Introduction

A company can remain legally alive while becoming practically impossible to operate.

This is particularly common in closely held Turkish limited liability companies where two shareholders founded the business together, both participate in management, and the corporate structure was originally built on personal trust. Once that trust disappears, ordinary disagreements can develop into a complete corporate deadlock.

Typical situations include:

• two shareholders no longer communicating;
• 50/50 shareholders blocking each other’s decisions;
• repeated failure to hold general meetings;
• inability to appoint or replace managers;
• shareholders filing criminal complaints and civil actions against each other;
• company funds being controlled by only one shareholder;
• refusal to provide accounting information;
• one shareholder diverting customers or company assets;
• shareholders refusing to approve essential investments;
• complete destruction of the personal trust on which the business was originally established.

At that point, the central legal question becomes:

When does a shareholder dispute become sufficiently serious to justify the dissolution of a Turkish limited liability company?

Article 636/3 of the Turkish Commercial Code No. 6102 (“TCC”) provides the principal remedy.

The provision allows every shareholder to request judicial dissolution of a limited liability company where just cause exists. Importantly, however, the court is not required to dissolve the company. Instead, it may order payment of the claimant shareholder’s real share value and his or her exit from the company, or adopt another solution appropriate to the circumstances.

This flexibility makes Article 636/3 one of the most powerful — and strategically complex — remedies in Turkish shareholder disputes.

1. What Does Article 636/3 TCC Provide?

Article 636/3 states, in substance, that where just cause exists:

• every shareholder may request dissolution of the company;
• the court may instead order payment of the real value of the claimant’s shares and remove the claimant shareholder from the company; or
• the court may impose another appropriate and acceptable solution.

Article 636/4 further authorises the court, upon request of a party, to take necessary measures while the dissolution action is pending.

Therefore, Article 636 is considerably broader than a simple “dissolve or dismiss” mechanism.

The court effectively has three categories of response:

Dissolution

Shareholder exit against real value

Another appropriate corporate solution

This becomes particularly important where the company is economically viable but the shareholder relationship has collapsed.

2. Every Shareholder Can File the Action

Unlike certain minority rights requiring shareholders to hold a minimum percentage of the capital, Article 636/3 expressly provides this right to every shareholder.

Accordingly, a shareholder holding:

• 50%;
• 25%;
• 10%; or
• even a much smaller percentage

may theoretically seek dissolution if sufficient just cause exists.

The size of the shareholder’s interest may nevertheless affect the court’s assessment of the dispute and the most proportionate remedy.

For example, where two shareholders each own 50% and neither can make corporate decisions without the other, the practical consequences of a breakdown may be substantially more serious than a disagreement between a 95% shareholder and a passive 5% investor.

3. What Is “Just Cause”?

The TCC deliberately does not provide an exhaustive definition of just cause under Article 636/3.

This gives commercial courts significant discretion.

Turkish judicial practice evaluates whether the circumstances have reached such seriousness that continuation of the existing corporate relationship can no longer reasonably be expected.

Examples recognised in case law and legal practice may include:

• persistent serious disputes between shareholders;
• complete destruction of the relationship of trust;
• continuous losses;
• inability to achieve the company’s corporate purpose;
• misuse or waste of company assets;
• persistent violation of minority rights;
• repeated denial of information and inspection rights;
• oppressive conduct against one shareholder;
• repeated unlawful general assembly practices;
• breakdown of the company’s management structure.

Courts emphasise that the assessment is case-specific. A personal disagreement does not automatically amount to just cause; the dispute must generally have a meaningful impact on the company or the shareholder relationship.

4. Is a Shareholder Deadlock Itself Just Cause?

Potentially yes.

A corporate deadlock exists where the company’s decision-making mechanisms become incapable of producing necessary decisions because shareholders are permanently opposed.

The classic example is a 50/50 limited liability company.

Shareholder A owns 50%.

Shareholder B owns 50%.

Their relationship collapses.

Neither will approve:

• appointment of managers;
• major investments;
• amendments to the articles;
• financing decisions;
• distributions;
• restructuring.

General assemblies repeatedly end without meaningful decisions.

The company may therefore remain registered but effectively become incapable of functioning.

In such circumstances, deadlock may constitute a strong factual basis for Article 636/3.

However:

A temporary disagreement is not the same as a permanent corporate deadlock.

The court will usually look for persistence, seriousness and practical consequences.

5. Personal Conflict Alone May Not Be Enough

Many limited companies, particularly family businesses, involve intense personal disputes.

Shareholders may:

• stop speaking;
• exchange aggressive correspondence;
• accuse each other of misconduct;
• file lawsuits;
• make criminal complaints.

These facts can support a just-cause claim, but they should not be treated mechanically.

A court may ask:

Is the company still functioning?

Are corporate decisions still being made?

Is the company profitable?

Can management continue?

Has the dispute actually prevented corporate operations?

Are shareholder rights being violated?

A 2026 first-instance decision illustrates this distinction. The court recognised serious disagreements between shareholders but considered dissolution to be a last resort and ultimately regarded payment of the claimant shareholder’s real share value and exit as a more appropriate solution than destroying an operating company.

Therefore, a claimant should not simply prove that:

“We dislike each other.”

The stronger argument is:

“Our conflict has made the continuation of this corporate relationship objectively intolerable and has materially impaired the company’s governance or my shareholder rights.”

6. Destruction of Trust Is Particularly Important in Closely Held Companies

Limited liability companies often possess stronger personal characteristics than large publicly held corporations.

The shareholders may have established the company because they trusted each other personally.

For example:

Two brothers establish a construction company.

One manages clients.

The other manages finance.

Neither role can function properly without cooperation.

Years later, they accuse each other of misappropriating company funds.

They stop communicating.

Dozens of civil and criminal proceedings begin.

Each attempts to exclude the other.

Even if the company technically continues, the original relationship that made the business structure workable may have disappeared.

Recent Court of Cassation jurisprudence recognises the importance of the necessary relationship of trust in assessing just cause, particularly in closely held companies.

7. The Company’s Purpose Becoming Impossible Is a Strong Ground

Another major just-cause scenario arises when the company can no longer achieve the purpose for which it was incorporated.

For example, a company is established exclusively to:

• develop a specific project;
• operate a particular facility;
• obtain and use a particular licence;
• establish an educational institution;
• conduct a joint venture.

If that objective becomes permanently impossible and shareholders have no realistic alternative corporate activity, continuation of the company may lose economic justification.

A March 2026 Court of Cassation decision involved a company whose original project could no longer be implemented, combined with serious shareholder conflict, lack of meaningful commercial activity and breakdown of trust. The Court accepted the existence of serious circumstances but nevertheless emphasised that preservation of commercial companies should generally be preferred where an appropriate alternative solution exists. Court of Cassation 11th Civil Chamber, E. 2026/1605, K. 2026/1454, 11 March 2026.

This decision is especially important for understanding the modern approach to Article 636/3.

8. Dissolution Is Generally Treated as the Last Resort

One of the most important principles in these cases is often described as:

ultima ratio — dissolution as the last resort.

Courts generally seek to avoid destroying an economically viable company if the shareholder dispute can be resolved by a less severe solution.

The Court of Cassation’s 11 March 2026 decision is particularly clear on this point.

Although the lower court had ordered dissolution, the Court of Cassation held that commercial continuity should be protected and that the court should consider a solution other than dissolution under Article 636/3 where appropriate.

Therefore, even where the claimant successfully proves just cause:

Just cause ≠ automatic dissolution.

The next question is:

What remedy best resolves the dispute while unnecessarily destroying the least economic value?

9. The Most Important Alternative: Paying the Shareholder the Real Value of the Shares

Article 636/3 expressly authorises the court to avoid dissolution by ordering:

payment of the claimant shareholder’s real share value + removal of that shareholder from the company.

This can be commercially superior to liquidation.

Example:

Company market value: TRY 200 million.

Shareholder A: 50%.

Shareholder B: 50%.

The company remains profitable.

The shareholders can no longer work together.

Liquidating the entire company may destroy:

• employment;
• contracts;
• customer relationships;
• goodwill;
• operating value.

Instead, the court may consider whether one shareholder should exit against payment of the real value of his or her share.

If A’s share is worth TRY 100 million, payment of that amount may end the conflict while preserving the company.

10. “Real Value” Is Not the Same as Nominal Capital

This distinction is critical.

Suppose:

Registered capital: TRY 1 million.

Claimant shareholder: 50%.

The majority may argue:

“Your registered share is TRY 500,000.”

But the company may own:

• TRY 50 million of real estate;
• TRY 20 million of machinery;
• TRY 30 million cash;
• valuable customer contracts;
• strong profitability;
• significant goodwill.

The claimant’s real economic interest may therefore be worth tens of millions of Turkish lira.

A buyout under Article 636/3 should not ordinarily be approached merely by multiplying nominal capital by the ownership percentage.

The valuation should examine the company’s actual economic position.

11. Recent Court of Cassation Practice Strongly Favors Corporate Continuity

The Court of Cassation’s decision E. 2026/1605, K. 2026/1454 provides a useful example.

The company was held 49% and 51% by the relevant shareholders.

There were serious disputes and numerous legal proceedings.

The lower court found just cause and ordered dissolution.

The Court of Cassation nevertheless reversed.

Its reasoning emphasised that:

• commercial continuity is fundamental;
• Article 636/3 expressly provides alternatives;
• the defendant had expressed a desire for the company to continue;
• the court should therefore consider a solution other than dissolution.

For practitioners, the message is clear:

A successful Article 636/3 case should be pleaded not merely around proving misconduct, but also around explaining why dissolution — or alternatively a buyout — is the proportionate solution.

12. A Profitable Company Is More Likely to Be Preserved

The economic condition of the company can materially influence the remedy.

Assume a company:

• employs 100 people;
• operates profitably;
• has valuable contracts;
• has positive equity;
• has significant ongoing operations.

Even where shareholder relationships are severely damaged, the court may be reluctant to destroy the enterprise.

Compare that with a company that:

• has ceased operations;
• lost its tax registration;
• has no functioning management;
• is heavily indebted;
• is insolvent;
• no longer has a realistic business purpose.

In the latter case, dissolution may be significantly more appropriate.

A 2025 appellate decision upheld dissolution where the company was no longer operational, lacked effective management following the death of a controlling shareholder, shareholders could not appoint a replacement manager, the company’s tax registration had been removed, and expert analysis showed insolvency and loss of equity.

13. What Evidence Shows a Genuine Deadlock?

A strong deadlock case should be documentary.

Useful evidence may include:

• unsuccessful general assembly invitations;
• meeting minutes;
• repeated voting deadlocks;
• correspondence between shareholders;
• notarial notices;
• failed manager appointment attempts;
• trade registry records;
• unresolved signature-authority disputes;
• bank-authority disputes;
• emails demonstrating inability to agree on major decisions;
• shareholder lawsuits;
• criminal complaints;
• expert financial reports;
• tax and social security records.

The objective is to show not merely personal hostility but corporate paralysis.

14. General Assembly Failure Can Also Trigger Article 636/2

A distinction should be made between Article 636/2 and Article 636/3.

Article 636/2 applies where, for a long period:

• one of the legally required corporate organs does not exist; or
• the general assembly cannot convene.

In such a case, a shareholder or company creditor may request dissolution before the commercial court at the company’s registered office.

The court first grants the company a period to bring its situation into compliance with the law.

Only if the deficiency is not corrected does dissolution follow.

Therefore:

Article 636/2 = structural corporate deficiency

while

Article 636/3 = just-cause dissolution

although the same factual dispute may sometimes involve both.

15. Blocking Access to Company Information Can Strengthen the Claim

Suppose one shareholder controls the accounting system and refuses to disclose:

• balance sheets;
• bank records;
• shareholder current accounts;
• invoices;
• tax records.

A single refusal may not justify dissolution.

But systematic information obstruction combined with:

• shareholder exclusion;
• related-party transactions;
• management conflict;
• financial irregularities

can become part of the overall just-cause picture.

Persistent violation of information and minority rights is among the circumstances recognised by Turkish judicial practice as potentially relevant to just-cause dissolution.

16. Misuse of Company Assets Can Constitute Just Cause

Another powerful category involves corporate asset abuse.

Examples include a managing shareholder:

• transferring company money to a personal account;
• using company property privately;
• selling assets to relatives below market price;
• directing customers to another company;
• creating fictitious liabilities;
• paying excessive fees to related entities.

Such behaviour may simultaneously support:

• manager liability;
• special audit;
• removal of the manager;
• general assembly challenges;
• just-cause dissolution.

A claimant should therefore avoid viewing Article 636/3 in isolation.

Sometimes the strongest case results from demonstrating a pattern of corporate-law violations.

17. What If Both Shareholders Blame Each Other?

This is very common.

Shareholder A says:

“B destroyed the company.”

Shareholder B says:

“A caused the conflict.”

For Article 636/3 purposes, the court may examine:

• who created the deadlock;
• whether one party acted abusively;
• whether both contributed;
• whether cooperation is objectively possible;
• which shareholder should leave if a buyout is ordered.

This becomes particularly important where the court considers an alternative solution rather than dissolution.

The Court of Cassation has accepted that the party to be removed may be determined by considering the overall circumstances and which solution best resolves the shareholder conflict while preserving the company.

18. Can the Court Remove the Other Shareholder Instead of the Claimant?

Article 636/3 expressly refers to paying the claimant shareholder the real value of the shares and removing that shareholder.

However, the provision also gives the court power to impose another “appropriate and acceptable solution.”

The limits of this judicial discretion must be evaluated carefully in each case.

In practice, the identity of the shareholder whose exit best resolves the conflict can become a central issue, particularly where:

• one shareholder operates the business;
• another no longer participates;
• one shareholder caused serious misconduct;
• shareholders previously concluded a settlement concerning exit.

Recent jurisprudence demonstrates that courts can analyse the entire structure of the dispute rather than mechanically assuming that dissolution is the only permissible outcome.

19. Interim Measures Can Be Critical

Article 636/4 provides that once the dissolution action has been filed, the court may take necessary measures upon request.

This provision can be extremely important because shareholder litigation may continue for years.

During that period, the controlling shareholder could potentially:

• transfer real estate;
• withdraw company cash;
• sell vehicles;
• change bank-authorisation structures;
• transfer customers;
• incur major debts.

Waiting until the final judgment may therefore make the judgment commercially meaningless.

Depending on the circumstances, interim protection may be requested to preserve company value.

20. But Appointment of a Trustee Is Not Automatic

Practitioners should be cautious about requesting a management trustee merely because shareholders are in conflict.

A 2026 Ankara Regional Court decision emphasised that where the company still has functioning managers and no organisational vacancy exists, management trusteeship cannot automatically be imposed without properly addressing the existing managers’ statutory authority.

The decision referred to the separate mechanisms under Article 630 concerning removal or restriction of managers’ powers.

Therefore:

Shareholder dispute ≠ automatic trustee appointment.

The requested interim measure must be legally appropriate, proportionate and connected to a demonstrated risk.

21. Article 630 May Be Used Against a Problematic Manager

Where the corporate deadlock is primarily caused by a manager’s conduct, Article 630 may provide a more targeted remedy.

Under Article 630, a shareholder may seek judicial removal or restriction of a manager’s management and representation powers where just cause exists.

Therefore, before seeking to dissolve an economically healthy company, the court may consider whether resolving the management problem would be sufficient.

This again reflects the principle that dissolution should generally be the last resort.

22. Article 638: Exit Instead of Dissolution

Article 638 provides another important remedy.

A shareholder may directly request judicial permission to exit the company where just cause exists.

The court may also take interim measures protecting the claimant’s position during the proceedings.

Therefore, counsel should distinguish between:

Article 636/3

“Because of just cause, dissolve the company; alternatively apply another appropriate solution.”

and

Article 638/2

“Because of just cause, allow my client to leave the company.”

The proper remedy depends on the client’s actual objective.

23. Should the Claimant Seek Dissolution or Exit?

This is a strategic question.

Dissolution may make sense where:

• the company is effectively dead;
• operations have ceased;
• the corporate purpose cannot be achieved;
• assets must be liquidated;
• there is no realistic future business;
• the company is structurally paralysed.

Exit may be preferable where:

• the company is profitable;
• one shareholder wishes to continue;
• the claimant wants liquidity rather than destruction of the business;
• liquidation would destroy going-concern value;
• the claimant’s real share value can be determined and paid.

The petition should therefore clearly explain the client’s desired commercial result.

24. Who Should Be Named as Defendant?

A frequent procedural mistake is directing the action against the other shareholder rather than the company.

An action under Article 636/3 concerns dissolution of the legal entity.

Accordingly, the proper defendant is generally the limited liability company itself.

Recent court decisions continue to treat claims brought directly against individual shareholders or managers in a dissolution/exit action as problematic from the perspective of passive standing.

This does not prevent separate claims being brought against managers or shareholders where other legal grounds exist.

But the causes of action must be distinguished.

25. Which Court Has Jurisdiction?

Corporate disputes arising from the TCC are commercial disputes.

A just-cause dissolution action should therefore be brought before the competent Commercial Court of First Instance (Asliye Ticaret Mahkemesi).

The company’s registered office is particularly important for determining territorial jurisdiction in company-law disputes.

Corporate registry documents should therefore be checked before filing.

26. Expert Evidence Is Usually Essential

Most serious Article 636 cases eventually require expert examination.

The expert panel may need to determine:

• whether the company remains active;
• the company’s financial condition;
• whether it is insolvent;
• shareholder current accounts;
• management transactions;
• asset transfers;
• company value;
• real value of the claimant’s shares.

Where exit is considered, valuation becomes central.

Depending on the business, expertise may include:

• certified public accounting;
• corporate finance;
• real estate valuation;
• machinery valuation;
• industry-specific valuation.

27. Practical Example: 50/50 Company Deadlock

Assume:

A owns 50%.

B owns 50%.

Both are managers.

For three years:

• they have not spoken directly;
• every important corporate decision is disputed;
• three general assemblies have failed;
• each has filed criminal complaints against the other;
• banking authority is disputed;
• major investments cannot be approved;
• company employees receive contradictory instructions.

Despite this, the company remains profitable.

A requests dissolution under Article 636/3.

The court may conclude:

Yes, just cause exists.

But it must then consider whether liquidation of a profitable business is proportionate.

Possible outcome:

B continues the company.

A receives the real value of the 50% share and leaves.

This may satisfy the purpose of Article 636 while protecting the company’s economic value.

28. Practical Example: Dissolution May Be Appropriate

Consider another case.

A owns 50%.

B owns 50%.

The company:

• has not operated for four years;
• has no meaningful revenue;
• cannot appoint a manager;
• has lost its principal licence;
• has no realistic commercial purpose;
• is insolvent.

The shareholders have multiple pending lawsuits and refuse any cooperation.

In such circumstances, ordering one shareholder to buy the other out may solve nothing.

Actual dissolution and liquidation may be the most appropriate result.

29. What Should Be Proven in the Petition?

A persuasive Article 636/3 petition should establish at least four things.

First: The dispute is serious and permanent

Explain the chronology.

Do not simply state:

“There is disagreement.”

Show repeated events.

Second: The dispute affects the corporate relationship

Explain how it has caused:

• decision-making paralysis;
• financial damage;
• management breakdown;
• violation of shareholder rights;
• impossibility of continuing cooperation.

Third: Less severe remedies are inadequate

If dissolution is genuinely required, explain why:

• manager removal;
• information proceedings;
• special audit;
• shareholder exit;
• corporate restructuring

would not realistically resolve the problem.

This point has become particularly important in light of the Court of Cassation’s emphasis on corporate continuity.

Fourth: Request appropriate alternative relief

A strategically drafted petition should consider alternative claims.

For example:

Primarily: dissolution and liquidation.

Alternatively: payment of the client’s real share value and exit.

Additionally: necessary interim measures.

This gives the court room to apply Article 636/3 without completely rejecting the case merely because dissolution itself is considered disproportionate.

30. The Most Important Practical Mistake: Treating Dissolution as a Punishment

Article 636/3 is not designed to punish the shareholder who behaved badly.

The objective is to resolve a corporate relationship that has become unsustainable.

Therefore, arguments such as:

“The other shareholder behaved unlawfully, therefore dissolve the company.”

are incomplete.

The better argument explains:

1. what happened;
2. why it constitutes just cause;
3. how it affects the company;
4. why the current shareholder structure is no longer sustainable;
5. why the requested remedy is proportionate.

This is a much stronger commercial-law approach.

31. A 2026 Constitutional Court Development Is Also Worth Watching

There has also been an important recent development concerning two-shareholder limited liability companies.

On 25 December 2025, the Constitutional Court found certain statutory rules unconstitutional insofar as they prevented a two-shareholder limited liability company from effectively initiating proceedings to expel one shareholder for just cause because the statutory general assembly majority could not be achieved.

The Court’s press announcement specifically referred to the practical difficulty faced by two-member companies and noted the alternative mechanism under Article 636/3.

For practitioners dealing with two-shareholder deadlocks, this development reinforces an important reality:

Traditional majority-based corporate mechanisms may fail precisely when the company has only two hostile shareholders. Judicial remedies therefore become especially important.

32. Conclusion: Deadlock Does Not Automatically Kill the Company — But It Can End the Existing Shareholder Relationship

A serious shareholder deadlock can constitute just cause for dissolution of a Turkish limited liability company.

But Article 636/3 should not be understood as a simple rule:

“There is just cause, therefore the company is dissolved.”

The modern judicial approach is more sophisticated.

The court must consider:

Is there genuine just cause?

Has trust permanently collapsed?

Can the company still function?

Is the company economically viable?

Can the dispute be resolved by removing or restricting a manager?

Can one shareholder exit against payment of the real value of the shares?

Would another solution preserve the company?

Is dissolution truly the last reasonable option?

Recent Court of Cassation jurisprudence, particularly the 11th Civil Chamber’s decision dated 11 March 2026, E. 2026/1605, K. 2026/1454, demonstrates the strong judicial preference for preserving commercially viable companies where the shareholder conflict can be resolved through an alternative mechanism.

For the claimant shareholder, the most effective litigation strategy is therefore not merely to prove that the relationship with the other shareholder has collapsed.

The case should demonstrate why that collapse has made the existing corporate structure unsustainable — and should present the court with a legally and economically workable solution.

In practice, the decisive issue is often not whether the company must end.

It is whether the existing shareholder relationship must end.