A due diligence lawyer in Turkey verifies what the seller claims against what the official records actually show, before the share transfer is signed and the liabilities become yours.
Every acquisition starts with a story. The seller describes a clean company: no litigation, no tax exposure, contracts in order, licences current. That story may well be accurate. The question is whether anyone has checked it against the trade registry, the share ledger, the court records and the tax file, and whether the checking happened before or after the price was agreed.
This is the work of legal due diligence in a Turkish share purchase, and it is narrower and more specific than the phrase suggests. Buyers arriving from other jurisdictions often ask a version of the same question first. What does a due diligence lawyer actually do that an accountant or a broker cannot? A lawyer verifies legal title to the shares, examines the enforceability of the contracts that generate the revenue, and searches the litigation and enforcement records in the company’s name. Financial analysis measures what the company earned; legal review establishes whether the company is entitled to keep earning it, and whether that entitlement survives a change of owner.
The second question is almost always about timing. When is it too early to bring a lawyer in? It rarely is. The most expensive findings are the ones that arrive after the price has been fixed, because a discovery made before the letter of intent reshapes the offer, while the same discovery made two weeks before closing can only be absorbed or argued about. A review that begins early is cheaper in every sense, including the sense that matters most, which is that a buyer who learns early still has the option of walking away.
Foreign buyers also ask which parts of the Turkish system are likely to surprise them. Which findings most often change a deal? Undisclosed litigation, unpaid tax and social security liabilities, and contracts containing change of control clauses. The last of these is the one buyers underestimate: a company can be entirely solvent, fully compliant, and still lose its largest customer contract on the day its ownership changes, because the contract permits it.
And there is the question underneath all the others, the one about whether any of this is required at all. How much of this is legally mandatory in Turkey? Almost none of it. Turkish law does not compel a buyer to investigate the company being purchased, which is precisely why the investigation carries weight: what the law leaves optional, the market treats as the difference between a priced risk and an inherited one.
⚖️ What Does a Due Diligence Lawyer Check Before You Buy a Turkish Company?
A due diligence lawyer in Turkey examines five categories of record: corporate documents held at the trade registry and in the company’s own books, litigation and enforcement records filed against the company, tax and social security standing, the contracts that carry the business, and the licences that permit it to operate. Each category answers a different question, and a gap in any one of them can change what the buyer is willing to pay.
The corporate file establishes something buyers assume rather than verify: that the person selling the shares actually owns them. In Turkish practice this is not a formality. Share ownership is recorded in the company’s share ledger, and the ledger does not always agree with what the trade registry shows, or with what the seller believes. A transfer made years earlier without the required formalities can leave a chain of ownership that looks settled and is not.
Litigation searches cover proceedings the company has brought and proceedings brought against it, together with enforcement files and any attachments registered over company assets. Sellers do not always conceal these; more often they genuinely do not track the smaller ones, particularly employment claims that have been running quietly for years.
The contract review is where legal work separates most clearly from financial work. An accountant reads the revenue a contract produced last year. A lawyer reads the term, the termination rights, the assignment restrictions and the change of control provision, and asks whether that revenue is still there in twelve months under a new owner. Those are different questions about the same page.
Licensing is the category that varies most by sector. Some permits transfer with the company automatically because the company holds them and the company continues to exist. Others are tied to the identity of the shareholders or the managers and require fresh application, which means the buyer acquires an operating business that cannot lawfully operate until a new file is approved.
⚖️ When Should the Lawyer Come In, Before or After the Letter of Intent?
Before, in most transactions. A letter of intent fixes the price and the deal structure, and both become considerably harder to move once signed, even where the document is expressed as non-binding. Findings that arrive before that point are negotiating material; findings that arrive after it are problems.
The sequence that works in practice is short. The buyer identifies the target and signs a confidentiality agreement. A preliminary legal review runs on publicly available records, which in Turkey means the trade registry file and the searchable litigation and enforcement databases. That review is inexpensive and often decisive, because the most serious problems tend to be visible from outside the company. Only then does the letter of intent get drafted, with a price that reflects what the preliminary review found and a structure that leaves room for what the full review might still uncover.
There is a version of this that goes wrong reliably. A buyer negotiates hard on price for two months, signs a letter of intent at a number they are pleased with, and then instructs a lawyer to confirm that everything is in order. The lawyer finds an unpaid tax assessment, a disputed shareholding, or a supply contract that terminates on transfer. The buyer now has three options and dislikes all of them: absorb the risk, reopen a negotiation they thought was closed, or withdraw and write off two months.
Sophisticated acquirers treat the legal review as part of pricing rather than as confirmation of it. The distinction sounds procedural and is not: it determines whether the buyer is negotiating from information or from hope.
⚖️ Legal Due Diligence Is Not Financial Due Diligence
Foreign buyers approaching the Turkish market encounter both terms, frequently from the same advisory firm, and the overlap in language hides a real division of labour. Financial due diligence is the work of certified public accountants and audit firms: examining the books, testing the accounting treatment, assessing tax compliance from the filings, and confirming that the numbers presented describe the business that exists. Legal due diligence is the work of lawyers: verifying title, reading contracts for enforceability and transfer risk, searching litigation and enforcement records, and confirming regulatory standing.
Neither substitutes for the other, and the seam between them is where problems hide. A tax liability appears in the accounts as a provision, which is a financial fact; whether the underlying assessment can still be challenged, and who bears it after closing, is a legal question. A customer contract appears in the accounts as recurring revenue; whether it survives a change of shareholder is a matter of what the contract says. Reading only one side of that seam produces a confident and incomplete picture.
There is also a practical reason for the division that has nothing to do with expertise. Certain searches in Turkey are conducted by lawyers acting in that capacity, using access that is not generally available to advisers without a bar licence. A consultancy can review documents the seller provides. It cannot independently verify what the seller has not provided, and the gap between those two activities is the entire point of the exercise.
This page addresses corporate and share purchase due diligence. Real estate acquisitions follow a separate review process built around title deed records, encumbrances, zoning and construction permits, and that work is covered in our page on legal due diligence for real estate in Turkey. Where a transaction involves both, such as the purchase of a company whose principal asset is property, the two reviews run in parallel and neither replaces the other.
Looking at a Turkish target and unsure what has already been checked?
A preliminary review of the public records usually takes a few days and often settles the question before the full process begins.
⚖️ Corporate Records: Establishing Who Actually Owns the Company
Verifying share ownership in a Turkish company requires reading the share ledger, the trade registry file and the historical transfer documents together, because each records a different stage of the same transaction and any of them can be incomplete. The Turkish Commercial Code (TCC) No. 6102 sets different formalities for the two main company types, and the difference determines what a buyer needs to see.
In a limited liability company (limited şirket), the Turkish Commercial Code Article 595 requires the share transfer agreement to be made in writing with the signatures certified by a notary. Turkish courts have treated this as a validity requirement rather than a procedural preference: a transfer executed without notarial certification is void, not merely defective. A buyer examining a chain of ownership that includes an uncertified transfer is looking at a seller who may not hold what they are selling.
Limited liability company transfers also require approval by the general assembly of shareholders unless the articles of association provide otherwise. The Turkish Commercial Code Article 595/7 supplies a fallback: if the transfer is notified to the company and the general assembly does not issue an express refusal within three months, approval is deemed given. That three month window is worth checking in any chain where a historical transfer was notified but no approval resolution appears in the company records.
In a joint stock company (anonim şirket), the Turkish Commercial Code Article 490 establishes the opposite default: registered shares transfer freely unless the law or the articles of association restrict them. The restriction possibility matters more than the freedom. Articles can make transfers subject to board approval, and where they do, a transfer completed without that approval does not give the acquirer enforceable shareholder status. The distinction between the two company forms is examined further in our comparison of limited and joint stock companies in Turkey.
The share ledger carries independent weight in a joint stock company. A transfer is effective against the company only when the acquirer is entered in the ledger, which means a buyer who completes payment and receives share certificates but is never registered has a claim against the seller rather than rights against the company. Buyers verify the ledger entry as a closing condition, not as a post-closing formality.
| Requirement | Limited liability company | Joint stock company |
|---|---|---|
| Form of transfer | Written agreement with notarised signatures (TCC Art. 595); absence renders the transfer void | Endorsement and delivery of registered share certificates, or written assignment where no certificate exists |
| Corporate approval | General assembly approval required unless the articles provide otherwise; deemed given if no express refusal within three months | Free by default (TCC Art. 490); approval required only where the articles restrict transfer |
| Share ledger entry | Required; transfers and their nominal values are recorded in the ledger | Required for the transfer to be effective against the company |
| Trade registry filing | Registered and announced; declaratory rather than constitutive | Not registered for ordinary share transfers |
| Main risk found in review | Historical transfer without notarial certification, breaking the ownership chain | Transfer completed without an approval the articles required, leaving the acquirer without enforceable status |
Registration of a completed transfer at the trade registry is declaratory rather than constitutive, meaning the transfer is valid between the parties without it. Its function is third party effect: an unregistered transfer cannot be asserted against third parties who relied on the registry. For an acquirer this cuts both ways, and the historical registry file is read for what it omits as much as for what it records.
⚖️ Change of Control: The Clause That Can Erase What You Are Buying
A change of control clause allows a contracting party to terminate the agreement, or to require renegotiation, when the ownership of the other party changes. In a share purchase the company itself continues to exist and its contracts remain in its name, which is why buyers assume the revenue transfers automatically. The clause is the reason that assumption fails.
The mechanism is straightforward and the consequence is not. A buyer acquires a company on the strength of its customer base. The largest customer contract, representing a substantial share of revenue, contains a provision permitting termination on a change of shareholder. The day after closing, that customer is entitled to walk. Nothing has been concealed and nothing unlawful has occurred; the contract was always available for reading.
Supply agreements, distribution and agency arrangements, franchise contracts, credit facilities and commercial leases are the categories where these provisions appear most often. Banking documentation deserves particular attention, because acceleration of a credit facility on change of control converts a manageable debt schedule into an immediate obligation at the least convenient moment.
Identifying the clause is the beginning of the work rather than the end of it. Where a material contract carries a change of control provision, the practical options are to seek the counterparty’s consent before closing, to adjust the price for the risk, or to make consent a condition precedent so that the transaction does not complete until the position is resolved. Which option fits depends on the leverage the buyer has and on how much of the business rests on that single agreement. The contractual architecture around these questions is discussed further in our page on contract law advice in Turkey.
Intellectual property registration belongs in the same review for a related reason. In closely held Turkish companies the trademark under which the business trades is sometimes registered in the name of the founder personally rather than the company. The buyer acquires the company, the founder retains the mark, and the brand the buyer thought they were purchasing stays with the seller.
⚖️ Liabilities That Travel With the Shares
In a share purchase the buyer acquires the company as it stands, which means every obligation the company carries transfers with it whether or not the buyer knew about it. This is the structural feature that makes the review worth its cost, and it distinguishes a share purchase from an asset purchase, where the buyer selects what to take.
Tax exposure is the category that most often exceeds expectations. Turkish tax assessments remain open to examination for a period after the relevant tax year, so a company acquired today can receive an assessment relating to a period before the buyer had any involvement with it. The provision in the accounts reflects what the seller expects to pay; the review establishes what the authorities are still entitled to claim. Related planning questions are addressed in our page on tax consultancy for investment in Turkey.
Employment liabilities accumulate quietly and surface at once. Severance entitlement in Turkey builds with length of service and crystallises on termination, which means a workforce with long average tenure carries a substantial contingent obligation that appears nowhere in the monthly accounts. The review quantifies accrued severance exposure, identifies employees whose contracts contain unusual terms, and checks for pending or threatened employment claims.
Social security compliance sits alongside this. Unpaid social security premiums attract statutory interest and remain the company’s obligation after transfer, and the underlying records also reveal whether the declared workforce matches the actual one, which is a separate and sometimes larger problem.
Litigation exposure is assessed by volume and by pattern rather than by individual file. Three unrelated commercial disputes over five years describe an active company. Twelve claims from former employees over the same period describe something about how the company is run, and the pattern is more informative than any single case. Where disputes are already in progress at the time of transfer, our page on commercial litigation in Turkey covers the procedural position an acquirer inherits.
⚖️ Regulatory Clearances Required Before Closing
Certain Turkish acquisitions cannot lawfully complete without prior regulatory clearance, and closing without it carries consequences that reach beyond a penalty. A transaction requiring Competition Board approval and completed without it does not acquire legal validity, which means the buyer may have paid for a transfer that has not legally occurred.
The thresholds changed materially in 2026. The amendment published in the Official Gazette on 11 February 2026 (issue 33165) as Communiqué No. 2026/2, amending Communiqué No. 2010/4 on Mergers and Acquisitions Requiring the Approval of the Competition Board, raised the notification thresholds substantially. Under the current position, notification is required where the combined Turkish turnover of the transaction parties exceeds 3 billion Turkish lira and the individual Turkish turnover of at least two parties each exceeds 1 billion Turkish lira. An alternative threshold applies where the Turkish turnover of the transferred asset or business exceeds 1 billion Turkish lira and the worldwide turnover of at least one other party exceeds 9 billion Turkish lira. The current text is published by the Turkish Competition Authority (Rekabet Kurumu).
The practical effect of the 2026 increase is that a substantial number of mid market transactions that would previously have required notification now fall outside it. Buyers working from pre 2026 guidance are at risk of preparing for a filing they no longer need, which costs time, or of applying an outdated arithmetic and reaching the wrong conclusion in the other direction.
Technology undertakings are treated separately. Where a transaction involves a technology undertaking resident in Turkey, a lower single threshold of 250 million Turkish lira applies, and the sectors covered include digital platforms, software, financial technology, biotechnology, pharmacology, agricultural chemicals and health technologies. A transaction well below the general thresholds can still require clearance if the target falls within this definition.
Foreign investment notification runs on a separate track and is frequently overlooked because it is not a permission. Under Foreign Direct Investment Law No. 4875, Turkey replaced the former permission and approval regime with an information regime. Where a foreign investor acquires shares in a wholly domestic Turkish company and the company consequently falls within the scope of the Law, the implementing regulation requires the share transfer information to be notified to the General Directorate of Incentive Implementation and Foreign Investment within one month of the transfer, submitted through the E-TUYS electronic system. The Law also defines the acquisition of at least 10 percent of shares or voting rights through a stock exchange as direct foreign investment, while acquisitions outside an exchange fall within scope regardless of percentage.
Sector specific clearances sit above both of these. Banking, insurance, energy, telecommunications, aviation and defence related activities involve their own regulators and their own approval requirements for changes in shareholding, and those requirements apply independently of whether competition clearance is needed. Ongoing obligations after completion are addressed in our page on corporate compliance in Turkey.
⚖️ From Findings to Contract Terms
A due diligence report that is read once and filed has produced no value. The findings earn their cost when they change the share purchase agreement, and the translation from finding to clause is the part of the process buyers most often leave incomplete.
Representations and warranties convert what the seller has told the buyer into contractual statements with consequences attached. Where the review has identified a specific area of uncertainty, the corresponding warranty is drafted specifically rather than generally: a general warranty that the company has complied with applicable law is worth considerably less than a warranty addressing the particular tax period, the particular licence or the particular claim that the review flagged.
Indemnities operate differently and are used for identified risks rather than unknown ones. Where the review has found a disputed tax assessment or a pending claim, a specific indemnity places that defined exposure on the seller regardless of the warranty position, and the negotiation moves to scope and duration rather than to whether the risk exists.
Escrow arrangements address the enforcement problem rather than the drafting problem. A warranty is only worth what can be recovered under it, and recovery from a seller who has taken the proceeds and left the jurisdiction is a theoretical remedy. Retaining part of the consideration for an agreed period gives the buyer a fund to claim against and gives the seller a defined end point.
Conditions precedent handle findings that must be resolved before completion rather than compensated afterwards. A missing regulatory clearance, an unresolved gap in the share transfer chain, or a required counterparty consent belongs in this category, because these are problems that cannot be priced. Where a defect cannot be cured, the buyer’s remaining options are a price reduction that reflects the risk or a decision not to proceed, and a review that arrives early enough preserves both.
Price adjustment is the most direct route and the one buyers reach for first. It works cleanly for quantifiable exposures such as accrued severance or an assessed tax liability. It works poorly for contingent risks whose magnitude depends on events that have not happened yet, which is why the other mechanisms exist. Where the parties’ longer term relationship continues after closing, the allocation of these risks connects to the arrangements discussed in our page on shareholder agreements in Turkey.
⚖️ How the Review Runs and How Long It Takes
A corporate due diligence review in Turkey typically runs between two and six weeks, and the variable that moves the timeline most is not the size of the target but the condition of its records. A company with organised corporate books and a responsive management team completes at the shorter end. A company whose share ledger has gaps, whose contracts are held in several places and whose management treats each request as an intrusion takes considerably longer.
The process begins with an information request list prepared against the specific transaction rather than from a template. The list covers corporate documents, the share ledger and transfer history, material contracts, employment records, tax and social security filings, licences and permits, litigation files, and details of any security granted over company assets.
Independent searches run in parallel with the seller’s disclosure and are the part of the exercise that distinguishes verification from review. Trade registry records, litigation and enforcement databases, and registered security interests are examined directly, because the purpose is to establish what exists rather than to organise what the seller has chosen to provide. Discrepancies between the two sets of information are themselves a finding, and sometimes the most significant one.
The report separates findings by materiality rather than listing everything discovered at equal weight. A useful report tells the buyer which three items should change the transaction, which items require a warranty, and which items are noted for completeness and require nothing. A report that treats an unregistered trademark and a minor filing irregularity as equivalent has transferred the analysis back to the buyer.
Remote execution is standard. Turkish corporate due diligence can be conducted without the buyer travelling to Turkey: document collection, registry searches, record examination and reporting are handled by the Istanbul based team, with findings delivered in English. Where the buyer’s signature is required at completion, a power of attorney executed before a notary in the buyer’s own country and legalised under the Apostille Convention allows the transaction to proceed without attendance. The broader remote engagement model is described in our page on mergers and acquisitions in Turkey.
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Whether you are evaluating a Turkish target, negotiating a share purchase agreement, or reviewing findings that arrived later than you would have liked, our corporate lawyers in Istanbul advise foreign acquirers at each stage of the transaction.
Every acquisition begins with a story the seller tells, and the story is usually close to true. Due diligence is not an expression of distrust; it is the process by which a buyer converts a description into a set of verified facts, and then converts those facts into contractual terms that hold if the description turns out to have been incomplete. The company that looks sound on the day of signing and the company that is sound are often the same company. The review is how a buyer stops needing to assume it.