Being a shareholder in a limited liability company does not mean that a person must remain trapped in the company indefinitely.
This becomes particularly important in closely held Turkish limited companies where one shareholder controls management, bank accounts, accounting records and day-to-day operations while the minority shareholder gradually becomes excluded from the business.
Typical complaints include:
- “I am a shareholder, but they do not show me the accounts.”
- “The company is profitable, but no dividends have been distributed for years.”
- “The manager is transferring business to another company.”
- “The other shareholder pays himself large amounts but gives me nothing.”
- “General meetings are not properly held.”
- “I no longer have any meaningful influence over the company.”
- “The relationship between us has completely broken down.”
- “I want to leave, but they refuse to purchase my shares.”
Turkish company law provides an important remedy for such situations.
Under Article 638/2 of the Turkish Commercial Code (“TCC” or “TTK”), every shareholder of a limited liability company may bring an action requesting permission to leave the company where just cause — haklı sebep — exists.
More importantly, a shareholder who successfully leaves the company is not normally required simply to surrender the shares and walk away.
Under Article 641 TCC, the departing shareholder is entitled to an exit payment — ayrılma akçesi — corresponding to the real value of the capital share.
This can turn an apparently impossible shareholder dispute into an economic exit.
The critical questions are therefore:
What constitutes just cause?
How is the exit action filed?
Against whom is the case brought?
How is the shareholder’s stake valued?
Can the majority shareholder reduce the company’s value before judgment?
And perhaps most importantly:
Does a shareholder receive nominal share capital, book value or the real economic value of the company?
1. The Legal Basis: Article 638 of the Turkish Commercial Code
Article 638 regulates withdrawal from a Turkish limited liability company.
The articles of association may expressly grant shareholders a contractual right to withdraw and may subject that right to specified conditions.
But even if the articles of association contain no withdrawal provision whatsoever, Article 638/2 provides an independent statutory remedy.
It states that every shareholder may bring an action requesting withdrawal from the company where just causes exist.
The court may also, upon application during the litigation:
- suspend some or all rights and obligations arising from the claimant’s shareholding; or
- order other measures necessary to secure the claimant shareholder’s position.
This is important because a shareholder does not need the consent of the majority shareholder to invoke Article 638/2.
If just cause exists, the dispute can be taken directly to court.
2. What Does “Just Cause” Mean?
The Commercial Code does not provide an exhaustive list of circumstances constituting just cause for withdrawal.
Therefore, courts examine each dispute individually.
The general principle developed in doctrine and case law is that a just cause exists where circumstances make continuation of the shareholder relationship objectively intolerable, such that requiring the shareholder to remain in the company would be contrary to good faith.
Recent court decisions describe just cause as circumstances that destroy the material or personal foundations of the partnership, seriously obstruct the company’s purpose, or make continuation of the legal relationship unbearable.
A limited liability company is legally a capital company, but in practice it often contains strong personal elements.
This is particularly obvious in:
- two-shareholder companies;
- family companies;
- husband-and-wife companies;
- companies founded by friends;
- professional partnerships; and
- businesses in which shareholders originally intended to work closely together.
For this reason, destruction of the relationship of confidence between shareholders can become legally significant.
3. Majority Oppression Can Constitute Just Cause
One of the most common practical situations involves a majority shareholder using control of the company to marginalize the minority shareholder.
Suppose the ownership structure is:
Shareholder A: 75%
Shareholder B: 25%
Shareholder A is also the sole manager.
Over several years:
- B is excluded from company decisions;
- financial statements are not properly disclosed;
- information requests are ignored;
- A pays substantial amounts to himself;
- dividends are never distributed;
- company opportunities are transferred to another business controlled by A; and
- B receives no economic benefit from remaining a shareholder.
The correct legal analysis is not simply whether each individual act constitutes a violation.
The court can examine the overall pattern.
Several relatively smaller violations, when considered together, may demonstrate that continuation of the shareholder relationship has become unreasonable.
4. Denial of Information and Inspection Rights
The shareholder’s right to obtain information about company affairs is one of the most important minority rights in a limited liability company.
A shareholder who is systematically prevented from understanding:
- company revenue;
- bank transactions;
- accounting records;
- customer relationships;
- company debts;
- contracts;
- related-party transactions; or
- management decisions
may gradually become a shareholder only on paper.
However, there is an important practical warning.
Not every allegation that “they did not give me information” will automatically constitute just cause.
In Yargıtay 11th Civil Chamber, E. 2020/6752, K. 2022/615, dated 25 January 2022, disputes included allegations concerning failure to hold general meetings, failure to distribute profits and obstruction of the shareholder’s information rights.
The Regional Court of Appeal considered some of those complaints insufficient on their own because the shareholder had not properly pursued the specific statutory remedies available for those violations. Nevertheless, withdrawal was ultimately justified by other serious circumstances, particularly the managing shareholder’s competing activities and conduct damaging the relationship of confidence. The Court of Cassation upheld the result.
The lesson for practitioners is important:
Use minority rights before relying on their violation as a just cause.
For example, counsel should consider formally demanding information and documenting any refusal.
5. Competing With the Company Can Be a Strong Just Cause
The same Court of Cassation decision provides a useful example of conduct that can support withdrawal.
The company had two equal shareholders.
One shareholder had sole managerial authority and later became involved in another company operating in the same commercial environment.
The Court considered that the managing shareholder’s pursuit of personal interests and competing activities had fundamentally damaged the relationship of confidence.
There were also multiple lawsuits between the shareholders and deficiencies concerning the company’s records.
Taken together, the circumstances justified allowing the claimant to leave the company.
This is highly relevant where a controlling shareholder:
- establishes a competing business;
- transfers customers to another company;
- redirects contracts;
- employs company personnel in another business;
- transfers know-how;
- uses company resources personally; or
- causes profits to arise in another entity that he or she controls.
Such conduct may affect both the existence of just cause and the valuation of the exit payment.
6. Failure to Distribute Profits
The mere fact that a company does not distribute profits in one particular year does not automatically create a right to leave.
A profitable company may legitimately retain earnings for:
- investment;
- debt repayment;
- working capital;
- expansion; or
- other genuine commercial reasons.
The situation becomes substantially different where profits are systematically withheld as a method of economically suppressing one shareholder.
For example:
The company makes profits every year.
No dividend is distributed.
At the same time, the controlling shareholder receives:
- substantial managerial remuneration;
- company-paid personal expenses;
- related-party payments;
- loans from the company; or
- indirect economic benefits.
The minority shareholder receives nothing.
In that situation, the court should examine the economic reality rather than merely the formal absence of a dividend resolution.
7. Personal Conflict Alone Is Not Always Enough
Shareholders frequently argue.
That alone does not necessarily justify judicial withdrawal.
The conflict must generally reach a level where continuation of the corporate relationship cannot reasonably be expected.
Relevant factors may include:
- duration of the dispute;
- seriousness of allegations;
- criminal complaints between shareholders;
- repeated litigation;
- complete loss of communication;
- inability to hold functioning general meetings;
- paralysis of decision-making;
- exclusion from management;
- diversion of business;
- misuse of company funds; and
- destruction of mutual trust.
The impact of personal conflict can be especially strong in small, closely held companies.
A dispute that may have little relevance in a company with hundreds of shareholders can become decisive in a company owned 50/50 by two individuals.
8. Divorce Between Shareholders Can Become Relevant
Family companies frequently create a particularly difficult overlap between corporate law and family law.
In Yargıtay 11th Civil Chamber, E. 2023/1384, K. 2024/5393, the company was effectively a family company and the shareholders were former spouses.
The courts found that the conflict resulting from the breakdown of the marital relationship had reached a level capable of obstructing the operation of the company and supported the existence of just cause.
The decision also emphasized that the exit payment should reflect the company’s real value, calculated as close as possible to the judgment date.
The important principle is not that divorce automatically constitutes just cause.
Rather:
where the personal relationship underlying a closely held company has collapsed so severely that the company’s functioning and shareholder relationship are materially affected, the personal conflict may become a corporate-law just cause.
9. Against Whom Should the Action Be Filed?
This is a crucial procedural issue.
A shareholder seeking withdrawal and payment of the exit amount should normally bring the action against the limited liability company itself.
It is generally unnecessary—and potentially incorrect—to direct the exit-payment claim personally against the other shareholder merely because that shareholder caused the conflict.
Recent Court of Cassation case law expressly confirms that in an action for judicial withdrawal and exit payment, directing the claim against the company is both necessary and sufficient; the other shareholders do not automatically have passive standing.
This does not prevent separate liability claims against managers or shareholders where they have personally caused damage.
But those are conceptually different claims.
10. Which Court Has Jurisdiction?
An action arising from a limited liability company shareholder relationship is a commercial dispute.
The competent court is generally the Commercial Court of First Instance — Asliye Ticaret Mahkemesi.
Territorial jurisdiction is particularly important.
Under Article 14/2 of the Code of Civil Procedure, disputes arising from shareholder or membership relationships are subject to the jurisdiction of the court where the relevant legal entity has its registered office.
Turkish courts treat this rule as one of exclusive jurisdiction.
Therefore, if the company’s registered office is in Bakırköy, filing the case elsewhere merely because the shareholder resides there may result in dismissal for lack of jurisdiction.
11. What Should the Claimant Request?
A properly structured action will generally seek:
First: determination that just cause exists;
Second: permission for the claimant to withdraw from the limited company;
Third: determination of the real value of the claimant’s capital share;
Fourth: payment of the corresponding exit payment by the company;
and, depending on the circumstances:
- unpaid dividends;
- interest;
- interim measures;
- protection of corporate assets; and
- examination of company books and financial records.
Where the amount cannot realistically be determined before examining the company’s records, procedural strategy concerning an unquantified claim or later increase of the monetary claim should be carefully planned.
The valuation may substantially change during a long-running case.
12. The Shareholder Is Entitled to “Real Value,” Not Merely Nominal Capital
This is perhaps the most economically important aspect of the entire remedy.
Article 641/1 TCC provides that a departing shareholder has the right to an exit payment corresponding to the real value of the capital share.
Suppose:
Company capital: TRY 100,000
Shareholder owns 30%.
The nominal value of the shareholder’s registered capital interest is therefore:
TRY 30,000.
But the company owns:
- a factory worth TRY 60 million;
- machinery;
- inventory;
- cash;
- receivables;
- trademarks;
- commercial contracts; and
- an established customer portfolio.
The shareholder’s economic interest obviously cannot be valued at only TRY 30,000 simply because that is the nominal share capital.
The purpose of Article 641 is to determine the real economic value of the shareholder’s participation.
13. Book Value and Real Value Are Not the Same Thing
This distinction is fundamental.
An accounting balance sheet may show a building at its historical acquisition cost.
For example:
Purchase price in company books: TRY 2 million.
Current market value: TRY 30 million.
If the exit payment were calculated solely from historical accounting values, the departing shareholder could suffer a substantial economic loss.
The valuation should therefore investigate the company’s assets and liabilities at realistic values.
Depending on the company, relevant items may include:
- real estate;
- machinery;
- vehicles;
- stock;
- cash;
- receivables;
- debts;
- loans;
- tax liabilities;
- trademarks;
- licences;
- intellectual property;
- business permits;
- subsidiaries;
- commercial contracts;
- shareholder receivables;
- related-party balances; and
- other economically valuable rights.
Court decisions demonstrate that expert examinations may include market valuation of real estate, machinery and licences rather than relying solely upon the accounting figures appearing in the company’s balance sheet.
14. The Valuation Date Is Extremely Important
Company value can change dramatically during litigation.
A lawsuit may continue for several years.
Suppose:
Company value when the case is filed in 2023: TRY 20 million.
Company value in 2026: TRY 80 million.
If the departing shareholder owns 25%, the difference between the two valuation dates could amount to millions of lira.
Court of Cassation case law is clear that the exit payment should generally be calculated according to the real value at a date as close as possible to the judgment date, rather than automatically using the filing date.
This principle was recently reaffirmed in Yargıtay 11th Civil Chamber, E. 2024/6870, K. 2025/4957, dated 8 July 2025. The Court reversed the judgment because the valuation had relied on outdated figures instead of sufficiently current real values.
The same approach appears in the Court’s settled case law.
This means that counsel should strongly challenge an expert report based on financial data that has become obsolete during proceedings.
15. A Recent 2026 Decision Again Emphasizes Current Real Value
The issue remains highly current.
In Yargıtay 11th Civil Chamber, E. 2025/5744, K. 2026/767, the Court addressed a dispute involving withdrawal and calculation of the shareholder’s financial entitlement.
The underlying judgment emphasized that the value should not be determined according to the filing or amendment date but according to the date closest to the termination of the shareholding, normally the judgment date, using updated company assets and liabilities.
For practitioners, this creates a simple rule:
Never assume that an old balance sheet is sufficient to calculate the exit payment.
16. How Does an Expert Calculate the Exit Payment?
In significant cases, the court will generally require an expert panel.
Depending on the business, the panel may include:
- certified public accountants;
- financial experts;
- company valuation specialists;
- real estate valuers;
- engineers;
- industry experts; and
- specialists relevant to particular licences or intangible assets.
A simplified calculation might begin as follows:
Real market value of assets
Real estate: TRY 50 million
Machinery: TRY 10 million
Vehicles: TRY 5 million
Inventory: TRY 8 million
Cash and receivables: TRY 12 million
Total assets: TRY 85 million
Liabilities
Bank loans: TRY 10 million
Trade debts: TRY 5 million
Tax liabilities: TRY 2 million
Total liabilities: TRY 17 million
Simplified real net asset value:
TRY 68 million
If the departing shareholder owns 30%, the starting economic value might be:
TRY 20.4 million
The real calculation may be substantially more complex.
But the example demonstrates why nominal capital is largely irrelevant.
17. What About Goodwill and Business Value?
This can become one of the most heavily disputed valuation issues.
A profitable operating company may be worth considerably more than the liquidation value of its physical assets.
A successful business may have:
- recurring customers;
- distribution networks;
- valuable contracts;
- brands;
- reputation;
- operational licences;
- know-how; and
- sustainable profitability.
Depending on the facts, expert valuation may therefore require analysis extending beyond simple accounting book values.
For example, a company with few physical assets but highly profitable recurring contracts may have substantial enterprise value.
The appropriate valuation methodology depends on the nature of the business.
18. What If the Majority Shareholder Tries to Reduce the Company Value?
This is a serious practical risk.
Once the controlling shareholder learns that the minority shareholder wants to leave and obtain the real value of the shares, he may attempt to make the company appear less valuable.
Examples include:
- selling company property below market value;
- transferring customers to another company;
- artificially increasing liabilities;
- paying excessive management fees;
- transferring trademarks;
- creating related-party debts;
- withdrawing cash;
- transferring stock;
- stopping profitable operations; or
- directing new business to another entity.
These transactions should not simply be accepted because they appear in the company’s accounting records.
Counsel should investigate:
Who received the asset?
Was the transaction at arm’s length?
Was real consideration paid?
Is the buyer related to the controlling shareholder?
Why did the company’s profitability suddenly collapse?
Did another company controlled by the same person become profitable at the same time?
This is where forensic accounting can become decisive.
19. Interim Protection Can Be Requested During the Case
Article 638/2 itself gives the court power to protect the claimant shareholder during litigation.
The court may suspend rights and obligations arising from the shareholding or take other measures necessary to secure the shareholder’s position.
This may be particularly relevant where there is evidence that the company is attempting to dispose of significant assets.
An Istanbul Regional Court of Appeal decision from 2024 expressly recognized that, in principle, protective measures preventing transfers of company assets may be considered under Article 638 together with the general precautionary-injunction rules.
However, the applicant must provide sufficient approximate proof of the underlying allegations and risk. In that particular case, the injunction was refused because the evidence available at the time did not sufficiently establish the claimed risk.
This illustrates an important strategy:
Do not merely request:
“Freeze all company assets.”
Instead, show:
- suspicious transactions;
- specific assets;
- imminent transfer risk;
- related-party transfers;
- accounting irregularities; and
- why absence of protection could make collection of the exit payment impossible.
20. When Does the Exit Payment Become Payable?
Article 642 regulates payment.
The exit payment becomes due upon departure where, among other situations:
- the company has sufficient disposable equity;
- the departing shareholder’s shares can be transferred; or
- the share capital has been reduced in accordance with the relevant statutory rules.
This distinction between:
determining the amount of the exit payment
and
determining when and to what extent it becomes payable
should not be overlooked.
The fact that a shareholder has a valuable exit entitlement does not mean that every amount can necessarily be paid instantly without regard to capital-protection rules.
21. Interest Should Be Expressly Requested
Interest is another important pleading issue.
In the decision concerning E. 2023/1384, K. 2024/5393, the appellate court noted that the exit payment becomes due with the judgment in the circumstances examined and therefore interest could not simply be calculated from the original filing date.
The judgment ultimately awarded interest beginning from the first-instance judgment date.
Practitioners should therefore expressly include the interest claim and consider carefully the legally appropriate commencement date.
Failure to request interest properly can create unnecessary disputes even after the principal claim succeeds.
22. Unpaid Dividends and Exit Payment Are Different Claims
Another common mistake is assuming that the exit payment automatically replaces every other corporate claim.
It does not necessarily do so.
A shareholder may have separate claims relating to:
- previously declared but unpaid dividends;
- shareholder loans;
- amounts owed to the shareholder by the company;
- management fees;
- damages caused by directors; or
- other contractual receivables.
These should be legally separated from the calculation of the exit payment.
A company may, for example, owe a shareholder:
TRY 10 million exit payment
plus
TRY 2 million shareholder loan
plus any separate legally established receivables.
Each claim requires its own legal analysis.
23. Withdrawal Is Different From Dissolution of the Company
A shareholder facing serious oppression may also consider requesting dissolution of the limited company for just cause under Article 636/3 TCC.
But dissolution and withdrawal are fundamentally different remedies.
Withdrawal
The claimant leaves.
The company continues.
The claimant receives the exit payment.
Dissolution
The company itself is terminated and enters liquidation if the legal conditions are satisfied.
Turkish company law generally seeks to preserve viable companies where a less destructive solution is available.
Recent Court of Cassation case law continues to emphasize the principle that dissolution should operate as a last resort, and courts may prefer other solutions appropriate to the circumstances where the company can continue economically.
For a minority shareholder primarily interested in obtaining the economic value of the investment and moving on, judicial withdrawal may therefore be more practical than destroying a profitable company.
24. What Evidence Should a Shareholder Collect Before Filing?
A strong withdrawal case should normally be prepared before the petition is filed.
Important documents may include:
- articles of association;
- trade registry records;
- share ledger;
- general meeting minutes;
- financial statements;
- tax returns;
- company ledgers;
- bank statements;
- dividend resolutions;
- correspondence requesting information;
- responses or refusals;
- notarial notices;
- evidence of competing businesses;
- related-party company records;
- customer transfers;
- invoices;
- management remuneration records;
- criminal complaints;
- existing shareholder litigation;
- expert findings from earlier cases; and
- evidence showing exclusion from company management.
The litigation should present a pattern of corporate oppression, not merely isolated personal complaints.
25. A Practical Litigation Strategy
A shareholder considering judicial withdrawal can structure the case as follows.
Step 1 — Review the Articles of Association
Determine whether there is already a contractual withdrawal right.
Step 2 — Document Corporate Violations
Use formal written and notarial requests where appropriate.
Step 3 — Exercise Minority Rights
Request information, inspection, general meeting action and other remedies where legally appropriate.
This prevents the defendant from later arguing that the shareholder never attempted to use available corporate mechanisms.
Step 4 — Obtain the Company’s Historical Financial Records
Do not analyse only the most recent balance sheet.
Look for changes in profitability, related-party transfers and asset movements.
Step 5 — Identify the Just Causes Clearly
Separate the allegations into categories such as:
- exclusion from management;
- information obstruction;
- competing conduct;
- diversion of business;
- systematic denial of economic benefits;
- misuse of company assets; and
- breakdown of the relationship of confidence.
Step 6 — File Against the Company
Avoid confusing the company with individual shareholders.
Step 7 — Request Protective Measures if Necessary
Particularly where company assets may be transferred during litigation.
Step 8 — Demand Real-Value Calculation
Request an expert panel capable of valuing the company’s actual assets and liabilities.
Step 9 — Challenge Outdated Valuation Reports
The calculation should reflect values as close as possible to the judgment date.
Step 10 — Separate Additional Receivables
Dividends, shareholder loans and damages should not be mechanically merged into the exit payment.
26. The Central Question in a High-Value Exit Case
Suppose a minority shareholder owns 20% of a successful company.
The majority shareholder says:
“Your registered capital is TRY 20,000. I will give you TRY 20,000 and you can leave.”
That statement fundamentally misunderstands Article 641.
If the company has a real net value of TRY 100 million, the shareholder may potentially be discussing an economic interest worth approximately TRY 20 million—not TRY 20,000—subject to the detailed valuation and legal circumstances of the case.
For this reason, an exit case should never be treated simply as a dispute over the number written beside the shareholder’s name in the trade registry.
The true dispute is often:
What is the business actually worth?
Conclusion: A Minority Shareholder Does Not Have to Remain Trapped Forever
A shareholder in a Turkish limited liability company cannot simply resign in every circumstance merely because he or she no longer wishes to remain invested.
But where serious circumstances make continuation of the shareholder relationship objectively intolerable, Article 638/2 TCC provides a powerful judicial exit mechanism.
Potential just causes may include, depending on the facts:
- serious majority oppression;
- systematic exclusion from company affairs;
- destruction of the relationship of confidence;
- diversion of company business;
- competing activities by management;
- persistent corporate irregularities;
- severe disputes preventing proper corporate functioning; and
- other conduct making continuation of the relationship unreasonable.
Once withdrawal is granted, the shareholder’s economic protection becomes equally important.
Under Article 641, the shareholder is entitled not merely to nominal capital, but to an exit payment corresponding to the real value of the shareholding.
And according to established Court of Cassation practice, that real value should generally be determined using economic data as close as possible to the judgment date.
For practitioners, the strongest case therefore combines two separate narratives:
Why can this shareholder no longer reasonably remain in the company?
and
What is the real economic value of what the shareholder is being required to give up?
The first question establishes the right to leave.
The second determines whether leaving the company results in a fair economic exit.
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