Notions of capital loss and over-indebtedness for joint stock companies under the Turkish Commercial Code no 6102 and merger transactions of joint stock companies with capital loss or over-indebtedness

The Turkish Commercial Code numbered 6102 (TCC) specifically regulates the deterioration of joint stock company's financial situation, and stipulates the measures to be taken by companies whose capital has been substantially lost, and by companies whose debt exceeds its assets (in other words over-indebted companies). On the other hand, article 139 of the TCC explicitly allows these companies to become a party to a merger transaction for the first time. The legislator aims to ensure the sustainability of this financially failed company while at the same time to prevent such company's financial situation worsen the financially healthier company's financial position in an unexpected way. Accordingly, article 139 of the TCC foresees that an over-indebted company or a company with capital loss can only merge with a company, which is able to compensate the deterioration in such company's financial situation. For this reason, such merger transactions are also called rescue mergers (Sanierungsfusion) in the doctrine. Financial situation of companies can worsen especially during economic stagnation. In this study, it is aimed to elaborate the notions of capital loss and over-indebtedness for joint stock companies as well as rescue merger regulation under article 139 of the TCC considering that there is not many academic study on such merger transactions despite it can appear as an alternative resolution in economic crisis times.