Vircon Legal advises companies on mergers, demergers, conversions, asset transfers, and pre-exit reorganizations under the Turkish Commercial Code (TTK Articles 134–194). We work with founders, private equity sponsors, and family offices to design restructuring transactions that achieve their commercial objectives while preserving tax neutrality, regulatory compliance, and corporate continuity.
Pre-exit restructuring is one of our recurring engagements: separating operating assets from holding structures, isolating IP into licensable subsidiaries, carving out non-core business lines, or implementing the parent-subsidiary architecture that strategic acquirers prefer. We coordinate with tax advisors to ensure each step satisfies the Corporate Tax Law’s tax-neutral merger provisions.
For distressed scenarios, we work on debt restructuring, concordato proceedings, and creditor negotiations. For growth-stage companies, we handle the share-class conversions and capital-structure adjustments required for new investment rounds.
Our Company Restructuring practice includes, but is not limited to, the following:
- Tax-neutral mergers under TTK and Corporate Tax Law
- Spin-offs, carve-outs, and demergers (kısmi/tam bölünme)
- Asset and business transfers
- Pre-exit corporate reorganization
- Holding-subsidiary structure design
- Share-class conversions and capital restructuring
- Domestic and cross-border mergers
- Conversion between legal forms (A.Ş. ↔ Ltd. Şti.)
- Debt restructuring and concordato (composition) proceedings
- Creditor consent and waiver negotiations
The restructuring toolkit under the Turkish Commercial Code
- Conversion of legal form. A limited company can convert into a joint-stock company and continues as the same legal person, keeping its contracts, licences, employees, bank accounts and tax number (Arts. 180 and 181). The resolution needs three quarters of the shareholders holding at least three quarters of the capital (Art. 189), and the conversion takes effect on registration (Converting a Limited Şirket into an A.Ş.).
- Mergers and demergers. Mergers (Arts. 134 to 158) and full or partial demergers (Arts. 159 to 179) move assets and liabilities by universal succession, and employment contracts pass to the receiving company (Arts. 158 and 178). Under the Corporate Tax Law, Arts. 19 and 20, qualifying mergers, demergers and share exchanges can be carried out without triggering corporate tax, provided their conditions are met.
- Business and asset transfers. A transfer of a business with its assets and liabilities makes the buyer liable for its debts once creditors are notified or the transfer is announced, with the seller jointly liable for two years (Turkish Code of Obligations, Art. 202).
- Winding down. Voluntary liquidation after a general assembly resolution, with creditors called by three announcements and distributions to shareholders no earlier than six months after the third; where the company is over-indebted, the board’s duties under Article 376 and the bankruptcy or concordat routes apply (When a Startup Dies).
Questions clients ask us
Should we convert our limited company into a joint-stock company before a round?
Usually yes, if outside investors are coming in. Venture investors expect the share transfer, privilege and option mechanics of a joint-stock company, and transfers of limited company shares need a notarised agreement and general assembly approval. A well-run conversion takes four to eight weeks, and the TRY 250,000 minimum capital for a joint-stock company must be met at conversion.
Can we merge two group companies without a tax cost?
Often, yes. Corporate Tax Law Articles 19 and 20 allow qualifying mergers, demergers and share exchanges between full taxpayers to be carried out without corporate tax at the time of the transaction, if the conditions are met, including the transfer at book values and the filing of the required returns. The conditions should be checked step by step before the board resolutions are drafted.
What happens to employees in a merger or demerger?
Their employment contracts pass to the receiving company with all rights and obligations, so their service period continues for severance purposes. Employees may object to the transfer, which ends the contract at the end of the statutory notice period, and the companies involved are jointly liable for employee claims that arose before the transfer (Turkish Commercial Code, Arts. 158 and 178).
How do we close a company that is still solvent?
The general assembly resolves to dissolve and appoints a liquidator; creditors are called by three announcements in the Trade Registry Gazette, assets are turned into cash and debts paid, and the remainder is distributed to shareholders no earlier than six months after the third announcement. Realistically the process takes most of a year, and final salaries, severance and taxes must be funded throughout.
What if the company cannot pay its debts?
The board must act under Article 376: call the general assembly when losses reach half of capital and legal reserves, and where over-indebtedness is confirmed by interim balance sheets, apply to court. A concordat (konkordato) can buy time where a realistic restructuring plan exists; for an early-stage startup its cost often exceeds its benefit, and directors who delay face personal exposure (TCC Article 376 for a Cash-Burning Startup).
Reading
- Group Companies After the Flip-Up: Control, the Dependency Report and Loss Compensation
- Turkish Founders in Foreign Holding Structures: Double Tax Treaties and CFC Rules
- Minimum Capital Deadline Extended to 31 December 2027
Sources. Turkish Commercial Code No. 6102. Statute links open the official consolidated Turkish texts on mevzuat.gov.tr.
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