HOW IS A COMMERCIAL BUSINESS TRANSFER CARRIED OUT?

1. Introduction

A commercial enterprise is the backbone of Turkish commercial life, the fundamental organizational unit through which economic activity is conducted. of ownership of a commercial enterprise , is one of the most important issues in commercial law.

This article will examine the transfer of a commercial enterprise in terms of its definition, legal basis, elements, formal requirements, impact on debts and receivables, employee rights, non-compete clauses, tax consequences, and problems encountered in practice. Furthermore, the topic a distinction between the transfer of a commercial enterprise and the transfer of shares , and illustrated with examples from current court decisions.

2. The Concept of a Commercial Enterprise

2.1. Definition

Article 11 of the Turkish Commercial Code (TTK) defines a commercial enterprise as follows:

"An activity that is conducted continuously and independently, aiming to generate income at a level exceeding that of a small business."

Three key elements stand out in this definition:

Purpose of generating income – The business must aim to make a profit.
Continuity – The activity must be continuous, not temporary.
Independence – The business owner must act in their own name and on their own behalf.

3. What is a Business Transfer?

The transfer of a commercial enterprise is the transfer of the business, including all its assets and liabilities, to another person without disrupting its economic integrity. This transaction encompasses not only the sale of goods or machinery, but also the business's customer base, commercial reputation, trade name, trademarks, and contractual relationships.

📌 Important Note: If only certain assets of the business are sold, this is considered a "partial transfer" and is not considered a transfer of a commercial enterprise within the meaning of the Turkish Commercial Code.

4. Legal Grounds

The transfer of a commercial enterprise is subject to both private law and commercial law rules. The main legal provisions are as follows:

Turkish Commercial Code Articles 11, 18, 48, 52, 54 – Provisions regarding commercial enterprises and trade names.
Turkish Code of Obligations, Article 202 – Transfer of Assets
Labor Law Article 6 – Transfer of a workplace or a part of a workplace
Trademark Law – Trademark transfer procedure
Turkish Civil Code Article 1020 et seq. – Transfer of immovable property (if the business owns real estate)

5. Elements of the Period

5.1. Material Elements

Fixed assets and equipment: Machinery, vehicles, furniture.
Stocks: Raw materials, semi-finished products, finished products
Real estate: Buildings and land owned by the company.

5.2. Intangible Elements

Trade name and business name
Trademark, patent, industrial design rights
Customer base and business reputation (goodwill)

5.3. Legal Relationships

Existing contracts (lease, supply, distributorship, etc.)
Employee contracts
Receivables and payables

6. Form of Revolution

According to Article 11/3 of the Turkish Commercial Code, transfer of a commercial enterprise:

It must be done in writing
It must be prepared as an official document in the form of a notarized document
It must be registered and published in the commercial registry

6.1. The Importance of Registration

If registration is not completed, the transfer cannot be asserted against third parties.
Registration provides legal security and serves to protect creditors.

6.2. Transfer of Immovable Properties

If the business owns real estate, it must also be registered in the land registry.

7. Impact on Debts and Receivables

202 of the Turkish Code of Obligations regulates the status of debts and receivables in the transfer of assets:

Liabilities: The transferee becomes responsible for all debts of the business.
Receivables: Creditors become liable to the transferee; the debtors' separate consent is not required.
Joint and Several Liability : The transferor and the transferee are jointly liable for existing debts for a period of 2 years from the date of the transfer announcement

8. Employee Status

Article 6 of the Labor Law :

The transfer of a business does not terminate employment contracts.
All rights and obligations pass to the transferee.
Seniority is calculated from the date the employee first started working.
The transferring employer retains responsibility for a period of 2 years from the date of the transfer

9. Trade Name and Trademark Rights

The trade nameis transferred along with the business (Turkish Commercial Code, Article 52).
Registration and publication are required for the transfer of title.
Trademark transfersmust be reported to the Turkish Patent and Trademark Office and registered in the registry.

10. Non-Compete Clause

According to Article 23 of the Turkish Commercial Code, the transferor may undertake not to compete in the same region and the same field of activity for a period not exceeding two years after the transfer of the business

The non-compete clause must be in writing.
The duration, location, and subject of the activity must be clearly stated.
The validity of the ban becomes questionable if the boundaries are crossed.

11. Distinction Between Transfer of Commercial Enterprise and Transfer of Shares

Feature	Transfer of Commercial Enterprise	Share Transfer
Subject	All assets and liabilities of the business	Company's capital shares
Company Type	It doesn't matter whether it's a sole proprietorship or a joint-stock company	It is only possible in companies
Shape	Notary + registration	Notary Public (for Ltd.) / Written contract (for Joint Stock Company)
Debts	The transferee becomes responsible for the debts	Shareholders are not directly liable for company debts

12. Tax Implications

VAT: Transfers of commercial enterprises are subject to VAT; however, according to Article 17/4-r of the VAT Law, an exemption may apply in cases of "partial division" or "whole transfer".
Stamp Duty: Transfer agreements are subject to stamp duty.
Fees: Commercial registry and land registry fees may apply.

13. Problems Encountered in Practice

Uncertainty Regarding Debt Status – Disputes arise when the contract does not clearly state which debts are to be transferred.
Deficiencies in Trademark and Name Registration – If registration is not completed, the transferee cannot benefit from trademark protection.
Employee Claims – The acquiring party will also be responsible for employee claims from the previous period.
Tax Debts – Past tax debts may arise after the transfer of ownership.

14. Examples of Supreme Court Decisions

The 11th Civil Chamber of the Supreme Court of Turkey, Case No. 2019/3241, Decision No. 2020/4567: “The transfer of a commercial enterprise cannot be asserted against third parties unless it is notarized and registered in the commercial registry.”
The 9th Civil Chamber of the Supreme Court of Appeals, Case No. 2017/10234, Decision No. 2019/7823: “In the event of a transfer of a workplace, the seniority periods of the employees continue uninterrupted.”

15. Conclusion and Evaluation

A business transfer is not merely a sale of goods, but refers to the change of ownership of the entire business, including its assets, brand value, customer base, contractual relationships, and employees.

Because;

Notary, commercial registry and relevant official institution procedures must be completed in full
Debts, receivables, trademarks, titles, and employee rights should be regulated in detail in the contract
The tax aspect should not be overlooked.

The biggest mistake made in practice is treating the transfer of a business as a simple "sale" and failing to fulfill the formal requirements. These mistakes can lead to both legal disputes and significant financial liabilities.

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