Under the regulation that entered into force in February 2026, the turnover thresholds that trigger a notification obligation to the Turkish Competition Board were raised significantly. Approval is now required only where the parties’ combined Turkey turnover exceeds TRY 3 billion and each party’s individual turnover exceeds TRY 1 billion. This change is a useful reminder that for a foreign investor planning to acquire a company or project in Turkey, the process is never simply a matter of negotiating price. Legal due diligence carried out before the acquisition brings both financial risks and regulatory approval requirements into view at an early stage.
Reviewing the Corporate Structure and Shareholding Table
A target company’s share ledger, general assembly resolutions and signature circular are the first and most fundamental subject of review in any acquisition process. If the shareholding structure includes undisclosed pledges, usufruct rights, or options granted to third parties, the real value of the shares being acquired may turn out to be lower than expected.
For example, a foreign investor group planning to acquire a manufacturing facility in Istanbul may find, upon reviewing the trade registry records, that part of the company’s shares were pledged to a bank three years earlier under a loan agreement. An encumbrance of this kind must be resolved before the transfer agreement is signed. Trade registry and share ledger records should be verified through official documents, not verbal assurances.
Auditing Financial Statements, Tax History and Social Security Records
Having the target company’s balance sheets and income statements for the last three to five years reviewed by an independent financial advisor is critical for uncovering hidden debts and contingent liabilities. The company’s tax audit history, any pending tax litigation, and outstanding social security premium debts must also be checked at this stage.
Suppose an investor is considering acquiring a seemingly profitable restaurant chain. During financial due diligence, an unpaid tax assessment from an earlier period and a dispute pending before a tax court may come to light. Since liabilities of this kind can pass through to the new partner after the transfer, identifying them before the agreement is signed is essential. The agreement should also clearly allocate responsibility for any tax and premium debts relating to the period prior to the transfer date.
Screening Contracts, Litigation and Hidden Liabilities
Reviewing all of the company’s agreements with its suppliers, customers, tenants and employees is, in effect, an extension of the drafting and review of commercial contracts brought forward into the pre-acquisition stage. In particular, “change of control” clauses found in these agreements can give the counterparty a right of termination once the transfer takes effect.
An investor who only discovers such a clause in the target company’s supply agreement with its largest customer after completing the transfer may find the commercial logic of the entire acquisition undermined. Pending or threatened lawsuits, enforcement proceedings and administrative fines should be screened with the same rigor, and their potential financial impact should be reflected in the purchase price.
Title Deed (TAPU) and Zoning Status of Real Estate and Project Assets
Where the target company owns a factory building, land, or an ongoing construction project, the title deed (TAPU) records, zoning status, and any mortgage encumbrances on these properties form a separate area of review. The requirement for a Foreign Exchange Purchase Certificate (Döviz Alım Belgesi, DAB) in real estate transactions involving foreign investors is another administrative requirement that should not be overlooked.
For instance, if an investor acquiring a project company signs the agreement without noticing that a third party has registered an annotation on a housing cooperative share over the land, completion of the project could be delayed by months. Every document relating to real estate should be verified against up-to-date records obtained from the land registry directorate. On this point, the considerations that apply to foreign nationals purchasing property in Turkey largely extend to real estate held within a company as well.
Competition Board Approval and Transactions Subject to Sector-Specific Regulation
Law No. 4875 on Foreign Direct Investments establishes a notification-based system that grants foreign investors the same rights as domestic investors, meaning an acquisition can generally be completed without prior application to a licensing authority. This freedom, however, is not absolute. In regulated sectors such as banking, insurance, energy, telecommunications, capital markets and broadcasting, approval from the relevant public authority may be required.
In addition, where the size of the transaction exceeds the updated turnover thresholds referred to above, notification to the Competition Board is mandatory. Transactions completed without notification may be deemed legally invalid and can result in administrative fines. An investor group that disregards these thresholds when acquiring a technology company on the grounds that it is a “small scale transaction” may later find itself facing a legal risk that is difficult to remedy.
Representations, Warranties and Indemnification in the Share Transfer Agreement
A recurring issue in practice is that, however thorough the due diligence, certain risks may not be visible at the time of transfer. For this reason, it has become standard international practice to include the seller’s representations and warranties regarding the company’s financial and legal condition in the agreements signed during the share transfer and valuation process.
Some practitioners argue that these warranties should run for a short period, for example limited to one year, while others maintain that, particularly for tax and environmental liabilities, a longer warranty period closer to the relevant statute of limitations should apply. In our view, given how long tax audits typically take to conclude, limiting warranties relating to tax and social security liabilities to the standard one-year period can leave the investor inadequately protected. For liabilities of this kind, a warranty period aligned with the relevant administrative statute of limitations is the more prudent approach. Structuring mechanisms such as an indemnification cap and a minimum claim threshold in a balanced way between the parties helps prevent disputes from arising later on.
Conclusion: The Recommended Approach Before an Acquisition
In a company or project acquisition, legal due diligence should begin well before the agreement is signed, ideally immediately after the letter of intent is executed. The typical order of priority is: first, the shareholding structure and title deed/registry records; then the financial and tax history; followed by contractual obligations; and finally, any applicable regulatory approval requirements.
Every risk identified before the acquisition can either be reflected in the purchase price or allocated to the seller through representations, warranties and indemnification provisions in the agreement. For this reason, rather than leaving legal due diligence to the final stage of the transaction, planning the process from the outset together with independent legal counsel is a step that also strengthens the investor’s negotiating position.
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