International Arbitration of M&A Transactions: On the Enforceability of Call Options in Turkish Law Shareholders’ Agreements

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ABSTRACT

Shareholders’ agreements are widely used where more than one interest is represented by equity ownership under the roof of a given corporation. Enforcement of some shareholders’ agreement provisions frequently used in global M&A practice may in some cases turn out to be complicated under Turkish law. One such clause is the ‘call option’. Whether a call option is enforceable and how it will be enforced should be considered at the drafting stage. It is also imperative to make this analysis taking into consideration the common dispute resolution mechanism of shareholders’ agreements, which is arbitration. The complications will vary depending on whether shares are represented by a paper share certificate or not. There are various solutions used in practice to address these problems, such as obtaining escrow services or inserting penalty clauses tied to the option.

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