
- Moroğlu Erdoğan, Anonim Ortaklıklarda Esas Sermaye Arttırımı, İstanbul: Onikilevha Yayıncılık, 2003.
- Çoştan Hülya, Anonim Ortaklıkların(Şirketlerin) Birleşme, Bölünme ve Nevi Değiştirme(Tür Değiştirme) Yoluyla Yeniden Yapılanmasında Alacaklının Korunması, Doktora Tezi, Ankara Üniversitesi, 2003.
- Turhan Meral Eker, 6102 Satılı Türk Ticaret Kanunu Çerçevesinde Anonim Şirketlerin Devralma Yolu ile Birleşmesi, Yüksek Lisans Tezi, Okan Üniversitesi, 2014.
- Yasaman Hamdi, “Anonim Ortaklıların Birleşmesinde Sermaye Artırımı Sorunu ”, Şirketler Hukuku ve Sermaye Piyasası Hukuku ile İlgili Makaleler, Mütalaalar, İstanbul: Vedat Kitapçılık 2006.
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- Tekinalp Ünal, Poroy Reha and Çamoğlu Ersin, Ortaklıklar Hukuku I, İstanbul: Vedat Kitapçılık, 2014.
- Çatalkaya Ekrem, “Ticaret Şirketlerinde Birleşme ve Devralmalar”, Yüksek Lisans Tezi, İstanbul Aydın Üniversitesi, 2014.
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[1] Kayalı, a.g.e., p.84.
[2] Kayalı, a.g.e., p.84-85
[3] Mustafa Yavuz, “Ticaret Şirketlerinin Birleşme Usulü ve Süreci”, https://dergipark.org.tr/en/download/article-file/1020020 (Accessed at 11.06.2022), p. 26.
[4] Kayalı, a.g.e., p.84-85; Erdoğan Moroğlu, Anonim Ortaklıklarda Esas Sermaye Arttırımı, (İstanbul: Onikilevha Yayıncılık, 2003), p.5.
[5] Hülya Çoştan, Anonim Ortaklıkların(Şirketlerin) Birleşme, Bölünme ve Nevi Değiştirme(Tür Değiştirme) Yoluyla Yeniden Yapılanmasında Alacaklının Korunması, (Doktora Tezi, Ankara Üniversitesi, 2003), p.25.
[6] Kayalı, a.g.e., p.85.
[7] Kayalı, a.g.e., p.85.
[8] Kayalı, a.g.e., p.85-86.
[9] Moroğlu, a.g.e.,p.5; Kayalı, a.g.e., p. 86; Kılıç, a.g.e., p.115.
[10] Meral Eker Turhan, 6102 Satılı Türk Ticaret Kanunu Çerçevesinde Anonim Şirketlerin Devralma Yolu ile Birleşmesi, (Yüksek Lisans Tezi, Okan Üniversitesi, 2014), p.90.
[11] Hamdi Yasaman, “Anonim Ortaklıların Birleşmesinde Sermaye Artırımı Sorunu ”, Şirketler Hukuku ve Sermaye Piyasası Hukuku ile İlgili Makaleler, Mütalaalar, (İstanbul: Vedat Kitapçılık 2006), p.29; Turhan, a.g.e, p.90.
[12] Kayalı, a.g.e., p.87.
[13] Kayalı, a.g.e., p.88.
[14] Kayalı, a.g.e., p.89.
[15] Ünal Tekinalp, Sermaye Ortaklıklarının Yeni Hukuku( İstanbul: Vedat Kitapçılık, 2013), n. 24-73.
[16] Kayalı, a.g.e., p.89.
[17] https://www.muglabarosu.org.tr/Upload/files/pdf/TTK%20Madde%20Gerek%C3%A7eleri.pdf , (Accessed at 12.06.2022).
[18] Kayalı, a.g.e., p.92.
[19] Kayalı, a.g.e., p.94.
[20] Kayalı, a.g.e., p.95.
[21] Kayalı, a.g.e., p.95.
[22] Kayalı, a.g.e., p.95.
[23] Hasan Pulaşlı, Şirketler Hukuku Genel Esaslar, ( Ankara: Adalet Yayıncılık, 2016), p. 72.
[24] Kılıç, a.g.e., p.71.
[25] Kılıç, a.g.e., p.71.
[26] Kayalı, a.g.e., p.97-98.
[27] Kayalı, a.g.e., p.98.
[28] Ünal Tekinalp, Reha Poroy and Ersin Çamoğlu, Ortaklıklar Hukuku I, ( İstanbul: Vedat Kitapçılık, 2014), n. 142c.
[29] Kayalı, a.g.e., p.99.
[30] Pulaşlı, a.g.e., p.72.
[31] Kayalı, a.g.e., p.100.
[32] Kayalı, a.g.e., p.100.
[33] Kayalı, a.g.e., p.100-101-102.
[34] Kayalı, a.g.e., p.103-104; Kılıç, a.g.e., p.72.
[35] Ekrem Çatalkaya, “Ticaret Şirketlerinde Birleşme ve Devralmalar”, (Yüksek Lisans Tezi, İstanbul Aydın Üniversitesi, 2014), p.102
[36] Kılıç, a.g.e., p.75-76-77.
[37] Kılıç, a.g.e., p.78; Çatalkaya, a.g.e., p.104.
[38] https://www.muglabarosu.org.tr/Upload/files/pdf/TTK%20Madde%20Gerek%C3%A7eleri.pdf , (Accessed at 12.06.2022).
[39] Erdoğan Moroğlu, 6102 Sayılı Türk Ticaret Kanunu Değerlendirme ve Öneriler, (İstanbul: Onikilevha Yayıncılık, 2016), p.82; Kayalı, a.g.e., p.105.
[40] Kayalı, a.g.e., p.105-106.
[41] Kılıç, a.g.e., p.84-85-86.
[42] Kılıç, a.g.e., p. 86; O.G. 24/4/1969, No: 1163.
[43] Kılıç, a.g.e., p. 86-87-88.
[44] Kılıç, a.g.e., p. 88-89.
[45] Kılıç, a.g.e., p. 86-87-88.
[46] Moroğlu, 6102 Sayılı Türk Ticaret Kanunu Değerlendirme ve Öneriler, p. 84; Kayalı, a.g.e., p.111.
[47] Kayalı, a.g.e., p.112.
[48] Kayalı, a.g.e., p.115.
[49] Kayalı, a.g.e., p.117.
[50] Kayalı, a.g.e., p.118.
[51] Kayalı, a.g.e., p.117.