Shares are the essential subject of share purchase agreements. Consequently, the seller`s main obligation results in principle from defects in the shares. In the absence of specific provisions concerning insurance and guarantees in the context of share purchase contracts, this obligation is subject to general provisions. Accordingly, the seller defends above all that the shares are properly issued by the target company, that the share certificates are duly issued, if any, and that other similar issues directly concern the shares. AyoÄŸlu, for its part, states that the insurance and guarantees relating to the target undertaking cannot be regarded as specific qualifications communicated by the seller within the meaning of Article 219/1 of the TCO7. Read on to find answers to frequently asked questions about the Representations and Warranties section. The buyer`s insurance and guarantees are generally limited to the following provisions: in the event that the seller is liable for the defects, the buyer is obliged to choose: Although shares are the essential object of share purchase contracts1, the buyer`s objective through share purchase contracts is usually the acquisition of companies of the company to which the shares concerned belong. In this context, in addition to the qualifications related to the shares, the qualifications, which would have a significant impact on the company`s activities, are essential for the buyer. During the negotiations, the seller will attempt to qualify the scope of this section in order to limit its risk and exposure.
This is achieved by adding qualifications of time, materiality and knowledge. In addition, insurance and warranties are included in disclosure plans. This article assesses the results of the breach of the guarantees and guarantees relating to the target undertaking to which the shares covered by a share purchase agreement belong and the seller`s liability resulting from such an infringement. The legal consequences for breach of the warranties and guarantees set out in the contracts differ depending on whether the buyer has performed due diligence on the legal, economic, tax and various other aspects of the target business and the actions being sold. The seller establishes the disclosure plans. It contains miscellaneous facts, exceptions or clarifying information about insurance and guarantees. Disclosure plans can require a lot of time and attention to prepare, so it`s important that the seller starts preparing as soon as possible. Often, the seller`s CFO, in collaboration with the seller`s lawyers, takes care of the preparation. If the transaction is not concluded at the same time as the signing of the sales contract, the disclosure plans must be updated at the time of conclusion. The rules on the seller`s liability for defects arising from sales contracts and the impact of defects on sales contracts are specified in the Code of Obligations in Turkey No.
6098 (“TCO”). However, there are no specific regulations for contracts for the sale of shares falling essentially under the Turkish Commercial Code No. 6102 (“TCC”). However, as explained above, the objective of buyers in share purchase agreements is usually to acquire companies of the company to which the shares belong, the qualifications that concern the company and its activities are also of paramount importance to the buyer. Therefore, share purchase contracts contain a large number of insurances and guarantees from the seller. The extent of such insurance and guarantees varies according to the interests of the parties and the agreement concluded3. . . .