Articles of Association in Turkey: Key Clauses and Negotiation Points (2025)
When you incorporate a company in Turkey, the Articles of Association (AoA) is not just a standard form for the Trade Registry. It is the company’s constitutional document: it defines how the company is governed, how decisions are made, and how shareholders protect themselves when things go wrong. Foreign founders often register using a generic template, then later discover they cannot control share transfers, cannot block risky borrowing, or cannot remove a manager easily.
This guide explains the key clauses in Articles of Association in Turkey and the most important negotiation points for founders, foreign investors, and joint ventures.
1) What the Articles of Association Controls in Turkey
In practice, the AoA impacts:
- company purpose and scope of activity
- capital and share structure
- management model (managers/board)
- representation and signing authority framework
- shareholder meeting rules and voting thresholds
- transfer restrictions (especially relevant in LLCs)
- profit distribution logic (to the extent regulated)
- dispute dynamics (because procedures define control)
Important: The AoA is registered and enforceable as part of the company’s official governance framework—so it must align with how the business will actually operate.
2) Clause #1: Company Purpose and Scope (Don’t Copy-Paste)
Foreign founders often use broad, generic activity descriptions. This can create friction later, especially with:
- banking compliance (KYC questions),
- licensing in regulated activities,
- contract counterparties who require clarity.
Best practice: Define a scope that fits your real business model while keeping enough flexibility for growth.
3) Clause #2: Capital Structure and Share Classes (Where Relevant)
The AoA should clearly state:
- capital amount and contribution details
- shareholding percentages
- timing and method of capital payments (where applicable)
- rules for capital increases and pre-emption rights (as designed)
If you anticipate investors, you should plan how capital increases will be approved and how shareholders protect their percentage against dilution.
4) Clause #3: Governance and Decision-Making Thresholds
A major negotiation point is what requires simple majority vs enhanced approval.
Common “high-risk” actions that founders/investors often want to control through higher thresholds include:
- borrowing above a threshold
- granting guarantees/pledges
- selling key assets
- related-party transactions
- changing business scope
- appointing/removing managers/directors
- opening/closing branches
In many deals, the AoA is designed to reflect “reserved matters” so that key protections are enforceable through corporate mechanisms.
5) Clause #4: Management Appointment, Removal, and Terms
Foreign investors frequently lose control not because of ownership, but because the AoA makes removal or replacement of management difficult.
Key points to negotiate:
- how managers/directors are appointed
- term lengths and renewal rules
- removal mechanics and voting thresholds
- whether management can be structured as a single executive or multiple executives
- whether certain shareholders have nomination rights
A clean governance design prevents deadlock and reduces litigation risk.
6) Clause #5: Representation and Signing Authority (Operational Control)
Signing authority is one of the most critical practical clauses. Even if shareholders agree on strategy, the company is legally bound by signatures given under representation rules.
A strong AoA should support:
- single vs joint signature models
- limits by transaction amount and type
- authority matrix logic for high-risk actions (loans, guarantees, leases)
Practical reality: If signing authority is too broad, the company can be bound to obligations that shareholders never approved.
7) Clause #6: Share Transfer Restrictions and Approvals
Share transfers are where the AoA becomes a real “protection tool.”
Common negotiation points:
- approvals required for transfers
- restrictions on selling to competitors
- permitted transferees (affiliates, group companies)
- pre-emption rights and timeline mechanics
- consequences of unauthorized transfers
Foreign founders should ensure AoA transfer rules align with their shareholders’ agreement to avoid gaps and enforceability problems.
8) Clause #7: Profit Distribution and Reserve Policy (Practical Expectations)
Many shareholder disputes start with dividends. While distribution depends on profits and legal rules, the AoA can clarify:
- dividend policy expectations (where relevant)
- reserve approach and timing
- approval process and meeting mechanics
Clear policy reduces conflict and improves investor trust.
9) Clause #8: Meeting Procedures and Information Rights
Operational conflict often arises from “information asymmetry.” AoA and governance systems should provide:
- meeting call procedures and notice periods
- quorum and voting rules
- minutes and decision documentation standards
- information rights and access procedures (often complemented by SHA)
For foreign shareholders, predictable procedure is essential—especially when they are not physically present in Turkey.
10) Common AoA Mistakes in Turkey (And How to Avoid Them)
- using a generic template with no transfer restrictions
- unclear thresholds for major decisions
- broad signing authority with no internal control logic
- management removal rules that create deadlock
- inconsistencies between AoA and the shareholders’ agreement
- an activity scope that conflicts with banking/compliance reality
The best AoA is not the longest. It is the one that matches the deal logic and prevents predictable conflict.
FAQ
Is the Articles of Association required to incorporate in Turkey?
Yes. The AoA is a core incorporation document and is registered through the Trade Registry process.
Can shareholders change the AoA later?
Yes, typically through formal corporate resolutions and registration procedures, but changing it later can be costly and may require negotiation with other shareholders.
Do foreign investors need a customized AoA?
In most multi-shareholder or investment scenarios, yes. A customized AoA prevents transfer disputes, authority issues, and governance deadlocks.
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