Merger, Acquisition, Division and Exchange of Shares Transactions in Share Capital Companies

207 Pages·2017·0.97 MB·English

Merger, Acquisition, Division and
Exchange of Shares Transactions
in Share Capital Companies
Okan NETEK
105664033
(cid:1)
stanbul Bilgi University
Institute of Social Sciences
Msc in International Finance
(cid:2)
Prof. Dr. Oral ERDO AN
2009
Merger, Acquisition, Division and
Exchange of Shares Transactions
in Share Capital Companies
Okan NETEK
105664033
Tez Danı(cid:1)manının Adı Soyadı : Prof. Dr. Oral Erdo(cid:2)an
Jüri Üyelerinin Adı Soyadı : Prof. Dr. Ahmet Süerdem
Jüri Üyelerinin Adı Soyadı : Doç. Dr. Do(cid:2)an Cansızlar
Tezin Onaylandı(cid:2)ı Tarih : 29/06/2009
Toplam Sayfa Sayısı : 206
Key Words Anahtar Kelimeler
1) Mergers 1) Birle(cid:1)me
2) Acquisitions 2) Devir
3) Division 3) Bölünme
4) Exchange of Shares 4) Hisse De(cid:2)i(cid:1)imi

Abstract
Allocation of resources to their best use is one of the greatest
concerns in finance theory. In this context; merger, acquisition, division and
exchange of shares transactions are among the most frequently applied
financial transactions in reaching the allocation goal of finance theory. On
the other hand, the success of those transactions in reaching the goal of
capital allocation depends on the existence of a convenient and reliable legal
environment.
This thesis deals with merger, acquisition, division and exchange
of shares transactions in share capital companies with respect to various
legislation established in Turkey and tries to answer the question of whether
there exists a specific harmonization between different legislations
regulating those transactions for the applicability of such transactions in
practice.
Following a brief introduction part, the Thesis is divided into 10
main sections. Share capital company concept is defined and its borders
within the context of this Thesis work is drawn under Section 2. Section 3
answers the question of how merger, acquisition, division and exchange of
shares transactions are considered in management literature. Section 4
analyzes the transactions based on Tukish Code of Trade numbered 6762,
while Section 5 handles related provisions in Draft Turkish Code of Trade,
which is expected to be legitimized in 2009. Section 6 and Section 7 are
seperated to explanations with respect to Capital Market Law and
Competition Law respectively. Section 8 and Section 9 are related to the
taxation results of transactions, while Section 10 deals with the accounting
applications for those tansactions. Finally, the Thesis is concluded with the
evaluation of emerging picture through collective consideration of
arrangements regarding transactions and suggestions about the concrete
steps to be taken are put in place.

3
Özet
Kaynakların en iyi kullanım alanlarına aktarımı finans teorisinin en
temel sorunlarından birisini olu(cid:1)turmaktadır. Bu ba(cid:2)lamda birle(cid:1)me, devir,
bölünme ve hisse de(cid:2)i(cid:1)imi i(cid:1)lemleri kaynakların en iyi kullanım alanlarına
da(cid:2)ılımı amacına hizmet eden finansal i(cid:1) ve i(cid:1)lemlerin en sık ba(cid:1)vurulanları
arasında yer almaktadır. Öte yandan söz konusu i(cid:1)lemlerin kaynakların en
iyi kullanım alanlarına aktarımı hedefini gerçekle(cid:1)tirmedeki ba(cid:1)arısı uygun
ve güvenilir bir yasal ortamın mevcudiyetine ba(cid:2)lıdır.
Bu tez sermaye (cid:1)irketleri tarafından gerçekle(cid:1)tirilen birle(cid:1)me,
devir, bölünme ve hisse de(cid:2)i(cid:1)imi i(cid:1)lemlerinin Türkiye’de yerle(cid:1)ik farklı
yasal düzenlemeler kar(cid:1)ısındaki durumunu irdelemekte ve söz konusu
i(cid:1)lemlerin uygulanabilirli(cid:2)ine ili(cid:1)kin olarak farklı yasal düzenlemeler
arasında belirli bir uyumun mevcut olup olmadı(cid:2)ı sorusuna cevap
aramaktadır.
Tez kısa bir giri(cid:1) bölümünün ardından temel olarak 10 ana bölüme
ayrılmaktadır. (cid:3)kinci bölümde sermaye (cid:1)irketinin tanımlaması yapılmakta ve
sermaye (cid:1)irketi kavramının çalı(cid:1)ma kapsamındaki sınırları belli
edilmektedir. Üçüncü bölümde birle(cid:1)me, devir, bölünme ve hisse de(cid:2)i(cid:1)imi
i(cid:1)lemlerinin i(cid:1)letmecilik literatüründe nasıl ele alındı(cid:2)ı sorusu
cevaplanmaktadır. Dördüncü bölümde i(cid:1)lemlerin 6762 Sayılı Türk Ticaret
Kanunu açısından de(cid:2)erlendirmesi yapılırken, be(cid:1)inci bölümde 2009 yılında
yasala(cid:1)ması beklenen Taslak Türk Ticaret Kanunu’ndaki düzenlemeler ele
alınmaktadır. Altıncı ve yedinci bölümlerde söz konusu i(cid:1)lemlere ili(cid:1)kin
Sermaye Piyasası Kanunu ve Rekabet Kanunu açısından açıklamalar
yapılmaktadır. Sekizinci ve dokuzuncu bölümde i(cid:1)lemlerin vergisel
sonuçlarına yer verilirken, onuncu bölüm i(cid:1)lemlerin muhasebe uygulamaları
kar(cid:1)ısındaki durumunu irdelemektedir. Son bölümde birle(cid:1)me, devir,
bölünme ve hisse de(cid:2)i(cid:1)imi i(cid:1)lemlerine ili(cid:1)kin mevcut düzenlemeler topluca
dikkate alındı(cid:2)ında ortaya çıkan tablonun genel bir de(cid:2)erlendirmesi
yapılmakta ve bu i(cid:1)lemlere ili(cid:1)kin olarak ilerleyen dönemde atılması
beklenen somut adım önerileri ortaya konmaktadır.
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Table of Contents
1. INTRODUCTION.........................................................................................13
2. SHARE CAPITAL COMPANIES (SCC).....................................................16
2.1. Definition of Company.....................................................................16
2.2. Company in Turkish Law System....................................................16
2.3. Share Capital Companies in Turkish Code of Commerce................17
2.4. Share Capital Companies in Turkish Code of Corporate Tax..........17
2.5. Comparison of Share Capital Company and Partnership Company18
3. MERGER, ACQUISITION, DIVISION AND EXCHANGE OF SHARES
TRANSACTIONS.............................................................................................20
3.1. Place in Management Literature.......................................................20
3.2. Mergers and Acquisitions.................................................................20
3.2.1. Types of Mergers.......................................................................20
3.2.1.1. Structural Mergers..............................................................20
3.2.1.1.a. Trust.............................................................................20
3.2.1.1.b. Holding........................................................................21
3.2.1.1.c. Consortium...................................................................21
3.2.1.1.d. Merger..........................................................................21
3.2.1.1.e. Hostile Takeover..........................................................22
3.2.1.1.f. Joint Venture................................................................22
3.2.1.2. Non-Structural Mergers......................................................22
3.2.1.2.a. Gentlemen’s Agreement..............................................22
3.2.1.2.b. Cartel............................................................................22
3.2.1.2.c. Consern........................................................................22
3.2.1.2.d. Interest Group..............................................................23
3.2.2. Literature Review......................................................................23
3.2.2.1. Reasons for Mergers and Acquisitions...............................23
3.2.2.1.a. Benefiting from Economies of Scale..........................27
3.2.2.1.b. Having Competent Management.................................27
3.2.2.1.c. Mergers Being More Advantageous than Internal
Growth.........................................................................................28
3.2.2.1.d. Reducing Borrowing Costs..........................................28
3.2.2.1.e. Tax Advantages...........................................................28
3.2.2.1.f. Acquiring Intangible Assets.........................................29
3.2.2.1.g. Reducing Competition.................................................29
3.2.2.1.h. Pshycological Reasons.................................................29
3.2.2.1.i. Diversification..............................................................29
3.2.2.1.j. Increasing Sales Volume and/or Amount.....................29
3.2.2.1.k. Increasing Share Value................................................30
3.2.2.2. Empirical Evidence Regarding Reasons for Mergers and
Acquisitions.....................................................................................30
3.2.2.3. Results of Mergers and Acquisitions..................................32
3.2.2.4. Empirical Evidence Regarding the Financial Results of
Mergers and Acquisitions................................................................32
3.2.2.4.a. Stock Price Results......................................................32
3.2.2.4.b. Profitability Results.....................................................34
3.2.3. Evolution of Mergers and Acquisitions.....................................35
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3.2.4. Evolution of Mergers in Turkey................................................37
3.3. Division............................................................................................38
3.3.1. Types of Division......................................................................39
3.3.1.1. Based on Division Method.................................................39
3.3.1.2. Based on Asset Transfer Criteria........................................39
3.3.1.3. Based on Share Distribution Method..................................39
3.3.2. Reasons for Division..................................................................40
3.3.2.1. Fiscal Reasons....................................................................40
3.3.2.2. Economic Reasons..............................................................40
3.3.2.3. Technical Reasons..............................................................41
3.4. Exchange of Shares...........................................................................41
3.5. Scope of Study..................................................................................41
4. ASSESSMENT BASED ON TURKISH CODE OF COMMERCE.............43
4.1. MERGER..........................................................................................43
4.1.1. Definition of Merger in TCC.....................................................43
4.1.2. Types of Merger........................................................................43
4.1.3. Requirements for Merger...........................................................44
4.1.3.1. Companies’ Being of Same Type.......................................44
4.1.3.2. Resolution...........................................................................44
4.1.3.3. Balance Sheet......................................................................44
4.1.3.4. Additional Requirements....................................................45
4.1.4. Legal Consequences of Merger.................................................45
4.1.4.1.a. The Objection Right of Creditors................................45
4.1.4.1.b. Universal Succession...................................................46
4.1.5. Special Merger Clauses Regarding Share Capital Companies..46
4.1.5.1. Special Clauses For Corporations.......................................47
4.1.5.1.a. Mergers through Acquisition.......................................47
4.1.5.1.b. Mergers through Establishing a New Company..........48
4.1.5.2. Special Clauses for Joint-Stock Comandite Companies and
Limited Companies..........................................................................51
4.2. ACQUISITION.................................................................................51
4.2.1. Definition of Acquisition in TCC..............................................51
4.2.2. Acquisition Clauses for Share Capital Companies....................51
4.3. DIVISION.........................................................................................52
4.4. EXCHANGE OF SHARES..............................................................54
5. ASSESSMENT BASED ON DRAFT TURKISH CODE OF COMMERCE
...........................................................................................................................55
5.1. MERGER..........................................................................................55
5.1.1. Principle.....................................................................................56
5.1.2. Validity of Mergers....................................................................57
5.1.3. Protection of Shares and Rights in Company............................58
5.1.4. Bargain Money..........................................................................58
5.1.5. Other Clauses Regarding Merger Transaction..........................59
5.1.5.1. Capital Increase..................................................................59
5.1.5.2. New Establishment.............................................................60
5.1.5.3. Interim Balance Sheet.........................................................60
5.1.6. Merger Agreement.....................................................................60
5.1.7. Merger Report............................................................................61
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5.1.8. The Audit of Merger Agreement and Merger Report................63
5.1.9. Examination Right.....................................................................63
5.1.10. Changes in the Asset Structure of Merging Companies..........64
5.1.11. Merger Decision......................................................................64
5.1.12. Registry in Turkish Commercial Register and Announcement65
5.1.13. Simplified Merger....................................................................66
5.1.14. Protection of Creditors.............................................................67
5.2. DIVISION.........................................................................................68
5.2.1. Principle.....................................................................................68
5.2.2. Validity of Division Transaction...............................................68
5.2.3. Protection of Rights and Shares in Divised Company..............69
5.2.4. Other Clauses Regarding Division Transactions.......................69
5.2.4.1. Capital Decrease.................................................................69
5.2.4.2. Capital Increase..................................................................70
5.2.4.3. Establishment of New Company........................................70
5.2.4.4. Interim Balance Sheet.........................................................70
5.2.5. Division Agreement or Division Plan........................................71
5.2.6. Content of Division Agreement and Division Plan...................71
5.2.7. Division Report..........................................................................72
5.2.8. Examination Right.....................................................................73
5.2.9. Division Decision......................................................................73
5.2.10. Protection of Creditors.............................................................74
5.2.11. Joint Liability...........................................................................74
5.2.12. Transfer of Employee Relationships.......................................75
5.2.13. Application of Clauses Regarding Merger Through Deductive
Reasoning............................................................................................75
5.2.14. Registry in Trade Registry and Effectiveness.........................75
5.3. EXCHANGE OF SHARES..............................................................76
6. ASSESSMENT BASED ON CAPITAL MARKET LAW...........................77
6.1. The Scope and Aim of Communique Serial: 1 No:31......................77
6.2. Legal Basis of Communiqué............................................................77
6.3. Principles Regarding Merger............................................................78
6.3.1. Preliminary Resolution of the Companies’ Authorized Bodies 78
6.3.2. Financial Statement Periods to Be Used As a Basis for the
Merger and Special Independent Audit Report...................................78
6.3.3. Expert Examination...................................................................79
6.3.4. The Methods in Calculation of Merger Ratio............................79
6.3.5. Expert Institution Examination..................................................80
6.3.6. Merger Contract.........................................................................81
6.3.7. Board of Director’s Report........................................................81
6.3.8. The Approval of Capital Market Board (CMB)........................81
6.3.9. Informing Shareholders.............................................................81
6.3.10. The Approval of Merger Agreement and Decision of Capital
Decrease by Acquisition......................................................................82
6.3.11. Registration with Capital Market Board..................................83
6.3.12. The Delivery of Common Shares............................................83
6.3.13. The Capital Amount To Be Reached After Merger through
Acquisition...........................................................................................84
7
6.3.14. The Capital Amount To Be Reached After Merger through
Establishing a New Company.............................................................84
7. ASSESSMENT BASED ON TURKISH COMPETITION LAW................86
7.1. Mergers and Acquisitions in The Act on Protection of Competition86
7.2. Cases Considered as Merger or Acquisition.....................................87
7.3. Cases not Considered as Merger or Acquisition..............................88
7.4. Mergers and Acquisitions Subject to Authorization.........................89
7.5. Notification of Mergers or Acquisitions...........................................89
7.6. Failure to Notify Merger and Acquisition........................................90
8. ASSESSMENT BASED ON TURKISH CODE OF CORPORATE TAX...92
8.1. MERGERS.......................................................................................92
8.1.1. Place in Code of Corporate Tax.................................................92
8.1.2. Arrangements Regarding Liquidity...........................................93
8.1.3. Merger Period............................................................................96
8.1.4. Merger Profit.............................................................................97
8.1.4.1. 1st Argument on Merger Period.........................................97
8.1.4.2. 2nd Argument on Merger Period......................................100
8.1.5. Payment of Corporate Tax on Merger Profit...........................101
8.1.6. Examples Regarding Merger Profit Calculation.....................102
8.1.6.1. Case 1: Acquired Company and Acquiring Company Has
No Subsidiary Relationship...........................................................102
8.1.6.2. Case 2: Acquired Company Is a Subsidiary of Acquiring
Company........................................................................................106
8.1.6.3. Case 3: Acquiring Company Is a Subsidiary of Acquired
Company........................................................................................110
8.1.7. Taxation After Merger.............................................................113
8.1.7.1. Taxation for Acquired Company......................................114
8.1.7.2. Taxation for Acquired Company Shareholders................114
8.1.7.3. Taxation for Acquiring Company.....................................115
8.1.8. Issues Related to After Merger Period.....................................115
8.2. ACQUISITION...............................................................................117
8.2.1. Place in Code of Corporate Tax...............................................117
8.2.2. Examples Regarding Acquisition Transaction........................120
8.2.2.1. Case 1: Acquisition Parties Have No Subsidiary
Relationship...................................................................................120
8.2.2.1.a. View 1: Exchange Ratio Calculated Using Current
Values........................................................................................121
8.2.2.1.b. View 2: Exchange Ratio Calculated Using Book Values
of Equity....................................................................................124
8.2.2.2. Case 2: Acquisition Transaction Is Among Parties Having
Subsidiary Relationship.................................................................125
8.2.3. Capital Market Board Communique Serial:1 No:31...............126
8.2.4. Corporate Tax Communique Serial No: 67.............................130
8.3. DIVISION.......................................................................................133
8.3.1. Full Division............................................................................134
8.3.1.1. Examples Regarding Full Division Transaction...............136
8.3.1.2. The Results of Full Division for the Shareholders of Divised
Company........................................................................................142
8
8.3.1.2.a. For Real Person Shareholders....................................142
8.3.1.2.b. For Legal Person Shareholders..................................144
8.3.2. Partial Division........................................................................144
8.3.2.1. Communique About Partial Division (Propagated by
Ministry of Finance and Ministry of Industry and Trade).............146
8.3.2.2. Cases Regarding Partial Division.....................................146
8.4. EXCHANGE OF SHARES............................................................150
8.4.1. Place in Code of Corporate Tax...............................................150
8.4.2. Examples Regarding Exchange of Shares Transaction...........151
9. ASSESSMENT BASED ON OTHER TAX LAWS...................................154
9.1. Code of Value Added Tax Implications.........................................154
9.1.1. Value Added Tax in Merger Transaction................................154
9.1.2. Value Added Tax in Full Division Transaction.......................155
9.1.3. Value Added Tax in Partial Division Transaction...................156
9.1.4. Value Added Tax in Exchange of Shares Transaction............156
9.2. Tax Procedure Law Implications....................................................157
9.3. Stamp Law and Charges Law Implications....................................157
9.4. Private Consumption Tax Implications..........................................157
9.5. Other Taxation Implications...........................................................158
9.5.1. Loss Deduction........................................................................158
9.5.2. Investment Allowances, Rigths and Priveleges.......................159
10. ASSESSMENT BASED ON ACCOUNTING APPLICATIONS............160
10.1. General View on Accounting Applications in Turkey.................160
10.2. Relationship Between Turkish Accounting Standards and Tax
Legislation.............................................................................................161
10.2.1. Business Combinations in Turkish Financial Reporting
Standard 3..........................................................................................161
10.2.1.1. Aim of TFRS 3...............................................................161
10.2.1.2. Scope of TFRS 3.............................................................162
10.2.1.3. Definition of Business Combination..............................162
10.2.1.4. Accounting Methods.......................................................163
10.2.1.5. Purchase Method............................................................163
10.2.1.6. Identifying Acquiring Company.....................................164
10.2.1.7. Determining Cost for Business Combination.................166
10.2.1.8. Allocation of “Cost for Business Combination” to
Acquired Assets, Liabilities and Contingent Liabilities Assumed 169
10.2.1.9. Goodwill.........................................................................171
10.2.1.10. A Special Case: Acquirer Company’s Share in Net
Realizable Value of Acquiree Company Assets, Identifiable Assets,
Liabilities and Provisional Liabilities Exceeds The Cost of Business
Combination..................................................................................172
10.2.1.11. Business Combination Achieved in Stages (Step
Acquisitions)..................................................................................172
10.2.1.12. Initial Accounting and Adjustment of Provisional
Accounts........................................................................................173
10.2.1.13. Adjusments After Initial Accounting............................173
10.2.1.14. Recognition of Deferred Tax Assets After Initial
Accounting is Complete................................................................174
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