1. Introduction: What Is a “Commercial Enterprise Transfer” in Turkey?
In Turkish law, the transfer of a commercial enterprise (“ticari işletme devri”) is a structured legal transaction whereby a business is transferred as a going concern from one person (the transferor) to another (the transferee). Instead of transferring only single assets or only the shares of a company, the parties agree to transfer the entire organized economic unit – including tangible and intangible elements – that is directed toward generating profit.
The concept is rooted primarily in the Turkish Commercial Code (TCC) and supported by the Turkish Code of Obligations (TCO), Labour Law, and various tax regulations. Proper structuring of a business transfer is crucial to avoid:
- Unexpected assumption of debts
- Loss of licences and contracts
- Employee claims and litigation
- Tax penalties and administrative fines
This article provides a detailed and practical overview of commercial enterprise transfers in Turkey, aimed at practitioners, investors, and business owners considering buying or selling a running business.
2. Legal Framework: Where Does the Transfer of a Commercial Enterprise Sit?
The main legal sources governing commercial enterprise transfer in Turkey include:
- Turkish Commercial Code (TCC) – definition and elements of a commercial enterprise, publicity through trade registry, transfer of trade name and commercial books, protection of creditors, etc.
- Turkish Code of Obligations (TCO) – provisions on assignment of contracts, assumption of debt, transfer of an “aggregate of assets and liabilities” (global transfer).
- Turkish Labour Law – transfer of workplace and the impact on employees’ rights and obligations.
- Enforcement and Bankruptcy Law – protection of creditors, avoidance actions against fraudulent transfers.
- Tax laws – corporate and income tax, value added tax (VAT), stamp tax and other indirect taxes consequences of the transfer.
Importantly, a transfer of commercial enterprise must be distinguished from:
- Share transfer – where the shareholder(s) transfer their shares in a company, and the legal entity itself remains unchanged.
- Isolated asset transfer – where only certain assets (a machine, a vehicle, a trademark, etc.) are sold, but not the organized whole of the business.
In a commercial enterprise transfer, the parties intend to transfer the business as a going concern, including its organization, customer base, reputation and ongoing operations.
3. What Is a “Commercial Enterprise” Under Turkish Law?
Under Turkish law, a commercial enterprise is defined as an independent and continuous organization aimed at generating income that exceeds a certain statutory threshold. An enterprise is more than a collection of assets; it is an organized bundle of:
- Tangible assets (machinery, inventory, fixtures, vehicles)
- Intangible assets (trade name, trademarks, patents, customer lists, goodwill, know-how)
- Contractual relationships (supplier contracts, customer contracts, leases, distribution agreements)
- Employees and organizational structure
- Licences, permits and authorizations (where transferable)
When the parties agree to transfer the “commercial enterprise”, they are not only selling goods; they are transferring the entire economic unit which has been organized to carry out commercial activity.
4. Business Transfer vs. Share Transfer: Why the Distinction Matters
From a practical standpoint, parties often hesitate between:
- Transferring the shares of the company; or
- Transferring the commercial enterprise itself as an asset (or bundle of assets).
4.1 Share Transfer
In a share transfer:
- The company remains the same legal entity.
- All assets, contracts, employees and debts remain with the company by operation of law.
- Only the shareholder(s) change.
- Regulatory licences or contracts that are tied to the legal entity typically remain valid (unless they contain change-of-control clauses).
Advantages often include simpler continuity of contracts and licences, but due diligence is critical because the buyer indirectly acquires all past liabilities of the company.
4.2 Commercial Enterprise Transfer
In a commercial enterprise transfer:
- The enterprise (business unit) itself is transferred as an asset from the transferor to the transferee.
- The legal entity owning the business may either remain with the seller or be dissolved later.
- Specific rules apply to:
- Debts and liabilities of the enterprise
- Transfer of contracts and employees
- Publicity and notifications to creditors
This route may be preferable where the buyer wants to acquire the business but not the entire company, or where there are multiple businesses within one legal entity and only one of them will be transferred.
5. Form Requirements and Registration: How to Transfer a Commercial Enterprise
5.1 Written Agreement
A written transfer agreement is mandatory for the transfer of a commercial enterprise. The agreement should clearly define:
- The parties (transferor and transferee)
- The scope of the enterprise (assets, contracts, IP, employees)
- Purchase price and payment terms
- Representations and warranties
- Conditions precedent and conditions subsequent
- Closing and post-closing obligations
Although a simple written form is the minimum, in practice notarized signatures are often used, especially where there are:
- Immovable properties
- Pledges, mortgages and other limited rights in rem
- Regulatory filings requiring notarized documents
5.2 Trade Registry Registration and Announcement
For the transfer to be effective against third parties, it must be:
- Registered in the relevant Trade Registry where the enterprise is registered; and
- Announced in the Turkish Trade Registry Gazette (TTRG).
This publicity is crucial for:
- Informing creditors and contractual counterparties
- Triggering the start of statutory periods for creditors’ claims
- Ensuring transparency in the commercial life
Without proper registration and announcement, third parties may continue to regard the transferor as the owner of the enterprise.
5.3 Transfer of Immovables and Other Special Assets
If the commercial enterprise includes immovable property (real estate), the transfer of such immovables must be carried out at the land registry with appropriate form requirements (official deed before the land registry officer). Similarly:
- Vehicles must be transferred at the traffic registry.
- Trademarks, patents and designs should be recorded at the Turkish Patent and Trademark Office.
- Domain names and social media accounts need to be transferred according to the relevant administrative procedures and platform rules.
The commercial enterprise transfer agreement often serves as a master agreement, and separate implementation steps are performed to effectuate the transfer of specific assets.
6. Scope of the Transfer: What Exactly Is Being Transferred?
One of the key legal and practical questions is: what is included in the transfer of a commercial enterprise?
6.1 Trade Name and Signs
As a rule, the trade name and other commercial signs of the enterprise are presumed to be part of the commercial enterprise and are transferred together with it, unless the parties agree otherwise. If the trade name is to remain with the seller, this must be clearly stated.
However, when a trade name is closely associated with the identity of the seller (for example, where it includes a personal name), the parties may prefer to:
- Change the trade name before the transfer; or
- Agree on co-existence and rebranding schemes.
6.2 Tangible Assets
The transfer typically includes:
- Machinery and equipment
- Inventory and stock
- Office furniture and fixtures
- Vehicles and other tangible goods
A detailed inventory list attached to the contract is highly recommended to avoid disputes.
6.3 Intangible Assets and Goodwill
Intangible assets are often the most valuable part of the business, including:
- Trademarks, patents and designs
- Software, databases and domain names
- Customer lists and supplier relationships
- Trade secrets and know-how
- Goodwill and reputation
The parties should specifically address:
- Whether all or only some of these assets are included
- How the value of goodwill is reflected in the purchase price
- Whether the seller is allowed to compete or use similar branding after closing
6.4 Licences, Permits and Regulatory Approvals
Some sectors (e.g. food, health, finance, telecommunications, energy) are heavily regulated. Licences and permits may:
- Be tied to the legal entity (company) rather than the enterprise; or
- Be transferable subject to regulatory approval; or
- Be non-transferable, requiring new licences for the buyer.
The transfer agreement should:
- Identify all critical licences and permits;
- Make the transfer (or new issuance) of these licences a condition precedent to closing where necessary;
- Allocate the risk and cost of obtaining regulatory approvals.
7. Contracts, Debts and Liabilities: Who Bears the Burden?
7.1 Contracts: Do They Transfer Automatically?
A central question is whether the contracts associated with the enterprise automatically transfer to the buyer, or whether each contract requires separate assignment and consent.
Under general principles of obligations law:
- Individual contracts typically require the consent of the counterparty to be assigned to a third party.
- However, where an entire commercial enterprise is transferred as a going concern, there is a strong argument that contracts pertaining to the operation of that enterprise are presumed to be part of the transfer, subject to the rules on assignment and assumption of contracts.
In practice:
- Many important contracts (lease agreements, bank loan contracts, distribution agreements, franchise, agency, etc.) contain explicit “change of control” or assignment clauses.
- These may require prior written consent of the other party or provide for termination in case of transfer.
Therefore, a thorough contract due diligence is indispensable before the transfer. The parties often:
- Prepare a list of “Key Contracts”;
- Obtain consents or waivers from counterparties before closing;
- Make obtaining such consents a condition precedent in the share purchase or enterprise transfer agreement.
7.2 Debts and Obligations: Joint Liability of Transferor and Transferee
A key risk area is the transfer of debts and liabilities. Under Turkish law, when a commercial enterprise is transferred:
- The transferee generally assumes the debts of the enterprise related to its operation.
- The transferor and transferee are often jointly liable for existing debts for a certain period following the publication of the transfer in the Trade Registry Gazette.
This joint liability aims to protect creditors, who may otherwise be prejudiced by the transfer. Practically:
- Creditors may choose to sue either the transferor or the transferee (or both) within the statutory period.
- Internal arrangements between the parties (e.g., indemnity clauses) do not affect third parties but govern the reimbursement among the parties after paying creditors.
Therefore, the purchaser should:
- Conduct detailed financial and legal due diligence;
- Seek comprehensive representations and warranties about the absence of undisclosed liabilities;
- Negotiate indemnity clauses, escrow mechanisms or price adjustments to protect against hidden debts.
8. Employees and Labour Law: Automatic Transfer and Protection of Rights
8.1 Transfer of Workplace and Employment Contracts
Under Turkish Labour Law, the transfer of a workplace or a part of a workplace to another employer does not terminate the employment contracts. Instead:
- Employees’ contracts automatically continue with the new employer, on the same terms and conditions.
- The existing rights and entitlements (seniority, accrued leave, etc.) remain protected.
This mechanism aims to safeguard employees against unjustified losses due to changes in the ownership of the business.
8.2 Joint Liability of Old and New Employer
Generally, the old and new employer may be:
- Jointly liable for certain employment-related obligations that arose before the transfer.
- The old employer may also retain liability for termination claims arising from pre-transfer periods.
Employees must not be forced to resign due to the transfer. Any attempt to circumvent their rights by:
- Forcing them to sign new contracts with worse conditions; or
- Pressuring them to resign and re-hire
may be considered invalid and may lead to compensation claims.
8.3 Collective Rights and Trade Unions
Where the enterprise is subject to:
- Collective bargaining agreements (CBA); or
- Trade union representation,
the transfer may have consequences on the status of the CBA, union rights and works councils. The buyer should:
- Review existing CBAs and their duration;
- Assess the financial impact of collective rights;
- Engage with union representatives as required by law.
9. Non-Compete and Protection of Goodwill
A buyer paying for a commercial enterprise usually wants to ensure that the seller does not immediately set up a competing business next door and use the same customer relationships, staff or know-how.
Therefore, non-compete clauses are a standard component of business transfer agreements. Under Turkish law:
- Non-compete clauses are generally enforceable, but they must be limited in terms of:
- Time (e.g., several years);
- Territory (e.g., certain cities or region);
- Scope of activity (same or similar line of business).
If drafted too broadly, a non-compete clause may be:
- Partially invalid or
- Reduced by the court to a reasonable scope.
In addition, confidentiality and non-solicitation clauses (e.g., prohibition on soliciting key employees or customers) are frequently used to protect the goodwill and competitive position of the transferred enterprise.
10. Protection of Creditors and Avoidance of Fraudulent Transfers
10.1 Creditor Protection Mechanisms
The law aims to prevent business owners from:
- Transferring their commercial enterprise to avoid paying debts; and
- Leaving creditors with an empty shell.
To protect creditors:
- The transfer must be registered and publicly announced, enabling creditors to become aware of the transaction.
- Joint liability of transferor and transferee for existing debts provides an additional level of comfort.
Creditors may also:
- Request security or guarantees;
- Negotiate repayment plans;
- Initiate enforcement proceedings if they suspect that the transfer is prejudicial to their interests.
10.2 Avoidance Actions
Under Enforcement and Bankruptcy law, a fraudulent transfer of assets can be challenged via avoidance actions (actio pauliana) where:
- The transfer was made with the intent to damage creditors; and
- The transferee knew or should have known about this intention.
Such actions can lead to:
- The transfer being declared ineffective against the creditor;
- The creditor enforcing its claim as if the transfer had not taken place.
For this reason, buyers must ensure that:
- The purchase price is fair and paid in a transparent, documented manner;
- There is no obvious pattern of debt evasion;
- Appropriate legal opinions and due diligence reports support the legitimacy of the transaction.
11. Tax and Fiscal Aspects of Commercial Enterprise Transfer
Tax consequences are crucial in designing the structure of the transaction. Key aspects include:
- Corporate/income tax on capital gains realized by the seller;
- Value Added Tax (VAT) – depending on whether the transfer qualifies as a transfer of a going concern or not, and sector-specific exemptions;
- Stamp tax on the enterprise transfer agreement and related documentation;
- Title deed fees for immovable properties;
- Withholding taxes where applicable.
Because Turkish tax laws are subject to frequent amendments and complex secondary legislation, tax planning should be undertaken with specialized advisors at an early stage. Depending on the structure (share deal vs. asset deal, merger, partial spin-off, etc.), it may be possible to:
- Optimize capital gains taxation;
- Benefit from exemptions or reductions;
- Minimize transaction costs related to indirect taxes.
12. Due Diligence and Transactional Steps: How to Structure a Safe Deal
A properly managed commercial enterprise transfer typically follows several phases.
12.1 Preliminary Negotiations and Confidentiality
The parties usually begin with:
- A non-disclosure agreement (NDA) to protect confidential information;
- A letter of intent (LOI) or term sheet setting out the main commercial parameters (price, payment terms, asset scope, conditions precedent).
These documents are typically not binding except for confidentiality, exclusivity and certain procedural obligations, but they provide a roadmap for the transaction.
12.2 Legal, Financial and Tax Due Diligence
Before committing to a binding contract, the purchaser should conduct a thorough due diligence covering:
- Corporate and registration status of the enterprise;
- Ownership and status of assets (immovables, machinery, IP);
- Existing contracts (leases, supply, distribution, financing, employment, IP);
- Litigation, administrative fines, compliance issues;
- Financial statements, tax filings and potential tax risks;
- Labour law compliance and employee claims.
Red flags identified during due diligence are:
- Reflected in the purchase price;
- Addressed through conditions precedent, indemnities or escrow arrangements.
12.3 Drafting the Commercial Enterprise Transfer Agreement
The main agreement should clearly regulate:
- Identification of the commercial enterprise and its components
- Purchase price and payment method (cash, instalments, earn-out, etc.)
- Closing and transfer date
- Conditions precedent (regulatory approvals, consents, registrations)
- Representations and warranties (financial, legal, tax, compliance, IP, employees)
- Indemnities and limitations of liability (caps, baskets, survival periods)
- Non-compete, confidentiality and non-solicitation obligations
- Dispute resolution (jurisdiction or arbitration, applicable law)
For cross-border transactions, parties may choose foreign law and arbitration for disputes. However, because the enterprise and assets are located in Turkey, mandatory rules of Turkish law and registration requirements will still apply at the implementation stage.
12.4 Closing and Post-Closing Steps
At closing, the parties:
- Execute the transfer agreement (often before a notary);
- Transfer possession and control of the enterprise;
- Sign separate transfer deeds for immovables, vehicles, IP, etc.;
- Make notifications to employees, customers, suppliers and regulatory authorities;
- File registrations and announcements at the trade registry and other relevant registries.
Post-closing, the buyer must:
- Integrate the enterprise into its existing operations;
- Update accounting and tax records;
- Monitor any post-closing obligations and claims under the agreement.
13. Common Pitfalls and Practical Tips for Buyers and Sellers
13.1 Underestimating Hidden Liabilities
A frequent mistake is focusing solely on visible assets and revenues while underestimating:
- Tax risks
- Long-term contract obligations
- Hidden labour law liabilities
- Environmental or regulatory issues
A rigorous due diligence process and carefully drafted indemnity clauses are essential.
13.2 Ignoring Contractual and Regulatory Consents
Assuming that every contract or licence will automatically transfer is risky. Some of the most important assets of the enterprise – such as:
- A long-term lease for a prime location;
- A key distribution or franchise contract;
- A regulatory licence for operating in a specific sector
may require third-party consents or new applications. The transaction documentation must include conditions precedent to ensure that these are obtained before closing, or that the buyer is not forced to complete a deal without them.
13.3 Failing to Manage Employee Relations
If employees are not properly informed and consulted, the transfer may cause:
- Loss of key staff;
- Labour disputes and compensation claims;
- Deterioration of workplace harmony and productivity.
Communication with employees should be managed carefully, respecting their legal rights and, where applicable, involving unions.
13.4 Inadequate Non-Compete Protection
If no effective non-compete and non-solicitation covenants are agreed with the seller:
- The buyer risks losing customers and staff shortly after the transaction;
- The value of the acquired goodwill may be significantly reduced.
Non-compete clauses should be tailored to the commercial reality, not copied from generic templates.
13.5 Insufficient Tax Planning
Tax consequences may make the difference between a successful and a problematic transaction. Early cooperation between:
- Legal advisors
- Tax advisors
- Financial advisors
helps structure the deal in a way that is both legally compliant and fiscally efficient.
14. Checklist: Key Points for a Commercial Enterprise Transfer in Turkey
To summarize, parties considering a transfer of a commercial enterprise in Turkey should pay attention to at least the following:
- Clarify the scope of the commercial enterprise (assets, contracts, IP, employees, licences).
- Ensure there is a written transfer agreement, preferably with notarized signatures.
- Plan for trade registry registration and announcement in the Turkish Trade Registry Gazette.
- Address the transfer of immovables, vehicles, IP rights and other registrable assets via separate implementation steps.
- Conduct a thorough legal, financial and tax due diligence.
- Analyse all key contracts for assignment and change-of-control clauses; obtain consents where necessary.
- Understand the rules on debts and joint liability between transferor and transferee; allocate risks via indemnities and security mechanisms.
- Respect labour law rules on transfer of workplace; protect employees’ rights and manage communication.
- Draft effective non-compete, confidentiality and non-solicitation clauses to protect goodwill.
- Evaluate tax implications and consider alternative structures (share transfer, merger, spin-off) if more efficient.
- Carefully plan closing and post-closing steps, including notifications and registrations.
- Establish a clear mechanism for dispute resolution (courts or arbitration) and governing law, especially for cross-border transactions.
15. Conclusion
The transfer of a commercial enterprise in Turkey is a powerful tool to transfer a business as a going concern, but it involves a dense network of commercial, obligations, labour, enforcement and tax rules. For both domestic and foreign parties, the transaction requires:
- Detailed planning,
- Comprehensive due diligence, and
- Sophisticated contractual engineering.
When properly structured and executed, a commercial enterprise transfer allows investors to acquire a functioning business with its customers, employees and goodwill, while providing a clear framework for the seller to exit and monetize the value they have built.
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