Although the continuation of shareholding is the rule in mergers, the Turkish Commercial Code regulates an opt out right and fund for shareholders as an exception to this rule. In a merger, as a rule, the acquiring company has the right to claim the shares and rights with the value that will acquire the shares in the transferred company, thus, the value of the shares of each shareholder in the transferred company in the old company is met and these shareholders have rights equal to the rights granted by the old shares they hold. The shareholders’ right to exit and the right to demand a separation fund is an formative right. The fact that the right to exit in a merger is recognised only for the shareholders of the transferred company shows that the merger aims to achieve a synergy within the transferee company. The right to demand an opt out fund is a right granted to the shareholders of the transferred company. This right is exercised through a unilateral notification and becomes effective when the notification reaches the transferee company. The value to be determined for the opt out fund must be the real value of the company shares to be acquired. The calculation of the real value shall be based on the value of the surviving company, not the value of the company terminated as a result of the merger. The real value of the shares is the value of the shares calculated by taking into consideration certain factors related to the financial data of the company, such as the company’s assets and profitability status. Although various methods are mentioned in the finance doctrine on the determination of the real value of the share, in our opinion, it would be more appropriate to make a determination based on the characteristics of the concrete case rather than a single method to be applied to all cases.
Although continuity of shareholdings is generally the norm in mergers, our legal system provides for an opt-out fund as an exception to this rule. In a merger, the acquiring company usually has the right to demand shares and rights at a value equal to the value of the shares in the transferred company. This ensures that the value of each shareholder’s shares in the transferred company in the old company is covered and these shareholders have rights equal to the rights conferred by the old shares they hold.
In another aspect, the right to opt out in a merger allows minority shareholders who do not wish to participate in the merger or who, for various reasons, are likely to disturb the harmony in the company, to leave the company by receiving the real value of their shares without participating in the merger and without damaging the level that the company will reach.
The right of shareholders to withdraw and demand a separation fund is a fundamental right granted to them. The doctrine in the preamble to the provision criticises the statement that the opt-out fund should not be in the form of a return of capital. It argues that the opt-out fund can be in the form of a return of capital if the actual capital is equal to or less than the nominal capital.
The recognition of the right to demand an opt-out fund solely for the shareholders of the transferred company suggests that it aims to protect the synergies resulting from the merger, particularly within the transferee company.
The right to request an opt-out fund is exclusively granted to the shareholders of the transferred company. The right to exercise is granted through a unilateral notification. This notification takes effect upon receipt by the acquiring company and becomes final upon receipt by the other party.
The value of the opt-out fund must be determined based on the actual value of the shares to be acquired. There will be no alteration to the share and partnership rights of the shareholders of the acquiring company, except in the case of a merger by formation of a new company. In this type of merger, the opt-out right should be granted to all shareholders since all parties to the merger are considered the acquiring company.
The statement in the preamble to TTK 141/1 suggests that the opt-out right should be granted only to the holders of rights who do not approve the merger. However, every shareholder of the transferred company has this right.
The possibility for any shareholder to exercise the opt-out right raises the question of what would happen to the merger if all shareholders of the acquiring company wish to exercise their optional opt-out right. In our opinion, although there is no legal regulation on this issue, a limit should be set in terms of the number or ratio of shareholders who can claim the opt-out fund.
To claim the opt-out fund, it must be included in the merger agreement. Shareholders requesting the opt-out fund must notify the company, which constitutes a legal demand.
The opt-out fund must be equivalent to the real value of the shares of the acquiring company. The calculation of the opt-out fund must be based on the real value of the shares to be acquired. The calculation of the real value is based on the value of the surviving company rather than the value of the company being dissolved due to the merger.
The intrinsic value of the shares is calculated by taking into account certain factors related to the financial data of the company, such as its assets and profitability status. Although there are various methods in financial doctrine for determining the intrinsic value of a share, it is more appropriate to decide based on the characteristics of the specific case rather than applying a single method to all cases.
Merger squeeze out merger opt-out right opt-out fund merger contract
