Share Deal or Asset Deal? Company Acquisitions in Turkey

A business operating in Turkey can change hands in two basic ways. In a share deal, the buyer acquires the shares of the company that operates the business, and the company continues to exist unchanged as a legal entity together with its assets, contracts and liabilities. In an asset deal, by contrast, the buyer does not acquire the company itself but the assets that make up the business. The choice between the two routes determines many aspects of the transaction, ranging from the formal requirements of the transfer and the buyer's liability for past obligations to the position of the employees, the tax consequences and whether approval from the Competition Board is required. It is therefore important that the decision on the structure is taken at the outset of the transaction, having regard to the situation of the target company and the objectives of the parties.

Contents

• What is the fundamental difference between a share deal and an asset deal?
• What form and procedure apply to a share transfer?
• How is an asset deal carried out?
• To what extent is the buyer liable for past obligations?
• What changes for the employees?
• Which tax differences stand out?
• When is Competition Board approval required?
• How are permits, licences and contracts affected by the transfer?
• Which structure is preferable in which situation?
• Conclusion

What is the fundamental difference between a share deal and an asset deal?

In a share deal, the subject matter of the transaction is the shares in the company. The selling shareholder transfers its shares to the buyer, while the company retains its legal personality, trade name, assets, employees, contracts, permits and debts unchanged. Only the shareholding structure of the company changes; the buyer therefore takes over, together with the company, its history as well.

In an asset deal, on the other hand, the seller remains the company and transfers to the buyer specific assets such as real property, machinery, inventory, trademarks, customer relationships or the business as a whole. The buyer integrates these assets into its own company, while the selling company continues to exist as a legal entity together with the purchase price. Since an asset deal allows the buyer to select the assets it will take over, it offers a flexible structure; however, the fact that each asset is subject to its own form of transfer makes the transaction technically more demanding.

What form and procedure apply to a share transfer?

In limited liability companies (Limited Şirket), the transfer of a share in the capital and the transactions giving rise to the obligation to transfer must, pursuant to Article 595 of the Turkish Commercial Code (TTK), be made in writing, and the signatures of the parties must be notarised. Unless the articles of association provide otherwise, the transfer requires the approval of the shareholders' general meeting and becomes valid upon that approval. Where the articles of association contain no other provision, the general meeting may refuse approval without stating reasons; if it does not refuse within three months of the application, approval is deemed to have been granted. The application for registration of the share transfer with the trade registry is filed by the managing directors of the company (Article 598 TTK). This procedure requires the timetable of a limited liability company acquisition to be planned with the shareholders' resolution, the notarial formalities and the registration in mind.

In joint stock companies (Anonim Şirket), registered shares may be transferred freely unless the law or the articles of association provide otherwise (Article 490 TTK). Where share certificates have been issued, the transfer is effected by handing over possession of the endorsed share certificate to the transferee; according to the case law of the Court of Cassation, the transfer of shares not represented by certificates is subject to the provisions on the assignment of receivables and must be made in writing. The articles of association may provide that registered shares can only be transferred with the approval of the company (Article 492 TTK). In the case of shares not listed on a stock exchange, the company may refuse the request for approval only on the basis of an important reason set out in the articles of association or by offering to acquire the shares at their real value (Article 493 TTK). Since only the person entered in the share register is recognised as a shareholder in relation to the company, the transfer must also be recorded in the share register (Article 499 TTK).

For both types of company, the provisions on pre-emption, tag-along, drag-along and approval in the articles of association and, where applicable, in a shareholders' agreement should be reviewed at the outset of the transaction. Experience in practice shows that identifying these provisions late can delay the steps at the signing stage by several weeks.

How is an asset deal carried out?

Pursuant to Article 11(3) TTK, a commercial enterprise may be transferred as a whole without the need for separate dispositive acts for the transfer of the assets it comprises. Unless otherwise provided, the transfer agreement is deemed to include the fixed assets, the goodwill, the leasehold right, the trade name and other intellectual property rights, as well as the assets permanently dedicated to the business. This agreement must be made in writing and registered with and published in the trade registry.

Pursuant to Article 133 of the Trade Registry Regulation, the transfer agreement must contain an unconditional declaration that the business is being transferred as a whole and in a manner that ensures its continuity, together with the items excluded from the agreement, and the transfer takes effect upon registration of the entire agreement. In this case, the assets dedicated to the business are, as a rule, covered by the transfer without the need for separate dispositive acts; nevertheless, the entries in special registers such as the land registry and the industrial property registers must be updated, and special rules applicable to the rights falling within the scope of the transfer must be taken into account. Since the leasehold right is also listed among the items covered by the transfer in Article 11(3) TTK, the lease agreement for the premises used by the business should be assessed separately.

In transactions in which only certain assets are transferred individually, by contrast, each asset is subject to its own rules on transfer and form. Ownership of real property passes by means of an official deed executed at the land registry; industrial property rights such as trademarks and patents are transferred by a written agreement with notarised signatures and must be recorded in the register of the Turkish Patent and Trademark Office (TÜRKPATENT) in order to be enforceable against third parties acting in good faith (Article 148 of the Industrial Property Law); and the transfer of contracts requires, pursuant to Article 205 of the Turkish Code of Obligations (TBK), the participation of the other party remaining in the contract. For this reason, in an individual asset transfer a complete list of the assets to be acquired and of the steps required for each of them must be established from the outset.

To what extent is the buyer liable for past obligations?

In a share deal, all of the company's obligations arising from the past, namely tax, social security, environmental, product liability and contractual obligations as well as pending and potential litigation, remain with the company. Although the buyer is not the direct debtor of these obligations, the value of the company is directly affected by them. To manage this risk, a comprehensive legal, financial and tax review (due diligence) must be carried out, and its findings must be addressed in the share purchase agreement by means of representations and warranties, indemnity provisions, the retention of part of the purchase price (escrow) or price adjustments.

An asset deal is generally regarded as safer, since it allows the buyer to select the liabilities it assumes; under Turkish law, however, this protection is not unlimited. Pursuant to Article 202 TBK, a person who acquires assets or a business together with its assets and liabilities becomes liable for the debts of the business from the date on which the transfer is notified to the creditors or, in the case of commercial enterprises, published in the Trade Registry Gazette; the previous debtor also remains jointly and severally liable together with the acquirer for a period of two years. Furthermore, pursuant to Article 89 of Law No. 5510 on Social Insurance and General Health Insurance, where a workplace at which insured persons are employed is taken over together with its assets or liabilities, the new employer is jointly and severally liable for the former employer's debts in respect of premiums, late payment penalties and late payment surcharges, and contractual provisions to the contrary are invalid vis-à-vis the Social Security Institution (SGK). For this reason, in an asset deal too, the debt position of the business being acquired must be examined and appropriate security must be obtained from the seller.

What changes for the employees?

In a share deal, since the employer remains the same company, the employment contracts continue without any change. The employees' length of service, their entitlements and the company's obligations towards them are preserved unchanged; accordingly, liabilities such as accrued severance pay, leave entitlements and overtime claims should be assessed separately when determining the purchase price.

In an asset deal, by contrast, Article 6 of Labour Law No. 4857 applies. Where a workplace or part of a workplace is transferred to another person on the basis of a legal transaction, the employment contracts existing on the date of transfer pass to the transferee together with all rights and obligations, and the transferee employer must take as the basis for service-related entitlements the date on which the employee started work with the transferor employer. The transferor and the transferee are jointly liable for debts that arose before the transfer and are payable on the date of transfer; the liability of the transferor, however, is limited to two years from the date of transfer. Neither the transferor nor the transferee employer may terminate an employment contract solely on account of the transfer; rights of termination based on economic or technological reasons or on changes in the organisation of work are, however, reserved. These rules show that, as regards the employees, an asset deal produces consequences similar to those of a share deal and that the takeover of the workforce is, as a rule, not left to the discretion of the parties.

Which tax differences stand out?

The tax consequences are, in most transactions, one of the main factors determining the choice of structure. In share deals in which the seller is a corporation, 50% of the gain derived from the sale of participation shares held as assets for at least two full years is exempt from corporate income tax pursuant to Article 5/1-(e) of the Corporate Tax Law, provided that the other statutory conditions are also met; this rate, which is set at 75% in the law, has been applied at 50% since 27 November 2024 by virtue of Presidential Decree No. 9160. In order to benefit from the exemption, the exempt amount must be held in a special fund account under liabilities until the end of the fifth year following the year of sale, and the sale price must be collected by the end of the second calendar year following the year of sale. With regard to value added tax, the delivery of share certificates and the transfer of participation interests not represented by certificates are subject to different rules. Whereas deliveries of share certificates benefit from the exemption under Article 17/4-(g) of the VAT Law without any holding period requirement, the sale of other participation shares, such as shares in a limited liability company, is subject under Article 17/4-(r) to the requirement that they have been held as assets for at least two full years and to the other statutory conditions.

In an asset deal, on the other hand, the sale of the transferred assets is, as a rule, subject to value added tax; in addition, further costs may arise, such as title deed fees for transfers of real property and stamp duty in respect of the agreements. In return, the buyer may capitalise the acquired assets at the purchase price and convert them into expenses by way of depreciation. The merger, demerger and share exchange transactions governed by Articles 19 and 20 of the Corporate Tax Law may, provided that the statutory conditions are met, allow certain activities to be restructured in a tax-advantageous manner. However, since in a partial demerger the integrity of the transferred production or service business must be preserved and all asset and liability items necessary for the continuation of the activity must be transferred, this method should not be regarded as a means of transferring selected assets. As different rules and double taxation agreements also come into play in transactions in which the seller is an individual or a foreign corporation, the tax consequences must be assessed separately in each transaction together with tax advisers.

When is Competition Board approval required?

Both share transfers and asset transfers that lead to a lasting change of control over one or more undertakings may qualify as acquisitions within the meaning of Law No. 4054 on the Protection of Competition. According to Article 7 of Communiqué No. 2010/4, as amended on 11 February 2026, approval from the Competition Board is mandatory for the transaction to become legally valid where the aggregate Turkish turnover of the transaction parties exceeds TRY 3 billion and the Turkish turnover of each of at least two of the parties exceeds TRY 1 billion, or, in acquisitions, where the Turkish turnover of the assets or activities being acquired exceeds TRY 1 billion and the worldwide turnover of at least one of the other parties exceeds TRY 9 billion. Where, in mergers, at least one of the transaction parties or, in acquisitions, the undertaking being acquired is a technology undertaking established in Turkey, the relevant turnover thresholds of TRY 1 billion apply as TRY 250 million.

In transactions requiring approval, closing must be made conditional upon the approval, and the contractual timetable and conditions precedent must be structured accordingly. Since the turnover of the group companies to which the parties belong is also taken into account in calculating turnover, the group turnover of foreign buyers often results in the thresholds being exceeded.

How are permits, licences and contracts affected by the transfer?

In a share deal, the permits, licences, investment incentive certificates and contracts held by the company remain, as a rule, with the company, which is a significant advantage of the share deal. However, change of control provisions, which are frequently found in material commercial agreements, loan agreements and lease agreements, may grant the counterparty a right to require consent, to terminate or to demand early repayment. In regulated sectors such as banking, insurance, energy and electronic communications, share transfers and changes of control may, depending on the activity and the type of licence concerned, be subject to prior approval, notification, a prohibition on transfer during certain periods or other special obligations; for example, the acquisition of shares representing ten per cent or more of the capital of a bank requires, pursuant to Article 18 of the Banking Law, the approval of the Banking Regulation and Supervision Board (BDDK). Identifying these provisions at the review stage ensures that the necessary approvals can be obtained before closing.

In an asset deal, by contrast, permits and licences are mostly tied to the person operating the business and must therefore be obtained anew in the name of the buyer. Since the transfer of contracts to the buyer depends, as a rule, on the consent of the counterparties, the consent processes for the customer, supply and lease relationships to be taken over must be built into the transaction timetable.

Which structure is preferable in which situation?

A share deal comes to the fore where the aim is to take over the company without interruption together with its permits, contracts and organisation, where the liabilities can be sufficiently identified through the review and where the seller wishes to benefit from tax advantages. For this reason, the share deal is the structure most frequently chosen in practice for company acquisitions in Turkey.

An asset deal, on the other hand, may be preferred where the buyer is interested only in a particular line of business, where the risks relating to the target company's history are high or difficult to identify, where the seller wishes to retain the company together with its other activities, or where a business is being acquired from a company in bankruptcy, concordat (konkordato) or liquidation proceedings. Experience in practice shows that, in order to combine the advantages of both structures, the activity to be transferred is, to the extent the conditions permit, first transferred to a new company by way of demerger and the shares in that company are then transferred.

Conclusion

The share deal and the asset deal are two structures that reach the same economic objective by different legal routes. Whereas in a share deal the company changes hands together with its entire history, an asset deal gives the buyer the opportunity to choose; however, Article 202 TBK, Article 89 of Law No. 5510 and Article 6 of the Labour Law provide that, in an asset deal too, the buyer is liable for certain obligations. The formal requirements of the share transfer, the tax consequences, Competition Board approval and the position of permits and contracts also have a direct bearing on the choice of structure.

The decision on the structure should therefore be taken at the outset of the transaction, assessing the findings of the preliminary review of the target company together with the tax position of the parties, and the share purchase agreement should be drafted in line with the risks of the chosen structure.

GEMS Schindhelm advises on company acquisitions with regard to determining the structure, legal due diligence, the preparation and negotiation of share purchase and shareholders' agreements, and Competition Board approval procedures. This article is for general information purposes only and does not constitute a legal opinion or legal advice; each transaction must be assessed separately according to the circumstances of the specific case and the legislation in force.