Escrow Agreement in Turkish Law and Its Application in Mergers & Acquisitions
Escrow[1]mechanism is a common practice in mergers and acquisitions aiming to secure the performance of the obligation at a later time if immediate performance is impossible or not preferred. This is a practice whereby the obligations of the parties to the underlying agreements in mergers and acquisitions are entrusted with a third party named as the escrow agent in an effort to secure the performance of the obligations (i.e. transfer of the purchase price and/or shares) arising therefrom.In this respect, the parties to merger and/or acquisition transactions and a trustee (escrow agent) enter into an escrow agreement setting forth the terms and conditions for returning the sale shares and/or consideration.
It is intended with this article to provide the reader an insight regarding escrow mechanisim and its implementation to mergers and acquisitions under Turkish Law.
Latest Amendments to the Turkish Commercial Code and the Law on Cheques
Comprehensive amendments were made to several laws including Turkish Commercial Code numbered 6102[1] (“TCC”), Law on Cheques numbered 5941[2] (“Law on Cheques”) and various tax laws under Law numbered 6728 on the Amendment of Several Laws for the Improvement of Investment Environment, published in the Official Gazette dated 9 August 2016 and numbered 29796[3] (“Law No. 6728”). According to the general preamble[4] of Law No. 6728, the purpose of the amendments to the TCC is to facilitate the incorporation and liquidation procedures of companies, and to contribute to the development of the economy through encouraging local and foreign real persons and legal entities to do business in Turkey. On the other hand, the amendments made to the Law on Cheques aim to increase the trust in cheques, which constitute a significant payment method in business life, and to prevent dishonored cheques.
Organizational Liability Added to Art. 66 of the Turkish Code of Obligations Regarding Employer’s Liability
The legislator has not only made various changes on the abolished Turkish Code of Obligations (“aCO”) numbered 818, but has also included various new concepts and institutions in the new code by implementing the Turkish Code of Obligations (“TCO”) numbered 6098. One of the aforementioned concepts and institutions is “organizational liability.” General information regarding this concept is provided, below.
