What are conditions precedent and the long stop date?
Conditions precedent (CPs) are the conditions that must be satisfied between signing of a share purchase agreement (SPA) and closing; the parties’ obligation to close arises only once they are met. The long stop date fixes the latest date by which the conditions must be satisfied: if CPs remain outstanding on that date, the parties may terminate the transaction.
Typical conditions precedent
- Merger control clearance: approval by the Turkish Competition Authority for acquisitions exceeding the turnover thresholds.
- Regulatory approvals: consents from the SPK, the BDDK and sectoral regulators; share transfer approvals in regulated companies.
- No MAC: the absence of a material adverse change since signing.
- Others: confirmation at closing that warranties remain true, third-party consents, and pre-completion group restructuring steps.
The legal dimension
The signing-to-closing gap is where the deal’s risk allocation lives: the seller undertakes to run the business in the ordinary course, and the parties assume a defined standard of effort (reasonable endeavours, best endeavours) to satisfy the CPs. The contract should state clearly whether the agreement terminates automatically on the long stop date or gives each party a termination right, whether a party whose own breach caused the delay may exercise that right, and on what terms the date can be extended; on deals with long approval processes a break fee is also negotiated. The contract should also record for whose benefit each CP operates: where a condition protects only the buyer, the right to waive it is, as a rule, granted to the buyer alone.
Turkish context
Under Turkish law, CPs operate through the suspensive condition mechanism of the law of obligations. Turkish Competition Authority clearance must be obtained before closing in acquisitions above the thresholds; implementing the closing in practice without clearance (gun jumping) creates administrative sanction risk. In regulated fields such as banking, insurance, energy, payment services and crypto-asset service provision, share transfers are subject to the relevant authority’s approval or notification. The long stop date should be set against a realistic timetable for Turkish approval processes, with room for information requests.
Do: record, for each CP, the responsible party, the effort standard and the document list; set the long stop date with a buffer over the approval timetable. Don’t: implement closing in practice before approvals are in, or leave the consequences of the long stop date and its extension mechanics vague.
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