On February 25, four leading lawyers in Turkey sat down for a virtual round table moderated by CEE Legal Matters Managing Editor Radu Cotarcea to discuss the Turkish technology sector, its recent developments, and the technology sector-related regulatory landscape.
Round Table Participants:
Ali Selim Demirel, Partner, Esin Attorney Partnership
Ayse Ulku Solak, Partner, Nazali
Sinem Mermer, Partner, Boden Law
Vefa Resat Moral, Managing Partner, Moral & Partners
You can also listen to the conversation as a podcast below.
CEELM: Let's start with the first thing that popped up in the news feed and was an initial starting point for this round table. Trendyol recently made the headlines as Turkey’s first decacorn. Was this success story a fluke, or do you believe that it was a sign of things to come?
Moral: Before we start, to see the big picture, I want to share some numbers evidencing that such investment behavior was not a fluke. In 2021-2022, the total investment injected into startups was more than USD 1.6 billion. We can see that this volume, exceeding the total number of 2019 and 2020 combined, shows the progress of Turkish startups, the investment appetite of angel investors, venture capital, PE, and family offices. We can see that Trendyol, Getir, and Hepsiburada have become unicorns and decacorns. There are certain emerging sectors, such as gaming, artificial intelligence, data analytics, delivery, and fintech. For example, three years ago, we were talking about conventional businesses, such as manufacturing, packaging, chemistry, etc. and now we are talking about technology and startups. Therefore, in short, we can say that evolution is real and will continue. This is not related to the country’s current conditions, such as the devaluation of the Turkish lira, but to the product and bright brains.
Demirel: I agree with Resat, however, I would like to mention that while tech M&A has increased in numbers, the per-deal value has been lowered. When you look at the overall value (of all M&A activity, not only tech), you see that the major three or four deals mentioned by Resat create nearly 60% of all the deal volume. There are great opportunities in Turkey, but when you look at the global landscape, with the COVID-19 pandemic and growth in technology and gaming industries, I think the activity here is still low and there are many untapped opportunities. It might sound a bit grim for the time being, but that also means that there is a lot of potential in Turkey. There is a strong consumer and technology base, and I believe there is more to come. But again, in e-commerce and gaming, we’ve already started to blossom.
CEELM: With regards to the slightly different numbers, is your point that, while the value increased in 2021 compared to 2019-2020 combined, funding only goes to a very small number of entities?
Solak: As a woman, I am very proud of Trendyol's deal as it is very promising. Trendyol raised USD 2.8 billion this year and reached the decacorn status with a valuation of USD 10 billion. It is now one of the most valued companies in Turkey. It evolved from a marketplace to its current status by incorporating some super-app features. It definitely is not a fluke, as it started from a fashion-focused website and has become the largest e-commerce platform now in Turkey, with some additional services. It is now operating delivery networks such as Trendyol Express, an R&D Center (a service driving digital transformation for Trendyol tech), as well as an instant grocery and food delivery service – which witnessed monopoly in the past, but now with [other] players, it’s getting a competitive market. The company also operates the largest second-hand platform under the Dolap umbrella. It seems that it is going to grow very fast, with an approach to developing high customer confidence. They are on the same path as Amazon, as they are immersed in building up consumer trust. Now, with the cooperation with the Union of Chambers and Commodity Exchanges of Turkey, Trendyol is launching the Grow Your Business with Trendyol small and medium-sized enterprises (SME) support program, which creates a win-win situation for both parties involved. In addition, they also have a key element – a program supporting female entrepreneurs' empowerment as part of the ESG campaign – which I am personally very proud of. I believe that ESG will be one of the key elements in Turkey and will trigger consumer trust and consumer sympathy. Consumers will hopefully also become more aware of those elements. In short, I am sure that it is not a fluke but a big success story.
CEELM: What made it a success story? Were there any particular conditions that it benefited from, or was it bound to happen at some point anyway?
Mermer: In general, the deals that were made with Trendyol were magnificent in the tech sector ecosystem in Turkey – although it coincided with difficult financial times in August 2021. With that attraction, compared to when we started in 2018, we definitely observe an increase in interest in the Turkish tech ecosystem. Trendyol is and will be very successful in the Turkish e-commerce ecosystem, and the reasons for it are many, including a geopolitical one. We have been seeing a surge in the opening of investing in the Turkish manufacturing sector ranging from automotive to healthcare, giving the country a strategic power in supplying goods and services to Europe, the Middle East, and Africa. That’s why the e-commerce, delivery, and logistics sectors will further attract many new foreign investors. Trendyol sets the best example in that regard but other sectors, such as the extremely successful gaming industry, follow it. I anticipate that the manufacturing sector and the related sectors will benefit the most from investor influx in 2022.
CEELM: What is it about local technology companies that makes them particularly attractive for foreign investors right now?
Demirel: I would like to share some insights about Trendyol's example. We first met Trendyol people back in 2017, on the Alibaba deal, and they had some angel investors. Back then, the value of the deal was around USD 800 million, for around 80% of the shares of the company. However, the founders said they expected to see a much higher price in the near future, in the billions. We, as lawyers, thought it was too much, but later we saw how Trendyol grew and things developed when we were involved in each and every funding round.
The difference between Trendyol and other competitors is that the founders of Trendyol, the angel investors, and the other investors there had more flexibility – meaning that they were more aggressive, made decisions fast, and were visionary. If you go back in 2017 and ask my colleagues whether Trendyol would be the number one amongst the other competitors, the answer would probably be “I don’t think so.” So, I think that the management made the difference.
Moral: The thing about Trendyol was a blended organizational operation, as Trendyol has provided e-commerce instruments as well as its own private-label production ability. That became a blend for the consumers to increase the appetite for purchasing from Trendyol, as it provided a one-stop shop for all consumers to be satisfied. One commercial point to add – Trendyol’s unique approach was the start of the avalanche. From the young population attending startup events, we can see that founders' age and education levels are different. If you look at the gaming companies, or other technology-related startups, and their founders, some of them may not even have graduated from university – which shows innovation and success do not need a diploma. However, of course, the product, agility, and growth make a difference. Often, a former stakeholder from a conventional business entity may most probably become an investor via VC funds, family offices, or private equity funds. Therefore, we now have a variety of investors who have the awareness of investing and sharing success. Of course, there are tax advantages for Turkey, making the Turkish market more attractive.
Solak: I agree that such success was unforeseen. I remember probably the first establishment of the Turkish startup ecosystem. Even though we were coming together at fancy meetings, when it came to funding everyone was a bit silent. Now, when we are looking at the investment landscape, our clients – VC funds, private equity [funds] from around the world – say that Turkish startup adaptability skills are amazing. We have to be honest that Turkey is not a very easy jurisdiction in terms of territory, geopolitics, and other challenges. It is difficult to survive in this country but, if you do, you can be sure that your company can survive in other jurisdictions bearing fewer risks – which creates more and more success stories, in the phase of internalization. Also, the pandemic showed us that, when it comes to facing challenges, quick adaptability skills mean everything. Venture capital [funds] and private equity [funds] also give credit to Turkish startups due to their adaptability skills. We should keep in mind that every challenge makes us stronger. This might be another attractive point for investors while making their judgments about Turkish startups. Success stories like Peak Games, Trendyol, Getir, and Dream Games show that Turkey's startup ecosystem has figured out what it takes to be a global player.
CEELM: Since you mention a strong investment landscape, who are the main investors in the country? Is it local capital or foreign capital, and where is it coming from?
Mermer: Compared to the early 2010s, there are lots of different players on the market. VCs are on the rise. In the past, we would come across a couple of them, but recently we have seen an increase in the number of both Turkish and international VC funds, which have established local offices or have representatives here in Turkey. Also, we see the exponential growth of Turkish businesspeople becoming angel investors. Other than that, I would like to put a special emphasis on corporate incubators which are playing a big part in supporting the whole ecosystem. The first to mention is fintech – it was one of the early subsectors in which we saw a lot of corporate backing. Various banks founded incubation centers, undertook idea competitions, and even organized hackathons. We observe the same in the manufacturing sector, too. For example, this year we advised an Estonian micro-mobility company on its merger with a US company. Interestingly, the Estonian company was first supported by a Turkish corporate incubator that has manufacturing power. This way, startups have the perfect setup of the “try, fail, and get better” phase, and they do not have to take huge financial risks.
Solak: When we look at the landscape, 294 deals were completed with the support of foreign investors. Despite the deal volume, I agree with Ali that there is still a long way to go. Amongst European cities raising the most capital, Istanbul was placed 13th – and fourth in terms of the number of investments in the MENA region. Turkey is ranked among the top ten countries in terms of startup investments and placed in the Super League, although there is a long way to be placed in the Champions League. In addition to angels, VCs, and private equity, corporate venture capital investments were outstanding last year, and big corporations and CVCs also become important players in the startup ecosystem. The landscape is very promising with the entrance of CVCs, as 87 out of the 294 deals were supported by the corporate VCs. Approximately one out of every three deals [included] corporations or CVCs.
Moral: I agree that a huge part of the financing was injected into one or two unicorns, however, we should consider the quantity of the investment, which shows the awareness of angel investment culture in Turkish businesspeople. In 2014-2015, I was giving training to angel investors when the first legislation entered into force, providing incentives for personal income tax. Now we see that Turkish business individuals are becoming co-investors in or with VCs and PEs, while corporate institutions, including leading conglomerates, either form investment vehicles or are directly investing or co-investing in other PEs or VCs. Personally, I am currently investing in five different startups, and, as a firm, we also invest under a hybrid model in some startups which are approved by the management board. This awareness in Turkish business society will pump a great impact in empowering new VCs. It is also true that, apart from four or five Turkish-managed PEs, recently, under current circumstances, the foreign private equity [funds] do not find Turkey so attractive. However, the technology market can change this negative impact.
CEELM: Is there a sense of a stronger local capital base that is floating around?
Demirel: It is a fact that startup activities are rising. One precise evidence to it is that startups have been present in Turkey for a decade or so, however, they only recently started approaching elite law firms. Before that, they could not afford it or did not know about it. Accordingly, there is a lot of awareness and activity. We also see that Turkish conglomerates are constantly launching their own VCs to invest more. Even more so, individuals began investing in startups. Resat said he has invested in various startups. So did I, and probably other colleagues here did as well. Hence, there is a lot of recognition in the Turkish market overall. When you look at publicly available data from the mentioned sources, you will also see that roughly 80% of the transactions are done by domestic investors and, again, nearly 80% are strategic acquisitions. So, our read of Turkish M&A activity, as a law firm, is in line with what we see from the industry/market reports. In terms of institutional/financial and foreign investors, in other words the remaining 20% of deals, I assume nearly all of the 20% are spread into the four major deals mentioned previously. So, financial and/or foreign investor appetite is still low. However, overall activity is promising. I think, in time, there will be more institutional and foreign investors but, for the time being, it is mostly local.
On the picture looking promising, I have one particular example: we had a client, a gaming company, and they had not a single game – yet their valuation with only a prospect of a game was around USD 300 million. Later, they hit USD 1 billion. I think that in Turkey there is an especially big market for hyper-casual and casual gaming. The founders of these gaming companies are not necessarily college graduates. But some others are extremely well educated – like a husband-and-wife [team] from a top university in Ankara. So, you never know who is going to come up with the next big game, and the beauty of gaming is that it is not geographically limited. For example, when we did the Peak games deal, its value was around USD 1.8 billion and they were one of the biggest hyper-casual game companies in Japan.
Mermer: I strongly believe that more local capital will become available to startups over time. Considering the geopolitical position we are in, if things return to normal, companies in the gaming industry can have spectacular prospects. With the hype in the metaverse, gaming companies and in-house software companies will get a lot more capital in the future. Moreover, there is an increased interest in NFTs (non-fungible tokens) and blockchain systems in Turkey. This is no surprise, since the number of smartphone users and credit card users is always higher in Turkey compared to the European average and Turkish market indicators show similarities with the US in terms of the fast pace in adopting new technologies. With the hype of the metaverse and Web3, the gaming industry and other industries that are linked to it will find much more capital more easily.
Solak: Because of the mega-deals Getir and Dream Games reached, foreign investors made up 89% of the total investment made into startups in Turkey; in terms of the number of deals, 15% of them were signed with foreign investors; 60 different foreign investors made investments into Turkish startups in 2021 – when you look at numbers and volumes, it needs to grow. However, I would say that 60% of newcomer foreign investors were making investments in Turkey for the first time. Some of them are very well-known players, such as Goldman Sachs, Balderton Capital, Elevator Ventures, Global Founders Capital, or Index Ventures and it is obvious that it is a growing trend, and newcomers are on the horizon. When we look at local funds, there is an increasing trend as well, despite the challenges. The dissemination of the venture capital investment fund (Girisim Sermayesi Yatirim Fonu) format and the continued increase in successful exits have increased the total number of investors. Local capital, despite the bureaucratic challenges, still tries to establish the funds. In 2021 we saw very well-developed venture capital investment funds – a total number of 18 funds were established. Still, the size of these funds is around USD 180 million. Of these, 13 were GSYFs and one was a venture capital investment partnership (Girisim Sermayesi Yatirim Ortakligi). Local VCs used the experience gained through successful exits to begin making additional investments as well as international ones. In the gaming industry, for example, unicorn numbers are increasing and, even though we still have some bureaucratic and legislative challenges, it is still promising to see such an increasing trend in local funds. Reputable financial institutions and players such as the IFC, EBRD, and Endeavour also gave rise and contributed to the growth of the Turkish startup ecosystem.
CEELM: What do you think still needs to be done to secure more funding?
Moral: Apart from other conventional businesses, the technology sector is the least affected by geopolitical and economic changes, because of the nature of the business activity. I would like to add that the legislative framework, tax-wise, has some hurdles regarding current incentives. Tax legislation should be more flexible, and this should be clearer with regard to foreign direct investments. On investments, we always think of converging from a limited company to a joint-stock company – to avoid any tax risks. Tech companies are agile, as they get their first investments within the first few months rather than long years, therefore we should avoid those roadblocks to welcome more injections and foreign capital.
Demirel: I have similar remarks. For the gaming industry, I would like to highlight that Zynga was sold globally for around USD 13 billion and Peak Games – which is now part of the Zynga ecosystem – was acquired by Zynga two years ago, for around USD 2 billion. It would be a fair guess to say that Peak probably represents nearly 20% of Zynga's value as of today. This gives a perspective on how big the Turkish gaming industry is and can become. In addition, on Ulku's remarks about well-known investors such as Goldman Sachs – it is true that we see such big players, but still, probably only in the four big deals. We want to see them more.
Overall, M&A activity in the world increased rapidly after the pandemic, and one of the main reasons for that was the ease in capital and easy access to money from the banks. This, unfortunately, was not the case in Turkey for local investors, because money is expensive. Even though official interest rates do not seem very high when you go to a bank and apply for a corporate loan you are faced with interest rates higher than 30%. That is the reality we live in and, in that sense, one of the regulatory problems is the foreign exchange restriction. It means that in certain industries it is restricted to trade in foreign currencies, and you have to deal with the Turkish lira. So, the borrower takes all the currency risk and banks do not like businesses generating predominantly local currency – hence the high-interest rates. Therefore, unless a company is mainly an exporter, it is very difficult to secure funding. Although the foreign exchange restriction is a problem, such a restriction is also understandable, since the government tries to keep the Turkish lira on a certain level. I understand the government’s rationale behind this decision and that they have to do it, so it is like a chicken-and-egg situation.
Other than the FX restriction, there is another legal bottleneck – though it probably is not a practical concern for startups, since they usually receive investment through rounds of subscriptions/capital increases, and it is very rarely a 100% buyout. But for buyouts or majority share acquisitions, there is a particular restriction in Turkish corporate law (Article 380) prohibiting companies from showing their assets as a form of security in the acquisition of their own shares – meaning that one cannot use the target's assets as security for acquisition financing. It could be a problem but, from the legislator’s perspective, the aim is to protect the company.
Briefly, the FX restriction and acquisition financing security issue may, from time to time, create roadblocks for the time being. But with more investments coming in and the Turkish lira recovering, these will become less of a problem.
Mermer: Access to cash through banks is problematic nowadays, due to global economic distress. Risks related to interest rates and the new legislation make it harder for investors to foresee the future. For foreign and local investors, it is important to know what will happen in terms of the legal framework. It is tough to give them an idea about the legal landscape in six months or a year’s time. Therefore, the uncertainty and ambiguity of the legal framework are definitely some of the problems.
We observe an interest in new investment methods, such as share swaps with foreign entities. We provide legal opinions on how to do that or what would be the most effective structure for all parties. We accomplished it with one of the US companies and the structure proved to be working. From the legal side, we are also trying to find new solutions; it is not only for startups to be creative, but the lawyers are also trying to navigate through these legal pitfalls and give clients advice on investments with unorthodox structures. Hopefully, the interest rates will be kept at this level and the currency exchange rates will remain more or less the same. In 2022, we will probably see a better financial environment for investments.
CEELM: Do you see the regulatory landscape more like a facilitator or roadblock for the technology sector?
Solak: It is challenging when it comes to the regulatory landscape in Turkey, as we adopted the European legal system, not the Anglo-American one. I think that co-regulation and regulatory sandboxes are becoming more and more important. We should abandon the traditional way of lawmaking – and it should cooperate more with the private sector newcomers such as startups, and not only the ones that already have a voice and influence on the legislative bodies. If we want to compete with the global landscape we need to adapt and hear the voices of others and the regulatory landscape should be open for innovation. A close collaboration between the private sector and the regulators enables the private sector to test new data uses, technologies, and applications while receiving regulatory guidance.
When it comes to corporate legislation, we are always facing some challenges. Despite reforms, bureaucratic challenges still remain. This is particularly true in terms of company establishment and corporate governance, with such difficulties around e-signing, e-meeting, legalized proxies for every general assembly meeting, etc. The commercial code still restricts the freedom of contract, especially considering share transfer restrictions. Also, the lack of common stock and the restrictions on issuing shares without having any voting powers create difficulties in terms of growth finance and employee stock options models, which was also the main issue during the adoption of the crowdfunding legislation.
I had the privilege to attend the meetings held by the legislative authority while discussing the draft crowdfunding legislation which came into force in 2019. Our proposal back then was also amending the commercial code to allow companies to issue shares without any voting power. This was reflected in legislation by the Capital Markets Board back in 2019, as the amendment of the commercial code was necessitating further efforts, but then the article allowing the issuance of shares without voting power was struck out from the legislation again, in 2021, with the recent communique on crowdfunding.
In Turkey, we need to find magical solutions for maintaining conformity of the shareholders’ agreements with companies’ articles, the enforceability of call/put options, or drag-along mechanisms – as we have to abide by the mandatory and restrictive provisions of the commercial code. So, we have a long way to go in terms of legislation, freedom of contract, and enforceability. I think that our legislation is still very bureaucratic and heavy but, hopefully, it will change soon, especially for the fintech sector. The Banking Regulation and Supervision Agency is a good example of a legislative body, as it has been listening to the voices of others. The PSD (Payment Services Directive), for example, was adopted in a legislative sandbox model. Payment companies were first allowed to operate and, once they positioned themselves, this industry started to become regulated. This kind of collaboration between the legislative bodies and the private sector would be great. I have a notion that every person working as a public employee must first work in the private sector, for at least two years – otherwise, they are blind to the private sector’s problems – to be more open to, and aware of, the realities of the private sector.
CEELM: What was the impact of data privacy and data protection on the tech sector and M&A transactions in that context?
Mermer: Tech M&A projects are heavily influenced by the data protection rules. The Turkish Law on the Protection of Personal Data was adopted in 2018, and tech companies now comply with data protection rules. When the data protection law was first adopted, it was hard to explain the necessity of due diligence specifically on this topic, especially to our American colleagues. Now they are aware of data protection legislation in Europe and Turkey and understand their implications. The Turkish Data Protection Authority issued heavy fines to Yemeksepeti, one of the biggest food delivery companies, due to data breaches it suffered. This example shows how the technology sector is directly affected by data protection laws. Of course, the Turkish data protection law is not the GDPR, and the Turkish parliament aims to adopt laws that will not be limited to personal data, similar to the European approach. Accordingly, this might lead to the implementation of stricter rules in terms of data protection.
During the first two years following the enactment of the Turkish data protection law, many B2C startups failed because it was hard to comply with these rules, since compliance required some legal and financial support. That said, I believe this is a thing of the past. Another point is that the Turkish commercial code allows joint-stock companies to undertake their general assembly electronically. In 2020, during the pandemic, we undertook an electronic general assembly of a Turkish joint-stock company that has a foreign sole shareholder and whose board consists of three non-Turkish citizens. We faced many practical limitations while trying to complete the general assembly electronically, such as the need for sending the flash disks containing the electronic signatures abroad. As experienced in this case, even when the code allows a particular action to be taken, it does not necessarily mean that execution will be easy. We do give feedback to governmental organizations about our experience, and we expect such procedures to become easier in the future.
Demirel: In terms of data protection rules, when you look at penalties issued by the data protection board so far, they are around USD 100,000-140,000. Also, the rules themselves are relatively easy to comply with. Turkish companies are becoming more aware of these rules and thus more careful but, at the end of the day, whatever they do is not going to have a devastating financial impact/penalty – because the penalties are not pro-rata, not imposed over profit or turnover.
With regards to other regulations, the e-commerce industry is on the rise, and it catches the eye of the regulator. Meaning that the data protection board, the competition board, and tax regulators will look into it. So what the investors should be careful of is not data protection but the competition law. Because, firstly, you don’t know exactly how to comply with it – you can do your best, but the board can still come anytime and claim that you breached the law in its interpretation – as competition law restrictions are much more subjective rules, compared to those of data protection. Second, the penalties may be devastating, as they are applied over turnover. So, the big regulatory risk area to watch out for is competition and I would say the Turkish competition board has increased its interest in certain industries recently.
Moral: I would also highlight the obstacles against leverage buyouts, which the commercial code does not enable, but our creative financial institutions always support such transactions. However, I want to mention the new generation of government authorities, such as the competition board, data protection board, Information and Communication Technologies Authority, Ministry of Trade – they all are liberal institutions, and they employ more liberal and well-educated people. Their understanding and attitude are very tough, opening another door for wider checklists of requirements to meet for investors and lawyers.
My first M&A experience was related to the privatization of Turk Telecom, and we had a due diligence checklist. Now, when I review our current due diligence checklists, data protection, cyber-security, e-commerce compliance, foreign sanctions, the list has increased significantly. Now we provide 20 pages due to diligence checklists – it is quite challenging for investors.
CEELM: Last question: if you had to pick one, what would be the main legislative item on your wish list to help the technology sector in your country?
Solak: As a privacy lawyer, I would like to touch upon privacy legislation. I will not criticize just Turkey, but the EU as well. I think we have a little bit of a “mom and dad versus child” situation between the regulators and data subjects. When it comes to privacy, we should find a middle way between the EU approach and the US approach. Data means everything to support the technology sector and innovation. We are not only talking about traditional e-commerce activities, but also the blockchain sector, artificial intelligence, machine learning, IoT, and the metaverse. The OECD reports point to this specific issue, that policymakers should not prevent innovation. Due to the GDPR’s material and territorial scope, the newcomers doing business or targeting data subjects in the EU need to abide by the GDPR as well as other local legislations in different countries. There are many different laws that companies need to abide by. Transfer of data abroad is another difficult issue. In addition, imprisonment sanctions in the Turkish criminal code and provisions having a very broad definition of crime, in terms of unlawful processing and transferring of data, need to be amended in a very fast way. The EU also needs to slow down a bit with the fast and conservative development of data laws and should embrace new technologies and understand the importance of data when it comes to innovation. For example, companies using cookies in the EU are forced to make huge investments to adapt cookie management tools very recently to comply with the GDPR are now required to adapt to a cookieless world. I am afraid that, due to legislative bombardment, companies would be busier with compliance work rather than carrying out their own business.
Mermer: Personally, I would start with the energy legislation, especially the European Green Deal and its implications in Turkey. The reason thereof is that the Turkish energy market will be affected directly by the new legislative acts enacted in Europe. Separately, many startups are using artificial intelligence to ensure the efficiency and storage of renewables. Turkey has enacted new legislation, which entered into force in 2021, concerning energy storage facilities. We work closely with startups in the energy sector and these startups are trying to have a better understanding of the legal framework for compliance reasons. The second one is related to artificial intelligence. We follow the developments regarding the European Union’s directive on artificial intelligence and try to foresee what the Turkish stand on that will be. Once the legal framework on artificial intelligence becomes clearer, those Turkish tech companies whose core business activity is AI can more safely develop new products and business models.
Moral: As an M&A lawyer, my wish is an increase in flexibility of commercial and tax legislation, which would enable more incentives and an attractive corporate environment. Regarding the commercial code, the lack of flexibility related to shareholder relations should be addressed. As for the tax legislation, some incentives regarding share transfers and corporate income taxes would be more investor friendly.
Demirel: I would say a combination of what has been mentioned. The biggest problem for the Turkish M&A landscape is an issue arising out of several pieces of legislation – corporate law, civil code, and tax rules. According to Turkish law, share certificates are qualified as movable assets and if you cannot find them and the owner (i.e., seller) does not file a “loss lawsuit" (a lawsuit that can only be filed by the owner) and document the share certificates being lost, you cannot buy them. Therefore, if someone – a seller in bad faith – loses them, there is no option for specific performance. You could now ask why are shares printed in the first place? (As, in unprinted shares, you will not have the risk of anything being lost and the agreement itself will be sufficient for the share transfer.) The reason behind printing shares comes from the tax regulations: if a seller holds their shares for more than two years, they are exempt from the income tax. If one could align these corporate, civil, and tax codes/rules – and say, for example, that you can proceed with unprinted share certificates and still be exempted from income tax – it would be a huge help for M&A transactions.