Disputes between startup founders can become one of the most serious threats to a growing business. Many startups are established by friends, former colleagues, software developers, family members or business partners who initially have a high level of trust in each other. During the early stages, the founders are usually focused on developing the product, finding customers and raising investment rather than preparing for a future conflict.
However, once a startup begins generating revenue, receiving investment or increasing in value, disagreements between founders may become much more significant.
One founder may believe that the other is not working enough. A majority shareholder may attempt to exclude a minority founder from management. A founder may refuse to approve an investment round. One shareholder may transfer company funds without authority. Another may establish a competing startup. Intellectual property may remain registered in the name of one founder rather than the company. A former founder may refuse to transfer shares even though the shareholders’ agreement contains vesting provisions.
At this stage, the question becomes:
What legal remedies are available when startup founders have a dispute in Turkey?
The answer depends on the nature of the dispute, the corporate form of the startup, the articles of association, the shareholders’ agreement, the percentage of shares owned by each founder and the specific conduct giving rise to the conflict.
In Turkey, startup disputes may involve several areas of law simultaneously, including:
- Turkish commercial law,
- corporate law,
- contract law,
- intellectual property law,
- employment law,
- unfair competition law,
- data protection law,
- civil procedure,
- arbitration,
- mediation,
- and, in serious cases, criminal law.
For this reason, a founder dispute should not be treated simply as a personal disagreement between business partners. In many cases, immediate legal action may be necessary to protect the company’s assets, software, bank accounts, intellectual property and investment opportunities.
Why Do Startup Founder Disputes Arise?
The causes of startup disputes vary considerably.
However, certain problems appear repeatedly.
One of the most common is an unequal contribution between founders.
For example, two founders may each own 50% of the company.
At the beginning, both founders expect to work full-time.
Six months later, one founder stops actively participating in the business while the other continues working twelve hours per day.
If there is no vesting arrangement, the inactive founder may still legally own 50% of the company.
Another common problem concerns decision-making.
A 50/50 company may become completely deadlocked if the founders cannot agree on an investment, capital increase, company sale or appointment of management.
Other common founder disputes include:
- misuse of company funds,
- unauthorised withdrawals,
- refusal to provide accounting information,
- removal of a founder from management,
- disputes over salaries,
- intellectual property ownership,
- breach of confidentiality,
- competing businesses,
- customer solicitation,
- employee solicitation,
- disagreements concerning company valuation,
- refusal to participate in a capital increase,
- dilution of minority shareholders,
- attempts to sell shares to third parties,
- disagreement over a company sale,
- and failure to comply with a shareholders’ agreement.
The legal strategy should therefore begin by identifying exactly what type of dispute exists.
The First Question: Is the Startup an A.Ş. or Ltd. Şti.?
The legal remedies available to startup founders may differ significantly depending on whether the company is structured as a:
Joint Stock Company – Anonim Şirket (A.Ş.)
or
Limited Liability Company – Limited Şirket (Ltd. Şti.)
Both are capital companies under Turkish law, but the rules governing management, share transfers, shareholder exit and exclusion are different.
This distinction becomes particularly important during serious founder disputes.
For example, Turkish law contains specific provisions allowing shareholders of a limited liability company to seek withdrawal from the company for just cause.
The Turkish Commercial Code also contains mechanisms allowing the exclusion of limited liability company shareholders under certain conditions.
A joint stock company operates under a different regime. A shareholder of an A.Ş. does not have an unrestricted general right simply to resign from the company and demand payment for the shares.
Therefore, the legal form of the startup should always be identified before determining the appropriate remedy.
Step One: Review the Articles of Association and Shareholders’ Agreement
Before commencing litigation, the company documents should be reviewed carefully.
These usually include:
- articles of association,
- shareholders’ agreement,
- founders’ agreement,
- investment agreement,
- share purchase agreement,
- subscription agreement,
- option agreements,
- vesting arrangements,
- board resolutions,
- general assembly resolutions,
- intellectual property assignments,
- employment agreements,
- consultancy agreements,
- confidentiality agreements,
- and investment term sheets.
The articles of association and shareholders’ agreement may regulate different matters.
The articles are part of the company’s formal corporate framework.
A shareholders’ agreement, by contrast, generally creates contractual obligations between its parties.
This distinction is extremely important.
A shareholder may breach the shareholders’ agreement without the relevant corporate transaction automatically becoming invalid.
For example, suppose the shareholders’ agreement states that Founder A cannot sell shares without first offering them to Founder B.
Founder A nevertheless attempts to transfer shares to a third party.
The legal consequences must be evaluated by considering both the contractual provisions and the mandatory corporate rules governing share transfers.
The remedy could involve contractual damages, enforcement of transfer obligations or other legal measures depending on the circumstances.
Can Startup Founders Resolve the Dispute Through Negotiation?
Yes, and in many cases this should be considered before commencing a long corporate dispute.
A founder conflict does not necessarily have to end in litigation.
The founders may negotiate a structured separation.
Possible settlement models include:
- one founder purchasing the other founder’s shares,
- the founders selling the company together,
- redistribution of management responsibilities,
- appointment of an independent manager,
- restructuring voting rights,
- repayment of shareholder loans,
- transfer of intellectual property,
- modification of vesting arrangements,
- or a complete founder exit agreement.
The important point is that the settlement should be properly documented.
An informal agreement such as:
“You leave the company and I will pay you later”
may create additional disputes rather than solving the original problem.
A founder settlement should ideally regulate the share transfer, price, payment schedule, intellectual property, management resignations, confidentiality obligations, company property and mutual release of claims.
Mediation in Startup Founder Disputes
Mediation can be particularly useful in founder disputes because commercial conflicts often involve issues that courts cannot resolve efficiently.
A court may determine whether a shareholder resolution is valid.
But a court cannot easily rebuild trust between founders or design a new management structure tailored to the company.
Mediation allows the parties to negotiate commercial solutions.
Examples might include:
Founder A transfers 20% of the shares to Founder B and retains 10%.
Founder B takes operational control.
Founder A receives a defined payment over twelve months.
Both parties waive additional claims.
Intellectual property is transferred to the company.
Founder A remains subject to confidentiality obligations.
Such a settlement may be commercially more valuable than years of litigation.
Turkish mediation legislation applies to private-law disputes over matters that the parties may freely dispose of.
Is Mediation Mandatory Before Filing a Commercial Lawsuit?
This depends on the claim.
Under Article 5/A of the Turkish Commercial Code, mediation is a mandatory precondition for certain commercial lawsuits involving monetary claims, including claims for receivables and damages and certain other specified monetary proceedings. The current provision also covers commercial actions concerning objection cancellation, negative declaratory actions and restitution claims where the subject is a monetary amount.
Therefore, if one startup founder brings a commercial compensation claim against another founder, mandatory mediation may need to be completed before litigation.
However, not every corporate lawsuit is automatically subject to mandatory mediation.
For example, disputes concerning the annulment of corporate resolutions or certain status-related corporate claims must be analysed separately according to the exact nature of the request.
The relief requested in the lawsuit is therefore important when determining whether mediation is a procedural precondition.
Litigation Between Startup Founders
Where negotiation and mediation do not resolve the dispute, court proceedings may become necessary.
Commercial disputes arising from corporate relationships will often fall within the jurisdiction of commercial courts, subject to the nature of the particular claim.
Potential lawsuits may include:
- annulment of general assembly resolutions,
- compensation claims against directors or managers,
- actions concerning shareholder rights,
- claims arising from shareholders’ agreements,
- requests for withdrawal or exclusion in limited liability companies,
- requests concerning unjustified transactions,
- intellectual property claims,
- unfair competition actions,
- and proceedings concerning the dissolution of a company for just cause.
The correct lawsuit depends on what the founder actually wants to achieve.
This is important because a founder should not start litigation before determining the commercial objective.
Is the founder trying to remain in the company?
Does the founder want to leave?
Does the founder want to remove another shareholder?
Does the founder want compensation?
Does the founder want to prevent a share transfer?
Does the founder want to cancel a corporate resolution?
Does the founder want access to financial information?
Does the founder want to stop misuse of company assets?
The litigation strategy will be different in each situation.
Annulment of General Assembly Resolutions
A common founder conflict arises when the majority shareholders adopt a general assembly resolution that the minority founder considers unlawful.
For example, the majority may approve:
- a controversial capital increase,
- changes to corporate governance,
- a dividend decision,
- amendments to the articles,
- or another resolution affecting shareholder rights.
Where the statutory requirements are satisfied, a shareholder may consider legal remedies against the resolution.
The distinction between resolutions that are void and resolutions that may be annulled is legally important.
The applicable requirements, standing and limitation periods should be assessed immediately because corporate litigation frequently involves strict procedural deadlines.
A shareholder who delays may lose an important remedy.
Minority Shareholder Protection
Holding a minority stake does not mean that a founder has no legal rights.
Turkish company law provides various minority and individual shareholder protections.
Depending on the company type and ownership percentage, these may include rights concerning:
- access to information,
- examination of company records,
- general assembly participation,
- voting,
- requesting certain corporate actions,
- challenging unlawful resolutions,
- requesting special audit mechanisms in appropriate circumstances,
- and seeking judicial remedies against abuse of majority power.
Minority protection becomes particularly important when a founding shareholder has been removed from management but still owns a significant percentage of the company.
For example, a founder may hold 30% of the shares but no longer have access to the company’s internal management systems.
The majority shareholder cannot necessarily treat that founder as if the shareholding no longer exists.
Shareholder rights and management authority are different concepts.
What If a Founder Is Denied Company Information?
Information asymmetry is common during founder disputes.
One founder controls accounting.
Another controls bank accounts.
A third controls the software infrastructure.
When the relationship deteriorates, one founder may suddenly lose access to financial information.
Warning signs may include:
- refusal to provide financial statements,
- unexplained bank transfers,
- related-party payments,
- unusual consulting expenses,
- transfer of customers to another company,
- missing invoices,
- unexplained capital movements,
- or transfer of intellectual property.
In such situations, the shareholder should document requests for information.
Depending on the corporate form and circumstances, shareholder information and examination rights may be exercised through corporate procedures and, if necessary, judicial remedies.
Evidence should be preserved early because records may become difficult to obtain later.
Liability of Directors and Managers
A founder dispute may also involve management liability.
Suppose Founder A controls the company and transfers company funds to another business owned personally by Founder A.
This is not merely a disagreement concerning management strategy.
It may create potential liability.
Managers and board members owe duties arising from the Turkish Commercial Code and other applicable legislation.
Where directors, managers or other responsible persons breach their legal obligations and cause damage, compensation claims may arise depending on the circumstances.
The company itself may have suffered damage.
In other situations, shareholders or creditors may have legally relevant claims.
The standing requirements and nature of the loss should be examined carefully because not every decrease in company value automatically creates a direct personal claim for an individual shareholder.
Misuse of Startup Funds
Financial misconduct is one of the most serious categories of founder conflict.
Examples include:
- using a corporate credit card for personal expenses,
- transferring company funds to relatives,
- creating fictitious consultancy agreements,
- paying excessive management fees,
- withdrawing funds without proper documentation,
- transferring revenue to another company,
- or selling company assets below value.
These transactions should be analysed from several legal perspectives.
There may be:
- corporate liability,
- contractual liability,
- unjust enrichment issues,
- tax consequences,
- director liability,
- and potentially criminal implications depending on the facts.
Where company assets are at immediate risk, waiting until the conclusion of an ordinary lawsuit may be inadequate.
Interim legal protection may need to be considered.
Interim Injunctions and Urgent Measures
Startup disputes can develop very quickly.
Imagine that a founder discovers on Monday that another founder intends to transfer the startup’s trademark, domain name or source code to a separate company on Friday.
A lawsuit that takes months or years to conclude would provide little protection if the asset disappears before judgment.
Turkish procedural law provides mechanisms for interim protection where the statutory requirements are satisfied.
Depending on the dispute, a party may seek an interim injunction to preserve the existing situation or prevent serious harm.
Potential situations could involve:
- disputed shares,
- intellectual property,
- company assets,
- confidential information,
- domain names,
- or certain corporate actions.
Whether an injunction is legally available depends on the precise request, urgency, evidence and procedural circumstances.
A founder seeking urgent relief should therefore act quickly and preserve supporting documents.
Evidence Preservation in Founder Disputes
Evidence is critical.
Startup founders often communicate through digital platforms rather than formal letters.
Important evidence may therefore exist in:
- emails,
- WhatsApp messages,
- Slack conversations,
- GitHub records,
- cloud logs,
- bank statements,
- accounting systems,
- electronic signatures,
- shareholder registers,
- board minutes,
- general assembly minutes,
- contracts,
- cap tables,
- investment documents,
- source-code repositories,
- and domain registration records.
A founder should not assume that messages will remain available indefinitely.
Digital evidence may be deleted.
Access permissions may be removed.
Company email accounts may be closed.
For this reason, evidence preservation should be considered as soon as the dispute becomes serious.
The legality of how evidence is obtained must also be respected. Unlawfully obtaining data can create separate legal problems.
Disputes Over Intellectual Property
For many technology startups, the most valuable asset is not cash.
It is intellectual property.
A founder may have personally created the original source code before the company existed.
Another founder may have registered the domain name personally.
The trademark may be registered in the founder’s name.
A developer may claim ownership of software.
When the founders separate, these issues can become existential.
Imagine that a startup raises EUR 2 million from investors.
The company later discovers that its main software is still legally owned by Founder A.
Founder A leaves and claims the company has no right to continue using it.
This type of problem can seriously damage both operations and future fundraising.
Founder disputes should therefore include an immediate review of:
- software ownership,
- trademark registrations,
- patent rights,
- design rights,
- domain names,
- databases,
- licensing agreements,
- employee intellectual property clauses,
- and founder IP assignments.
Confidentiality and Trade Secrets
Departing founders frequently possess highly sensitive information.
This may include:
- customer lists,
- pricing strategies,
- product roadmaps,
- investor presentations,
- source code,
- algorithms,
- commercial agreements,
- supplier terms,
- business plans,
- and financial information.
If a founder begins using this information for a competing business, several legal remedies may potentially arise.
The shareholders’ agreement, confidentiality agreements, employment documentation and unfair competition legislation should be examined.
The startup should also take practical measures.
For example, after a founder legitimately loses authority to access systems, the company should review:
- cloud permissions,
- GitHub access,
- CRM systems,
- banking authorisations,
- company email,
- social media accounts,
- domain administration,
- electronic signatures,
- and password management.
Legal strategy and cybersecurity strategy should often be coordinated in serious startup disputes.
What If One Founder Establishes a Competing Startup?
Competition between a current or former founder and the startup can create complex legal issues.
The first question is whether there is an enforceable contractual non-compete obligation.
The second is whether the founder is using confidential information, trade secrets, company opportunities, employees or customers belonging to the startup.
A non-compete clause is not automatically enforceable merely because it appears in a contract.
Its scope must be evaluated according to applicable Turkish law.
Overly broad restrictions concerning duration, geography or economic activity may create enforceability concerns.
However, even where a broad non-compete provision is problematic, misuse of trade secrets or unlawful competitive conduct may still give rise to separate claims.
Share Transfer Disputes
Another common startup dispute concerns the sale of shares.
A founder may want to exit while the other shareholders want the founder to remain.
Alternatively, the founder may want to sell shares to a third party whom the other founders do not want in the company.
The legal analysis depends heavily on whether the startup is an A.Ş. or Ltd. Şti.
It also depends on:
- the articles of association,
- share type,
- shareholders’ agreement,
- pre-emption rights,
- rights of first refusal,
- lock-up provisions,
- call options,
- tag-along rights,
- drag-along rights,
- and any investor consent requirements.
A share transfer that appears commercially simple may therefore require detailed corporate analysis.
Founder Deadlock: What Happens in a 50/50 Startup?
A 50/50 startup structure is especially vulnerable to deadlock.
Consider the following example.
Founder A owns 50%.
Founder B owns 50%.
Founder A wants to accept an investment offer.
Founder B refuses.
Founder A wants to increase capital.
Founder B refuses.
Founder B wants to replace the CEO.
Founder A refuses.
Founder A wants to sell the company.
Founder B refuses.
The business may become unable to make important decisions.
If the shareholders’ agreement contains a deadlock clause, the parties may have a predetermined solution.
Possible mechanisms include:
- mandatory negotiation,
- mediation,
- escalation procedures,
- independent expert determination,
- buy-sell mechanisms,
- call options,
- put options,
- or an agreed sale process.
If there is no deadlock clause, statutory corporate remedies must be evaluated.
This is considerably more difficult.
Withdrawal From a Limited Liability Company
Limited liability companies have specific statutory rules concerning shareholder withdrawal.
Under Article 638 of the Turkish Commercial Code, the articles of association may grant a shareholder a right to withdraw from the company subject to specified conditions.
A shareholder may also request judicial permission to withdraw where a just cause exists.
This can become important when a founder relationship has irretrievably broken down.
However, not every disagreement constitutes just cause.
The circumstances must be sufficiently serious to justify ending the shareholder relationship through judicial intervention.
Examples must always be evaluated case by case.
Exclusion of a Shareholder From a Limited Liability Company
Another remedy may involve exclusion.
Article 640 of the Turkish Commercial Code allows the articles of association of a limited liability company to identify circumstances in which a shareholder may be excluded by general assembly resolution.
The company may also seek judicial exclusion where just cause exists.
This is an important distinction between a limited liability company and a joint stock company.
Startup founders should therefore consider exclusion provisions when drafting the articles rather than waiting until a serious dispute occurs.
A carefully designed articles of association may provide much more predictable remedies.
What Happens Financially When a Limited Liability Company Founder Exits?
Departure does not necessarily mean that the founder loses the economic value of the shares.
Under the Turkish Commercial Code regime concerning limited liability companies, a departing shareholder may have rights concerning the real value of the capital interest, subject to the applicable legal and contractual framework.
Valuation can therefore become a major issue.
For a startup, calculating “real value” may be extremely difficult.
The company may have:
- minimal physical assets,
- substantial software value,
- rapidly increasing revenue,
- recent venture capital investment,
- intellectual property,
- future contracts,
- or a rapidly changing valuation.
The founders may disagree dramatically about value.
Founder A may argue that the company is worth EUR 10 million based on the latest investment discussions.
Founder B may argue that the company is worth only EUR 2 million based on current financial performance.
Expert valuation may therefore become necessary.
Dissolution of a Joint Stock Company for Just Cause
The Turkish Commercial Code provides an important minority remedy for joint stock companies.
Under Article 531, shareholders representing at least one-tenth of the capital in a non-public joint stock company may seek dissolution where just cause exists.
Importantly, dissolution is not necessarily the only possible outcome.
The court may consider another appropriate solution instead of ending the entire company.
This mechanism may become relevant in severe shareholder conflicts where the continuation of the corporate relationship has become intolerable.
However, dissolution is an extraordinary remedy.
A founder should not assume that every disagreement with another shareholder will justify termination of a successful company.
The nature, duration and seriousness of the conduct must be evaluated carefully.
Compensation Claims Between Founders
A founder may also claim damages where another founder has breached contractual or statutory obligations and caused legally compensable loss.
Examples could include:
- breach of a shareholders’ agreement,
- breach of confidentiality,
- unlawful transfer of intellectual property,
- violation of a share transfer obligation,
- misuse of company funds,
- breach of management duties,
- or violation of investment representations.
The claimant must normally establish the relevant legal elements, including the breach, damage and causal relationship.
The exact requirements depend on the legal basis of the claim.
This is why calculating the loss at the beginning of litigation is essential.
Enforcement of Shareholders’ Agreement Obligations
A shareholders’ agreement is one of the most important documents in startup disputes.
It may contain obligations concerning:
- voting,
- management,
- vesting,
- founder departure,
- share transfers,
- investment rounds,
- confidentiality,
- non-compete provisions,
- drag-along rights,
- tag-along rights,
- and call or put options.
When one founder breaches the agreement, contractual remedies may arise.
However, a fundamental distinction should always be remembered:
A breach of the shareholders’ agreement and the validity of a corporate action are not necessarily the same question.
The shareholders’ agreement primarily binds its parties.
Therefore, where possible, critical startup protections should be coordinated with the company’s articles and relevant corporate procedures rather than relying exclusively on contractual language.
Arbitration in Startup Disputes
Startup founders may choose arbitration rather than ordinary court litigation.
This is particularly common where:
- investors are foreign,
- the startup operates internationally,
- confidentiality is important,
- the dispute has a significant financial value,
- or the shareholders want specialist decision-makers.
An arbitration clause may be included in a shareholders’ agreement or investment agreement.
The Istanbul Arbitration Centre, known as ISTAC, provides institutional arbitration procedures for disputes where the parties have agreed to use its rules. ISTAC’s model clause provides that disputes arising from or connected with a contract may be finally resolved through arbitration under the ISTAC Arbitration Rules. The parties may additionally specify matters such as the seat, language, number of arbitrators and applicable substantive law.
Arbitration can offer important advantages in complex investment disputes.
However, not every corporate dispute is automatically capable of being resolved by arbitration.
Questions relating to corporate status, mandatory company-law rules and the effect of arbitral awards on third parties require particular attention.
Therefore, startup arbitration clauses should be drafted carefully rather than copied from standard international templates.
Why Confidentiality Matters in Founder Litigation
A public corporate dispute can damage a startup even if the company eventually wins.
Litigation may reveal:
- internal financial problems,
- disagreements between founders,
- investor conflicts,
- product problems,
- confidential commercial information,
- or allegations concerning management.
Potential investors conducting due diligence may discover the dispute.
Employees may become concerned.
Customers may question the stability of the company.
This commercial reality makes negotiated settlement, mediation and arbitration particularly attractive in some startup disputes.
The legal objective should not necessarily be to “defeat” the other founder.
The objective should often be to protect the economic value of the startup.
Can a Founder File a Criminal Complaint Against Another Founder?
In serious cases, conduct arising during a founder dispute may potentially have criminal-law consequences.
However, criminal complaints should never be used simply as commercial pressure in an ordinary shareholder disagreement.
The fact that founders disagree about company management does not automatically make the dispute criminal.
Criminal analysis may become relevant where there are allegations involving conduct such as:
- fraud,
- forgery,
- unauthorised appropriation of assets,
- unlawful access to systems,
- destruction of data,
- or other acts that satisfy the elements of an offence.
The exact facts and evidence must be evaluated carefully.
Corporate litigation and criminal proceedings can also affect each other strategically.
For this reason, criminal-law allegations in shareholder disputes require particular caution.
What Should a Founder Do Immediately When a Serious Dispute Begins?
A founder should avoid impulsive decisions.
Deleting another founder’s email account, transferring money, changing company ownership records or removing assets without examining legal authority can make the situation worse.
A more appropriate initial process is generally:
- identify the company structure and ownership percentages;
- review the articles of association;
- review the shareholders’ and investment agreements;
- identify management and representation authority;
- preserve relevant evidence;
- review bank and accounting records;
- determine ownership of intellectual property;
- identify urgent risks to company assets;
- consider negotiation or mediation;
- determine whether interim judicial protection is necessary;
- identify the appropriate legal claims;
- evaluate the commercial consequences of litigation.
The legal strategy should then be aligned with the founder’s actual objective.
Settlement Is Often Better Than Destroying the Startup
A founder can technically win a lawsuit and still lose economically.
Suppose two founders spend four years litigating against each other.
During that period:
- investors disappear,
- employees leave,
- customers move to competitors,
- product development stops,
- and legal costs increase.
At the end, one founder may receive a favourable judgment.
But the startup may no longer have meaningful value.
This is why startup disputes should be approached differently from ordinary debt collection litigation.
The preservation of company value should remain a central objective.
Sometimes the most successful legal outcome is a negotiated founder exit rather than a final judgment.
How Can Startup Founder Disputes Be Prevented?
The best legal dispute is often the one that never arises.
Startup founders should therefore establish clear rules before the company becomes valuable.
A comprehensive founders’ or shareholders’ agreement should address:
- founder roles,
- minimum time commitment,
- vesting,
- good leaver and bad leaver provisions,
- board composition,
- management authority,
- reserved matters,
- voting thresholds,
- deadlock procedures,
- information rights,
- share transfer restrictions,
- rights of first refusal,
- tag-along rights,
- drag-along rights,
- future investment rounds,
- dilution,
- intellectual property,
- confidentiality,
- non-compete obligations where appropriate,
- founder exit,
- valuation,
- and dispute resolution.
The articles of association should also be coordinated with these contractual arrangements where corporate effectiveness requires it.
Frequently Asked Questions About Startup Founder Disputes in Turkey
Can a founder be removed from a startup?
Removing a person from management and removing that person as a shareholder are different matters.
A founder may cease to be a manager or board member while continuing to own shares.
Ending share ownership requires an appropriate contractual, corporate or statutory legal mechanism.
Can a majority founder remove a minority shareholder?
Not simply because the majority shareholder wants to do so.
The available mechanisms depend on the company type, articles of association, contracts and whether statutory grounds exist.
Limited liability companies have specific rules concerning exclusion.
Can a founder sue another founder?
Yes.
Depending on the circumstances, claims may arise from contractual breaches, management liability, share transfers, compensation obligations, intellectual property or other legal grounds.
Can a founder force another founder to sell shares?
Only where there is a legally enforceable basis for doing so.
This might arise from a call option, vesting mechanism, drag-along provision, exclusion mechanism or another statutory or contractual rule.
There is no general principle allowing one founder to force another shareholder to sell merely because the relationship has deteriorated.
What happens if two 50/50 founders cannot agree?
The shareholders’ agreement should first be reviewed for a deadlock mechanism.
If there is none, corporate and judicial remedies must be evaluated depending on the company structure and seriousness of the deadlock.
Is mediation required before suing a startup partner?
For certain commercial monetary claims, mandatory mediation is a precondition to filing proceedings under Article 5/A of the Turkish Commercial Code. Whether mediation is mandatory depends on the exact legal claim being brought.
Can startup disputes be resolved by arbitration?
Many contractual startup disputes may be referred to arbitration where a valid arbitration agreement exists and the particular dispute is arbitrable. Corporate-law disputes involving mandatory rules or corporate status require separate analysis.
Conclusion: What Legal Remedies Are Available in Disputes Between Startup Founders?
Disputes between startup founders can involve much more than a disagreement between business partners.
A founder dispute may determine who controls the company, who owns the intellectual property, whether an investment can proceed and whether the startup itself can survive.
Under Turkish law, there is no single legal remedy applicable to every startup dispute.
The appropriate solution may involve:
- negotiation,
- mediation,
- enforcement of a shareholders’ agreement,
- annulment of a corporate resolution,
- compensation proceedings,
- director or manager liability,
- interim injunctions,
- shareholder information rights,
- share transfer proceedings,
- withdrawal or exclusion in a limited liability company,
- dissolution proceedings for just cause,
- arbitration,
- or a negotiated founder exit.
The legal structure of the company is especially important.
A founder dispute in a Turkish limited liability company cannot always be treated in the same way as a dispute in a joint stock company.
The articles of association, shareholders’ agreement and investment documents must therefore be analysed together.
Perhaps the most important practical principle is that startup litigation should not be approached solely as a question of who is legally right.
A startup may be worth substantially more as a functioning business than the value that either founder could obtain after years of litigation.
The objective should therefore be to protect both legal rights and enterprise value.
Where reconciliation is possible, a carefully negotiated founder separation may provide the best solution.
Where misconduct threatens company assets, minority rights or intellectual property, urgent legal intervention may instead be necessary.
For founders establishing a startup in Turkey, disputes should also be anticipated before they occur. A professionally drafted shareholders’ agreement, carefully structured articles of association, founder vesting arrangements, intellectual property assignments, deadlock mechanisms and exit provisions can significantly reduce uncertainty when relationships later deteriorate.
The most expensive time to decide what happens when founders disagree is after the disagreement has already begun.
The rules governing founder disputes should therefore be established while the founders are still working toward the same objective.
No Responses