7 COMMERCIAL LAW In cases where there is no change of control, as long as the transferor does not provide explicit representations and warranties through the promissory transaction, the transferor will only be liable for the existence of ownership rights over the shares that are subject to transfer.12 However, if the share transfer results in change of control of the company, the transferor will be liable for the current activities, assets, and economic values of the target company, even though representations and warranties are not provided as to these matters. For share transfers that result in transfer of dominance of the target company, the transferor will be responsible for material legal defects and shortfalls in the assets.13 The most important factor in figuring out the scope of the qualification commitments and guarantees explained in this article, and the remedies to be applied in case of breach, is the due diligence process. The purchase of shares of a company includes divergent risks at each step. During the share purchase transaction, foreseeing the risk, then calculating the risk, and finally managing the risk and minimizing its consequences is the paramount strategy.14 The instruments that outshine all others in this strategy are representations and warranties. Calculating the risks spotted during the due diligence process is necessary to determine the structure and scope of the representations and warranties while they are drafted. Representations and warranties should be determined and structured with that strategy, after evaluating the likelihood of the risks identified and the magnitude of their impact.15 Incompletely or poorly drafted representations and warranties will cause the buyer to not be able to cover damages in case of realization of the risk, while attempts to draft representations and warranties for a risk that is broader than necessary or that does not even exist will cause the negotiations to be prolonged and eventually result in waste of time and opportunity. 12 Paslı, p. 273. 13 Poroy, Reha/Tekinalp, Ünal/Çamoğlu, Ersin: Ortaklıklar Hukuku, Vol. I, Vedat Kitapçılık 2014, p. 556. 14 Esin, İsmail G.: Birleşme ve Devralmalar, On İki Levha Yayıncılık 2021, p. 117. 15 Esin, p. 118.
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