How to Exit a Turkish Investment Safely: Selling Shares, Property and Companies
Entering a market is exciting. Exiting, however, is where investors often lose money, time and legal protection – especially in a foreign jurisdiction. In Turkey, selling shares, real estate or even an entire company is perfectly feasible and investor-friendly if the exit is structured correctly and the legal steps are followed carefully.
This guide walks through the main legal points foreign investors should consider when exiting Turkish investments, focusing on share sales, real estate sales and full company exits.
1. Start With the End in Mind: Exit Planning
Most “bad exits” in Turkey are not caused by the law, but by lack of planning at the entry stage. When investing, you should already be thinking about:
- Who can buy your stake in the future (other shareholders, strategic investors, management, third parties)?
- Do you have contractual exit rights (put options, drag-along, tag-along, call options)?
- How will the price be calculated (fixed, formula, earn-out, valuation by an expert)?
- Which court or arbitration will resolve disputes, and which law governs the investment documents?
If your shareholder agreements, joint venture agreements and property purchase contracts are drafted with a clear exit in mind, the final step becomes a mechanical process instead of a negotiation crisis.
2. Exiting Share Investments in Turkish Companies
2.1 Know What You Hold: A.Ş. vs Ltd. Şti.
The first question is: What type of company did you invest in?
- Joint stock company (Anonim Şirket – A.Ş.)
Shares are more easily transferable. For larger investments, venture capital, listed companies or regulated sectors, the vehicle is often an A.Ş. - Limited liability company (Limited Şirket – Ltd. Şti.)
Quotas (shares) are more tightly regulated; transfers typically require general assembly approval and notarisation. Many SMEs and smaller joint ventures are Ltds.
The transfer mechanics, approvals and formalities are different for each type and must be followed strictly for the exit to be legally valid.
2.2 Check the Contractual Framework
Before discussing price, review your paperwork:
- Articles of Association (AoA) – Do they restrict share transfers? Is board or general assembly approval required? Are there pre-emption rights or rights of first refusal in favour of other shareholders?
- Shareholders’ Agreement / Joint Venture Agreement –
Look for:- Lock-up periods
- Tag-along rights (minority can sell when majority sells)
- Drag-along rights (majority can require minority to sell)
- Put / call options
- Non-compete and non-solicitation clauses
- Dispute resolution clauses (Turkish courts vs arbitration)
If you ignore these, you risk triggering a breach of contract, claims for damages or even the nullity of the transfer.
2.3 Corporate Approvals and Formalities
For joint stock companies (A.Ş.), in a typical private company:
- Share transfers are documented by a share purchase agreement.
- Registered share certificates (if any) are endorsed and delivered to the buyer.
- The share ledger is updated, and board or general assembly approvals are taken if required by the Articles.
- In many cases there is no mandatory trade registry registration for transfers in non-public A.Ş.’s, but specific situations (e.g. privileged shares, management rights) may require registrations.
For limited companies (Ltd. Şti.) the rules are stricter:
- The transfer must be based on a written agreement signed before a notary.
- The general assembly must approve the transfer unless otherwise regulated.
- The transfer becomes effective upon registration with the trade registry and update of the share ledger.
Skipping these formalities can leave you in a grey zone where you think you have sold, but legally you are still the shareholder – and potentially still liable.
2.4 Regulatory Approvals and Competition Law
Depending on the sector and transaction size, you may need:
- Turkish Competition Authority clearance if turnover thresholds are met (for larger M&A or share deals).
- Regulatory approvals in areas such as banking, insurance, energy, telecoms, capital markets, aviation and similar regulated sectors.
- For listed companies, capital markets rules on public disclosure, tender offers and insider trading must be strictly observed.
A safe exit means checking these aspects early, not on the signing date.
2.5 Tax and FX Considerations in Share Sales
From a tax perspective, key issues include:
- Capital gains tax on the profit from the sale.
- Possible participation exemption if the seller is a company and certain holding periods and conditions are met.
- Impact of double taxation treaties between Turkey and your home state.
On the foreign exchange side:
- Purchase price is often paid via a Turkish bank account with full documentary evidence.
- Banks may ask for underlying contracts, board decisions and trade registry records for compliance and anti-money laundering checks.
- For cross-border payments, you must comply with Turkish capital movements, FX and reporting rules.
A coordinated approach between your legal and tax advisors is essential to avoid surprise assessments later.
3. Exiting Real Estate Investments in Turkey
Real estate is a popular route for foreign investors, both as a pure investment and as part of citizenship or residence strategies. Exiting safely requires careful handling of title, zoning, tax and banking rules.
3.1 Title and Legal Due Diligence Before You Sell
Before putting the property on the market:
- Obtain an updated title deed extract from the Land Registry to verify:
- Current owner
- Mortgages, pledges or other encumbrances
- Easements, annotations, rights of third parties
- Check zoning status and any urban transformation or expropriation risks.
- Confirm that the building has the required construction permits and occupancy permit (iskan).
- If the property is part of a condominium, review the condominium records and management plan.
These checks allow you to disclose issues early and avoid disputes or price reductions at closing.
3.2 Structuring the Sale and Price
In practice, parties often:
- Sign a preliminary sale agreement (sometimes in notarised form) with a deposit; and
- Then complete the transaction through an official sale deed at the Land Registry.
Points to consider:
- Currency of the purchase price: Turkish legislation includes rules on using Turkish lira or foreign currency in certain domestic contracts; you should ensure your agreement complies with current rules.
- Payment method: bank transfer is strongly preferred for traceability and banking compliance.
- Security mechanisms: escrow accounts, simultaneous transfer of funds and title, or bank letters of guarantee.
3.3 Taxes on Real Estate Exit
On exit, you must consider:
- Title deed transfer tax (calculated over the declared value; parties often agree to share the cost, although legal liability may formally rest mainly with one party).
- Capital gains tax on the profit, depending on holding period and whether the seller is an individual or a legal entity. For individuals, real estate held for a certain minimum period may benefit from partial or total exemption; for companies, there may be corporate tax and specific exemptions if conditions are met.
Tax treatment can significantly impact your net return, so the tax angle should be part of the price negotiation and not an afterthought.
3.4 Special Issues for Foreign Owners
Foreign individuals and foreign-owned companies generally can sell their Turkish real estate without restrictions, but:
- If your property acquisition was linked to a citizenship by investment or residence permit program, a sale may affect your status or lead to loss of certain benefits if minimum holding periods are not respected.
- If you own multiple properties in sensitive areas (near military zones, borders, etc.), special rules or limits may apply to new acquisitions and should be checked prior to any restructuring.
3.5 Repatriating Sale Proceeds Abroad
After the sale:
- Funds are typically paid into a Turkish bank account in your name.
- You may then transfer them abroad, subject to standard banking AML and documentation requirements.
- Keep all records – contracts, title deed, bank receipts, tax payment receipts – in case your home country or Turkish authorities question the source and flow of funds later.
A clean, documented money trail is an essential part of a safe exit.
4. Selling or Exiting an Entire Turkish Company
Sometimes the investor’s goal is not just to sell shares, but to exit an entire business in Turkey.
Common exit formats include:
- Share deal – selling your shares to another shareholder or outside buyer.
- Asset deal – selling some or all assets and operations of the Turkish company.
- Merger or de-merger – combining or separating entities as part of a group restructuring.
- Liquidation – winding up the company and distributing remaining assets.
4.1 Share Deal vs Asset Deal
A share deal:
- Transfers the company as a whole (assets, liabilities, employees, contracts, permits) to the new shareholder.
- Is usually faster and administratively simpler, but due diligence must be thorough because the buyer takes over historic risks.
An asset deal:
- Allows the buyer to choose specific assets (for example, a factory, brand, customer contracts) and leave unwanted liabilities behind.
- Requires individual transfer of each asset and contract, and may need third-party consents.
From a legal and tax standpoint, each structure has different implications; the “safest” exit depends on your priorities: speed, price, risk transfer, tax efficiency.
4.2 Due Diligence and Documentation
For a safe exit:
- Expect the buyer to conduct legal, financial and tax due diligence on the Turkish company.
- Disclose known risks thoroughly to avoid post-closing disputes and indemnity claims.
- Negotiate and sign:
- A Share Purchase Agreement (SPA) or Asset Purchase Agreement,
- Any ancillary documents (non-compete agreements, transitional services agreements, guarantees, escrow arrangements),
- Corporate approvals and board/general assembly decisions.
Your SPA should clearly regulate:
- Purchase price and adjustment mechanisms,
- Representations and warranties,
- Indemnities, caps and time limits,
- Conditions precedent (regulatory approvals, bank consents, third-party consents),
- Closing mechanics and deliverables.
4.3 Employees, Contracts and Licences
In a company-level exit:
- Employment contracts may automatically continue under the new owner in a share deal, but may need assignment or new contracts in an asset deal. Turkish labour law imposes obligations on terminations and restructuring, including notice and severance pay.
- Key contracts (supply, distribution, leases, financing) should be checked for change-of-control clauses or assignment restrictions.
- Licences and permits may be company-specific and either transfer automatically with the company or require renewal / regulatory notifications.
Ignoring these details can turn a clean sale into a long series of disputes.
5. Compliance, Sanctions and AML – Hidden Exit Risks
When exiting a Turkish investment, a foreign seller should also be aware of:
- Sanctions and export control issues if the business operates in sensitive sectors or regions.
- Anti-money laundering (AML) and “know your customer” (KYC) procedures at Turkish and foreign banks.
- Beneficial ownership transparency requirements, especially when using holding structures or trusts.
A transaction that looks commercially perfect can fail at closing simply because the bank or notary refuses to process it without adequate documentation. Proactively preparing the compliance file (corporate documents, IDs, source of funds, tax certificates) reduces this risk.
6. Practical Checklist for a Safe Exit
Before you sign or accept an offer, ask yourself:
- Have I reviewed all governing documents?
- Articles of Association
- Shareholders’ or joint venture agreements
- Loan agreements, security documents
- Property purchase contracts
- Do I know which approvals I need?
- Board / general assembly
- Trade registry
- Land registry
- Regulatory authorities
- Competition authority
- Have I analysed tax consequences and FX aspects?
- Is my documentation complete and clean for the bank?
- Are my rights protected if something goes wrong after closing?
- Price adjustment
- Escrow
- Indemnities
- Dispute resolution forum
If you can answer “yes” to these questions – ideally with written advice from Turkish counsel – you are far closer to achieving what every investor wants: a smooth, lawful and profitable exit from their Turkish investment.
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