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Merger Process and Procedure of Limited Liability Companies


In Turkish Commercial Law, the formal processes of selling (transferring), dividing, changing of type or merging of commercial companies are regulated. 

Within the scope of the Turkish Commercial Code No. 6102, commercial companies may merge for various reasons such as reducing competition, increasing market share, lowering input costs and increasing efficiency, and benefiting from tax advantages. Another advantage of mergers is that companies don’t lose their legal personality without entering the liquidation process. After the termination of legal personality, they can merge within a new legal entity scope or within an existing legal entity. 

In this context, Limited Liability Companies being a type of company preferred by entrepreneurs due to the prominence of capital and limited liability of partners, are subject to regulations on mergers in Articles 134 and subsequent articles of the Turkish Commercial Code.  

Pursuant to Article 136/3-4 of the Turkish Commercial Code, "A merger occurs through the spontaneously acquisition of the shares of the acquiring company by the shareholders of the acquired company in exchange for the assets of the acquired company according to an exchange ratio. With the merger, the acquiring company takes over the assets of the acquired company as a whole. Upon merger, the acquired company shall be dissolved and be struck off from the trade registry." 

Company mergers can occur in two different ways: "merger under new establishment" and "merger through acquisition". In both cases, the merging company is absorbed into the acquiring company, losing its legal personality and being struck off from the trade registry. This is referred to as ‘’Dissolution without Liquidation’’ in our legal system. All assets and liabilities of the dissolved company have now transferred to the acquiring company and this is also evaluated within the scope of the Principle of Subrogation. In this manner, the shareholders of the dissolved company automatically acquire partnership shares in the merged company based on the calculated change rate. 

Pursuant to Article 137 of the Turkish Commercial Code, companies of different types cannot merge with each other. The merging companies must be of the same type. 

Since Joint Stock Companies, Limited Liability Companies and Limited Partnership Companies are capital companies, and they can merge with each other as both transferring and the acquiring party. These companies may also merge with Cooperatives. Generally, in commercial life, mergers between Joint Stock and Limited Liability companies are commonly observed.  

Limited Liability companies may merge with Collective and Limited Partnership companies, which are private companies, as long as they are the acquiring party. However, such mergers are not commonly encountered in commercial practice. 

Stages to be followed in Limited Company Mergers: 

  1. Planning and Preparation Stage of the Merger; 

Prior to the merger of a Limited Liability company, detailed research should be conducted to determine the company to be involved in the merger process and negotiations should be carried out at this stage, various aspects such as legal, tax, financial status and human resources of the candidate company should be examined through Due Diligence. 

During the preparation phase, considering that important data and information of the companies will be shared between the parties, a Confidentiality Agreement should be prepared and necessary measures should be taken in terms of information and data security.  

  1. Preparation and Approval of the Merger Agreement; 

The merger agreements of Limited Liability companies are required to be made in the form specified in Article 145/1 of the Turkish Commercial Code. All conditions of the merger, details, responsibilities of the managers and shareholders, prohibitions and sanctions must be specified in the agreement, signed by the managers or authorized representatives of the merging companies and approved by their General Assemblies. 

Pursuant to Article 151/1-c of the Turkish Commercial Code, the merger agreement must be approved by a three-fourths majority vote of all shareholders, provided that they hold shares representing at least three-fourths of the capital in Limited Liability companies. 


  1. Registration and Announcement of the Merger; 

Mergers become legally effective when registered in the Trade Registry and during registration, all assets and liabilities of the acquired company automatically transfer to the acquiring company. For mergers to be registered in the Trade Registry, the merger agreements must meet all validity requirements and the documents must be prepared as deemed appropriate by the Trade Registry Directorate. Pursuant to Article 146 of the Turkish Commercial Code, the merger agreements must include: 

  • Trade names, legal forms and headquarters of companies; 

  • Exchange ratio and method of changing company shares, if provided, the equalization amount; 

  • The shares and rights of the shareholders of the acquired company in the acquiring company; 

  • The rights granted by the acquiring company to non-voting and non-preferential shareholders and bondholders, if necessary, the separation fund; 

  • Special benefits granted to the board of directors and managing partners. 


Pursuant to Article 147 of the Turkish Commercial Code, after the merger agreement is signed and before obtaining General Assembly, a Merger Report must be prepared and announced to inform the company’s shareholders. This merger report is prepared by the manager or the board of directors, which is the management body in a Limited Liability company. After the merger process and registration procedures are completed, the merger is announced in the Trade Registry Gazette. 

Law No. 6102 of the Turkish Commercial Code has made certain regulations to protect the shareholding rights of the shareholders in the acquired company. Accordingly, the shareholders of the acquired company have the right to demand, based on the value corresponding to their existing partnership shares and related rights, shares and rights in the acquiring company. Factors to be considered in calculating the right to claim include the values of the assets of the merging companies and the distribution of voting rights among company shareholders.   

Indeed, the Payment of Equalization to the shareholders of the acquired company is subject to the condition that the real value of the allocated partnership shares does not exceed one-tenth.  

The existence of non-voting shares and privileged rights attached to shares in the acquired company can also be considered. The merged companies may offer the shareholders of the acquiring company the opportunity to choose between the acquisition of shares and shareholding rights or the provision of their value as a separation fund. In essence, in mergers, each case requires a separate evaluation in terms of shareholding shares and rights. As each company has a special functioning and an established order. 

In cases where companies choose to merge through acquisition, the acquiring company is required to increase its capital. The purpose is to ensure the protection of the rights of shareholders in the acquired company. In cases where the period between the signing of the merger agreement and the balance sheet date is more than 6 months, the companies participating in the merger are required to issue an interim balance sheet, and this is not optional but a requirement, especially when significant changes occur in the assets of the companies participating in the merger.  

In conclusion, it should be noted that Limited Liability company merger agreements are highly significant legal documents that need to be tailored by taking into account specific factors such as the companies' unique capital and shareholding structure, assets, the sector in which they operate, the purpose of the merger and the expected benefits. Neglecting necessary in a merger agreement can lead to significant disputes between the parties. For a valid and smooth merger, it is recommended to seek legal support not only at the contract stage, but also during pre-contract Due Diligence activities, preparation of the merger report, obtaining General Assembly and Board of Directors decisions, planning and registration stages. 

  • Tags : Company, limited company, company partners, limited company merger


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