Newsletter-21

15 COMMERCIAL LAW Transfer of Assets in Company Spin-offs* Att. Tuna Colgar The Turkish Commercial Code (“TCC” or “Law”) has enabled companies to apply different structural models and to implement new legal formations by including spin-off provisions to its Article 159 et seq. In accordance with the provisions of the law, companies may transfer a certain element, or elements, of their assets to a single company or multiple companies that are already incorporated, or to a newly incorporated company via spin-off method. By this means, companies may exclude the unwanted elements of their assets in a manageable manner. TCCArt. 159/I categorizes spin-off operations into two types that are full or partial spin-offs. In a full spin-off, all assets are transferred to the current or potential company or companies, by being separated. The separated company dissolves, and the shareholders of such com- pany become the shareholders of the acquiring company. On the other hand, in a partial spin-off, a single or multiple parts of the company transfers its assets to another current or potential com- pany. The shareholders of the company that is the subject of the spin- off becomes the shareholders of the acquiring company. The company that is partially spun off does not dissolve, but continues its existence with its remaining assets. TCC Art. 160 regulates how spin-offs are to be conducted. Ac- cording to this Article, equity companies and cooperatives may be spun off to equity companies and cooperatives. Invalid spin-offs are avoided by means of conversion. With respect to company shares and the preservation of rights in spin-offs, the TCC refers to Article 140 that pertains to mergers. As * Article of May 2016