Authors: Capital Markets Law Department, Attny. Mustafa Şahin

Introduction

A change in corporate control in publicly held companies gives rise to legal consequences that directly affect not only the governance structure of the company but also the economic interests of minority shareholders. To ensure predictability, market integrity and investor confidence, the Turkish capital markets regime imposes a mandatory tender offer obligation in certain cases where control is transferred. This mechanism is established under Articles 25 and 26 of the Capital Markets Law (“CML”) and the Communiqué on Tender Offers (II-26.1) (“Communiqué”).

The following sections provide a holistic assessment of the legal framework governing mandatory tender offers, including the definition of control, circumstances triggering the obligation, procedural timelines, pricing rules and the exemption regime.

Normative Framework and Regulatory Purpose

The Capital Markets Law delegates the authority to determine the procedures and principles applicable to tender offers to the Capital Markets Board (“Board”). The Board has exercised this authority through Communiqué II-26.1, which sets out in detail the scope, method of implementation and investor-protection principles governing mandatory tender offers.

The Communiqué aims to prevent changes in corporate control from being used to the detriment of minority shareholders and ensures that all investors are treated equally during a control shift.

Concept of Corporate Control and Circumstances Triggering a Mandatory Tender Offer

At the core of the mandatory tender offer regime lies the concept of “corporate control”, defined under Article 12 of the Communiqué. Control is deemed to be acquired in two situations:

• where a person, alone or together with persons acting in concert, directly or indirectly holds more than 50% of the voting rights of the company; or
• where a person holds privileged shares granting the right to appoint or nominate the majority of the members of the board of directors, regardless of the voting rights ratio.

This definition is intentionally broad, capturing also the control structures frequently encountered in Turkish capital markets that rely on privileges rather than majority voting rights. Conversely, temporary majority obtained in a general assembly meeting does not constitute acquisition of control.

Once control is acquired, Article 11 of the Communiqué requires the initiation of a mandatory tender offer. A change in control may occur through:

• transfer of shares or privileges,
• indirect ownership structures, or
• written agreements between shareholders that result in the transfer of control.

Importantly, the relevant date for identifying the shareholders entitled to participate in the tender offer is the date on which the change in control is publicly disclosed, not the date on which the share transfer is completed.

Procedure and Timelines for Implementing the Mandatory Tender Offer

The mandatory tender offer process is subject to strict timelines under Article 13 of the Communiqué. A person acquiring control must:

• file an application with the Board within 6 business days following the change in control; and
• launch the tender offer within 2 months from the date control is acquired.

Following the Board’s approval, the tender offer must commence within 6 business days, and the offer period must last between 10 and 20 business days.

Failure to comply with these timelines may lead to severe consequences, including administrative fines up to the total consideration of the offer and the automatic suspension of the voting rights of the person failing to carry out the mandatory tender offer.

For this reason, transaction structures involving change of control must incorporate the mandatory tender offer timelines into the overall deal schedule from the outset.

Determination of the Tender Offer Price: An Investor-Protection-Oriented Model

The tender offer price, governed by Article 15 of the Communiqué, is designed to safeguard investors by preventing the understatement of consideration in control-changing transactions.

In cases of direct acquisition of control, the tender offer price for shares traded on the stock exchange must not be lower than the higher of:

• the arithmetic average of the adjusted daily weighted average prices of the shares during the 6-month period preceding public disclosure of the change in control; and
• the highest price paid by the offeror or persons acting in concert during the same 6-month period.

For non-traded shares, the price must not be lower than the higher of the valuation report prepared in accordance with Board regulations and the highest price paid within the prior 6 months. In indirect acquisitions of control, an additional valuation criterion applies, and the highest value in favor of shareholders must be used.

Furthermore, the Communiqué requires that side payments, hidden premiums and contingent consideration be reflected in the offer price, thereby preventing the concealment of the actual consideration paid in control-transfer transactions.

Price Equalization Mechanism and Transactions During the Offer Period

Article 16 of the Communiqué establishes a price equalization mechanism that ensures dynamic price protection during the offer period. If the offeror or persons acting in concert acquire shares of the target company at a price higher than the tender offer price during the offer period, the offer price must automatically be increased to this new higher price, and early tendering shareholders must be paid the price difference.

This mechanism prevents market manipulation during the offer process and ensures equal treatment of all investors.

Late-Commencement Interest and Currency Provisions

Article 17 of the Communiqué regulates the interest applicable in cases where the tender offer is not initiated on time. If the consideration is denominated in Turkish Lira, a daily interest rate of TLREF + 50% is added for each day of delay. For foreign-currency-denominated consideration, the applicable rate is EURIBOR or LIBOR + 50%.

This structure serves as a deterrent against unnecessary delays and reinforces the integrity of the tender offer regime.

Exemptions from the Mandatory Tender Offer Requirement

Article 18 grants the Board the discretion to exempt certain transactions from the mandatory tender offer obligation. Exemptions typically arise in cases such as financial restructurings, enforcement of share collateral by lenders, or changes in control resulting from inheritance or matrimonial property regimes. The Board evaluates each exemption request case-by-case, always prioritizing investor protection and market stability.

Conclusion

The mandatory tender offer mechanism is an integral component of corporate control transactions in publicly held companies, directly shaping transaction costs, timelines and legal risks. Determining whether a change in control has occurred, understanding the concept of persons acting in concert, correctly calculating the offer price, adhering to statutory timelines and evaluating exemption possibilities must all be assessed at the earliest stages of transaction planning.

When properly applied, this framework ensures investor protection and market integrity, contributing significantly to the predictability and reliability of Turkish capital markets.