In Turkish M&A practice, representations and warranties in a share purchase agreement are among the most heavily negotiated provisions in the entire deal. Price matters, structure matters, and regulatory approvals matter, but the representations and warranties package is often where the real legal and economic allocation of risk takes place. A buyer wants comfort that the target company is what the seller says it is. A seller wants to give enough comfort to close the deal, but not so much that the agreement becomes an unlimited insurance policy for every past problem the business may ever face. Under Turkish law, that negotiation takes place within a legal framework built primarily on the Turkish Code of Obligations, the Turkish Commercial Code, and, where the transaction is large enough, merger-control rules that can affect closing mechanics.
For that reason, representations and warranties in Turkish share purchase agreements should not be viewed as imported common-law clauses with no local legal foundation. On the contrary, Turkish law gives parties broad room to define their contractual risk allocation, while at the same time imposing important limits where mandatory rules, public policy, or gross fault are involved. The Turkish Code of Obligations expressly states that parties are free to determine the content of a contract within the limits of the law, but it also provides that agreements contrary to mandatory law, morality, public order, personality rights, or impossibility are absolutely null. That combination of contractual freedom and mandatory-law limits is the core reason why Turkish SPA warranty packages are both highly negotiable and legally structured.
A well-drafted Turkish SPA therefore does much more than state that the seller owns the shares and that the company exists. It usually identifies which risks are being affirmatively promised away by the seller, which risks are carved out through disclosure, which breaches will trigger indemnity-style recovery, how long claims may survive, whether the buyer must notify claims quickly, how liability will be capped, and whether some matters are so fundamental that no contractual limitation should apply. Those choices are commercial, but they sit on top of Turkish statutory concepts such as non-performance, defect liability, known defects, limitation rules, and invalidity of clauses that attempt to exclude liability for gross fault.
Why representations and warranties matter so much in Turkish share deals
The reason representations and warranties are especially important in a Turkish share purchase agreement is structural. In a share sale, the buyer is not usually acquiring selected assets only. It is acquiring the shares of a company that continues to exist with its own legal history, contracts, liabilities, employees, tax profile, licenses, and compliance record. The Turkish investment framework confirms that international investors may acquire shares in Turkish companies under the same basic share-transfer conditions applicable to local investors, which is one reason share deals remain a standard acquisition route in Türkiye. But that same continuity means the buyer inherits the legal shell of the target rather than a freshly assembled asset package.
That continuity makes warranty protection commercially central. If the company later turns out to have undisclosed tax exposure, defective corporate approvals, missing permits, unlawful data practices, labor-law liabilities, or unreported litigation, the problem generally sits inside the same company the buyer has purchased. The Investment Office’s Legal Guide highlights just how broad the legal risk profile of a Turkish business can be by specifically identifying labor law, property rights, environmental law, competition law, public procurement, and personal data protection as relevant parts of the Turkish legal environment. In other words, a Turkish share purchase is rarely just a title transfer; it is a transfer of legal history.
This is why Turkish SPAs usually distinguish between fundamental warranties and business warranties. Fundamental warranties often cover title to shares, authority, capacity, organization, and absence of encumbrances. Business warranties more commonly address accounts, material contracts, litigation, tax, employment, permits, IP, data protection, and compliance. That distinction is a drafting convention rather than a statutory category, but it reflects the legal reality that some promises go to the existence and ownership of the transaction itself, while others go to the operating condition of the company being sold. Turkish law allows the parties to build that distinction contractually because the content of the agreement may be freely determined within legal limits.
The legal basis under Turkish law
The most important statutory starting point is Article 26 of the Turkish Code of Obligations, which provides that the parties may freely determine the contents of their contract within the limits prescribed by law. Immediately after that, Article 27 states that contracts contrary to mandatory provisions, morality, public order, personality rights, or impossibility are null. For SPA drafting, these two provisions do the heavy conceptual work. They explain why detailed, negotiated warranty regimes are possible under Turkish law, and also why not every liability exclusion or seller-friendly disclaimer will necessarily be enforceable.
The next key provisions are the general rules on breach. Article 112 states that if an obligation is not performed at all or is not duly performed, the obligor must compensate the loss unless it proves absence of fault. Article 114 adds that the debtor is generally liable for all fault, and that tort-law principles apply by analogy to contractual breach. These provisions matter because a breach of a contractual representation or warranty in a Turkish SPA is, at bottom, a matter of contractual non-performance unless the parties have created a special remedial regime in the agreement.
Turkish law also sets important limits on advance exclusions of liability. Article 115 provides that an agreement excluding liability for gross fault in advance is absolutely null, and it also restricts exclusions for certain professional or licensed activities. In the sales context, Article 221 states that any agreement eliminating or limiting the seller’s liability for defects is absolutely null if the seller was grossly at fault in transferring the sold asset as defective. These rules are highly relevant in M&A drafting because they mean a Turkish SPA cannot safely assume that every disclaimer, every “as is” clause, or every broad seller exclusion will stand regardless of the seller’s conduct.
Contractual warranties and statutory sale liability are related but not identical
One of the most important drafting points in Turkish transactions is that contractual representations and warranties and statutory defect liability are related, but they are not the same thing. Article 219 of the Turkish Code of Obligations states that the seller is liable not only where characteristics specifically communicated to the buyer are absent, but also where the sold item contains material, legal, or economic defects that remove or substantially reduce its value or the benefit expected by the buyer. It also says the seller is liable even if unaware of the defect. This provision is often discussed in ordinary sale law, but its logic still matters in share deals because it shows that Turkish law already recognizes liability tied to stated qualities and undisclosed defects.
Even so, M&A lawyers rarely rely only on the statutory default regime. Instead, they usually build a bespoke SPA warranty package that is more precise than Article 219 alone. The reason is simple. A share acquisition presents risks far more complex than a standard movable-goods sale. The parties typically want tailored rules for tax audits, litigation, environmental matters, employment obligations, data protection, compliance breaches, and post-signing events. Turkish law permits that contractual refinement because Article 26 allows the parties to shape the contents of the agreement.
The Turkish statutory rules on known defects also influence SPA drafting. Article 222 provides that the seller is not liable for defects known by the buyer at the time of the sale, and that the seller is not liable for defects the buyer could have discovered through sufficient inspection unless the seller separately undertook that no such defect existed. Article 223 adds that the buyer must inspect the sold item as soon as reasonably possible and notify the seller within an appropriate period if a defect is found; otherwise the item is deemed accepted, subject to the latent-defect exception. These provisions are one of the legal reasons why disclosure letters, due diligence, knowledge qualifiers, and notice clauses are so important in Turkish SPAs.
In practical drafting terms, this means Turkish sellers usually want broad disclosure language and strong anti-sandbagging style arguments, while Turkish buyers usually try to preserve claims even if issues were not fully apparent from diligence materials. The Code itself does not use common-law labels such as “sandbagging,” but Articles 222 and 223 show that buyer knowledge and defect notice are already part of Turkish statutory logic. That makes careful drafting essential when the parties want a warranty regime that differs from, supplements, or clarifies the default framework.
What representations usually cover in a Turkish SPA
In Turkish share purchase agreements, the first category is usually fundamental representations and warranties. These often include the seller’s title to the shares, authority and capacity to enter into the transaction, valid existence of the company, accuracy of corporate records, and absence of undisclosed pledges, usufruct rights, or transfer restrictions affecting the shares. These issues are especially important because Turkish share-transfer mechanics depend on company form. For joint stock companies, the Turkish Commercial Code states that registered shares are transferable without restriction unless the law or the articles of association provide otherwise. For limited liability companies, by contrast, share transfers must be in writing, signatures must be notarized, and—unless the articles provide otherwise—general assembly approval is required for validity.
That corporate-law background directly affects warranty drafting. In a Turkish JSC share sale, a buyer may want warranties confirming that the articles do not contain unusual transfer restrictions, that share certificates have been properly issued where relevant, and that the seller has power to transfer good title. In an LLC transaction, the buyer usually wants even more precise warranties around the share ledger, articles of association, notarization, existing pre-emption rights, side arrangements among quotaholders, and the validity of past transfers. This is a good example of how Turkish representations and warranties are not abstract boilerplate; they must be adapted to the company type being sold.
The second category is usually business warranties. These commonly address financial statements, tax compliance, material contracts, real estate, permits, litigation, labor matters, intellectual property, data protection, competition compliance, and regulatory status. The breadth of these warranties mirrors the breadth of Turkish legal risk areas identified in the Investment Office’s Legal Guide, which specifically points investors toward labor law, property rights, environmental law, competition law, public procurement, and personal data protection. Where the target processes personal data, the Turkish Personal Data Protection Law applies to natural and legal persons processing personal data by automated means or as part of a filing system, which is why data-protection warranties are now a routine feature in many Turkish SPAs.
Where the target has foreign investors or foreign counterparties, SPA warranties may also address post-closing formalities. The Investment Office states that foreign-issued documents to be used in Türkiye generally require notarization and apostille or Turkish consular ratification, followed by official translation and Turkish notarization, and it also notes that FDI-related forms such as the FDI Share Transfer Data Form are submitted electronically via E-TUYS. These rules do not transform every SPA warranty into an FDI clause, but they do explain why foreign-led Turkish transactions often include warranties on corporate authority documents, validity of apostilled materials, and compliance with post-closing reporting obligations.
Disclosure, knowledge qualifiers, and disclosure letters
A disclosure letter is one of the most important companions to a Turkish SPA warranty package. Strictly speaking, the Turkish statutes do not require that the disclosure document be called by that name. But the logic of Articles 222 and 223 strongly supports the need for a carefully structured disclosure mechanism because Turkish law already cares about what the buyer knew or should have known, and whether defects were communicated appropriately. A disclosure letter allows the seller to say: these warranties are given, but subject to the exceptions specifically disclosed here.
Knowledge qualifiers also matter for similar reasons. Turkish SPA drafting often distinguishes between matters warranted absolutely and matters warranted “so far as the seller knows” or “to the best knowledge of the management.” These formulations are not themselves statutory categories, but they are a contractual method of defining the scope of the promise under Article 26. At the same time, Turkish mandatory-law limits remain relevant, especially where a seller acted with gross fault or actively concealed serious problems. That is why knowledge qualifiers must be drafted carefully: they can narrow a promise, but they cannot reliably sanitize bad-faith conduct.
From the buyer’s side, the core concern is whether disclosed material is truly sufficient to qualify the warranty. From the seller’s side, the core concern is whether disclosed material should bar a later claim. Turkish law does not provide a single SPA-specific statutory formula for this debate. Instead, the answer depends on the wording of the agreement, the disclosure record, the nature of the defect, and the background rules on known defects and notice. That is one reason why well-organized data rooms, disclosure bundles, and clearly cross-referenced schedules are so important in Turkish M&A.
Survival periods and limitation periods
Another central issue in representations and warranties in Turkish share purchase agreements is how long claims survive. Turkish law contains both a general and a specific limitation structure. Article 146 of the Turkish Code of Obligations states that, unless the law provides otherwise, claims are subject to a ten-year limitation period. But Article 231 provides a specific two-year limitation period for claims arising from defect liability in sales, unless the seller has assumed a longer period, and also states that a seller who transferred the sold asset defectively with gross fault may not benefit from the two-year period.
This is precisely why Turkish SPAs almost always include their own survival regime. The parties may not want fundamental title warranties to expire as quickly as operational warranties. They may want tax warranties to survive through the end of the audit or reassessment cycle, and employment or social-security warranties to survive longer than ordinary commercial warranties. Turkish law gives the parties significant room to design such a regime, but the drafting should be clear about whether the contractual survival period is intended to replace, extend, or merely supplement default statutory periods.
Notice mechanics also matter. Because Article 223 links recovery to prompt notice of defects under the default sales regime, Turkish SPA practice often sets out its own claim-notice procedure: when the buyer must notify, what the notice must contain, whether estimated quantum is required, and whether failure to notify in time bars the claim. These provisions are particularly important where the parties want to avoid uncertainty about whether the statutory “appropriate period” standard has been met.
Indemnities, damages, and contractual liability tools
In Turkish deal practice, representations and warranties rarely stand alone. They are usually linked to a contractual indemnity-style recovery regime. Turkish law does not prohibit the parties from creating such a regime; indeed, the general breach provisions support it. Article 112 provides the general basis for compensation where an obligation is not performed or not duly performed, while Article 114 sets the default rule that the debtor is generally liable for all fault. This means a seller’s breach of warranty can be connected to an agreed claim process, agreed loss definition, and agreed allocation of recoverable damage.
Turkish law also expressly recognizes penalty clauses. Article 179 states that if a penalty has been agreed for non-performance or improper performance, the creditor may, unless the contract indicates otherwise, demand either performance of the obligation or the penalty. Article 180 adds that the agreed penalty is due even if no actual damage was suffered, though additional loss above the penalty generally requires proof of fault. These provisions are relevant because some Turkish SPAs use liquidated-payment logic, penalty clauses, or specific agreed payments for certain breaches such as failure to close, breach of exclusivity, or breach of post-closing covenants.
At the same time, there are enforceability limits. Articles 115 and 221 make clear that advance exclusions of liability for gross fault are invalid in their respective contexts. As a result, broad seller language such as “buyer waives all remedies whatsoever” or “seller shall have no liability for any inaccurate statement” may not be enforceable if the facts amount to gross fault or intentional concealment. For that reason, sophisticated Turkish SPA drafting often distinguishes between ordinary warranty breaches, specific indemnity matters, and fraud or gross-fault carveouts.
Caps, baskets, de minimis thresholds, and other contractual limits
One of the reasons Turkish SPA warranty drafting can be so technical is that the parties usually do not negotiate only whether a warranty exists; they also negotiate how liability is limited. Market-standard mechanisms such as liability caps, de minimis thresholds, baskets, time bars, and carveouts are generally consistent with Turkish contractual freedom, provided they do not violate mandatory rules. The legal basis for that flexibility is again Article 26, while the legal warning sign is Article 27 and the mandatory invalidity rules tied to gross fault.
A common structure is to apply a lower cap and shorter survival period to ordinary business warranties, while leaving fundamental warranties uncapped or subject to a much higher cap and longer survival. Buyers often push for separate treatment of tax, employment, bribery, sanctions, environmental, or data-protection matters, especially where the target operates in a heavily regulated sector. Sellers, by contrast, typically want one integrated liability system with as many quantitative limits as possible. Turkish law allows the parties to design these distinctions contractually, but the drafting must remain consistent with the non-waivable limits described above.
Closing mechanics, bring-down concepts, and regulatory conditions
Representations and warranties in a Turkish SPA also interact with the signing-to-closing period. In some transactions, signing and closing happen simultaneously. In others, closing is deferred pending corporate approvals, third-party consents, financing, or competition clearance. Turkish competition law is especially relevant here. Communiqué No. 2010/4 states that notifiable mergers and acquisitions require notification and Board authorization in order to gain legal validity, and the filing form and supporting documents must be submitted completely and accurately. In a transaction that needs clearance, the SPA commonly includes conditions precedent tied to merger approval and may require that key warranties remain true at closing.
This is where Turkish-style bring-down logic usually appears, even if the agreement does not use that exact common-law label. The parties may agree that certain representations must be true both on signing and on closing, or that only fundamental warranties must be repeated at closing while ordinary business warranties are qualified by material adverse changes or updated disclosures. The precise structure is contractual, but the need for it often comes from the legal gap between signing and a later closing event such as Competition Board approval.
How due diligence should shape the warranty package
A Turkish SPA should never be drafted as if due diligence did not happen. The Investment Office’s Legal Guide shows how wide the relevant diligence field can be by listing labor law, property rights, competition law, environmental law, public procurement, and personal data protection among the key legal topics for investors. That list helps explain why the strongest Turkish warranty packages are closely aligned with the actual diligence findings. A company with real-estate-heavy operations needs a different warranty focus from a software company processing sensitive personal data or a regulated business facing licensing constraints.
This relationship between diligence and warranties is also important because of Article 222’s known-defect rule. If a matter is fully disclosed and the buyer knowingly accepts it, the seller’s liability position becomes stronger. If, however, the seller gives a clean warranty despite knowing of a problem, the buyer’s claim position strengthens, especially where gross fault is involved. In Turkish practice, the best approach is usually not to overload the SPA with abstract promises, but to create a tailored warranty schedule that mirrors the real risk profile uncovered during diligence.
Conclusion
Representations and warranties in Turkish share purchase agreements are not ornamental drafting. They are the main contractual device by which the parties allocate historical risk in a share deal. Turkish law supports that function through broad contractual freedom under Articles 26 and 27 of the Turkish Code of Obligations, general contractual damages rules under Articles 112 and 114, and express recognition of seller liability for stated qualities and defects under Article 219. At the same time, Turkish law imposes real limits, especially through the invalidity of advance exclusions for gross fault under Articles 115 and 221, and through default rules on known defects, notice, and limitation periods under Articles 222, 223, and 231.
The practical lesson is that a Turkish SPA should be drafted with both contract technique and statutory discipline in mind. Fundamental warranties, business warranties, disclosure mechanics, knowledge qualifiers, indemnity provisions, caps, baskets, and survival periods all need to be structured so that they work with Turkish law rather than against it. When done properly, the warranty package does not merely protect the buyer. It also gives the seller a predictable liability map and helps prevent post-closing disputes by making clear which risks were transferred, which were disclosed, and which were priced into the deal.
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