Legal Business

Sponsored briefing: Measures taken by the regulatory authorities in the banking sector regarding the Covid-19 outbreak

Sponsored briefing: Measures taken by the regulatory authorities in the banking sector regarding the Covid-19 outbreak

The Banking Regulation and Supervision Agency (the BRSA), the Central Bank of Republic of Turkey (the CBRT) and the Banks’ Association of Turkey (the BAT) have swiftly taken several measures after the declaration of the first confirmed Covid-19 case in Turkey on 11 March 2020 in order to mitigate the outbreak’s impact on the financial markets and soften expected disruptions in commercial activities that may be caused by Covid-19. Such measures are set forth by the relevant regulators in order to provide flexibility to financial institutions (the FIs) to ensure (i) financial stability of the FIs and (ii) meet FIs customers’ needs such as facilitating cash flow of individuals and SMEs which are likely to be the most affected by this outbreak and ultimately to mitigate the macroeconomic effects and risks arising from Covid-19 in financial markets.

Firstly, the BRSA, in its press release dated 16 March 2020, indicated that the business continuity plans prepared routinely by banks in accordance with the Guide on Management of Operational Risks with the aim of continuity of FIs’ activities and limitation of losses which arise from severe business interruptions are re-examined by the BRSA and in this regard all necessary measures are taken. This measure has been taken by the BRSA within the framework of prudent supervision approach.

Legal Business

Sponsored briefing: Labour law issues in Covid-19 crisis

Sponsored briefing: Labour law issues in Covid-19 crisis

Upon confirmation of the spread of Covid-19 in Turkey with the declaration of the first case on 11 March 2020 and simultaneously with the World Health Organization’s declaration of COVID-19 as a global pandemic, government started to take certain measures including banning people above the age of 65 from going out; closing down certain workplaces. The measures are actively changing based on the evolution of the pandemic disease, yet, no complete lock down has been announced for many sectors but companies are encouraged to take their own measures during this period. This article mainly focuses on the impact of the Covid-19 pandemic on the employment relationship by presenting possible options provided under the Turkish labour legislation.

It is globally accepted that the Covid-19 pandemic is a force majeure event. However, force majeure provisions provided under the Labour Code (Law No 4857) (published in the Official Gazette dated 10 June 2003 and numbered 25134) (Labour Code) allow parties to terminate the employment relationship under limited circumstances.

Legal Business

Sponsored briefing: How to handle contractual disputes in the COVID-19 era

Sponsored briefing: How to handle contractual disputes in the COVID-19 era

Since the COVID-19 coronavirus was first reported in Wuhan, China in December 2019, strict and unprecedented measures have been gradually imposed by governments around the globe to limit risks of contagion. On 11 March 2020, the severity of the phenomenon was emphasised by the World Health Organization (WHO)’s declaration of COVID-19 as a global pandemic. As circumstances continue to evolve, substantial business and operational disruptions are a cause of great uncertainty that now reigns in various sectors and trade relations around the world. The implications are particularly profound when it comes to performance of contractual obligations in view of COVID-19’s far-reaching socio-economic effects. In this context of a health crisis exacerbated by the unexpected nature of the outbreak, the main issue is whether parties to affected commercial contracts may invoke force majeure as an argument to justify for failure to perform their contractual obligations.

For contracts governed by Turkish law, the first observation to be made is that the concept of force majeure and its defining conditions are not explicitly provided in the Turkish Code of Obligations (TCO) (published in the Official Gazette dated 4 February 2011 and numbered 27836) (Law No. 6098). The Court of Cassation has come to clarify at various occasions what should be understood by force majeure and under which circumstances parties are entitled to rely upon this concept. Within the framework of the case law and legal doctrine, it can be said that force majeure is deemed to arise when a contracting party’s performance is materially affected by (i) an event beyond his reasonable control, (ii) the effects of which could not have been foreseen at the date of commencement of the legal relationship and (iii) avoided despite all appropriate measures being taken.

Legal Business

Sponsored briefing: Growing interest in asset deals

Sponsored briefing: Growing interest in asset deals

Yegan Liaje of Pekin & Pekin describes a rising interest in asset deals following a period of economic uncertainty in Turkey

Turkey has faced some serious financial challenges in recent years, such as high inflation, currency collapse and rising borrowing costs; however, surprisingly, these challenges have not dramatically affected the Turkish M&A market in terms of total transaction volume; though, we have noticed that it has affected the deal type in which investors have gained interest. In the last two years, we have experienced asset deals attracting more attention in the eyes of investors, despite share deals still having more advantages. Although investors do not have to bother with costly revaluations and retitles of individual assets, and can typically assume non-assignable licenses and permits without having to reapply for the same licenses and permits in share deals, asset deals also have some noticeable benefits.

Probably the most appealing advantage of asset deals is to enable buyers to pick and choose what they want to buy in the relevant target company without being bound to the whole company, all the unwanted remaining assets and certainly their unwanted liabilities. In other words, asset deals provide a playing field for investors where they can freely choose what suits best their business insight, in contrast to share deals where the shares of the target company are purchased with all attached shareholding rights and obligations, but the target company would remain liable against third parties for all historic claims.

On the other hand, asset deals do have some procedural disadvantages as well; each category of asset and liabilities subject to the relevant asset deal will be evaluated separately for consent requirements or formal perfection requirements rendering asset deals procedurally more burdensome. Furthermore, even where there are no consent requirements or formal perfection requirements, notifications would have to be provided to creditors in order to prevent good-faith payments made by creditors to the seller with respect to acquired assets, since under the Turkish Code of Obligations, such good-faith payments would discharge the debts of creditors who were not informed of the transfer. One more interesting point about asset deals in Turkey: as per the Turkish Labour Code, in the event that a workplace is transferred to another legal body on the basis of a legal transaction, the employment contracts that exist at the workplace at the date of transfer are automatically transferred to the transferee together with all rights and obligations. Therefore, buyers are not able to pick and choose when it comes to employees!

For more information, please contact:Yegan Liaje, senior partner, M&A

Pekin & Pekin
10 Lamartine Caddesi
Taksim 34437 Istanbul

D: +90 212 313 35 48
T: +90 212 313 35 00
F: +90 212 313 35 35
E: yliaje@pekin-pekin.com

www.pekin-pekin.com

Legal Business

Turkey – Bridging the Gap

Turkey – Bridging the Gap

As its economy booms Turkey has attracted the attention of the world’s legal market. Will Clifford Chance and DLA Piper’s arrival mark a new chapter for the country’s local firm?

Clifford Chance’s move into Istanbul didn’t exactly take the market by surprise. The announcement that the Magic Circle firm is to open an outpost in the Turkish city followed its 2009 hire of Mete Yegin from local heavyweight Pekin & Pekin. Required by local Bar rules to ally with a local firm, CC will now officially launch in conjunction with Yegin’s firm, Yegin Legal Consultancy.