Av. Sevcen CAN
In this article series, we will inform you about Investment Law.
First of all we have to declare that, Investment Law is not one of the basic legal branches, in recent years, especially due to developments in the technology and software sectors, it has emerged as a need arising from the practice and it has developed rapidly. So in fact, Investment Law can be applied more effectively on some popular sectors.
Especially the companies engaged in software, technology and innovation are actively interested in all kinds of domestic and overseas investments. As it is known, sometimes the way to gain a popularity and recognition in the sector may depend on getting an investment. Aside from all financial, commercial and administrative difficulties that the companies faced (to stand out among rivals, to find the right investor, to provide investment conditions, to make a difference in the product etc…), at several phases of the investment process, companies may face extremely complex legal texts to sign. At that point, we can say that there is no doubt that any written text encountered in the period from the meeting with the investor to end of the investment process has a place in the Investment Law.
For these reasons, the company that will get investment, needs for legal support regarding many branches of law such as specially Contract Law, Commercial Law and Intellectual Property Law. It should be emphasized that the Investment Law includes these main legal branches and the company that will get investment should work with a lawyer who is expert in predicting and planning all possible risks, probabilities and disputes regarding that case.
After the initial explanations above, let’s continue the article on an hypothetical investment. Firstly, the investor will be requesting the signing of a NDA (Non Disclosure Agreement ), regardless of whether it is located abroad or domestically. NDA is an agreement that includes the basic regulations regarding the confidentiality of the parties. NDA usually begins with a definition of « the confidential information ».
This agreement is the first written text in which the investor’s interests are protected for the first time on the basis where the investor’s confidential information is protected. The company (regardless of the type, whether it is start-up or not) that gets investment should follow up the process by being aware that its own rights should be protected too in the NDA. It has to be remembered that this is the first written text submitted for signature. It is also encountered that this agreement is named and used as Confidentially Commitment if it is written in Turkish and only the company that will get investment is expected to sign it.
In these types of agreements, where the definition of the confidential information is generally kept comprehensively, breach actions, that regarding giving or leaking this information to third parties, making it public or sharing it in anyway, are in detail regulated. In some NDAs, legal sanctions for such breaches are stipulated. By the way, let’s state that such agreements are absolutely included in which cases the information or data will not be counted as «confidential» or, even if it is counted as confidential at the beginning, the confidentiality feature will be considered lost.
Since the investor will prefer to invest in companies that are honest, transparent, carefully adopting all the information about the investment and having commercial ethics, it absolutely considers signing an NDA in the first step of the investment process is important. In this way, investor feels more secure, is aware of the fact that an official channel has been entered, and has started to get to know other party more objectively without any financial resource is transferred.
In our next article, we will explain the stages of the investment process after the signature of the NDA.