Online mergers and acquisitions

has long been part of M&A TECHNOLOGY lawyers’ work, particulalry tools enabling and facilitating domestic and international transactions. Before the C•VID-19 pandemic, clients and practitioners already demonstrated a proclivity towards using technology in transactions. However, the outbreak of the pandemic introduced new ways of doing business, thereby accelerating the technological transition of remote and online transactions. This acceleration comes with its own challenges in terms of negotiations, due diligence processes and agreement signings, in addition to forcing Turkish law practitioners to evaluate the legality around certain aspects of online transactions.

Investments are being made without investors, founders, or shareholders ever meeting in person; billion-dollar transactions are negotiated through virtual meetings and call platforms. Standard negotiation tactics, such as looking into your counter party’s eyes, shaking hands, and levelling your tone of voice are old-school; now you simply have to turn on your camera and be seen.

The Turkish M&A market has quickly adopted the “new normal” by conducting the entire M&A due diligence process without touching a sheet of paper: management meetings are conducted online, negotiations take place without physically meeting, and signing transaction documents are done digitally.

Ceremonies came with the culture of doing business in Turkey as an important celebration of marking the signing of a transaction. Now, the signing of most transactions are done online without physical meetings. Although Turkish legislation recognizes electronic signatures, they are not widely utilized. While issuing a power of attorney to a representative readily available to provide their wet ink signature is a popular option, Turkish law allows share purchase agreements for joint stock companies whose shares are in printed form (the most common company type in the Turkish M&A market) to be executed as oral or written agreements. In other words, a medium indicating mutual understanding, terms and intentions of the parties is necessary and sufficient to conclude these types of agreements. This flexibility has easily allowed a new practice to emerge, where the relevant parties’ authorized signatories sign the agreements in their home jurisdictions, share the signed versions though e-mail and exchange the hard copies after the agreement is executed.

While this has become an established practice for signing agreements in Turkish M&A transactions, it can become legally complicated to verify the existence of agreements subject to Turkish law before Turkish courts if the transaction in dispute exceeds TRY 4,880.00. In this case, positive evidence (e.g., the wet ink signature of the plaintiff ) is required to prove the existence of an agreement. Having said that, under Turkish law, we believe that the executed and scanned copy of an agreement, accompanied by witnesses of the signing through having the signing made online with the virtual platforms, and witness statements should be sufficient to prove a claim that an agreement was entered into if the parties did not exchange hard copies. Scanned copies of executed agreements qualify as “prima facie evidence” (delil başlangıcı) enabling the claimant party to prove its case by utilizing witness evidence. Prima facie evidence under Turkish law is defined as an ordinary document sent or delivered by the party (or their authorized representatives) subject to the relevant claim, indicating that the relevant legal transaction is probable. Under the Turkish Code of Civil Procedure No. 6100, prima facie evidence on its own is insufficient to fully prove the legal transaction subject to the allegation and must be supported with witness evidence.

The C•VID -19 pandemic has impelled a new normal for executing M&A transactions in the Turkish sector, with the online M&A transactions practice both facilitating the process and bringing new legal queries to the forefront.