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Gönenç Gürkaynak and Bora Ikiler of ELIG Attorneys-at-Law discuss recent trends in the Turkish merger-control regime

Bond documentation has failed to keep pace with changing bondholder meeting practices. Draftsmen should take note of these common discrepancies

Muharrem Küçük Mustafa Yigit Örnek When international banks and financial institutions finance a project or provide acquisition financing, they need to acknowledge certain restrictions under the Turkish Commercial Code No 6102 (TCC) in respect of security granted to secure such financing. For any project or acquisition financing, the borrower itself is able to provide a corporate guarantee to the lenders. But there is a concern if a subsidiary company is required to provide a corporate guarantee in respect of the obligations of its parent company. According to article 202 of the TCC, a parent company cannot cause any loss to its subsidiary. Although abuse of control by the parent company does not render the relevant transaction void, the parent company is obliged to compensate the losses of the subsidiary within the same financial year or provide a method for compensation within the same financial year. If the parent company fails to compensate, the other shareholders or creditors of the subsidiary are entitled to commence proceedings against the parent company and the directors of the parent company for compensation of losses. Article 202 also applies if either the parent or the subsidiary is incorporated in Turkey.

Mian Muhammad Nazir Transfer of ownership and possession under certain Shariah nominate contracts and structures are the cornerstone for the validity of the sale and purchase transactions. Principles of Shariah provide for specific requirements that must be satisfied to ensure validity and enforceability of the underlying sale contract. It has been observed that there may be certain instances where a sale, which is perfectly valid and enforceable under the principles of Shariah, may need to comply with additional requirements under the local laws of the relevant jurisdiction in order to qualify as a valid and enforceable transaction. The question is whether a sale transaction strictly entered into in accordance with the principles of Shariah will still be required to comply with the local laws for its validity under Shariah principles. The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) seems to suggest that compliance with local laws in relation to transfer of ownership and possession is an integral part of a Shariah sale in respect of certain Shariah-compliant contracts and structures. To this extent, it is encouraging to note that for the modern application of Shariah nominate contracts and structures, compliance with local laws, in relation to transfer of ownership, possession and legal effects of the sale and purchase contract, is well recognised by Shariah scholars and the AAOIFI (which is a standard setting organisation). However, the more important question is what are the effects of non-compliance with the local law requirements on the Shariah compliance of underlying transactions in view of the AAOIFI's resolution, which obligates transfer of ownership in the sukuk assets to be in accordance with local law requirements.

Fernando Navarro Coderque A number of Spanish companies are nowadays struggling to get new money or to restructure their debt, but traditional financing seems to be still unavailable. In most cases the reason is not the poor fundamentals of such companies but rather that their regular lenders are not in a position to incur further risk with them. Certain companies are therefore looking for new sources of financing and at the same time for another type of financier. For this purpose, high-yield bonds are becoming popular, usually combined with a revolving credit facility, which is a structure that has been used by large Spanish companies where restructuring their debt.

Zeynel Tunc and Asli Kehale Altunyuva of Paksoy examine the continuing liberalisation of Turkey’s oil and gas market

There is little need for this in regulator-bank settlements When Judge Rakoff rejected a $285 million settlement between Citi and the Securities & Exchange Commission (SEC) in 2011, many dismissed the move as type of financial-world publicity stunt. Rakoff has long been a critic of neither-admit-nor-deny settlements, and the Citi/SEC agreement seemed to push him over the edge. Of course the bank and Commission have appealed, and of course that is still rumbling through the court system. And of course everyone expects the court to rule in favour of the appellants (a judgment is expected early this month).

The world is eagerly awaiting the internationalisation of the renminbi (RMB), but it may be further away than many believe.

Ozan Karaduman and Tugçe Avcisert of Mehmet Gün & Partners explore the likely impact of a new law on the Turkish electricity market, and the effect on the use of renewable energy

Has New Zealand found a way to keep these away from creditors?