1) Why Company Shares Matter in Cross-Border Enforcement
When the debtor is abroad (or simply difficult to reach), shares in a Turkish company can become one of the most valuable and controllable assets for a creditor. Shares are often:
- High-value (especially in holding structures, real estate SPVs, or operating companies),
- Less liquid than cash but still convertible through enforcement sale,
- Connected to cashflow via dividends and related receivables,
- Harder to “hide” when proper corporate and capital markets records are used.
However, turning “the debtor owns shares” into “the creditor collects money” requires mastering two intertwined regimes:
- Turkish Enforcement and Bankruptcy Law (İcra ve İflas Kanunu – İİK): attachment (haciz), preservation, and sale (paraya çevirme).
- Turkish Commercial Code (Türk Ticaret Kanunu – TTK) and (where relevant) Capital Markets rules: the legal nature of the share, transfer mechanics, registries (share ledger, MKK), restrictions, and third-party rights.
This article explains how to attach and monetize shares in Turkey when the debtor is foreign—covering joint stock companies (AŞ), limited liability companies (Ltd. Şti.), and practical pitfalls that commonly derail share enforcement.
Disclaimer: This is a general legal analysis for informational purposes and is not legal advice for a specific file. Procedures vary by fact pattern, company structure, and the enforcement office’s practice.
2) Legal Framework: The Toolbox You Will Actually Use
A) Enforcement backbone (İİK)
In practice, share seizures rely on general rules on attachment of assets and rights, plus the procedures for sale by the enforcement office. Shares are typically treated as movable/intangible property rights (depending on form and registry), which means:
- You attach the share right and its monetary fruits (e.g., dividends),
- You preserve the asset against transfer,
- You liquidate via enforcement sale, with the buyer acquiring the share subject to corporate law mechanics.
B) Corporate law backbone (TTK)
TTK defines what a share is and how it transfers:
- AŞ (Anonim Şirket): shares may be registered (nama yazılı) or bearer (hamiline); transfer mechanics differ. Public/regulated shares are often tracked through MKK (Central Securities Depository).
- Ltd. Şti.: share transfer is usually more formal (written agreement, notarization, and often general assembly approval). That directly affects enforcement sale feasibility and risk.
C) Private international law layer (MÖHUK)
Foreignness mostly impacts:
- Service of process and notification (tebligat) to a debtor abroad,
- Whether you need recognition/enforcement of a foreign judgment or arbitral award before Turkish enforcement,
- Cost-security and procedural defenses sometimes raised in cross-border disputes.
Crucially, if the shares are in a Turkish company, the asset is in Turkey for enforcement purposes—even if the shareholder is foreign.
3) Step Zero: Do You Have an Enforceable Basis to Start Attachment?
Before targeting shares, you need a valid enforcement pathway:
Scenario 1 — You have a Turkish enforceable title
Examples: Turkish court judgment, Turkish notarized debt acknowledgment eligible for enforcement, finalized award, or another executable instrument.
You can proceed directly with enforcement and request attachment.
Scenario 2 — You have a foreign judgment or arbitral award
Typically, you must obtain recognition/enforcement in Turkey (depending on the instrument) before you can run Turkish enforcement on assets like shares.
For arbitration, enforceability often follows the New York Convention route (subject to conditions). For foreign judgments, you usually proceed under MÖHUK rules.
Scenario 3 — You are still litigating but need immediate preservation
If you fear the debtor will transfer the shares, you may consider interim measures (e.g., precautionary attachment / injunction routes depending on claim type and conditions). This is where speed matters: share transfer can be quick if not blocked at the correct registry level.
4) Asset Tracing: Proving the Debtor Owns Shares (and What Type)
Successful share attachment begins with accurate identification:
A) Identify the company and the shareholding
Common sources:
- Trade Registry records (MERSİS / registry filings)
- Corporate documents (articles of association, general assembly minutes)
- Share ledger (pay defteri) for registered shares
- MKK records (especially for dematerialized / reported holdings)
- Banking/custody documents (if shares are held via intermediary)
Practical note: In many real cases, the creditor knows the company but not the exact share class/number. The enforcement strategy should include requests that compel disclosure through legally available channels and third-party notices.
B) Determine the share “form,” because form dictates attachment method
- AŞ registered shares: typically tracked via share ledger and transfer by endorsement/delivery (or contractual mechanisms, depending on issuance).
- AŞ bearer shares: historically transferred by delivery of the certificate; modern compliance rules may require reporting to MKK—creating a leverage point for enforcement.
- Dematerialized shares (common in listed/public context): effectively “live” in the MKK system, which is excellent for freezing and controlling transfer.
- Ltd. shares: membership interest rather than a negotiable certificate; transfer is formal and often requires approvals.
5) Attachment (Haciz) of Shares in a Joint Stock Company (AŞ)
5.1) Registered (Nama Yazılı) AŞ shares — How attachment works
Goal: prevent disposal and prepare for sale.
Typical operational steps (practice-oriented):
- Request attachment from the enforcement office specifying that the debtor’s AŞ shares (in [Company Name], MERSİS/registry details) be seized.
- Notify the company: The enforcement office sends an attachment notice to the company to ensure:
- the attachment is reflected in corporate records where possible, and
- the company does not register transfers contrary to the attachment.
- Target the share ledger: For registered shares, the share ledger is the practical gatekeeper. Even if transfer can occur contractually, opposability often depends on corporate recognition/recording.
- Attach related monetary rights:
- Dividends and other distributions (kâr payı, liquidation share, bonus issues),
- Receivables the shareholder has from the company (shareholder loans, reimbursements) if identifiable.
Why this works: Even when a debtor tries to dispose of shares, a properly executed attachment and third-party notices make it harder for the company to safely process transfer and distributions without risk.
5.2) Bearer (Hamiline) AŞ shares — The special challenge
Bearer shares are historically “mobile.” That creates enforcement risk: if the debtor physically holds certificates, transfer can be as simple as delivery.
Your strategy depends on the compliance regime in play:
- If the system requires registration/reporting (e.g., through MKK reporting mechanisms), the attachment can be made effective by targeting the recorded holder status and blocking recognized transfers.
- If the share is truly “off-record” in practice, enforcement becomes more evidence-heavy: you may need to locate certificates, attach via possession, and prevent physical delivery.
Practical enforcement insight: In modern practice, effective bearer-share enforcement often hinges on whether the company and intermediaries will recognize the buyer at enforcement sale without the correct reporting chain being satisfied.
5.3) Dematerialized / MKK-tracked shares — The creditor-friendly category
If the debtor’s AŞ shares are dematerialized and visible in MKK, attachment becomes much more controllable:
- You can request blocking / freezing at the depository level,
- You can prevent transfer through intermediaries,
- Sale and settlement become more standardized.
In these cases, the strongest play is to combine:
- Share attachment, and
- Attachment of dividends and other distributions, and
- Rapid preservation measures to prevent “last-minute” reallocations.
6) Attachment (Haciz) of Shares in a Limited Liability Company (Ltd. Şti.)
Ltd. share enforcement is usually more complex than AŞ due to transfer formalities and internal approvals.
6.1) Why Ltd. shares are harder to liquidate
A typical Ltd. share transfer requires:
- A written transfer agreement (often notarized),
- General assembly approval (unless articles provide otherwise),
- Updates to corporate records and often trade registry formalities.
This matters because an enforcement sale buyer wants certainty that they will become a lawful shareholder. The key legal and practical question becomes:
Can the enforcement sale override (or safely navigate) company approval requirements and transfer restrictions?
In practice, creditors should anticipate resistance and plan for it upfront.
6.2) What attachment looks like in a Ltd.
Common practice steps include:
- Attachment request specifying the debtor’s share ratio/units in the Ltd. and all corporate identifiers.
- Notice to the company to ensure the share is marked as attached (hacizli) in internal records and that the company does not process transfers or distributions inconsistent with the attachment.
- Attachment of profit shares and receivables: dividends/distributions are often the easiest “cash conversion” path in a Ltd. enforcement, especially when sale is difficult.
6.3) The “sale feasibility” test in Ltd. enforcement
For a creditor, Ltd. shares can deliver value in three ways:
- Direct sale of the share through enforcement auction (best when governance is cooperative or transfer rules are manageable),
- Indirect pressure leading to settlement (the debtor prefers paying over losing corporate control),
- Monetization via cashflows (dividends, shareholder receivables, liquidation proceeds).
Because sale may be contested or practically obstructed, experienced creditors often:
- Prioritize attaching dividend streams and company receivables,
- Use the seized share as leverage while preparing the sale route,
- Consider parallel actions if the debtor’s conduct amounts to evasion (e.g., fraudulent transfers).
7) Preservation and Anti-Dissipation: Stopping the “Share Escape”
Shares can be transferred quickly—especially AŞ shares—so preservation is not optional.
A) Attach not only the share, but also its “economic outputs”
Even if the debtor tries to move the share, dividends and related payments can be intercepted by:
- Third-party attachment notices to the company,
- Seizure of receivables payable to the shareholder.
B) Consider timing of general assembly and dividend distribution
If a dividend distribution is imminent, you want the attachment in place before:
- the record date / entitlement date (where relevant),
- the distribution decision becomes payable.
C) Use corporate chokepoints
Depending on share type, chokepoints include:
- Share ledger (registered AŞ shares),
- MKK/intermediary (dematerialized or reported holdings),
- Company’s internal transfer approval processes (Ltd. shares).
D) Watch for “dilution” tactics
A debtor controlling the company may attempt to dilute value via:
- Capital increases excluding the debtor (or using mechanisms to shift value),
- Related-party transactions,
- Dividend suppression.
While enforcement offices are not corporate governance regulators, creditors can consider civil/commercial remedies in parallel if value stripping is abusive.
8) Valuation: Setting a Realistic Sale Price for Shares
Before sale (paraya çevirme), valuation matters because:
- Shares are not like a car with a public market price (especially in private companies),
- Buyers discount heavily for governance risk and transfer uncertainty,
- Too high a starting valuation can cause failed auctions and delays.
Valuation drivers include:
- Company financials (EBITDA, net asset value, cashflow),
- Encumbrances (pledges, liens, negative equity),
- Share class rights (preferred dividends, voting),
- Transfer restrictions,
- Ongoing lawsuits, tax risks, regulatory constraints.
Practical tip: If the company is private and opaque, a creditor should simultaneously pursue:
- attachment of company-payable receivables, and
- collection on other assets,
to avoid being “locked” into a slow share auction.
9) Sale (Paraya Çevirme) of Shares: What Actually Happens
9.1) How enforcement sale generally works
The enforcement office sells attached assets—often via an auction model—under procedural rules aimed at transparency and creditor satisfaction.
For shares, sale success depends on whether the buyer can:
- Obtain legally valid title to the share, and
- Be recognized as shareholder under corporate law requirements.
9.2) Sale of AŞ shares — generally more auction-friendly
AŞ share transfer is usually more flexible than Ltd.:
- Registered shares: transfer mechanics often align better with auction transfer, especially if the company records and cooperates.
- Dematerialized shares: operationally the easiest (depository systems).
- Bearer shares: success depends on possession/reporting mechanics and the company’s recognition route.
9.3) Sale of Ltd. shares — the “approval problem”
This is where disputes often arise. If the articles or law require approval, the buyer may face:
- Company refusal to register the transfer,
- Litigation risk to force recognition,
- Reduced bidding due to uncertainty.
Risk-mitigation approach: In many files, the most rational “liquidation” method is not pure auction; it is:
- Use the seized share as leverage,
- Seize dividends and company receivables,
- Pressure a negotiated settlement or a structured buyout (sometimes by other partners),
- Proceed to auction only when conditions are stabilized.
9.4) Priority and third-party rights
Shares may already be encumbered (e.g., pledged). Priority affects what the buyer actually receives and whether proceeds satisfy the creditor fully.
A creditor should investigate:
- Existing pledges over shares,
- Restrictions registered or contractually binding,
- Competing attachments.
10) Cross-Border Practicalities: Service, Representation, and Defenses
A) Serving the debtor abroad (tebligat)
Foreign debtors frequently use service delays as a tactical shield. Expect:
- Address disputes,
- “Unknown address” claims,
- Slow foreign service channels.
Operational approach: Build redundancy:
- Use corporate addresses, registry addresses, known commercial addresses,
- Use counsel/agent details where available,
- Ensure procedural compliance to avoid later nullity claims.
B) Recognition/enforcement prerequisites (if your title is foreign)
If you are starting with a foreign judgment/award, the debtor may resist by alleging:
- Lack of jurisdiction in the foreign court,
- Violation of defense rights,
- Public policy objections,
- Non-finality or procedural defects.
Plan timeline and interim measures accordingly.
C) Foreign exchange, AML, sanctions, and “practical friction”
When the ultimate buyer is foreign or proceeds move cross-border, banks and intermediaries may apply:
- Enhanced due diligence,
- Source-of-funds inquiries,
- Sanctions screening.
This does not defeat the legal validity of enforcement but can slow closing and settlement.
11) Strategic Playbook: What an Effective Creditor Does Differently
1) Attach the share and its cashflows
Do not rely on auction alone. Attach:
- dividends,
- shareholder receivables,
- liquidation entitlements,
- any company-payable sums.
2) Move fast on the correct registry chokepoint
- AŞ: share ledger / MKK / intermediary
- Ltd.: company notice and internal restriction monitoring
3) Anticipate the “buyer’s fear” and reduce uncertainty
Auction bidders discount uncertainty. Improve sale prospects by:
- documenting ownership and restrictions clearly,
- clarifying whether approvals are needed,
- obtaining corporate documents early.
4) Prepare for hostile company behavior
If the debtor controls the company, expect:
- withholding information,
- manipulating value,
- resisting transfer recognition.
Parallel legal remedies may be needed in extreme abuse scenarios.
12) Debtor-Side Defenses You Should Expect (and Neutralize)
Foreign debtors often raise procedural and substantive defenses such as:
- Jurisdiction/competence objections (especially if the title is foreign),
- Improper service claims,
- Third-party ownership allegations (“these shares are not mine”),
- Pledge or superior right defenses (priority claims),
- Transfer restriction arguments (Ltd. approvals),
- Valuation challenges to stall sale.
The best neutralizer is early, clean documentation:
- registry extracts,
- shareholder ledger evidence,
- MKK confirmations where applicable,
- corporate resolutions and share class documents,
- proof of debtor identity linkage to the shareholding.
13) Common Pitfalls That Cause Share Enforcement to Fail
- Not identifying the share type (registered vs bearer vs dematerialized).
- Only attaching the share, not the dividends/receivables.
- Late attachment—after the debtor already transferred to a nominee.
- Ignoring transfer restrictions in Ltd. structures.
- Overpricing the share at auction leading to repeated failed sales.
- Underestimating service delays and procedural objections.
- Not investigating existing pledges and competing attachments.
14) Frequently Asked Questions (FAQ)
Q1) Can a foreign debtor’s shares in a Turkish company be seized even if the debtor lives abroad?
Yes. If the share is in a Turkish company, the asset is effectively enforceable in Turkey. The main friction points are service, identification, and procedural compliance—not “location” of the debtor.
Q2) Is it easier to seize AŞ shares or Ltd. shares?
Generally AŞ shares are easier to liquidate, especially if dematerialized or properly recorded. Ltd. shares often involve approval and formalities that reduce auction appetite.
Q3) Can dividends be seized separately from the share?
In practice, yes—dividends and other distributions are monetary receivables and can be targeted through third-party attachment notices to the company.
Q4) What if the company refuses to recognize the enforcement sale buyer?
This risk is higher in Ltd. structures. It can lead to additional disputes and litigation. That’s why many creditors prioritize dividend/receivable seizures and settlement leverage while preparing a robust sale path.
Q5) What if the debtor transfers the shares to a third party right before attachment?
If the attachment was not in place, you may need to explore remedies against fraudulent transfers depending on timing and facts. This is a high-stakes area where immediate preservation and evidence are critical.
15) Conclusion: Turning Share Ownership into Collection in Turkey
Attaching and liquidating a foreign debtor’s Turkish company shares is absolutely feasible—but it is rarely “one motion and done.” The winning approach is multi-layered:
- Identify the share type and registry chokepoint,
- Attach the share and its economic outputs,
- Preserve aggressively to prevent dissipation,
- Price and sell realistically (or use sale as leverage),
- Anticipate corporate transfer restrictions—especially in Ltd. companies,
- Manage cross-border service and recognition issues with procedural discipline.
When executed strategically, share enforcement can produce either:
- a successful auction sale,
- dividend-based collections, or
- a settlement that pays the claim faster than litigation alone.
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