Abstract
As a result of commercial life being instable and ever-changing, occasionally companies may want to go through restructuring and they may choose to demerge for this reason. Despite the fact that demergers of the companies due to restructuring process is in compliance with the dynamism of the commercial life, sometimes it does bring along some unintended consequences. Until recently, the status of business experience certificates and the documents relating to economic and financial qualifications, prohibition from participating in tenders, and the public procurement contracts of the demerging company had been determined according to the regulative resolution dated November 12th, 2010 and numbered 2010/DK.D-181 (“Prior Resolution”) of the Public Procurement Board (“Board”). However, the Board cancelled the Prior Resolution and reconstituted ensuring the use of business experience certificates, the documents related to economic and financial qualifications, and the prohibition from participating in tenders of the demerging company by the other companies being part of the demerger and transfer of the public procurement contracts with a regulative resolution dated January 28th, 2016 and numbered 2016/DK.D-10 (“Resolution”). With the review herein, the points regulated with the Resolution regarding demerger of companies will be discussed and terms of use of the documents by the parties of the demerger will be explained.
I. INTRODUCTION
In general demerger of a company means, by means of partial or entire demerger of assets and liabilities of a company, transferring them to a newly-established company or to an already existing company with full subrogation 1. Thus, the demerging company’s shareholders have assigned shares in transferee company. According to this definition, demerging company will be able to transfer its assets and liabilities partially or entirely by means of demerger and all rights and obligations related to the transferred assets will be transferred to the transferee company with subrogation principle. Under Turkish Commercial Code2 (“TCC”) numbered 6102, a company may carry out demerger process in two ways, either partially or entirely. In the entire demerger, all assets of the demerging company are transferred to other companies and in return the shareholders of the demerging company obtain shares in the transferee company. In the entire demerger, demerging company dissolves and its record gets deleted from the trade registry.
In the partial demerger, a part of the company’s assets is transferred to other companies and in return the shareholders of the demerging company obtain shares in the transferee company or the demerging company obtains the shares of the transferee company. Under TCC, there are no explicit provisions regarding the status of business experience certificates, the documents relating to economic and financial qualifications, the prohibition from participating in tenders, or the public procurement contracts of demerging company following the partial or entire demerger of companies. For this reason, these points are explained in the light of the Resolution.
II. THE USE OF BUSINESS EXPERIENCE CERTIFICATES
The business experience certificates are the documents confirming the experience of natural or legal person contractors and that the contracted business is completed by the contractor. The Board expressed that the use of the business experience certificates by someone other than the person whom the business experience certificates are registered to is not in compliance with the whole purpose of the certificates. Indeed, the certificate is registered to the person who has experience in that business and the use of the certificate by someone who is not experienced constitutes an inconsistency with.
regard to the quality of the certificate. Thus, Public Procurement Code3 (“Code”) numbered 4734 prohibits the transfer of the business experience certificates obtained from the completion of work, the management or the supervision to others and the use of the business experience certificates by others. However, according to the Code,4provided that those having business experience certificate with more than fifty percent of the shares of the legal person, relevant legal person may participate in tenders with this business experience certificate. The Board evaluated the transfer of the business experience certificates following the demerger of a company within the framework of the aforesaid matters.
According to the Resolution, in cases where the demerging company does not dissolve and preserves its existence, in other words where it partially demerges, demerging company may continue to utilize its business experience certificates and these business experience
certificates belonging to the demerging company shall not be subject to the demerger agreement. In return, in the event that the partially demerging company forms its filial having more than fifty percent of shares of the transferee company, it shall be possible that the filial uses the business experience certificates belonging to the demerging company when the terms specified in the article 10 of the Code are provided.
On the other hand, it is expressed in the Resolution that in demergers where the demerger is realized upon the practice areas and the demerging company dissolves, the business experience certificates shall be used by the company practicing in the area which the certificates are related to; and that otherwise is not equitable. Hence, according to the Resolution, the use of the business experience certificates of the demerging company by the transferee company shall be possible, provided that the demerger is realized upon expertise and practice areas.
III. THE USE OF FINANCIAL TURNOVER VALUES
Financial turnover means the amount of the sales made in a particular time period. It is expressed in the Resolution that the financial turnover, regulated as a qualification criteria for the participation to the tender by the Code, is a fact confirming the economic and financial qualification of the tenderers. Even the financial turnover is not qualified as an asset, as it is determined as a qualification criterion for public tenders, an evaluation regarding the way of using the financial turnover criteria is made in the Resolution.
In the Resolution, firstly, the cases where the demerging company does not dissolve, namely where it demerges partially and preserves its existence are examined. In such case, it is expressed that the financial turnover values belonging to the demerging company shall be used only by the demerging company; however the transferee company which the assets are transferred to shall not use the relevant financial turnover values.
In the Resolution, it is stated that the practice regarding the use of the financial turnover value in case where the demerging company dissolves, namely when it demerges entirely, would be formed according the fact that whether the demerger is realized upon the practice areas or not. Accordingly, in the demerger where the demerging company dissolves, if the demerger is realized upon the practice areas, it is possible to use the financial turnover values by separating them upon the practice areas. In the demerger, where the demerging company dissolves, if the demerger is realized not based on the practice areas, the financial turnover values are allowed to be used in proportion with the transferred assets of the demerging company.
IV. THE USE OF BALANCE SHEETS
It is possible to determine the balance sheets drawn in compliance with the subjected legislation as a qualification criterion for participation to the tender. In the Resolution, it is expressed that the balance sheets which are not qualified as assets, are qualified as instant proves, but that in such case, their use in demerger of company must be examined.
According to the Resolution, in cases where the demerging company does not dissolve and preserves its existence, the balance sheets shall be used only by the demerging company. However, two cases are regulated for the cases where the demerging company dissolves. In the first case where the demerging company dissolves and demerges into newly-established companies, the newlyestablished companies may use the balance sheets of the demerging company. The second case is the case where the demerging company dissolves and demerges into already existing companies. In this case, already existing transferee company shall use its own past years’ balance sheets; but it shall use the demerging company’s balance sheets for the years with no balance sheets of its own.
V. TRANSMISSION OF THE PROHIBITION DECISIONS
The prohibition from participating in tenders is qualified as an administrative sanction. For this reason, its effects and consequences arise against the person whom prohibition from participating in tenders decision is rendered about.
The Board evaluated the existence of the prohibition decision, as aforesaid explanations, separately in the cases where the demerging company dissolves or not. Accordingly, in cases where the demerging company does not dissolve, the prohibition decision already existing before the demerger shall preserve its existence for the company demerging and preserving its existence.
Under the Resolution, in cases where the demerging company dissolves, as the company (demerging company) having the prohibition decision will expire, the prohibition decision will be without a subject. However, due to the fact that the transferee company which the assets of the demerging company are transferred to does not become affected by the prohibition decision which renders the prohibition institution ineffective, the Board concluded by the Resolution that during the prohibition period of the demerging company, the company which the assets are transferred to by the demerger shall be affected by the prohibition decision and shall not be able to participate in tenders.
In addition to this, in the event that there are the prohibition decisions rendered for the shareholders of the demerging company, the proceeding regarding prohibition decision shall continue by paying regard to the share proportions in already existing transferee company or in newly-established company following the demerger, in compliance with article 11 of the Code where the person who cannot participate in public tenders is mentioned. In line with that, in the event that the demerging company which the prohibition decision is rendered for forms its filial by a partial demerger transaction, article 11 of the Code will be applied regarding the prohibition decision of the demerging company.
VI. TRANSFER OF PUBLIC PROCUREMENT CONTRACTS
Public procurement contracts may, when necessary, with the written authorization of tendering official, be transferred to another person provided that the person provides the terms of qualification of the first tender according to Public Procurement Contracts Code5(“PPCC”) numbered 4735. The Board, in the Resolution, concluded that pursuant to this provision of the PPCC, with the authorization of the tendering official and provided that the terms of the first tender are provided, the public procurement contracts may be transferred.
VII. EVALUATION REGARDING EQUAL TENDERS IN SERVICE PROCUREMENT AGREEMENT
Provisions regarding the evaluation of equal tenders in service procurement agreement is regulated by regulation and communique and the Board made a deduction pursuant to the legislation provisions in the Resolution. The Board expressed that in cases where there are more than one tenderers providing all qualifications, having bid bonds and undertaking to work with equal rates, administration authority aims to make the evaluation with the help of the factors other than the rates. The Board expressed that the evaluation regarding equal tenders for service procurement shall be made in a way that will result in a joint responsibility for demerging and transferee companies.
According to the Resolution, the effects of the demerger of a company during the evaluation period of equal tenders in service procurement have been examined in three different ways. The first one is the evaluation regarding the total amount of contracts. It is expressed in the Resolution that while the evaluation regarding the total amount of contracts is being made, the total amount of the contracts, executed by the transferee tenderer to whom the assets are transferred following the demerger of the company and by the demerging company prior to the demerger of the company for the past two years prior to the announcement or invitation date, shall be taken into consideration.
The second matter evaluated regarding service procurement is the evaluation related to the registered office of the tenderer. Accordingly, the Board stated that, in the event that the demerging and the transferee companies are registered to the chamber of trade and/or industry of the local administrative borders of the authority making the tender for at least one year prior to the announcement or the invitation date, the tenderer shall outpoint in this evaluation.
The third matter evaluated regarding the effects of demerger of a company related to equal tenders in service procurements is the evaluation of the employee compensations. According to the Resolution, in the event that there is no determination of the authority regarding the absence of full and timely payment of the employee compensations in the service procurement works of the authority making the tender for the last two years prior to the announcement or invitation date, the tenderer shall gain point in this evaluation.
VIII. CONCLUSION
Demerger of a company, being the case often confronted as a result of the dynamism of the commercial life, there is no explicit provision in the legislation regarding its effects to the public tenders. The effects of the demerger of companies to the public tenders, resolved by the Prior Resolution formerly, as said in the Resolution, as a result of the entry into force of the TCC and the “guidance of practice” of the Board, are regulated afresh by the Resolution. The Resolution cancelled the Prior Resolution and regulated afresh the use of the economic and financial qualification criteria and business experience certificates of the demerging company in the tenders made within the scope of the Code, in compliance with the rules of partial and entire demergers. Within this framework, the Board regulated the matters non-regulated by the legislation regarding the effects of the demerger of companies in the public tenders. In the light of abovementioned aspects, it is reflected that the Board aims to prevent the possible or already existing disruptions regarding or arising from the aforesaid matters.
BIBLIOGRAPHY
Hasan Pulaşlı, Şirketler Hukuku Genel Esaslar, Ankara 2015.
FOOTNOTE
1 Hasan Pulaşlı, Şirketler Hukuku Genel Esaslar, Ankara 2015, p. 98.
2 Official Gazette (OG) dated 14.02.2011, numbered 27846.
3 OG dated 22.01.2002, numbered 24648.
4 Article 10 of the Code explains the qualification criteria for tenders.
5 OG dated 22.01.2002, numbered 24648.
