Introduction: What Happens When a Foreign Investor and Turkish Business Partner Fall Out?

A foreign investor may enter the Turkish market through a joint venture or by establishing a company together with a Turkish business partner.

At the beginning of the relationship, the interests of the parties are usually aligned.

The foreign investor may contribute:

• capital;
• technology;
• trademarks;
• international customers;
• management experience;
• or access to overseas markets.

The Turkish partner may contribute:

• local market knowledge;
• customer relationships;
• personnel;
• regulatory experience;
• suppliers;
• distribution;
• or operational infrastructure.

The legal problems typically begin later.

The business becomes profitable, but the shareholders disagree about dividend distribution.

The foreign investor wants to increase capital, while the Turkish partner refuses.

The Turkish shareholder enters transactions with companies owned by family members.

The foreign investor is denied financial records.

A majority shareholder adopts a general assembly resolution diluting the foreign investor.

One shareholder refuses to attend board meetings and creates a deadlock.

The company’s intellectual property is transferred without the foreign investor’s approval.

A Turkish partner allegedly diverts customers or business opportunities to another company.

The parties agree that one shareholder should exit but cannot agree on the value of the shares.

Or the relationship deteriorates so severely that continuing the company together becomes commercially impossible.

At that stage, the foreign investor generally has several possible remedies under Turkish law.

Depending on the dispute, these may include:

negotiation → mediation → contractual claims under the shareholders’ agreement → challenge of general assembly resolutions → information and inspection proceedings → special audit → director or manager liability claims → interim measures → share purchase/exit mechanisms → withdrawal from an Ltd. Şti. → judicial dissolution → Turkish commercial court litigation → arbitration.

Turkey’s Foreign Direct Investment Law applies the principle of national treatment to international investors and expressly recognises access to authorised Turkish courts and, where the necessary conditions and agreement exist, national or international arbitration for relevant private-law investment disputes.

The correct dispute-resolution mechanism therefore depends on what type of right has been violated.

A breach of a shareholders’ agreement is not necessarily litigated in the same way as an unlawful general assembly resolution.

A claim for unpaid purchase price is different from a request to dissolve a deadlocked company.

An arbitral tribunal may be appropriate for a contractual dispute, while certain mandatory corporate-law remedies require careful consideration of Turkish court jurisdiction and arbitrability.

This guide explains the principal ways disputes between foreign investors and Turkish partners are resolved under Turkish law in 2026.

1. First Identify the Real Nature of the Shareholder Dispute

The most important first step is legal classification.

“Shareholder dispute” is not a single cause of action.

The underlying dispute may concern:

• breach of a shareholders’ agreement;
• violation of articles of association;
• unlawful general assembly resolutions;
• director misconduct;
• denial of information;
• misuse of company assets;
• dilution;
• unpaid shareholder loans;
• dividend disputes;
• breach of a non-compete obligation;
• intellectual property;
• share transfers;
• exercise of put/call rights;
• tag-along or drag-along rights;
• valuation;
• deadlock;
• or dissolution.

Different disputes have different:

defendants, courts, limitation/deadline rules, remedies and evidentiary requirements.

For example, if a foreign investor simply says:

“My Turkish partner acted unfairly,”

that is not yet a legal remedy.

Counsel needs to determine whether the conduct constitutes:

contractual breach, unlawful corporate resolution, breach of management duties, abuse of majority power or a just cause for exit/dissolution.

That classification should occur before urgent litigation is started.

2. Review the Shareholders’ Agreement Before Starting Litigation

If the shareholders signed an SHA, it will usually be the starting point.

The agreement may contain rules concerning:

• governance;
• board appointments;
• reserved matters;
• funding;
• dividend policy;
• confidentiality;
• intellectual property;
• related-party transactions;
• non-compete;
• share transfers;
• tag-along;
• drag-along;
• put/call options;
• deadlock;
• valuation;
• dispute resolution;
• and governing law.

The first question should therefore be:

What exactly did the Turkish partner contractually promise?

Example

The SHA states that any borrowing exceeding EUR 1 million requires foreign investor consent.

The Turkish partner causes the company to borrow EUR 4 million without approval.

This may create:

1. a corporate-law issue concerning the validity or authority behind the transaction; and/or
2. a contractual claim against the shareholder for breach of the SHA.

These two issues should not be confused.

An SHA primarily creates contractual rights between its parties, while the company’s corporate validity and its organs remain subject to Turkish corporate law.

3. Shareholders’ Agreement and Articles of Association May Produce Different Claims

One of the most important issues in Turkish shareholder disputes is the distinction between:

the Shareholders’ Agreement

and

the Articles of Association.

A contractual breach of the SHA does not automatically mean that the corporate decision is void.

Similarly, a corporate resolution can be unlawful even if the SHA contains no relevant provision.

Example

The SHA requires the Turkish shareholder to obtain the foreign investor’s consent before appointing a CEO.

However, the articles do not reproduce the same approval mechanism.

If the majority shareholder appoints the CEO through formally valid corporate procedures, the appointment’s corporate effect and the majority shareholder’s contractual liability under the SHA may need to be examined separately.

This is why foreign investment structures should coordinate corporate and contractual rights from the beginning.

When a dispute begins, counsel should identify:

which rights are contractual and which rights are corporate.

4. An Unlawful A.Ş. General Assembly Resolution Can Be Challenged in Court

A major dispute often arises when the controlling shareholder uses the general assembly to approve a decision opposed by the foreign investor.

Turkish Commercial Code Article 445 provides that qualifying persons may bring an annulment action against general assembly resolutions that violate:

• the law;
• the articles of association;
• or particularly the principle of good faith.

The action must generally be filed within three months from the date of the resolution before the commercial court at the company’s registered office.

This deadline is extremely important.

A foreign investor should not spend four months negotiating informally and then assume that the resolution can still be challenged through the ordinary annulment mechanism.

Who Can Bring the Action?

Article 446 includes, among others, shareholders who attended the meeting, voted against the resolution and had their opposition recorded in the minutes. It also provides standing in specified procedural-irregularity situations, such as defective notice or wrongful exclusion from participation.

For this reason, a minority investor attending a contentious general assembly should ensure that:

its negative vote and opposition are formally recorded where required.

The minutes can later become essential evidence.

5. Some General Assembly Resolutions May Be Null Rather Than Merely Annulable

Not every defective general assembly resolution falls into the ordinary three-month annulment category.

Article 447 provides that certain resolutions are null, including resolutions that improperly:

• eliminate or restrict indispensable shareholder rights;
• restrict information, inspection or audit rights beyond what the law permits;
• violate the fundamental structure of a joint stock company;
• or violate capital-protection principles.

The distinction between:

annulment, nullity and non-existence

can be important in Turkish corporate litigation.

Foreign shareholders should therefore avoid assuming that every defective resolution is governed by exactly the same rules.

The nature of the defect should be legally characterised immediately.

6. Can the Court Stop an Unlawful General Assembly Resolution From Being Implemented?

Potentially, yes.

This can be critical where waiting for a final judgment would make the lawsuit meaningless.

Under Article 449, when an action for annulment or nullity is filed, the court may, after hearing the board members, order that implementation of the disputed general assembly resolution be suspended.

Example

The general assembly passes a resolution enabling a major corporate restructuring that the foreign shareholder argues is unlawful.

If the resolution is implemented immediately, assets may be transferred or the company’s structure may change before the annulment case is completed.

The foreign investor should therefore consider whether an urgent request to suspend implementation is necessary.

In shareholder litigation, interim relief can sometimes be as important as the final claim.

7. Denial of Financial Information Is Itself a Legal Issue

A common foreign-investor complaint is:

“The Turkish partner has stopped giving us the accounts.”

A shareholder in an A.Ş. has statutory information and inspection rights.

Article 437 provides access to specified financial statements and corporate reports and permits shareholders to request information from the board concerning company affairs. If an information or inspection request is unanswered, unfairly rejected or postponed, the shareholder can apply to the commercial court under the statutory conditions. Importantly, the right cannot be abolished or restricted through the articles or a decision of a corporate organ.

This means a majority shareholder cannot simply say:

“You own only 20%, so we will no longer provide any financial information.”

A foreign shareholder faced with systematic information denial should document its requests carefully.

Formal written requests can later be important evidence in:

• information proceedings;
• special audit proceedings;
• director liability actions;
• and potentially just-cause dissolution litigation.

8. A Foreign Investor Can Seek a Special Audit

Information rights are sometimes insufficient.

The investor may suspect:

• related-party payments;
• undisclosed loans;
• asset transfers;
• manipulation of accounts;
• or diversion of company opportunities.

Article 438 allows any shareholder, where the statutory requirements are satisfied and the information/inspection right has previously been exercised, to ask the general assembly for a special audit of particular matters.

If the general assembly approves, the company or any shareholder may apply to the commercial court within 30 days for appointment of a special auditor.

Where the general assembly rejects the request, Turkish law contains an additional judicial mechanism for qualified minority shareholders under the following provisions.

A special audit can be highly effective because it moves the dispute away from:

“I think money was transferred improperly”

toward a structured judicial investigation of identified transactions.

9. Directors and Managers Can Face Liability for Breach of Their Duties

Some shareholder disputes are actually management-liability disputes.

Article 553 of the Turkish Commercial Code provides that founders, board members, managers and liquidators who breach obligations arising from law or the articles are liable for resulting damage unless they establish the absence of fault under the statutory framework. The liability can extend toward the company, shareholders and creditors depending on the damage.

Article 555 further permits the company and individual shareholders to claim compensation for loss suffered by the company, although the shareholder generally requests payment to the company in such a derivative-type claim.

The director-liability rules are also relevant to limited companies through Article 644.

Typical Dispute Examples

Potential management-liability allegations may involve:

• unauthorised transfer of company funds;
• self-dealing;
• loss-producing related-party transactions;
• improper disposal of company assets;
• breach of articles;
• misuse of corporate opportunities;
• or other breaches of statutory management obligations.

A foreign investor should determine whether the correct defendant is:

the Turkish shareholder, the company, the manager/director, or several of them under different legal grounds.

10. Deadlock Is a Different Problem From Majority Abuse

Not every corporate dispute involves misconduct.

Sometimes neither party has acted unlawfully.

They simply cannot agree.

This occurs frequently in:

50/50 joint ventures.

The foreign investor wants to expand.

The Turkish partner wants to distribute cash.

The foreign investor wants a new CEO.

The Turkish partner refuses.

The Turkish partner wants to borrow.

The foreign investor vetoes the financing.

If the articles and SHA require joint approval, the company can become effectively paralysed.

This is a deadlock.

The best solution is usually an agreed contractual mechanism, such as:

management escalation → senior shareholder negotiation → mediation → expert determination for technical issues → buy-sell/put/call mechanism → arbitration or other final remedy.

If no deadlock mechanism exists, the parties may ultimately need to rely on statutory court remedies.

11. What Can an Ltd. Şti. Shareholder Do When Continuing the Partnership Becomes Impossible?

Turkish law provides important remedies for limited company shareholders.

Under Article 638, the company agreement can give shareholders a contractual right to withdraw and may attach conditions to that right.

More importantly, every shareholder may bring an action to withdraw from the company for just cause.

During the litigation, the court can, on request, freeze some or all rights and obligations arising from the claimant’s shareholder status or take other protective measures to secure the shareholder’s position.

If the shareholder exits, Article 641 provides a right to an exit payment corresponding to the real value of the capital share, subject to the statutory framework governing payment.

This can be an important remedy where a foreign investor is effectively trapped in a private Ltd. Şti. and continuation of the relationship has become untenable.

12. An Ltd. Şti. Can Also Be Dissolved for Just Cause

Article 636 provides an additional remedy.

Where just cause exists, any shareholder may ask the commercial court to dissolve the limited company.

However, dissolution is not the court’s only option.

Instead of dissolving the company, the court may:

• order payment of the real value of the claimant’s shares and remove that shareholder from the company; or
• order another appropriate and acceptable solution.

The court may also take necessary measures after the dissolution action has been filed.

This flexibility is important.

A shareholder dispute does not necessarily have to destroy an otherwise viable business.

Turkish courts may seek a solution preserving the company while separating the disputing investor.

Recent Turkish appellate practice also emphasises that just cause depends on the facts of the particular relationship and that dissolution is generally treated as a last resort where an alternative solution can adequately protect the shareholder.

13. Can a Minority Shareholder Seek Dissolution of an A.Ş.?

Yes, under stricter standing requirements.

Article 531 provides that, where just cause exists, shareholders representing at least:

• 10% of the capital in a non-public A.Ş.;
• 5% in a publicly held A.Ş.

may request dissolution from the commercial court at the company’s registered office.

The court is not required to dissolve the company.

Instead, it can order payment of the real value of the claimant’s shares and their removal from the company or fashion another appropriate and acceptable solution.

This provision can become relevant where minority rights are systematically abused and ordinary governance remedies no longer provide meaningful protection.

Potential just-cause situations in practice may include persistent obstruction of shareholder rights, serious misuse of majority control, systematic denial of information or other circumstances making continuation of the relationship intolerable.

Dissolution should generally be regarded as a serious, last-stage remedy rather than the first litigation option.

14. Capital Increase and Dilution Disputes Are Common

Another frequent dispute arises when the majority shareholder attempts to increase capital.

The foreign investor may allege that:

• there is no genuine financing need;
• the timing is designed to disadvantage the minority;
• the valuation is improper;
• pre-emption rights have been unfairly restricted;
• or the objective is simply to dilute the foreign investor.

Such disputes can involve:

• challenge of the relevant general assembly resolution;
• statutory pre-emption rights;
• articles of association;
• SHA anti-dilution clauses;
• equal-treatment principles;
• or liability claims.

The investor should act quickly because corporate resolutions can be subject to short challenge periods.

A dilution dispute should therefore not be treated only as a financial negotiation.

It can be a corporate-law emergency.

15. Related-Party Transactions Can Trigger Multiple Claims

Suppose a Turkish 70% shareholder also owns a logistics company.

The jointly owned company begins paying that logistics company twice the normal market rate.

The foreign 30% shareholder may believe value is being extracted indirectly.

This type of dispute can generate several legal questions:

• Was the transaction properly approved?
• Did the shareholder or director have a conflict?
• Was there a reserved-matter requirement in the SHA?
• Did directors breach their duties?
• Did the company suffer loss?
• Was information concealed from the minority?
• Is a special audit appropriate?
• Is compensation due?

Foreign investors should therefore collect:

• contracts;
• invoices;
• payment records;
• board minutes;
• benchmarking;
• accounting records;
• and shareholder communications.

Corporate litigation is often won or lost through documentary evidence rather than broad allegations of unfairness.

16. Share Transfer and Exit Disputes Can Be Resolved Through Contract Enforcement

Many shareholder disputes occur when one party wants to leave.

The relevant SHA may contain:

• ROFR;
• ROFO;
• tag-along;
• drag-along;
• put option;
• call option;
• lock-up;
• valuation formula;
• mandatory transfer following default;
• or deadlock buy-sell mechanisms.

The legal dispute may concern whether:

• the trigger occurred;
• a notice was valid;
• the option was exercised on time;
• the valuation is correct;
• the buyer must complete;
• or the sale conditions were satisfied.

These are often primarily contractual disputes, making the dispute-resolution clause in the SHA especially important.

A strong agreement should therefore say more than:

“The parties will determine fair market value.”

It should explain how that value is determined and what happens if experts disagree.

17. Is Mediation Mandatory in Turkish Shareholder Disputes?

Sometimes—but not for every corporate dispute.

Turkish law requires pre-litigation mediation for specified commercial claims whose subject is the payment of a sum of money, including relevant receivable and compensation claims; the regime was later expressly expanded in commercial matters to include actions such as annulment of objection, negative declaratory and restitution claims.

Therefore, a shareholder’s claim such as:

“Pay me EUR 2 million damages for breach of the SHA”

may require a mediation-stage analysis before litigation.

By contrast, a pure action seeking:

• annulment of a general assembly resolution;
• dissolution of the company;
• or another non-monetary corporate remedy

should not automatically be assumed to fall within the same mandatory mediation category.

The exact relief sought must be examined.

Voluntary mediation remains possible for many private-law shareholder disputes even where it is not mandatory. Turkey’s official investment legal guide identifies voluntary mediation as an available mechanism for contractual and other private-law disputes.

18. Why Mediation Can Work Particularly Well in Shareholder Disputes

Corporate disputes are unusual because the parties often need to continue dealing with each other while the dispute is being resolved.

Court litigation can establish legal rights.

It may not create a workable business relationship.

Mediation can allow parties to design commercial solutions that a judgment may not easily provide, such as:

• one shareholder buying the other;
• restructuring board rights;
• refinancing shareholder loans;
• dividing business lines;
• transferring intellectual property;
• changing dividend policy;
• revising territorial rights;
• or agreeing an orderly sale process.

Example

Foreign shareholder wants to leave.

Turkish shareholder wants to keep the company.

The dispute is not really about whether one person “wins.”

The issue is:

What price allows one to exit and the other to continue?

A mediated valuation and payment schedule may therefore be more commercially effective than years of litigation.

19. When Should a Shareholder Dispute Go to Turkish Commercial Courts?

Turkish commercial courts are often appropriate where the dispute concerns mandatory corporate-law remedies, including matters such as:

• general assembly annulment/nullity;
• statutory information rights;
• special audit applications;
• director liability;
• judicial withdrawal/dissolution;
• or other Turkish Commercial Code remedies.

For example, Article 445 expressly places an A.Ş. general assembly annulment action before the commercial court at the company’s registered office.

Likewise, Article 531 identifies the commercial court at the company’s registered office for just-cause dissolution of an A.Ş.

For a foreign investor, Turkish courts have an obvious advantage in disputes requiring:

• Trade Registry consequences;
• corporate status relief;
• orders directly affecting a Turkish company;
• or urgent protective measures concerning corporate decisions.

20. When Is Arbitration Better?

Arbitration can be particularly attractive for contractual disputes between sophisticated shareholders.

Examples can include:

• SHA breach;
• share purchase agreement disputes;
• earn-out disputes;
• put/call options;
• valuation;
• funding obligations;
• contractual indemnities;
• breach of confidentiality;
• IP licensing obligations;
• and contractual deadlock arrangements.

Turkey’s International Arbitration Law No. 4686 applies to qualifying disputes containing a foreign element where Turkey is the seat or the law is otherwise selected within its statutory scope. The statute expressly recognises written arbitration agreements covering all or some disputes arising from an existing legal relationship.

A foreign shareholder often values arbitration because the parties can choose:

• arbitrators with M&A or company expertise;
• language;
• seat;
• procedural rules;
• and institutional framework.

It can also provide greater confidentiality than ordinary public court proceedings.

21. Not Every Corporate Dispute Should Automatically Be Sent to Arbitration

This qualification is important.

Article 1 of the International Arbitration Law excludes disputes that are not subject to the parties’ disposition and disputes concerning rights in rem over immovable property located in Turkey.

Turkish corporate disputes can also involve mandatory rules, third-party effects, company status and Trade Registry consequences.

Therefore, the question:

“Does our SHA contain an arbitration clause?”

is not always the end of the jurisdiction analysis.

Pure contractual shareholder claims are often well suited to arbitration.

But remedies directly affecting the corporate status of a Turkish company—such as certain annulment, nullity or dissolution remedies—require careful analysis of arbitrability and mandatory Turkish jurisdiction.

A sophisticated shareholder agreement should therefore avoid assuming that every possible dispute can be treated identically.

22. ISTAC Arbitration Can Be Used for International Shareholder Disputes

The Istanbul Arbitration Centre (ISTAC) provides institutional arbitration for both domestic and international parties.

ISTAC states that it can administer arbitration where the parties agree to resolve their disputes under the ISTAC Arbitration Rules, and its framework allows parties to choose arbitrators with relevant subject-matter experience.

ISTAC’s procedure includes:

• Request for Arbitration;
• response/defence;
• evidentiary submissions;
• hearings where appropriate;
• and issuance of the arbitral award.

Online hearings are also expressly supported under ISTAC’s published rules and procedures.

For a Turkish–foreign shareholder joint venture, an ISTAC clause can therefore provide a locally based but internationally oriented institutional mechanism.

Other international arbitration institutions may of course also be selected depending on the transaction.

23. Arbitration Clauses Must Be Drafted Correctly

A badly drafted arbitration clause can create a jurisdiction dispute before the underlying shareholder dispute even begins.

The clause should generally address:

• institutional or ad hoc arbitration;
• arbitration rules;
• seat;
• number of arbitrators;
• language;
• governing law;
• scope of disputes;
• and interaction with urgent/interim relief.

Under Article 4 of the International Arbitration Law, an arbitration agreement must satisfy the written-form requirement, which can also be met through specified electronic communications and other statutory methods.

A clause merely stating:

“Any dispute shall be resolved internationally”

is not an appropriate arbitration agreement.

For high-value Turkish JVs, the dispute clause should be drafted at the same level of sophistication as the economic terms of the investment.

24. Can the Parties Seek Urgent Court Protection Even if There Is Arbitration?

Arbitration and court assistance are not necessarily mutually exclusive.

The International Arbitration Law expressly includes a statutory mechanism concerning interim injunctions and provisional attachment, and its arbitration framework recognises a defined role for national courts.

This can be particularly important in shareholder disputes.

The foreign investor may need to prevent:

• disposal of assets;
• transfer of shares;
• payment of disputed funds;
• destruction of evidence;
• or implementation of a contested corporate action

before the arbitral tribunal can resolve the merits.

The exact remedy, jurisdiction and relationship with the arbitration agreement must be analysed case by case.

25. Can a Foreign Arbitral Award Be Enforced in Turkey?

Yes, subject to the applicable legal framework.

Türkiye has been a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards since 1992. The UN’s current treaty status records Türkiye as a Convention party.

This is extremely important for foreign investors.

Suppose a foreign investor wins an arbitral award in a shareholder dispute, but the Turkish partner’s assets are located in Turkey.

The investor may seek recognition and enforcement in Turkey under the applicable international and domestic rules.

Turkey’s legal investment guide also notes that recognition and enforcement of foreign arbitral awards is available subject to recognised Convention-type conditions, including issues such as arbitrability and public policy.

Therefore, when drafting an arbitration clause, the investor should consider not only:

where it wants to win the case

but also:

where the losing party’s assets are located.

26. Evidence Preservation Is Critical Once a Shareholder Dispute Begins

Foreign investors frequently realise too late that most company records are under the control of the Turkish management team.

As soon as a serious dispute appears likely, the investor should lawfully preserve available evidence such as:

• articles of association;
• SHA;
• investment agreements;
• board minutes;
• general assembly minutes;
• accounting reports;
• bank records;
• e-mails;
• management reports;
• contracts;
• invoice records;
• notices;
• IP documents;
• share ledger records;
• and relevant Trade Registry information.

The investor should also avoid informal actions that could later be challenged as unlawful access to company data.

Evidence gathering should be legally controlled.

27. Do Not Resign From the Board Too Early Without Understanding the Consequences

Foreign investors sometimes react emotionally to a shareholder dispute:

“We no longer trust them, so our directors will resign today.”

That may or may not be strategically sensible.

Board representation can provide:

• access to information;
• voting rights;
• notice of corporate actions;
• and evidence concerning management.

Resigning immediately may reduce influence at exactly the moment the dispute becomes serious.

On the other hand, remaining as a director can also involve continuing statutory obligations and potential liability.

The correct decision therefore depends on the facts.

The investor should assess both:

governance advantage

and

director-liability exposure

before resignations are delivered.

28. Do Not Stop Funding Automatically Because There Is a Dispute

A shareholders’ agreement may contain binding funding obligations.

If the foreign investor stops payments unilaterally, the Turkish partner may argue that the foreign shareholder itself is in breach.

Before suspending:

• committed capital;
• shareholder loans;
• contractual services;
• licences;
• or technology access,

the investor should determine whether there is a contractual right to do so.

A defensive step taken without legal analysis can turn the claimant into a counterclaim defendant.

29. A Shareholder Dispute May Need More Than One Proceeding

Complex corporate disputes often involve multiple parallel legal relationships.

For example:

Proceeding 1: arbitration for SHA damages.

Proceeding 2: commercial court action challenging a general assembly resolution.

Proceeding 3: statutory information or special audit proceeding.

Proceeding 4: interim relief application.

This is not necessarily duplication.

Each proceeding may protect a different right.

However, parallel proceedings create risks concerning:

• jurisdiction;
• contradictory decisions;
• evidence;
• strategy;
• cost;
• and settlement.

Foreign investors therefore need a single overall dispute strategy rather than separate lawyers acting independently on each claim.

30. What Is the Best Way to Resolve a 50/50 Foreign–Turkish Shareholder Deadlock?

Consider:

Foreign Investor: 50%

Turkish Partner: 50%.

The board cannot approve a budget.

No dividends are distributed.

Neither side agrees to the other’s proposed CEO.

The company remains profitable but cannot make strategic decisions.

The commercially optimal solution may not be a damages claim.

Instead, counsel should examine whether:

1. the SHA contains a deadlock process;
2. senior-management escalation is required;
3. a valuation mechanism exists;
4. one shareholder can exercise a put or call;
5. a buy-sell procedure exists;
6. mediation can produce a separation;
7. judicial withdrawal/dissolution remedies are available depending on company type;
8. arbitration applies to the contractual deadlock rights.

The ultimate goal may be:

separating the shareholders while preserving the company.

That is different from simply winning a lawsuit.

31. Practical Example: Foreign Minority Investor Is Denied Information

Assume:

Foreign investor owns 25% of a Turkish A.Ş.

Turkish founder owns 75%.

The foreign investor discovers that financial reporting stopped six months earlier.

The founder refuses to explain payments to related companies.

A potential strategy may include:

• formal Article 437 information and inspection requests;
• recording questions and objections at general assembly meetings;
• seeking a special audit under Article 438;
• examining potential director liability under Articles 553 and 555;
• challenging unlawful general assembly decisions;
• invoking SHA information and related-party provisions;
• and seeking urgent relief if assets appear at risk.

The investor should generally avoid starting only with an unsupported accusation of fraud.

A structured evidence strategy is stronger.

32. Practical Example: Turkish Majority Tries to Dilute the Foreign Investor

Assume:

Foreign Investor: 40%.

Turkish Partner: 60%.

The Turkish partner proposes a major capital increase.

The foreign investor alleges that there is no genuine funding need and that the purpose is to reduce its shareholding.

Counsel should review:

• statutory pre-emption rights;
• the articles;
• capital-increase procedure;
• SHA anti-dilution rights;
• voting thresholds;
• equal treatment;
• whether the resolution is challengeable;
• and whether implementation should be suspended.

If a general assembly action is required under Article 445, the three-month period becomes critical.

Delay can materially reduce the investor’s remedies.

33. Practical Example: The Foreign Investor Wants to Leave an Ltd. Şti.

Assume the Turkish partner owns 60% and the foreign investor owns 40%.

The foreign investor argues that:

• information is systematically withheld;
• management decisions are taken solely for the majority’s benefit;
• trust has completely collapsed;
• and no external buyer can be found.

Depending on the facts and corporate documents, possible options may include:

• negotiated share sale;
• contractual put right;
• mediation;
• Article 638 withdrawal action for just cause;
• Article 636 just-cause dissolution proceedings, with the possibility that the court orders payment of the investor’s real share value instead of dissolving the company.

This shows why an investor in an Ltd. Şti. is not necessarily trapped permanently simply because the Turkish partner refuses to buy.

34. Practical Example: A Shareholders’ Agreement Contains ISTAC Arbitration

Assume a German investor and Turkish founder signed an SHA providing that contractual disputes are resolved through ISTAC arbitration in Istanbul in English.

The founder allegedly breaches a contractual put option.

That type of dispute may be well suited to arbitration if the claim is arbitrable and falls within the clause.

ISTAC administers both domestic and international disputes, and its published framework permits institutional arbitration based on party agreement.

However, suppose the German investor simultaneously wants to invalidate a Turkish general assembly resolution.

Counsel should separately analyse whether the corporate-law remedy should be brought before the Turkish commercial court and how the two proceedings interact.

An arbitration clause should therefore be read claim by claim, not mechanically.

How Foreign Investors Can Reduce Shareholder Dispute Risk Before Investing

The best shareholder dispute is the dispute that the investment documents prevent from escalating.

Before entering a Turkish joint venture, a foreign investor should ensure that the corporate structure addresses:

1. board nomination rights;
2. reserved matters;
3. signature authority;
4. bank controls;
5. information and inspection;
6. related-party transactions;
7. future funding;
8. capital increases and dilution;
9. IP ownership;
10. confidentiality;
11. non-compete obligations;
12. ROFR/ROFO;
13. tag-along;
14. drag-along;
15. deadlock;
16. put/call options;
17. valuation;
18. default events;
19. governing law;
20. court/arbitration jurisdiction;
21. interim relief;
22. exit.

A one-page agreement stating:

“The parties will operate the company jointly and resolve disputes amicably”

does not provide meaningful protection for a multimillion-euro investment.

Frequently Asked Questions

Can a foreign shareholder sue a Turkish business partner in Turkey?

Yes. Foreign investors generally have access to Turkish courts under the applicable procedural and corporate-law rules. Foreign-investment legislation is based on equal treatment.

Which court hears shareholder disputes?

Many statutory company-law disputes are heard by the competent Commercial Court of First Instance. For example, Article 445 places A.Ş. general assembly annulment actions before the commercial court at the company’s registered office.

How long does a shareholder have to challenge an A.Ş. general assembly resolution?

For an annulment action under Article 445, the period is generally three months from the date of the resolution.

Can implementation of the resolution be stopped?

Potentially. Article 449 permits the court, after hearing board members, to suspend implementation of a disputed general assembly resolution during an annulment/nullity proceeding.

What if the majority refuses to provide financial information?

Article 437 gives A.Ş. shareholders statutory information and inspection rights and permits judicial application where requests are improperly rejected or unanswered.

Can a shareholder request a special audit?

Yes, subject to the statutory conditions under Article 438 and following provisions.

Can directors be sued for damaging the company?

Potentially. Article 553 establishes liability for founders, directors, managers and liquidators who breach statutory or articles-based obligations under the applicable fault framework. Article 555 allows a shareholder to pursue compensation for company loss with payment generally requested to the company.

Can a foreign shareholder withdraw from a Turkish Ltd. Şti.?

Yes, where the company agreement provides a withdrawal right or where just cause exists. Article 638 permits a shareholder to seek judicial withdrawal for just cause.

Can a Turkish Ltd. Şti. be dissolved because of serious shareholder conflict?

Potentially. Under Article 636, every shareholder may seek dissolution for just cause. The court can instead order the claimant’s shares bought out at real value or impose another appropriate solution.

Can a minority shareholder seek dissolution of an A.Ş.?

Yes. Under Article 531, shareholders representing at least 10% of a non-public A.Ş. or 5% of a public A.Ş. may seek dissolution for just cause. The court can order an alternative solution, including payment of the claimant’s real share value.

Is mediation mandatory for every shareholder dispute?

No. Mandatory mediation applies to specified commercial monetary claims, not automatically to every corporate-law remedy.

Can shareholder disputes be arbitrated?

Many contractual shareholder disputes can be arbitrated where a valid arbitration agreement exists and the dispute is arbitrable. However, mandatory corporate-status matters require separate analysis. International Arbitration Law No. 4686 excludes matters not subject to party disposition.

Can ISTAC hear a dispute between a foreign investor and Turkish partner?

Yes, where the parties have agreed to ISTAC arbitration and the dispute is arbitrable. ISTAC administers domestic and international arbitration.

Can a foreign arbitral award be enforced in Turkey?

Potentially yes. Türkiye is a party to the New York Convention, subject to the Convention and applicable Turkish recognition/enforcement requirements.

Conclusion: What Is the Best Way to Resolve a Dispute Between a Foreign Investor and Turkish Partner?

There is no single procedure that applies to every shareholder dispute.

The correct strategy depends on what went wrong.

If the Turkish partner breached a shareholders’ agreement, the foreign investor may have a contractual damages or performance claim.

If the majority adopted an unlawful general assembly resolution, the correct remedy may be a corporate annulment or nullity action.

If financial information is being concealed, statutory information and inspection rights or a special audit may be more useful than immediately seeking dissolution.

If managers transferred company value improperly, director or manager liability claims may be appropriate.

If the company is paralysed by a genuine 50/50 deadlock, the commercial objective may be separation rather than damages.

If continuing an Ltd. Şti. relationship has become intolerable, withdrawal or just-cause dissolution remedies may be available.

If the dispute arises from a put option, share purchase agreement or other contractual exit right, arbitration may be the best route where a valid arbitration clause exists.

The first major rule for foreign investors is therefore:

Do not choose the remedy before identifying the violated right.

The second rule is to act quickly.

This is particularly important for general assembly disputes.

Article 445 provides a three-month period for an annulment action.

A foreign shareholder that spends months sending informal e-mails can therefore lose a strategically important procedural remedy.

The third rule is to preserve evidence.

Corporate litigation frequently turns on:

minutes + e-mails + bank transfers + board resolutions + contracts + accounting records + formal notices.

The fourth rule is to separate the shareholder from the company.

A Turkish shareholder may have breached the SHA.

The company’s board may have breached statutory duties.

The company itself may have adopted an unlawful resolution.

Those are not necessarily the same legal wrong.

The fifth rule is to use interim remedies where delay may cause irreversible damage.

An annulment judgment issued years later may be commercially useless if the challenged corporate action has already been fully implemented.

Turkish law therefore provides mechanisms such as suspension of implementation of disputed general assembly resolutions under Article 449.

The sixth rule is to consider settlement seriously.

Shareholder disputes are often different from ordinary debt litigation.

Both sides may own a profitable business together.

Destroying that company can make both shareholders poorer.

A negotiated solution may involve:

buyout + valuation + payment schedule + IP transfer + release + non-compete + management transition.

No ordinary damages judgment can necessarily deliver that same integrated commercial solution.

The seventh rule is to understand arbitration properly.

International investors often prefer arbitration, and Turkey has a developed international arbitration framework. The International Arbitration Law recognises written arbitration agreements in qualifying cross-border disputes, while ISTAC provides institutional arbitration for domestic and foreign parties.

But an SHA should not simply state:

“All disputes go to arbitration”

without considering mandatory corporate remedies.

Some claims are fundamentally contractual.

Others directly concern the legal status and organs of a Turkish company.

The dispute-resolution clause should reflect that reality.

The eighth rule is to plan enforcement.

A foreign investor may obtain an arbitral award outside Turkey, but if the Turkish shareholder’s principal assets are in Turkey, the award ultimately needs to be enforceable there.

Türkiye’s participation in the New York Convention provides an internationally recognised framework for enforcement of foreign arbitral awards, subject to the applicable requirements and defences.

Finally, the most effective shareholder-dispute strategy begins before there is a dispute.

A properly structured foreign investment should include:

board rights + reserved matters + information rights + anti-dilution + bank controls + related-party restrictions + transfer rules + tag/drag + deadlock + valuation + put/call + dispute resolution + exit.

The foreign investor should ask before investing:

“If my Turkish partner and I completely disagree three years from now, who controls the company, who controls the money, what prevents either of us from abusing the other, and how can we separate without destroying the business?”

If the shareholders’ agreement and articles provide clear answers, many disputes can be contained.

If they do not, Turkish law still provides substantial judicial and arbitral remedies—but exercising those rights usually becomes more expensive, slower and commercially disruptive.

The most effective approach is therefore:

diagnose the dispute → protect evidence → stop irreversible harm → identify corporate and contractual claims separately → evaluate mediation → select court or arbitration correctly → pursue an exit or governance solution that preserves economic value.

A shareholder dispute should ultimately be managed as both:

a legal problem and a business problem.

Winning the lawsuit but destroying the company may not be a successful outcome.

For a foreign investor, the stronger result is usually the one that protects:

the investment, the enforceable rights and the investor’s ability to exit on commercially reasonable terms.

This article reflects Turkish corporate, international arbitration and dispute-resolution rules and publicly available official guidance as of August 2026. It is intended for general informational purposes only and does not constitute transaction-specific legal advice. The appropriate remedy depends on the company type, articles of association, shareholders’ agreement, ownership percentages, disputed corporate decisions, governing law, arbitration clause and the specific facts of the shareholder relationship.