A Turkish company owns a valuable shareholding in another business.

The investment has a fair market value of approximately TRY 100 million. The company’s manager or board of directors subsequently sells that stake for TRY 25 million.

The buyer may be an independent investor, another shareholder, a related company, a family member of the manager or even a party indirectly connected with the controlling shareholder.

Minority shareholders later discover the transaction and ask:

“The shares were worth four times the sale price. Can the directors be personally liable for the difference?”

Potentially, yes.

Under Turkish company law, directors and managers do not guarantee that every commercial decision will ultimately prove profitable. A bad investment decision does not automatically create personal liability.

However, directors are required to manage corporate assets with appropriate care and loyalty and to protect the company’s interests.

Selling a valuable corporate participation substantially below its real economic value without a commercially defensible reason may therefore constitute a breach of directors’ duties and may expose the persons responsible to substantial personal liability.

The central question is not simply:

“Was the sale price below market value?”

It is:

“Why was the asset sold at that price, what information did the directors possess when they made the decision, and did they genuinely act in the company’s interests?”

That distinction is fundamental.

1. First Clarify What Has Actually Been Sold

The legal analysis depends on the ownership of the shares.

This article primarily concerns situations where:

• Company A owns shares in Company B and Company A’s directors sell those shares;
• a company holds an investment or subsidiary and management disposes of that participation;
• treasury shares or similar corporate share assets are transferred;
• management controls a disposal that economically removes a valuable corporate participation from the company’s balance sheet.

If the shares personally belong to an individual shareholder, the company’s manager normally cannot simply sell that shareholder’s personal shares unless there is an independent legal basis such as a power of attorney.

The first investigation should therefore establish:

Who legally owned the shares immediately before the sale?

If the company owned them, an undervalued sale may directly damage the company.

That distinction determines who suffered the loss and who can bring the claim.

2. Directors Must Protect the Company’s Interests

For joint-stock companies, Article 369 of the Turkish Commercial Code requires board members and persons entrusted with management to perform their duties with the care of a prudent manager and to protect the interests of the company in accordance with good faith.

The statutory obligation is not limited to avoiding fraud.

It also requires decision-makers to approach important transactions with appropriate diligence.

The current TCC formulation expressly requires directors to act with the care of a prudent manager and to protect corporate interests.

In limited liability companies, the corresponding management duties must principally be considered together with Article 626 and the liability provisions applicable through the TCC.

Accordingly, when management is considering the sale of a valuable corporate stake, reasonable corporate governance may require questions such as:

• What is the current value of the shares?
• Has an independent valuation been obtained?
• Are comparable transactions available?
• Has the company received other offers?
• Why does the company need to sell now?
• Is there an urgent liquidity requirement?
• Are there contractual restrictions on transfer?
• Is the buyer related to management?
• Does management have a conflict of interest?
• Would a competitive sale process produce a higher price?
• What benefit does the company obtain from accepting a lower price?

A director who cannot answer any of these questions may face difficulty later explaining why the transaction protected corporate interests.

3. Selling Below Market Value Is Not Automatically Unlawful

This is an essential distinction.

Assume a company’s shares in a subsidiary have an estimated theoretical value of TRY 50 million.

Management sells them for TRY 42 million.

The difference alone does not establish liability.

There may be legitimate commercial reasons for accepting a lower price.

For example:

• the company urgently requires liquidity;
• the shares are illiquid;
• the shareholding is a minority interest carrying little control;
• the articles of association contain transfer restrictions;
• the subsidiary has significant contingent liabilities;
• the buyer assumes additional company debts;
• the sale forms part of a broader settlement;
• negotiations with higher bidders failed;
• the valuation contains optimistic assumptions;
• there is a significant minority discount;
• the company avoids substantial future funding obligations.

Fair value is not always identical to the highest theoretical valuation produced by an expert.

Commercial assets do not necessarily have one objectively indisputable price.

That is why managerial liability cannot normally be based exclusively on hindsight.

4. The Difference Between a Bad Decision and a Breach of Duty

Suppose directors receive an independent valuation indicating a value between TRY 45 million and TRY 55 million.

They negotiate with three investors.

The highest credible offer is TRY 47 million.

They accept that offer.

Two years later, the shares are sold again for TRY 100 million.

The second transaction does not automatically prove that the first directors acted unlawfully.

The later increase may result from:

• improved financial performance;
• market developments;
• a new licence;
• a strategic acquisition;
• technological changes;
• new contracts;
• changed investor expectations.

Managerial decisions should generally be evaluated according to the information reasonably available when the decision was made, not merely according to what became known later.

Compare that with another scenario.

A valuation indicates TRY 80–100 million.

A third-party investor has already offered TRY 85 million.

The board rejects that offer without explanation.

One week later, it sells the shares for TRY 30 million to a company controlled by the chairman’s brother.

There is no independent fairness opinion.

The TRY 30 million is paid in instalments over five years without security.

That case presents a radically different liability profile.

5. The Core Liability Provision: TCC Article 553

Article 553 of the Turkish Commercial Code establishes the general framework for directors’ liability.

Founders, board members, managers and liquidators who culpably breach obligations arising from the law or articles of association may be held liable for losses caused to the company, shareholders or creditors.

A successful management liability action therefore normally requires proof of four central elements:

1. Breach of Duty

There must be a violation of a statutory or articles-of-association obligation.

2. Fault

The responsible person must have acted intentionally or negligently.

3. Damage

A legally compensable loss must have occurred.

4. Causal Connection

The breach must have caused the alleged loss.

An undervalued share sale may potentially satisfy all four.

6. How Does an Undervalued Share Sale Breach the Duty of Care?

Imagine that the company owns 40% of a successful manufacturing company.

Management decides to sell the investment.

Before the sale:

• no valuation is obtained;
• no financial adviser is consulted;
• no alternative buyer is contacted;
• no market-testing process is undertaken;
• no financial analysis is presented to the board;
• the board minutes contain no commercial justification.

The shares are then sold to a connected person for a fraction of their probable value.

The absence of a valuation is not necessarily unlawful by itself.

But in a high-value transaction it may constitute important evidence that management failed to exercise adequate care.

The court may ask:

What would a prudent manager reasonably have done before disposing of an asset representing a substantial part of company value?

If the answer includes obtaining financial information, considering valuation and comparing alternatives, the failure to take those steps can become relevant to liability.

7. The Duty of Loyalty Makes Related-Party Transactions More Dangerous

An undervalued sale becomes especially sensitive where the purchaser is connected with management.

Possible relationships include:

• spouse;
• child;
• parent;
• sibling;
• close business partner;
• company controlled by a director;
• company controlled by a director’s relative;
• controlling shareholder;
• another company in the same corporate group.

A related-party transaction is not automatically unlawful.

But the closer the relationship, the stronger the need for management to demonstrate that the transaction was commercially fair.

If a director participates in a transaction from which he or a connected person obtains a private advantage at the company’s expense, the issue may move from negligent decision-making toward a potential breach of loyalty.

The company should not function as a mechanism for transferring corporate value to insiders.

8. Example: €10 Million Stake Sold to the Chairman’s Brother for €2 Million

Company A owns 35% of Company B.

Company B is profitable and has valuable intellectual property.

An independent financial adviser previously valued Company A’s stake at between EUR 9 million and EUR 11 million.

The chairman of Company A arranges a sale to his brother for EUR 2 million.

There is:

• no open bidding process;
• no new valuation;
• no documented urgency;
• no explanation for the 80% discount.

Six months later, the brother sells part of the shares to an independent investor at a valuation equivalent to EUR 10 million for the whole stake.

Those facts may support allegations that:

1. the company’s investment was transferred below fair value;
2. the decision-makers breached their duties of care and loyalty;
3. the company suffered a measurable loss;
4. the relative obtained an unjustified economic benefit;
5. the transaction may have been structured deliberately to transfer corporate wealth.

A director’s potential liability would therefore not be based merely on the fact that a later sale produced more money.

It would arise from the surrounding evidence showing that the original transaction itself was commercially indefensible.

9. How Is the Company’s Loss Calculated?

This is often the central forensic issue.

At first sight, the formula appears simple:

Fair market value at the date of sale – consideration actually received = corporate loss.

Suppose:

Fair value: TRY 120 million

Sale price: TRY 40 million

Corporate loss: TRY 80 million

But real litigation is rarely that simple.

An expert may have to determine:

• the company’s financial position;
• EBITDA;
• net debt;
• future cash flows;
• market multiples;
• comparable transactions;
• control premium;
• minority discount;
• lack-of-marketability discount;
• shareholder agreements;
• transfer restrictions;
• options;
• contingent liabilities;
• litigation exposure;
• regulatory risk.

Accordingly, the “real value” of a corporate participation should normally be established through appropriate financial expert evidence.

10. Nominal Value Is Usually Not Real Value

A frequent defence is:

“The nominal value of the shares was only TRY 5 million, and we sold them for TRY 6 million, so the company made a profit.”

That argument may be economically meaningless.

Nominal capital value and actual enterprise value are different concepts.

A stake with a nominal value of TRY 5 million may have an economic value of TRY 100 million because the business owns:

• real estate;
• brands;
• technology;
• cash;
• customer contracts;
• licences;
• subsidiaries;
• intellectual property;
• significant market share;
• recurring profits.

Therefore, the correct comparison is ordinarily not simply:

sale price versus nominal value.

It is:

sale price versus economically supportable market value at the relevant transaction date.

11. Book Value Is Also Not Necessarily Fair Value

The same warning applies to accounting book value.

A balance sheet may record an investment at historical acquisition cost.

Suppose the company purchased shares for TRY 10 million in 2015.

Those shares remain recorded at or near historical accounting value.

By 2026, the underlying company is worth TRY 1 billion.

Management cannot necessarily justify a TRY 15 million sale simply by saying:

“The shares appeared in the accounting records at TRY 10 million.”

Accounting value and market value serve different purposes.

Expert analysis must determine the economic substance of the asset.

12. The Most Important Yargıtay Principle: Liability Must Be Personalised

Another major point concerns multiple board members.

It is not sufficient to state:

“There were five board members, so all five must pay the entire loss.”

Turkish law applies the principle of differentiated joint and several liability under TCC Article 557.

Each defendant’s personal involvement, fault and causal contribution must be assessed.

This principle has been applied specifically in litigation concerning the sale of company property below its actual value.

In Court of Cassation 11th Civil Chamber, E.2019/4815, K.2021/4664, dated 1 June 2021, the dispute concerned damages resulting from the allegedly undervalued sale of company real estate. The Court held that the lower court could not automatically make every board member jointly liable without determining whether a board resolution existed and which members had personally contributed to the loss.

The principle is directly relevant to an undervalued share sale.

The court should determine:

• Who proposed the transaction?
• Who negotiated the price?
• Who obtained the valuation?
• Who voted in favour?
• Who voted against?
• Who abstained?
• Who signed the sale agreement?
• Who knew about the conflict of interest?
• Who concealed relevant information?
• Who could reasonably have prevented the transaction?

Liability should follow actual responsibility.

13. A Dissenting Board Member May Be in a Very Different Position

Assume there are five board members.

Three vote to sell a EUR 20 million participation for EUR 5 million.

One member votes against the transaction and has the objection recorded in the minutes.

One member does not attend the meeting.

It would be legally problematic simply to treat all five identically.

The member who actively opposed the transaction may have a powerful defence.

The absent member’s position will depend on factors including:

• why he was absent;
• whether he knew of the transaction;
• whether he had other management responsibilities;
• whether the transaction fell within his area of delegated authority;
• whether he subsequently approved or participated in implementation.

This is precisely why board minutes can become decisive evidence.

14. Delegation of Authority Can Change the Liability Analysis

Article 553 also recognises circumstances where duties have lawfully been delegated.

A director who lawfully delegates a function is not automatically liable for every act performed by the delegate, subject to the statutory requirements concerning appropriate selection and supervision.

Therefore, in a complex corporate structure the court may need to identify:

• board-level authority;
• executive management authority;
• investment committee authority;
• delegated signature limits;
• internal directives;
• articles-of-association provisions.

A claimant should not assume that formal board membership alone proves responsibility.

15. What If the General Assembly Approved the Sale?

This strengthens the defence but does not necessarily resolve every issue.

Important questions remain:

• What information was given to the shareholders?
• Was the real market value disclosed?
• Were related-party relationships disclosed?
• Was material information concealed?
• Was the resolution itself lawful?
• Was the approval obtained before or after the transaction?
• Did conflicted shareholders participate in voting where restrictions applied?
• Did the transaction involve mandatory corporate rules?

A general assembly resolution obtained through incomplete or misleading information may generate additional disputes.

Furthermore, management cannot always eliminate statutory liability simply by obtaining a formal resolution while concealing the real economic circumstances.

16. What If the Sale Covers a Substantial Part of the Company’s Assets?

The analysis becomes even more serious where the shares sold represent most of the company’s value.

TCC Article 408 reserves the wholesale disposal of a significant amount of company assets to the general assembly in joint-stock companies.

Yargıtay jurisprudence treats the disposal of essential corporate assets with particular caution, especially where losing the asset prevents the company from continuing its principal business.

For example:

Company A is effectively a holding company.

Its only meaningful asset is a 70% stake in Company B.

The board sells that entire stake.

After the sale, Company A has virtually no operating assets.

In such a situation, the transaction may raise not only managerial liability questions but also questions concerning the proper corporate organ authorised to approve the disposal.

17. Who Can Bring the Liability Claim?

Where an asset is sold below value, the immediate loss normally belongs to the company.

Suppose a participation worth TRY 100 million is sold for TRY 30 million.

The company’s assets have potentially fallen by TRY 70 million.

The immediate victim is Company A.

Shareholders may suffer economically because the value of their own shares in Company A decreases.

But that is generally an indirect loss.

TCC Article 555 therefore provides an important mechanism: both the company and each shareholder may claim compensation for damage suffered by the company, but a shareholder pursuing the company’s loss must request that the compensation be paid to the company.

This distinction is fundamental when drafting the relief sought.

18. A Minority Shareholder Can Sue Even If the Majority Controls Management

Consider:

A owns 75%.

B owns 25%.

A controls the board.

The board sells a corporate investment to an entity connected with A at a substantial undervalue.

Obviously, the company controlled by A may refuse to sue its own directors.

TCC Article 555 prevents this control structure from making managerial liability meaningless.

B may potentially bring the liability action for the company’s loss and request that the damages be paid to the company.

Therefore, majority control does not necessarily prevent judicial examination.

19. Direct Shareholder Damage Must Be Distinguished

Sometimes the shareholder may suffer a separate direct loss.

Direct and indirect damage should not be confused.

If management’s conduct reduces corporate assets, the primary loss is normally the company’s.

But if the conduct separately violates an individual shareholder right and directly causes financial damage to that shareholder, a personal claim may potentially arise depending on the circumstances.

The statement of claim should clearly identify:

Who suffered the loss?

What legal right was violated?

To whom should damages be paid?

Incorrect characterisation of the loss can seriously weaken an otherwise strong case.

20. The Buyer May Also Matter

A managerial liability action against directors is not necessarily the only available remedy.

Suppose the purchaser:

• is the director’s family member;
• knew the shares were being transferred at a fraction of their value;
• participated in designing the transaction;
• lacked the financial capacity to pay even the stated price;
• immediately resold the asset;
• transferred part of the profit back to the director.

The claimant should then investigate whether separate claims may exist against the purchaser based on the legal structure of the transaction.

The possible remedies depend heavily on whether the underlying sale itself is valid, voidable, simulated or affected by representation problems.

Managerial liability and recovery against the transferee are separate questions and should not be automatically conflated.

21. An Undervalued Sale Does Not Automatically Make the Contract Invalid

This distinction is critically important.

A director can breach his duties toward the company while the transaction with an external purchaser nevertheless remains binding.

In that scenario:

The shares stay with the purchaser, but the director may have to compensate the company.

Therefore:

director liability ≠ automatic cancellation of the share sale.

Whether the underlying transfer can also be reversed depends on separate questions such as:

• authority;
• representation;
• bad faith of the purchaser;
• collusion;
• simulation;
• mandatory corporate approval requirements;
• general principles concerning invalidity.

The litigation strategy should therefore identify both potential tracks from the beginning.

22. How Can the Director Defend the Transaction?

A well-documented director may have a strong defence even where the ultimate price appears relatively low.

Useful evidence may include:

• independent valuation reports;
• investment bank advice;
• financial adviser reports;
• board presentations;
• comparable offers;
• bidding records;
• due diligence findings;
• transaction-risk assessments;
• liquidity forecasts;
• legal opinions;
• negotiation records;
• evidence of contingent liabilities;
• board minutes explaining the commercial reasoning.

The strongest defence is not:

“I was the manager, so I was entitled to decide.”

It is:

“I made an informed commercial decision based on reliable information and reasonably believed that the transaction was in the company’s interests.”

23. The Absence of Documentation Can Be Dangerous

Now consider the reverse.

The director cannot produce:

• a valuation;
• another offer;
• a financial report;
• negotiation documents;
• board analysis;
• any explanation for the discount.

The buyer is related to management.

The transaction is significantly below expert-determined market value.

The lack of contemporaneous documentation can make a subsequent claim that the transaction was a rational commercial decision much less convincing.

Courts and experts should ideally evaluate what was known at the transaction date, rather than accepting explanations constructed only after litigation began.

24. Expert Valuation Is Usually Essential

A plaintiff alleging undervalue should avoid relying only on statements such as:

“Everyone knows the company was worth much more.”

A professional valuation should address the company as it existed on the transaction date.

Possible valuation methods include:

Discounted Cash Flow

Future expected cash flows are discounted to present value.

Comparable Company Multiples

Comparable businesses may be analysed through EV/EBITDA, P/E or other appropriate multiples.

Precedent Transactions

Previous sales of comparable companies or shares may provide evidence.

Net Asset Value

This may be especially relevant for holding, investment or real-estate-heavy companies.

Transaction-Specific Adjustments

The expert may consider:

• control premium;
• minority discount;
• marketability;
• transfer restrictions;
• debt;
• shareholder agreements.

The appropriate methodology depends on the business.

25. Date of Valuation Matters

The relevant issue is generally the value of the participation when the allegedly harmful transaction occurred.

Suppose shares were sold in January 2024 for TRY 30 million.

By January 2026 they are worth TRY 200 million.

The claimant cannot simply assume:

TRY 200 million – TRY 30 million = TRY 170 million damages.

The increase may have occurred after the transaction.

A forensic expert should determine the defensible economic value at the historical transaction date and then the legal consequences of that damage.

Otherwise, the analysis risks confusing subsequent business growth with the original manager’s alleged wrongdoing.

26. Payment Must Also Be Traced

Even the stated low price may not have been genuinely paid.

Suppose:

Contractual sale price: TRY 40 million

Fair value: TRY 100 million

Money actually entering company accounts: TRY 10 million

The case may no longer concern only a TRY 60 million valuation discount.

The remaining TRY 30 million contractual receivable must also be investigated.

Relevant evidence includes:

• company bank accounts;
• buyer’s payment records;
• general ledger;
• shareholder accounts;
• loan agreements;
• set-off documentation;
• subsequent circular transfers.

A transaction can be more damaging than the written contract initially reveals.

27. What If the Buyer Pays Through Set-Off?

Management may argue:

“The purchaser did not transfer cash because the company owed it money.”

This defence must be tested.

Ask:

• When was the debt created?
• What was its legal basis?
• Was it recorded in earlier financial statements?
• Did the company actually receive value for the alleged debt?
• Is the creditor connected with management?
• Was the set-off legally valid?
• Was the claimed debt genuine or artificially created before the share sale?

Related-party receivables can sometimes be used to disguise extraction of corporate assets.

28. Parent Companies and Corporate Groups Require Additional Analysis

Suppose Company A controls Company B.

The controlling entity instructs Company B to sell a valuable participation below fair value to another group company.

This may require additional examination under the Turkish Commercial Code’s group of companies rules.

TCC Article 202 addresses unlawful exercise of control and specifically identifies transactions through which a controlled company may be caused to suffer losses, subject to statutory conditions concerning compensation and balancing.

Therefore, where the undervalued transfer is not merely a director decision but part of a broader group strategy benefiting the controlling enterprise, Articles 195 et seq., particularly Article 202, may become relevant in addition to ordinary managerial liability.

29. Differentiated Joint Liability

Where several people contributed to the loss, Article 557 prevents automatic one-size-fits-all liability.

A person is jointly liable only to the extent that the loss can personally be attributed to him considering his fault and the circumstances.

Yargıtay’s E.2019/4815, K.2021/4664 decision is particularly useful here because the Court expressly required investigation into which directors participated in the allegedly undervalued disposal rather than automatically imposing liability on everyone.

For practical litigation, the claimant should therefore build a responsibility map.

For each director:

This can materially affect the damages allocation.

30. What About Discharge of Directors?

Another issue is whether the directors were subsequently released through a general assembly discharge resolution.

A valid discharge may affect later liability claims to the extent of matters properly disclosed to the shareholders.

However, discharge should not automatically be assumed to protect directors from transactions whose material circumstances were concealed.

For example, if shareholders are told:

“The investment was sold.”

but are not told that:

• the buyer was the chairman’s relative;
• the independent valuation was TRY 100 million;
• the sale price was TRY 20 million,

the scope and legal effect of any subsequent discharge requires careful examination.

Disclosure is therefore crucial.

31. Limitation Periods Must Be Checked Immediately

TCC Article 560 establishes special limitation periods for managerial liability claims.

As a general rule, the compensation claim becomes time-barred:

• two years after the claimant learns of the damage and responsible person; and
• in any event five years after the act causing the damage.

Where the conduct also constitutes a criminal offence subject to a longer criminal limitation period, the longer period may apply under the statutory conditions.

A shareholder who discovers an old undervalued transfer should therefore immediately establish:

transaction date;

discovery date;

identity of responsible persons;

and whether the alleged conduct may also constitute a criminal offence.

Waiting can destroy an otherwise strong damages claim.

32. Which Court Has Jurisdiction?

Director liability actions under TCC Article 553 et seq. constitute commercial disputes and are generally heard before the Commercial Court of First Instance.

Article 561 provides that an action against responsible persons may be filed before the commercial court at the company’s registered seat.

Yargıtay and regional appellate case law recognise that this rule operates as an additional venue rather than necessarily an exclusive jurisdiction rule in every procedural configuration.

Where the lawsuit also seeks cancellation of a transaction concerning immovable property or another right subject to special jurisdiction, the procedural analysis may change. Yargıtay has specifically addressed such combined claims.

33. What Evidence Should a Minority Shareholder Secure?

An undervalued-share-sale investigation should ordinarily obtain:

1. the share purchase agreement;
2. board resolutions;
3. general assembly resolutions;
4. attendance and voting records;
5. articles of association;
6. historical shareholder records;
7. valuation reports;
8. financial statements of the company whose shares were sold;
9. independent audit reports;
10. buyer correspondence;
11. competing offers;
12. term sheets;
13. investment committee reports;
14. management presentations;
15. due diligence documents;
16. correspondence concerning price negotiations;
17. bank records showing payment;
18. shareholder and related-party accounts;
19. documents identifying the beneficial owners of the purchaser;
20. evidence of relationships between directors and the purchaser;
21. subsequent resale documentation;
22. evidence concerning the use of the sale proceeds.

The investigation should reconstruct the decision from beginning to end.

34. A Particularly Suspicious Pattern

A strong managerial liability case may arise where several indicators appear together:

• valuable shares are sold rapidly;
• price is substantially below independent valuation;
• buyer is related to management;
• no competing bids are sought;
• no commercial urgency exists;
• no independent valuation is obtained;
• the board receives incomplete information;
• payment is delayed without security;
• buyer lacks independent financing;
• purchaser quickly resells at a substantially higher price;
• directors receive a direct or indirect benefit.

None of these factors alone necessarily proves liability.

Together, however, they can create compelling evidence that the transaction was not a genuine arm’s-length corporate decision.

35. Practical Example: Legitimate Discounted Sale

Company A owns a 15% minority stake in Company B.

An investment adviser values the theoretical pro rata value at TRY 100 million.

However:

• the stake has no board representation;
• transfer restrictions exist;
• no dividends have been paid for years;
• there is no ready market;
• buyers request a substantial minority discount.

Management markets the stake for six months.

The highest credible bid is TRY 72 million.

The board obtains a fairness opinion and accepts it.

A shareholder later argues that the shares were “worth TRY 100 million.”

The directors may have a strong defence.

The discount is commercially explainable.

36. Practical Example: Potential Director Liability

Company A owns 45% of a profitable technology company.

Independent valuation: TRY 250–280 million.

Third-party written offer: TRY 230 million.

The board refuses the offer.

Two weeks later, the shares are sold for TRY 90 million to Company X.

Company X is indirectly controlled by the controlling shareholder’s son.

There is no new valuation.

Payment is spread over four years without interest.

The controlling shareholder’s nominees approve the board decision.

Company X resells half the stake eight months later for TRY 150 million.

In this situation, the following claims should be investigated:

• breach of duty of care;
• breach of loyalty;
• managerial liability under TCC Article 553;
• compensation for corporate loss under Article 555;
• differentiated liability under Article 557;
• possible invalidity or recovery claims concerning the transaction;
• corporate-group liability if applicable;
• possible interim measures;
• potential criminal consequences if intentional diversion of corporate assets can be proven.

37. Potential Criminal Consequences

Not every undervalued sale is a criminal offence.

A commercial disagreement over valuation should not automatically become a criminal complaint.

However, where evidence indicates that management intentionally transferred corporate property to itself or connected persons for private benefit, criminal-law issues may require separate examination.

Depending on the facts, offences involving breach of trust, fraud, false records or other misconduct may potentially become relevant.

The essential distinction is between:

a commercially defensible decision that turned out badly

and

an intentional transfer of company wealth to insiders.

Criminal allegations should be based on concrete evidence of intentional conduct rather than merely on an expert’s later disagreement with the sale price.

38. The Best Plaintiff Strategy: Attack the Process, Not Only the Price

The strongest case is rarely:

“Our expert says the shares were worth more.”

A much stronger case is:

“Management knew the shares were worth substantially more, rejected a superior third-party offer, conducted no competitive process, sold to a connected party, concealed the relationship and could provide no commercial justification for the discount.”

The second argument proves much more than valuation.

It attacks the integrity of the entire decision-making process.

A successful action should therefore combine:

valuation evidence + corporate governance evidence + conflict-of-interest evidence + payment tracing.

39. The Best Director Defence: Build a Contemporary Decision File

Directors handling a major share disposal should create a defensible record before signing the transaction.

A prudent file may contain:

• current valuation;
• strategic rationale;
• alternative options;
• competing offers;
• tax implications;
• financial consequences;
• conflict disclosures;
• adviser opinions;
• board discussion;
• dissenting opinions;
• reasons for accepting the specific price.

Good corporate governance is not merely paperwork.

Years later, these records may determine whether the transaction is viewed as legitimate commercial judgment or a breach of fiduciary duty.

Conclusion

Selling a company’s shareholding below its theoretical market value does not automatically make directors personally liable.

Corporate assets may legitimately be sold at a discount.

Liquidity needs, minority discounts, transfer restrictions, financial distress, transaction risks and strategic considerations may all justify a price below an expert’s headline valuation.

But management’s discretion has limits.

Where directors sell a valuable corporate participation substantially below fair value:

• without proper investigation;
• without obtaining necessary financial information;
• despite better offers;
• to themselves or connected persons;
• without a legitimate commercial purpose;
• or in circumstances indicating that corporate value was deliberately transferred away from the company,

the transaction may constitute a breach of the duties of care and loyalty.

Under TCC Articles 553 and 555, the responsible managers may potentially be required to compensate the loss suffered by the company. Liability must, however, be determined individually under the differentiated joint-liability principle reflected in Article 557.

For litigation purposes, the critical question is therefore not merely:

“How much were the shares sold for?”

The better question is:

“What were the shares reasonably worth at that time, what did the directors know, why did they accept the lower price, who benefited from the discount, and what loss did that decision cause the company?”

When the answers show that a TRY 100 million corporate asset was deliberately converted into a TRY 20 million insider benefit, Turkish company law provides considerably stronger remedies than simply calling it a bad business decision.