Introduction
Share transfers are among the most common corporate transactions in Turkey, occurring in contexts such as mergers and acquisitions, private equity investments, venture capital financing, family business restructuring, and shareholder exits.
Under Turkish Commercial Law, share transfer procedures differ significantly depending on the type of company involved—Joint Stock Company (A.Ş.) or Limited Liability Company (Ltd.). Understanding these distinctions is essential for both domestic and foreign investors, as improper execution of transfer formalities may invalidate the transaction or create legal uncertainty.
This article provides a comprehensive overview of share transfer procedures under Turkish Commercial Law, including formal requirements, restrictions, registration rules, tax considerations, and practical risk factors.
1. Legal Framework
Share transfer procedures in Turkey are primarily governed by:
- Turkish Commercial Code (TCC) No. 6102
- Turkish Code of Obligations
- Trade Registry Regulation
- Tax legislation
Company type determines the applicable procedure.
PART I – SHARE TRANSFER IN JOINT STOCK COMPANIES (A.Ş.)
2. Basic Principle: Free Transferability
Under the TCC, shares in a Joint Stock Company are generally freely transferable unless restricted by:
- Articles of Association
- Shareholders’ agreement
This flexibility makes A.Ş. structure particularly attractive for investors.
3. Types of Shares in A.Ş.
Share transfer procedures depend on share type:
1️⃣ Registered Shares (Nama Yazılı)
- Most common form
- Transfer requires endorsement and delivery of share certificate (if issued)
2️⃣ Bearer Shares (Hamiline Yazılı)
- Transfer occurs through physical delivery
- Additional reporting obligations apply
Recent reforms require registration of bearer shareholders with the Central Securities Depository (MKK).
4. Transfer of Registered Shares
If share certificates are issued:
- Transfer requires endorsement (ciro)
- Physical delivery of certificate
If no certificates issued:
- Transfer documented via written share transfer agreement
- Entry into share ledger required
Share ledger entry is important for recognition by the company.
5. Restrictions on Share Transfer in A.Ş.
Articles of Association may include:
- Board approval requirement
- Right of first refusal
- Transfer limitations
However, restrictions cannot eliminate transferability entirely.
In non-public A.Ş., board may reject transfer under certain statutory grounds.
6. Public Joint Stock Companies
For publicly traded companies:
- Share transfers occur electronically through Central Securities Depository
- Subject to Capital Markets Law
- Mandatory tender offer rules may apply upon acquisition of control
Disclosure obligations are strict.
7. Trade Registry Registration
In A.Ş.:
- Share transfer does not require trade registry registration
- Exception: if board composition changes
However, internal records must be updated.
PART II – SHARE TRANSFER IN LIMITED LIABILITY COMPANIES (LTD.)
8. More Restrictive Transfer Regime
Share transfer in Ltd. companies is significantly more formal and restrictive.
It requires:
- Written agreement
- Notarization
- General Assembly approval
- Trade Registry registration
Without fulfilling all requirements, transfer is invalid.
9. Notarized Share Transfer Agreement
The transfer agreement must:
- Be in writing
- Be notarized
Failure to notarize renders the transfer legally invalid.
10. General Assembly Approval
The General Assembly must approve the transfer.
Articles of Association may:
- Restrict transfer
- Require qualified majority
- Prohibit transfer under specific conditions
Without approval, transfer does not become effective.
11. Trade Registry Registration
After approval:
- Transfer must be registered with Trade Registry
- Published in Trade Registry Gazette
Legal effect toward third parties begins upon registration.
12. Public Debt Liability Risk in Ltd.
Unlike A.Ş.:
- Ltd. shareholders may bear secondary liability for public debts.
This risk continues until:
- Transfer is properly registered.
Delay in registration may prolong exposure.
PART III – TAX IMPLICATIONS
13. Capital Gains Tax
Capital gains from share transfer may be subject to:
- Income tax (for individuals)
- Corporate tax (for companies)
Certain exemptions apply, particularly for:
- Shares held more than 2 years (for corporations)
Tax structuring is important in M&A transactions.
14. Stamp Tax
Share transfer agreements may be subject to stamp tax.
Tax liability depends on:
- Contract structure
- Monetary value specified
Professional tax advice is recommended.
PART IV – SPECIAL SITUATIONS
15. Share Transfer in Family Businesses
Common issues include:
- Inheritance transfers
- Minority protection
- Valuation disputes
Pre-existing shareholders’ agreements may affect process.
16. Share Pledge vs Share Transfer
In financing transactions:
- Shares may be pledged instead of transferred.
Pledge does not transfer ownership but creates security interest.
Different formalities apply.
17. Competition Law Implications
If share transfer results in:
- Change of control
And turnover thresholds are exceeded:
- Merger notification to Competition Authority required.
Closing before approval may lead to fines.
18. Foreign Investors
Foreign investors may freely acquire shares in Turkish companies.
No special approval is required in most sectors.
However, sector-specific licenses may apply (banking, energy, defense).
19. Common Legal Risks
Investors should watch for:
- Undisclosed liabilities
- Share encumbrances
- Incomplete trade registry filings
- Invalid notarization
- Failure to update share ledger
Due diligence is essential before transfer.
20. Timing Considerations
In A.Ş.:
- Transfer may be completed within days.
In Ltd.:
- Process may take longer due to notarization and registry procedures.
Transaction structuring should account for timing.
Conclusion
Share transfer procedures under Turkish Commercial Law vary significantly depending on whether the company is structured as a Joint Stock Company or a Limited Liability Company. While A.Ş. shares are generally freely transferable with relatively simple formalities, Ltd. share transfers require notarization, general assembly approval, and trade registry registration.
For investors engaging in acquisitions, financing transactions, or shareholder restructuring, careful compliance with statutory formalities is essential to ensure legal validity and minimize liability exposure.
Proper documentation, due diligence, and timely registry updates are critical components of secure and enforceable share transfers in Turkey.
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