Introduction

Investing in an existing company can be considerably faster than building a business from the ground up.

A foreign investor may acquire:

• 100% of a Turkish company;
• a controlling majority;
• a strategic minority interest;
• shares through a venture capital investment;
• shares in a family-owned business;
• an existing manufacturing company;
• a technology startup;
• a distributor;
• a licensed energy business;
• a healthcare company;
• a logistics company; or
• an operating company holding valuable contracts and assets.

The commercial opportunity may look attractive.

The company may have:

• strong revenue;
• established customers;
• experienced employees;
• valuable trademarks;
• licences;
• factories;
• real estate;
• government contracts; or
• a profitable distribution network.

However, purchasing shares in a company is fundamentally different from purchasing an individual asset.

When an investor purchases shares, the target company usually continues to exist as the same legal entity.

Its history does not disappear when its shareholders change.

The company may therefore continue carrying liabilities arising before the acquisition, including:

• unpaid taxes;
• social security liabilities;
• employee claims;
• pending lawsuits;
• customer disputes;
• defective products;
• administrative fines;
• environmental liabilities;
• hidden guarantees;
• bank loans;
• mortgages;
• intellectual property disputes;
• data protection violations;
• regulatory problems; and
• contractual obligations.

This is why legal due diligence is not merely a corporate formality.

It is a process designed to answer one central question:

“What legal and economic risks am I actually buying together with these shares?”

Turkey generally maintains an open foreign-investment regime. The official investment framework identifies principles including freedom to invest and national treatment, although sector-specific restrictions can apply. Current official investment guidance notes that nationality restrictions do not generally apply to shareholders or management rights, subject to regulated sectors including areas such as television broadcasting, maritime activities and civil aviation.

Foreign investment does not therefore remove the need for transaction-specific due diligence.

Quite the opposite.

An investor entering an unfamiliar legal and commercial environment should understand both:

what the company owns

and

what the company owes.

This guide explains how legal due diligence should be conducted before investing in a Turkish company and how the findings should influence the share purchase agreement, price, closing conditions and post-closing protection.

What Is Legal Due Diligence?

Legal due diligence is a structured investigation of a target company before an investment or acquisition is completed.

It is usually conducted together with:

• financial due diligence;
• tax due diligence;
• accounting review;
• commercial due diligence;
• technical due diligence; and
• depending on the industry, environmental or operational due diligence.

Legal due diligence focuses on rights, liabilities and legal exposure.

The review typically asks:

• Does the company legally exist?
• Who actually owns its shares?
• Does the seller have the right to transfer those shares?
• Are there third-party rights over the shares?
• Who controls the company?
• Are there hidden shareholder agreements?
• Is the company’s capital properly constituted?
• Who may legally bind the company?
• Does the company own the assets it claims to own?
• Are important contracts transferable after a change of control?
• Is the company involved in litigation?
• Does it have tax or SGK debt?
• Are employees making potential claims?
• Are licences valid?
• Does the company actually own its trademarks and software?
• Has personal data been processed lawfully?
• Could the acquisition require Competition Board approval?

The answer to any one of these questions can materially change the value of the transaction.

Share Purchase vs Asset Purchase: The First Structural Decision

Before beginning due diligence, the investor should understand whether the transaction is structured as:

a share deal

or

an asset deal.

In a share deal, the investor acquires shares in the existing company.

The target remains the same company.

Its contracts, assets, debts and legal history generally remain within that entity.

This is precisely why historical liabilities matter so much.

In an asset deal, by contrast, the investor purchases identified business assets or rights rather than the corporate entity itself.

These may include:

• machinery;
• trademarks;
• inventory;
• customer contracts;
• real estate;
• licences where transferable;
• or a particular business unit.

An asset transaction can sometimes isolate risks more effectively, but it introduces different issues concerning transfer formalities, employees, licences, taxes, contracts and third-party consents.

The transaction structure should therefore be decided only after understanding the target.

Why Buying Shares Can Mean Buying Historical Risk

Suppose an investor acquires 100% of a Turkish manufacturing company for EUR 10 million.

Six months after closing, the tax authority assesses TRY 50 million relating to transactions carried out two years before the acquisition.

From the investor’s commercial perspective, saying:

“But I was not a shareholder when those transactions occurred”

may not solve the problem.

The tax assessment is directed at the company whose shares were purchased.

Similarly, assume the company is sued by 40 former employees after closing for alleged overtime, severance or employment-related receivables arising during the seller’s ownership period.

Again, the economic impact may ultimately fall on the target that the investor now owns.

The purpose of due diligence is therefore not necessarily to eliminate every historic risk.

That is impossible.

Its purpose is to:

1. identify risks;
2. quantify them where possible;
3. determine whether the deal should continue;
4. reflect risks in the price; and
5. allocate those risks contractually to the seller where appropriate.

Step One: Confirm the Company’s Legal Identity

A surprisingly common mistake in acquisitions is beginning due diligence on a brand name rather than the actual legal entity.

A business may trade commercially as:

“ABC Technology”

while the legal company is:

“ABC Yazılım Teknoloji Sanayi ve Ticaret Anonim Şirketi.”

Another company within the same group may own:

• the trademark;
• intellectual property;
• property;
• factory;
• employees; or
• customer agreements.

The first due diligence step should therefore identify:

• full registered company name;
• legal form;
• MERSİS number;
• trade registry number;
• tax identification number;
• headquarters;
• branches;
• incorporation date; and
• current legal status.

Turkey’s MERSİS — Central Registry Record System is a central electronic infrastructure for company registration and corporate changes. The Ministry of Trade describes MERSİS as a system through which registration, amendment and deregistration procedures are conducted electronically and registered information is stored centrally.

The company should not merely provide its own PDF documents.

Official registry data should be independently checked.

Review the Turkish Trade Registry Gazette

The Türkiye Ticaret Sicili Gazetesi — Turkish Trade Registry Gazette is one of the most important public sources in Turkish corporate due diligence.

The Gazette states that published company announcements dating back to 1957 can be accessed through its system and certified electronic or wet-signed copies can be obtained.

A historical Gazette review can reveal matters such as:

• incorporation;
• capital increases and reductions;
• amendments to articles of association;
• changes in directors;
• changes in managers;
• representation powers;
• registered share changes where applicable;
• mergers;
• demergers;
• liquidation;
• address changes; and
• other registered corporate events.

Due diligence should not review only the latest Gazette.

The company’s history matters.

A ten-year-old transaction can still explain a current ownership, authority or liability problem.

Verify the Shareholders — Do Not Rely Only on the Seller’s Statement

One of the most important questions in any acquisition is obvious:

Who owns the company?

The answer can nevertheless become complicated.

Due diligence should examine:

• share ledger;
• articles of association;
• capital structure;
• historical transfer documentation;
• subscription records;
• capital increase documents;
• shareholder resolutions;
• shareholders’ agreements;
• share certificates where applicable;
• beneficial ownership documentation; and
• available trade registry records.

The legal mechanics of share ownership and transfer differ between Turkish joint stock companies — anonim şirket (A.Ş.) and limited liability companies — limited şirket (Ltd. Şti.). The Ministry of Trade confirms that foreign individuals and entities may generally become founders or subsequent shareholders of both joint stock and limited liability companies.

The investor should therefore not treat every Turkish company as though its ownership evidence works in exactly the same manner.

Is the Cap Table Really Correct?

Technology investments create a particularly common problem.

The investor receives a spreadsheet saying:

• Founder A: 45%
• Founder B: 35%
• Employee Pool: 10%
• Angel Investor: 10%

But legal due diligence may reveal:

• undocumented founder promises;
• convertible financing;
• phantom shares;
• unregistered historical transfers;
• option agreements;
• usufruct rights;
• pledges;
• pre-emption rights;
• call options;
• put options;
• or a shareholders’ agreement containing dilution protections.

The investor needs the legal cap table, not merely the startup’s financial presentation.

Inspect the Share Ledger and Corporate Books

Corporate books can be critical evidence.

Depending upon the company form and date of incorporation, investors should review:

• share ledger;
• general assembly meeting and negotiation book;
• board resolution book;
• managers’ resolutions;
• and relevant accounting/commercial books.

Turkey introduced an important digital corporate-record development in 2025–2026. The Ministry of Trade announced that companies registered from 1 January 2026 are required to keep specified non-accounting commercial books, including the share ledger and general assembly meeting/negotiation book, through the Electronic Commercial Book System.

For a newly established target, due diligence should therefore include electronic corporate records rather than assuming all relevant books exist physically.

Check Capital and Whether Capital Obligations Were Actually Satisfied

The registered capital figure should not simply be accepted at face value.

Due diligence should examine:

• subscribed capital;
• paid-in capital;
• unpaid subscription obligations;
• capital increases;
• capital reductions;
• shareholder receivables;
• shareholder loans;
• capital advances;
• and whether capital contributions were properly documented.

The investor should also compare corporate records with financial accounts.

If the Trade Registry shows TRY 100 million capital but accounting records tell a different story, the discrepancy requires explanation.

Articles of Association: The Company’s Constitutional Document

The articles of association should be reviewed clause by clause.

Important matters can include:

• business purpose;
• share classes;
• privileged shares;
• voting rights;
• board nomination rights;
• quorum requirements;
• transfer restrictions;
• capital structure;
• management rules; and
• special approval mechanisms.

An investor acquiring 51% of the shares should not automatically assume it will control every important corporate decision.

For example, articles may contain privileged rights giving another shareholder authority to nominate directors or influence governance.

Commercial ownership percentage and legal control are related but not always identical.

Shareholders’ Agreements Can Be More Important Than Expected

A company may also be governed commercially by a separate shareholders’ agreement.

That agreement can contain rights such as:

• right of first refusal;
• pre-emption;
• tag-along;
• drag-along;
• anti-dilution;
• board appointment rights;
• veto rights;
• reserved matters;
• deadlock mechanisms;
• put options;
• call options;
• non-compete obligations;
• exit rights; and
• change-of-control provisions.

The existence of such an agreement can completely change the investment.

No investor should purchase shares before confirming whether another shareholder has contractual rights that could prevent, delay or economically alter the transaction.

Who Can Legally Represent the Company?

A company may have a chief executive who appears to make every commercial decision.

That does not necessarily mean the CEO has unlimited legal authority.

Due diligence should verify:

• board composition;
• managers;
• registered representation authority;
• signature rules;
• signature circulars;
• powers of attorney;
• internal directives;
• joint signature requirements; and
• any restrictions registered or internally adopted.

The practical question is:

Who could legally sign contracts on behalf of the target?

This matters not only for the future.

It also affects existing contracts.

If a EUR 5 million loan was signed by someone without proper authority, the legal consequences may become material.

Related-Party Transactions and Shareholder Dealings

Family-owned and founder-controlled businesses frequently transact with related parties.

Examples include:

• the founder personally owns the factory and leases it to the company;
• the company’s trademark belongs to another group company;
• loans are made between shareholder and company;
• customer revenue is routed through an affiliated company;
• vehicles belong personally to the founder;
• employees work for one entity but are paid by another.

These arrangements may not necessarily be unlawful.

But the investor must understand them.

A target advertised as owning “its manufacturing facility” is very different from a target whose founder personally owns the property and can terminate the lease after selling the company.

Material Contracts: The Commercial Heart of the Due Diligence

The investor should identify all contracts that are material to the company’s value.

Typical contracts include:

• major customer agreements;
• supply agreements;
• distribution contracts;
• franchise agreements;
• licences;
• loan agreements;
• leases;
• manufacturing arrangements;
• IT agreements;
• agency contracts;
• public procurement contracts;
• joint venture agreements;
• guarantees; and
• insurance policies.

Each contract should be reviewed for:

• duration;
• termination;
• automatic renewal;
• minimum purchase obligations;
• exclusivity;
• liability;
• indemnification;
• penalties;
• governing law;
• dispute resolution;
• assignment;
• and change of control.

Change-of-Control Clauses Can Destroy Deal Value

A contract may state that the counterparty may terminate if ownership of the target changes.

This can be one of the most dangerous acquisition risks.

Suppose 60% of the target company’s revenue comes from one international distribution agreement.

The investor values the business at EUR 15 million because of that agreement.

The contract provides:

“Any direct or indirect change in control requires our prior written consent.”

If the investor closes the share acquisition without obtaining consent, the counterparty may have a termination right.

The investor may technically own the company while having lost the commercial relationship that justified buying it.

Change-of-control due diligence should therefore be completed before signing or at least before closing.

Bank Loans and Financing Documents

Financing arrangements deserve special attention.

Due diligence should identify:

• bank loans;
• shareholder loans;
• revolving credit;
• leasing;
• factoring;
• project finance;
• foreign currency debt;
• financial covenants;
• guarantees;
• mortgages;
• commercial enterprise pledges;
• account pledges;
• share pledges;
• and cross-default provisions.

A share acquisition can trigger:

• mandatory repayment;
• lender consent;
• increased interest;
• default;
• or additional security requirements

if financing agreements contain change-of-control clauses.

This should be addressed as a closing condition.

Guarantees and Off-Balance-Sheet Liabilities

One of the most dangerous risks is a liability that does not immediately appear in ordinary commercial accounts.

The target may have guaranteed:

• a shareholder’s debt;
• an affiliate’s bank loan;
• a group company’s obligations;
• a distributor;
• or another related party.

Due diligence should request a complete schedule of:

• guarantees;
• sureties;
• letters of guarantee;
• comfort letters;
• indemnities;
• mortgages;
• pledges;
• and security interests.

The company may have very little bank debt itself while being economically exposed to large obligations of another group company.

Litigation and Enforcement Due Diligence

The investor should obtain a complete schedule of:

• pending lawsuits;
• criminal proceedings concerning the company or management where relevant;
• administrative cases;
• arbitration;
• enforcement proceedings;
• tax litigation;
• employee cases;
• consumer claims;
• intellectual property disputes;
• competition investigations;
• and threatened disputes.

Management representations are not enough.

The target’s available UYAP records, lawyers’ litigation schedules and accounting provisions should be cross-checked.

Questions should include:

• What is the claim amount?
• What stage has the case reached?
• Has an expert report been issued?
• Is there a precautionary attachment?
• Could the lawsuit affect a critical licence?
• Is there a pattern of similar claims?
• Has the company lost comparable cases?

A TRY 500,000 lawsuit may be immaterial to a large acquisition.

A lawsuit seeking cancellation of the target’s operating licence may be existential.

Due diligence should therefore assess risk, not merely count cases.

Enforcement Files Can Reveal Financial Distress

Pending enforcement proceedings may be particularly informative.

Repeated creditor enforcement can indicate:

• liquidity problems;
• unpaid suppliers;
• defaulted loans;
• tax problems;
• or broader insolvency risk.

Investors should ask not only:

“Has anyone sued the company?”

but also:

“Are creditors actively trying to seize company assets?”

A company may report strong accounting revenue while simultaneously facing serious cash-flow pressure.

Tax Due Diligence

Tax review is essential because historical tax exposure can remain economically inside the target after a share acquisition.

A tax due diligence should consider areas such as:

• corporate income tax;
• VAT;
• withholding taxes;
• stamp tax;
• transfer pricing;
• related-party transactions;
• payroll taxes;
• customs;
• tax incentives;
• investment incentives;
• tax audits;
• tax settlements;
• penalties;
• and pending tax litigation.

The Revenue Administration’s current systems continue to impose reporting obligations concerning ultimate beneficial ownership, and 2026 tax schedules include ongoing Gerçek Faydalanıcı — Beneficial Owner reporting requirements.

Due diligence should therefore confirm that the company’s disclosed ownership structure is also consistent with tax/beneficial ownership reporting.

Obtain Tax Debt and Compliance Evidence

The seller should be asked for:

• current tax debt information;
• tax certificates;
• recent tax returns;
• audit correspondence;
• settlement documents;
• tax authority notices;
• and information regarding ongoing examinations.

A “tax debt clearance” document can be useful, but it should not be mistaken for a guarantee that no future historical assessment can ever arise.

Tax due diligence must look backwards.

Social Security — SGK Due Diligence

Companies employing personnel have social security obligations.

The target should provide evidence concerning:

• employee registration;
• SGK premiums;
• outstanding debt;
• occupational classifications;
• incentive use;
• workplace registrations;
• subcontractors;
• and pending SGK audits.

The Social Security Institution operates an e-Borcu Yoktur system through which qualifying employer debt-clearance documentation can be obtained.

Again, a current no-debt document is helpful but not a substitute for reviewing historical employment and payroll compliance.

Employment Law Due Diligence

Employment liabilities can become substantial after acquisition.

The investor should review:

• number of employees;
• employment agreements;
• salary structure;
• bonuses;
• overtime;
• unused annual leave;
• severance exposure;
• notice obligations;
• remote work;
• executives;
• consultants who may actually be employees;
• foreign employees and work permits;
• collective agreements;
• unions where relevant;
• workplace policies;
• disciplinary records; and
• pending employment claims.

A company with 500 employees can carry considerable accrued employment exposure even without any pending lawsuit.

Key Employees and Founders

For many investments, the company’s real value depends on people.

A technology company may be worth little if its CTO leaves immediately after closing.

A distribution company may depend on the founder’s relationships.

Due diligence should therefore identify:

• key personnel;
• notice periods;
• non-compete obligations;
• confidentiality obligations;
• incentive plans;
• intellectual property assignments;
• and retention risk.

Transaction documentation may then include:

• founder lock-in;
• management service agreements;
• non-compete obligations;
• retention bonuses;
• or earn-out structures.

Intellectual Property Due Diligence

A target may tell the investor:

“Our brand is worth EUR 5 million.”

The first question should be:

“Does the company actually own the brand?”

Due diligence should investigate:

• trademarks;
• patents;
• utility models;
• industrial designs;
• domain names;
• software;
• source code;
• copyrights;
• licences;
• know-how;
• trade secrets; and
• employee-created intellectual property.

TÜRKPATENT currently provides online trademark research facilities allowing searches by trademark and applicant information, while its patent database provides research and file tracking for registered patent information.

Independent registry searches should be performed rather than relying solely on trademark certificates supplied by management.

A Trademark May Belong to the Founder Personally

This problem is particularly common in SMEs.

The company may trade under a valuable brand, but the trademark may have been registered personally by the founder years earlier.

If the founder sells their company shares but retains the trademark, the buyer may face serious commercial risk.

Before closing, the investor should ensure that critical IP is:

• owned by the target; or
• transferred to the target; or
• subject to an adequate long-term licence.

Software Companies: Who Owns the Code?

Technology due diligence requires additional investigation.

The company should prove rights over software developed by:

• founders;
• employees;
• freelance programmers;
• foreign contractors;
• universities;
• consultants; or
• external software houses.

The investor should also investigate:

• open-source software;
• third-party licences;
• SaaS dependencies;
• source-code repositories;
• ownership of domains;
• cloud infrastructure;
• and cybersecurity.

A startup can have millions of euros in revenue while holding uncertain ownership of the software on which the entire business depends.

Personal Data and KVKK Compliance

Companies processing personal data are subject to Turkish Personal Data Protection Law No. 6698 — KVKK.

Legal due diligence should examine:

• privacy notices;
• processing inventories;
• legal bases;
• employee data;
• customer data;
• cookies;
• marketing communications;
• data processor agreements;
• cross-border transfers;
• retention;
• deletion;
• cybersecurity;
• breach history;
• and VERBİS compliance where applicable.

This has become particularly important after changes to Turkish data-protection rules and the continued development of international transfer mechanisms.

VERBİS Due Diligence in 2026

Not every company has identical VERBİS obligations.

The investor should determine whether the target falls within a registration obligation or an applicable exemption.

The KVKK Authority’s 2026 guidance confirms that corporate data controllers becoming subject to registration requirements must complete registration within the statutory period after becoming obligated.

For 2025 financial statements, the Authority explained that ordinary corporate data controllers with a financial balance-sheet total of TRY 100 million or more, and certain entities whose main activity involves processing special-category personal data with a balance-sheet total of TRY 10 million or more, could become subject to VERBİS registration under the current exemption criteria.

A target that should have registered but did not should be treated as a compliance risk.

Data Breaches Can Be an M&A Liability

The investor should ask:

• Has the company ever suffered a cyberattack?
• Has personal data been leaked?
• Was the KVKK Authority notified?
• Were affected individuals notified where required?
• Are investigations pending?
• Has ransomware occurred?
• Are administrator credentials controlled securely?

A buyer acquiring a data-heavy technology company should not discover after closing that millions of customer records were compromised before the acquisition.

Cybersecurity should therefore be integrated into legal and technical due diligence.

Regulatory Licences and Permits

A business may look profitable only because it possesses a licence that cannot easily be replaced.

The investor should identify every licence, permit and authorization required for the company’s operations.

Depending on the sector, these can include:

• energy licences;
• health authorizations;
• tourism licences;
• transport permissions;
• aviation approvals;
• broadcasting permissions;
• financial-sector permissions;
• payment institution licences;
• mining licences;
• environmental licences;
• food-sector approvals;
• warehouse licences; and
• municipal workplace licences.

Foreign investment may also be subject to special ownership rules in regulated industries. Official investment guidance specifically identifies sector-specific nationality restrictions in certain fields despite the general openness of the Turkish investment regime.

Is the Licence Transferable After the Share Acquisition?

A licence may contain rules concerning:

• direct ownership;
• indirect ownership;
• controlling shareholders;
• managers;
• technical personnel;
• change of control;
• prior regulatory approval;
• notification after acquisition;
• or prohibited foreign ownership levels.

The investor should therefore not assume that buying the shares automatically preserves the company’s regulatory position.

In an energy transaction, for example, EPDK maintains detailed licensing procedures and public information concerning licences in regulated energy markets.

Regulatory approval should be a condition precedent where legally required.

Environmental Due Diligence

Environmental liability is particularly important for:

• manufacturing;
• chemicals;
• mining;
• energy;
• waste;
• industrial facilities;
• food production;
• logistics;
• and businesses involving emissions.

The Ministry of Environment’s current framework classifies certain operations under the Environmental Permit and Licence Regulation according to their environmental impact and requires qualifying businesses to hold the appropriate permits or licences.

Environmental review should cover:

• environmental permits;
• emissions;
• wastewater;
• waste management;
• hazardous materials;
• soil contamination;
• environmental fines;
• inspection reports;
• remediation obligations;
• and environmental impact assessment status.

A contaminated industrial site can convert an apparently cheap acquisition into an extremely expensive liability.

Real Estate Due Diligence

If the target owns property, each material property should be separately investigated.

The investor should verify:

• title ownership;
• mortgages;
• attachments;
• usufruct;
• rights of construction;
• easements;
• leases;
• zoning;
• occupancy permits;
• construction licences;
• expropriation risk;
• annotations;
• and pending land disputes.

If the factory is leased, review:

• lease term;
• rent;
• termination rights;
• renewal;
• change-of-control implications; and
• related-party ownership.

The company’s value may depend upon continued access to a site that it does not actually own.

Competition Law and Merger Control

Competition-law analysis should begin before signing a large acquisition.

Turkey’s merger-control rules were materially updated in February 2026.

The Competition Authority announced that the turnover thresholds in Communiqué No. 2010/4 were increased, including:

• the former TRY 250 million individual threshold to TRY 1 billion;
• the Turkish turnover threshold from TRY 750 million to TRY 3 billion; and
• the worldwide turnover threshold from TRY 3 billion to TRY 9 billion.

The amendments entered into force upon publication in the Official Gazette on 11 February 2026.

Whether a particular transaction is notifiable depends on the detailed turnover tests and transaction structure, not merely the purchase price.

Do Not Close a Notifiable Transaction Before Competition Approval

Where a share acquisition results in a change of control and meets the applicable merger-control requirements, Turkish Competition Board clearance may be required before closing.

A due diligence team should therefore calculate:

• target turnover;
• purchaser/group turnover;
• Turkish turnover;
• worldwide turnover;
• control structure;
• and whether the transaction involves a technology undertaking under the special current regime.

The Competition Authority updated not only thresholds but also the application of the technology-undertaking rules in 2026.

Merger control should be treated as a transaction-closing issue, not something to investigate after the shares have already changed hands.

Foreign Investment Reporting and E-TUYS

Foreign investment into a Turkish company can also generate foreign direct investment reporting obligations.

Current official investment guidance states that information including:

• FDI activity;
• FDI capital; and
• FDI share transfers

is received electronically through E-TUYS, the foreign direct investment information system administered through the relevant investment authorities.

Accordingly, transaction closing checklists involving foreign shareholders should include E-TUYS compliance rather than focusing only on the Trade Registry.

Compliance, Anti-Bribery and Internal Investigations

Foreign investors, particularly international groups, should investigate whether the target has compliance issues involving:

• bribery;
• facilitation payments;
• procurement;
• public officials;
• sanctions;
• money laundering;
• customs;
• gifts and hospitality;
• intermediaries;
• agents;
• or questionable consulting payments.

Review should be especially careful where a company generates significant revenue from:

• public tenders;
• regulated concessions;
• customs-intensive activities;
• or government approvals.

A seemingly minor accounting entry described as “consultancy expense” may require further investigation if there is no underlying service.

Competition Compliance Beyond Merger Control

The investor should also investigate historical competition-law conduct.

Questions include:

• Is the company part of a cartel investigation?
• Has it exchanged sensitive information with competitors?
• Are resale prices imposed on distributors?
• Are exclusivity arrangements problematic?
• Does the company hold a dominant market position?
• Are non-compete obligations excessive?
• Have dawn raids occurred?

Historical competition exposure can remain economically significant after acquisition.

Merger clearance does not erase previous competition violations.

Commercial Insurance

Legal due diligence should identify:

• property insurance;
• employer liability;
• product liability;
• professional liability;
• directors’ and officers’ coverage;
• cyber insurance;
• business interruption;
• cargo;
• environmental insurance;
• and sector-specific coverage.

Questions include:

• Are limits adequate?
• Are premiums paid?
• Have major claims occurred?
• Is coverage claims-made or occurrence-based?
• Does a change of control terminate coverage?
• Are known circumstances excluded?

Insurance should be treated as one layer of risk protection, not a replacement for due diligence.

What Is a Red Flag Report?

Not every investor wants a 300-page legal report.

Many transactions use a red flag due diligence report.

This focuses on matters that could materially affect:

• transaction price;
• structure;
• closing;
• legality;
• future operations;
• or investor liability.

A red flag might be:

Critical: target does not own its core software.

Critical: key licence requires regulator approval for change of control.

High: 60% of revenue depends on a contract terminable upon acquisition.

High: TRY 40 million tax audit is pending.

Medium: several employment lawsuits are pending.

Low: outdated internal corporate policy.

The objective is to help the investor make decisions, not merely produce a catalogue of documents.

How Due Diligence Findings Should Affect the Share Purchase Agreement

Due diligence has little value if its findings never influence the transaction documents.

Risks identified should be addressed through mechanisms such as:

• representations and warranties;
• specific indemnities;
• closing conditions;
• price adjustments;
• escrow;
• holdbacks;
• deferred consideration;
• earn-outs;
• retention;
• seller guarantees;
• disclosure letters; and
• termination rights.

For example:

Risk: TRY 20 million tax audit.

Possible solution:

Seller provides a specific tax indemnity covering the identified historic period.

Risk: change-of-control consent required from key customer.

Possible solution:

Customer consent becomes a condition precedent to closing.

Risk: founder personally owns trademark.

Possible solution:

Trademark transfer must be completed before closing.

Due diligence should therefore produce transaction solutions, not just risk descriptions.

Representations and Warranties

The share purchase agreement may require the seller to represent matters such as:

• valid ownership of shares;
• authority to sell;
• absence of share encumbrances;
• accuracy of accounts;
• tax compliance;
• absence of undisclosed litigation;
• ownership of intellectual property;
• employee compliance;
• material contracts;
• permits;
• data protection;
• and absence of undisclosed liabilities.

If a warranty is untrue, the purchaser may have contractual remedies subject to:

• governing law;
• liability caps;
• baskets;
• de minimis thresholds;
• limitation periods;
• disclosure;
• and causation requirements.

Warranty drafting should correspond directly with due diligence results.

Specific Indemnities

A general warranty may not be enough for a known problem.

Suppose due diligence reveals an existing tax investigation.

The seller cannot realistically warrant:

“There is no tax investigation.”

because everyone knows there is.

Instead, the transaction may use a specific indemnity.

For example:

Seller indemnifies Buyer against losses arising from the identified tax assessment relating to the 2024–2025 period.

This places the known risk where the parties negotiate that it should economically remain.

Escrow and Holdback

The seller may promise to pay future claims.

But that promise has value only if the seller will still have money later.

The purchaser may therefore require part of the purchase price to remain:

• in escrow; or
• as a contractual holdback

for a specified period.

For example:

Purchase price: EUR 20 million
Paid at closing: EUR 17 million
Escrow: EUR 3 million for 24 months.

If identified warranty or indemnity claims arise, payment can be made from the reserved amount according to the agreement.

This can be far safer than litigating several years later against a seller who has dissipated the sale proceeds.

Conditions Precedent

Some risks should be solved before the investor becomes the owner.

Typical conditions precedent can include:

• Competition Board approval;
• sector regulator approval;
• key customer consent;
• lender consent;
• release of share pledge;
• repayment of related-party debt;
• transfer of IP;
• termination of problematic contract;
• rectification of corporate records;
• resignation/appointment of directors;
• or renewal of a licence.

The principle is straightforward:

If the problem is fundamental, solve it before closing rather than relying solely on damages afterward.

Minority Investment Requires Different Due Diligence

A minority investor faces a different risk profile from a purchaser acquiring 100%.

A 20% investor may not control:

• board;
• dividends;
• budget;
• financing;
• future capital increases;
• related-party transactions;
• sale of major assets;
• or exit timing.

Due diligence must therefore examine governance rights alongside company liabilities.

The investor should negotiate appropriate protection through:

• board seat;
• information rights;
• veto rights;
• reserved matters;
• pre-emption;
• anti-dilution;
• tag-along;
• exit rights;
• and protections against related-party transactions.

Ownership percentage alone does not provide adequate minority protection.

Startup Due Diligence

A startup may have very few traditional assets.

Its principal value may consist of:

• software;
• team;
• brand;
• user data;
• contracts;
• domain names;
• and growth potential.

Startup due diligence should therefore emphasize:

• founder ownership;
• employee IP assignment;
• code ownership;
• option plans;
• convertible instruments;
• data protection;
• open-source software;
• investment agreements;
• cap table;
• tax incentives;
• technology-zone status;
• and regulatory requirements.

An incomplete cap table or defective IP assignment can be more important than an ordinary commercial lawsuit.

Manufacturing Company Due Diligence

Industrial acquisitions require deeper review of:

• environmental permits;
• machinery ownership;
• factory title/lease;
• zoning;
• occupancy;
• labour;
• workplace safety;
• product liability;
• import/export;
• customs;
• energy;
• waste management;
• licences;
• and supply-chain contracts.

The Ministry’s environmental framework expressly subjects qualifying facilities to environmental permit and licensing requirements based on their impact categories.

For an industrial target, site-level technical and environmental due diligence should normally accompany the legal review.

25 Critical Questions Before Buying a Turkish Company

A foreign investor should be able to answer all of the following before closing:

1. What is the exact legal identity of the target?
2. Who legally owns the shares?
3. Are there undisclosed beneficial owners?
4. Are the shares pledged or otherwise encumbered?
5. Are there share classes or privileged rights?
6. Is there a shareholders’ agreement?
7. Does any party have pre-emption, call or veto rights?
8. Is the capital properly constituted?
9. Who legally represents the company?
10. Are major contracts valid?
11. Do contracts contain change-of-control provisions?
12. What bank debt exists?
13. Has the company guaranteed another person’s debt?
14. What litigation and enforcement files exist?
15. Is a tax audit pending?
16. Is SGK debt outstanding?
17. What employment liabilities are accrued?
18. Does the target own its trademarks and technology?
19. Does it comply with KVKK?
20. Does it hold all necessary licences?
21. Will those licences survive the acquisition?
22. Does the company own or properly lease its premises?
23. Are environmental liabilities present?
24. Is Competition Board approval required?
25. Which risks should become indemnities, escrow items or closing conditions?

If these questions have not been answered, the investor is not yet ready to close.

Frequently Asked Questions

Can a foreigner buy shares in a Turkish company?

Generally yes. Türkiye’s foreign investment framework is based on broad freedom of investment and national treatment, although sector-specific restrictions may apply.

Can a foreign investor own 100% of a Turkish company?

In many ordinary sectors, yes. Official investment guidance states that nationality restrictions generally do not apply to shareholders and management, subject to specific regulated sectors.

Why is legal due diligence necessary?

Because in a share acquisition the investor purchases ownership of an existing legal entity with its historical rights, obligations and potential liabilities.

Can I rely only on financial due diligence?

No. Financial accounts may not reveal all legal risks such as lawsuits, licences, employment liabilities, IP ownership disputes or contractual change-of-control rights.

Where can Turkish company information be checked?

Corporate registration information is maintained through the Turkish trade registry/MERSİS framework, while historical company announcements can be reviewed through the Turkish Trade Registry Gazette.

Can I see historical Turkish company announcements?

Yes. The Turkish Trade Registry Gazette states that announcements dating from 1957 onward are accessible through its system.

Is the Trade Registry enough to prove the complete ownership structure?

Not necessarily. Due diligence should also examine share ledgers, articles, transfer documentation, shareholder agreements and beneficial ownership information.

Should tax liabilities be investigated?

Yes. Historical tax exposure can materially affect the value of a share acquisition.

Should SGK debt be checked?

Yes. SGK provides employer debt-clearance mechanisms, but historical employment and social-security compliance should also be reviewed.

What should be checked for intellectual property?

Trademarks, patents, software ownership, domains, licences, employee-created IP and third-party rights should be investigated. TÜRKPATENT provides online trademark and patent research tools.

Should KVKK compliance be included?

Yes, particularly for technology, e-commerce, healthcare, HR-intensive and consumer businesses.

When is VERBİS relevant?

Whether registration is required depends on current criteria and exemptions. The KVKK Authority updated relevant financial criteria in 2025–2026.

Can the acquisition require Competition Board approval?

Yes, where the transaction constitutes a qualifying concentration and the applicable turnover tests are satisfied.

What changed in 2026?

The Competition Authority raised major merger-control turnover thresholds, including the individual threshold to TRY 1 billion, Turkish turnover threshold to TRY 3 billion and worldwide threshold to TRY 9 billion.

Can we close before Competition Board approval?

Where prior notification and clearance are required, the transaction structure and closing timetable must comply with Turkish merger-control rules.

Do foreign investments need E-TUYS reporting?

Foreign-capital activity and share-transfer information can create E-TUYS reporting requirements under the current FDI information system.

What if due diligence discovers a serious liability?

The investor can renegotiate price, require an indemnity, use escrow, impose a closing condition or decide not to proceed.

Conclusion

Legal due diligence before investing in a Turkish company should be treated as an investigation of the business’s legal reality—not merely as a document checklist.

The investor is ultimately trying to determine three things:

What am I buying?

What liabilities am I inheriting economically?

How should those risks affect the transaction?

The process begins with the company’s identity.

MERSİS provides Turkey’s central company-registration infrastructure, while the Turkish Trade Registry Gazette provides access to historical corporate announcements extending back decades.

But public records are only the beginning.

A serious due diligence process should go inside the company.

It should review:

• corporate books;
• ownership documents;
• articles;
• shareholder agreements;
• financing;
• contracts;
• litigation;
• taxes;
• employees;
• intellectual property;
• licences;
• data protection;
• real estate;
• environmental issues; and
• regulatory exposure.

Ownership must be investigated particularly carefully.

The investor must establish not merely who the seller says owns the company, but who legally owns the shares and whether another person has rights capable of interfering with the proposed acquisition.

The same principle applies to assets.

If the target’s main brand belongs to the founder personally, the investor is not buying what it thinks it is buying.

If the factory is owned by a related party, the investor must understand the lease.

If the core software belongs to freelance programmers who never assigned their rights, the value proposition changes completely.

Contracts require similar scrutiny.

A company can look extremely valuable because it generates EUR 10 million in annual revenue.

But if 70% of that revenue comes from a customer agreement terminable upon a change of control, the acquisition itself may destroy part of the company’s value.

This is why consent requirements should be identified before closing.

Historical liabilities are equally important.

Tax, SGK, employment and litigation exposure may remain within the target after the investor acquires its shares.

Current debt-clearance documents are useful, but they do not replace historical investigation.

The investor should understand whether old accounting periods, employee practices or tax structures could generate future assessments.

For data-intensive companies, KVKK has become a major due diligence field.

The Turkish data-protection regulator continues to update VERBİS thresholds and compliance guidance. In 2026, the Authority specifically addressed registration timelines for corporate data controllers crossing the current balance-sheet criteria.

For industrial businesses, environmental and licensing review can be even more important.

The Ministry of Environment’s current environmental permit regime classifies operations according to their environmental impact and subjects qualifying facilities to permit or licensing requirements.

An investor buying a manufacturing company should therefore not evaluate only machines and revenue.

It should determine whether the plant can legally continue operating after closing.

Regulatory consent must also be identified early.

Foreign investment is generally open in Türkiye, but sector-specific restrictions remain in certain regulated areas.

A transaction involving energy, media, aviation, maritime operations, financial services or another regulated industry may therefore require a much more detailed regulatory analysis.

Competition law is another essential closing issue.

Turkey materially revised its merger-control thresholds in February 2026, raising major figures to TRY 1 billion, TRY 3 billion and TRY 9 billion within the updated turnover framework.

Every material acquisition should therefore undergo a merger-control calculation before the closing structure is finalized.

Foreign investment reporting must also be integrated into the closing checklist.

The official investment system requires specified foreign-capital, activity and share-transfer information to be submitted electronically through E-TUYS.

However, identifying risk is only half of the lawyer’s work.

A useful due diligence report should explain what to do about the risk.

Possible responses include:

• price reduction;
• specific indemnity;
• representation and warranty;
• escrow;
• holdback;
• deferred purchase price;
• regulatory approval condition;
• third-party consent;
• IP transfer;
• debt repayment;
• release of security;
• or termination of the transaction.

For example:

If a tax exposure can reasonably be quantified at TRY 30 million, the investor should decide whether:

• the purchase price should decrease;
• the seller should provide a specific indemnity;
• part of the price should remain in escrow; or
• the risk makes the transaction unacceptable.

If the target does not own its trademark, transfer can be required before closing.

If a key licence requires regulatory approval, closing can be conditioned on obtaining that approval.

If the company’s largest customer has a change-of-control termination right, consent can become a condition precedent.

The purpose of legal due diligence is therefore not to produce the longest possible report.

It is to convert legal information into investment decisions.

A strong due diligence process should ultimately classify every major issue as:

acceptable risk;

risk requiring contractual protection;

risk requiring resolution before closing;

or

deal-breaking risk.

Foreign investors should also remember that due diligence should be proportional to the target.

A EUR 500,000 startup investment does not necessarily require the same process as a EUR 200 million acquisition of an industrial group.

However, even a small startup transaction should verify the issues that create the company’s fundamental value:

• cap table;
• founders;
• software;
• intellectual property;
• data;
• employees;
• key contracts; and
• regulatory position.

For a manufacturing company, the priorities may instead be:

• real estate;
• environmental liabilities;
• licences;
• employee exposure;
• machinery;
• financing;
• customs;
• and product liability.

There is therefore no universal due diligence checklist that should be applied mechanically to every Turkish company.

The investigation must follow the company’s actual business model.

The most effective investment process can be summarized as:

identify the target → verify ownership → investigate historical liabilities → review assets and contracts → examine employees, tax and regulatory compliance → determine merger-control and FDI requirements → quantify material risks → negotiate transaction protections → satisfy closing conditions → close only when the remaining risk is commercially acceptable.

The most dangerous sentence in an acquisition is often:

“The seller told us there is no problem.”

Due diligence exists because the investor should not need to rely solely on that statement.

Before investing in a Turkish company, the investor should be able to understand not only the company’s projected future—but also the legal consequences of its past.

Legal Disclaimer

This article provides general legal information concerning legal due diligence, foreign investment and acquisitions of Turkish companies as of August 2026.

It does not constitute legal, tax, financial, investment or accounting advice regarding any particular company or transaction.

The appropriate due diligence scope depends upon factors including:

• company type;
• industry;
• transaction value;
• ownership percentage;
• share or asset structure;
• regulated activities;
• employees;
• tax history;
• corporate structure;
• financing;
• intellectual property;
• real estate;
• data-processing activities;
• environmental exposure;
• competition-law thresholds;
• and the investor’s intended level of control.

Foreign investors considering an acquisition or minority investment in a Turkish company should conduct transaction-specific legal, tax and financial due diligence before signing definitive transaction documents or transferring the investment funds.