A shareholders’ agreement is one of the most important documents for regulating the relationship between the shareholders of a Turkish company. While the articles of association establish the company’s formal corporate structure, a shareholders’ agreement may provide a more detailed and confidential framework governing management, voting rights, financing obligations, share transfers, profit distribution, dispute resolution and exit mechanisms.
Shareholders’ agreements are particularly common in:
- Joint ventures;
- Family-owned companies;
- Start-ups and technology companies;
- Private equity investments;
- Foreign direct investments;
- Companies with minority investors;
- Businesses owned equally by two shareholders;
- Companies preparing for future investment or sale.
A shareholders’ agreement cannot, however, replace the company’s articles of association or override mandatory provisions of the Turkish Commercial Code No. 6102 (“TCC”). Certain rights and obligations may be agreed contractually between shareholders, but corporate decisions must still be adopted by the competent company body in accordance with the TCC and the articles of association.
For this reason, an effective Turkish shareholders’ agreement should be coordinated with the company’s articles, share structure, management system and trade registry records.
What Is a Shareholders’ Agreement?
A shareholders’ agreement is a private contract entered into between some or all shareholders of a company. The company itself may also become a party where appropriate.
The agreement commonly regulates:
- Appointment and removal of directors or managers;
- Voting arrangements;
- Matters requiring enhanced approval;
- Business plans and budgets;
- Capital increases and additional financing;
- Dividend policy;
- Share transfer restrictions;
- Pre-emption and first-refusal rights;
- Tag-along and drag-along rights;
- Non-compete and confidentiality obligations;
- Deadlock resolution;
- Exit rights;
- Breach remedies;
- Governing law and dispute resolution.
The articles of association primarily operate within the corporate-law framework and, once registered and announced where required, may produce effects beyond the original signatories. A shareholders’ agreement generally creates contractual rights and obligations only between its parties.
This distinction is critical. A shareholder may breach the shareholders’ agreement by voting contrary to an agreed voting commitment, but the resulting general assembly resolution may not automatically become invalid merely because of that contractual breach. The validity of the corporate resolution must be assessed separately under the TCC.
Articles of Association and Shareholders’ Agreement
The shareholders’ agreement and articles of association should complement each other.
The articles of association ordinarily regulate matters such as:
- Company name and registered office;
- Business purpose;
- Share capital;
- Classes and nominal value of shares;
- Privileges attached to shares;
- Management and representation;
- General assembly rules;
- Transfer restrictions permitted by law;
- Company announcements;
- Financial year.
The shareholders’ agreement may regulate the parties’ commercial relationship in greater detail. It can also contain commercially sensitive provisions that shareholders may not wish to include in a publicly accessible corporate document.
However, placing an obligation only in the shareholders’ agreement may create an enforcement limitation. Where a provision is intended to affect the company, its corporate bodies or future shareholders, the parties should examine whether it should also be reflected in the articles of association or other corporate documents.
Not every contractual provision can validly be inserted into the articles. The TCC limits the matters that may be regulated through the articles and protects the mandatory allocation of authority between the general assembly and the board of directors. (WIPO)
Choice of Company Type
The drafting strategy depends on whether the company is a joint-stock company or a limited liability company.
Joint-stock companies
Joint-stock companies provide greater flexibility for investment structures, share classes, institutional investors and future exits. Shareholders are generally responsible only for the capital they have undertaken to contribute to the company.
The company is managed and represented by its board of directors. The general assembly exercises the powers allocated to it by law and the articles of association.
Shareholders’ agreements in joint-stock companies often focus on:
- Board composition;
- Investor nomination rights;
- Reserved matters;
- Share transfer mechanisms;
- Preferred economic rights;
- Anti-dilution provisions;
- Exit rights;
- Initial public offering arrangements.
Limited liability companies
Limited companies are also frequently used for family businesses, small and medium-sized enterprises and closely held joint ventures.
A limited company is managed by one or more managers. At least one shareholder must have management and representation authority. Share transfer formalities are generally stricter than those applicable to non-listed joint-stock companies.
Because limited company shareholders may face statutory responsibility for certain uncollectible public debts, the shareholders’ agreement should also address historical tax and social security liabilities, recourse rights and management responsibility.
The Ministry of Trade identifies joint-stock and limited companies as the most commonly used company types in Turkey and explains their principal corporate characteristics under the TCC. (Ticaret Bakanlığı)
Corporate Governance Provisions
A well-drafted shareholders’ agreement should establish a clear governance structure.
Board composition
The agreement may grant designated shareholders the right to nominate a particular number of board members or managers.
For example, a joint venture owned equally by two investors may provide that each shareholder will nominate two directors. An institutional investor holding a minority interest may receive the right to nominate one director for as long as its ownership remains above an agreed threshold.
The agreement should address:
- Number of board members;
- Nomination rights;
- Appointment procedure;
- Removal and replacement;
- Chairperson and deputy chairperson;
- Term of office;
- Meeting frequency;
- Notice periods;
- Quorum;
- Voting thresholds;
- Remote participation;
- Conflict-of-interest procedures;
- Observer rights.
The parties must distinguish between the contractual obligation to vote for a nominated director and the formal appointment authority of the general assembly. Under the TCC, the election, removal, remuneration and release of board members fall within the general assembly’s non-transferable authority. (Kayseri Ticaret Müdürlüğü)
Management and representation
The agreement may determine the commercial principles according to which the company should be managed. It cannot, however, unlawfully deprive the board of directors of its statutory authority and responsibility.
The TCC assigns certain non-transferable and indispensable duties to the board, including the company’s high-level management, establishment of the management organisation, financial supervision, appointment of certain senior managers and oversight of persons responsible for management.
A provision requiring shareholders to dictate every operational decision may therefore conflict with the directors’ independent statutory duties. Board members must act in accordance with the law, the articles and their duties toward the company, even where they were nominated by a particular shareholder. (Aydın Ticaret Müdürlüğü)
Reserved Matters
Reserved matters are decisions that cannot be adopted without the approval of a specified shareholder, director or qualified majority.
They are commonly used to protect minority investors or maintain balance in joint ventures.
Typical reserved matters include:
- Amendment of the articles of association;
- Capital increase or reduction;
- Issuance of new shares;
- Creation of privileged shares;
- Entry into a new business line;
- Approval or amendment of the annual budget;
- Material borrowing;
- Granting guarantees or security;
- Acquisition or disposal of material assets;
- Related-party transactions;
- Appointment of senior executives;
- Commencement or settlement of significant litigation;
- Distribution of dividends;
- Formation or sale of subsidiaries;
- Merger, demerger or liquidation;
- Change of auditors;
- Intellectual property transfers;
- Material employment or consultancy agreements.
Reserved matters should be drafted with financial thresholds and objective criteria. A clause covering “all important matters” creates uncertainty and may prevent the company from operating effectively.
The agreement should also identify whether approval must be obtained at shareholder level, board level or both.
Certain matters are exclusively assigned to the general assembly or board by the TCC. Contractual consent requirements may supplement the corporate process, but they cannot legally transfer the statutory competence of one corporate body to another. The general assembly’s non-transferable powers include amendments to the articles, election of directors, approval of financial statements, decisions concerning profit and certain major asset disposals. (Kayseri Ticaret Müdürlüğü)
Voting Agreements
Shareholders may agree to vote in a particular manner on specified issues.
Voting commitments may concern:
- Appointment of directors;
- Approval of budgets;
- Capital increases;
- Dividend distributions;
- Amendments to the articles;
- Sale of the company;
- Admission of new investors;
- Exercise of pre-emption rights.
The agreement should specify:
- The relevant resolutions;
- The required voting behaviour;
- Whether the obligation is continuing or transaction-specific;
- Exceptions required by law;
- Consequences of breach;
- Whether a proxy must be issued.
A voting agreement does not guarantee that a corporate resolution adopted in breach of the agreement will be annulled. The shareholder who breached the agreement may instead face contractual liability, damages or a contractual penalty.
A general assembly resolution may be challenged where it violates the law, the articles or the principle of good faith under the relevant TCC provisions. Contractual breach and corporate invalidity should therefore be analysed separately. (WIPO)
Share Transfer Restrictions
Shareholders’ agreements frequently restrict the ability of shareholders to sell or transfer their shares.
Common restrictions include:
- Lock-up periods;
- Prohibition on transfers to competitors;
- Consent requirements;
- Pre-emption rights;
- Right of first offer;
- Right of first refusal;
- Permitted transfers to affiliates;
- Restrictions on indirect change of control;
- Mandatory transfers following specified events.
The agreement should define “transfer” broadly enough to cover:
- Sale;
- Gift;
- Assignment;
- Pledge;
- Usufruct;
- Trust or nominee arrangement;
- Merger involving a shareholder;
- Transfer of control over a corporate shareholder;
- Economic arrangements having an equivalent effect.
Transfer provisions must be coordinated with the TCC and the company’s articles. A transfer may breach the shareholders’ agreement while remaining legally effective against the company if the restriction has no valid corporate-law effect.
This is why important transfer restrictions should, where legally permissible, also be reflected in the articles and corporate approval mechanisms.
Pre-emption and Right of First Refusal
A pre-emption right allows existing shareholders to purchase shares before they are transferred to an outside buyer.
A right of first refusal generally requires a selling shareholder to obtain a genuine third-party offer and then give the protected shareholders an opportunity to acquire the shares on the same terms.
The clause should regulate:
- Form of the transfer notice;
- Identification of the proposed buyer;
- Offered number of shares;
- Purchase price;
- Payment terms;
- Non-cash consideration;
- Exercise period;
- Allocation between multiple exercising shareholders;
- Closing procedure;
- Consequences if the third-party sale is not completed;
- Whether a new process is required if terms change.
Without detailed provisions, disputes may arise over whether an offer was genuine, whether the terms were equivalent or whether the selling shareholder structured the transaction to avoid the restriction.
Tag-Along Rights
A tag-along right protects minority shareholders when a controlling shareholder sells its shares.
The minority shareholder may require the buyer to purchase some or all of the minority shareholder’s shares on the same terms.
A tag-along clause should address:
- Ownership threshold triggering the right;
- Whether the right applies to direct and indirect transfers;
- Whether all or a proportional part of the minority shares may be included;
- Notice procedure;
- Price and payment terms;
- Treatment of warranties and indemnities;
- Transaction costs;
- Consequences if the buyer refuses to acquire tagged shares.
The agreement should prevent the majority shareholder from completing its sale unless the buyer honours the tag-along right.
Drag-Along Rights
A drag-along right enables a specified majority of shareholders to require minority shareholders to sell their shares as part of a sale of the entire company.
The purpose is to allow a buyer to acquire 100% ownership without negotiating separately with every minority shareholder.
The clause should define:
- Required shareholder majority;
- Minimum price or valuation condition;
- Whether the sale must be to an independent third party;
- Notice period;
- Terms applicable to dragged shareholders;
- Limits on minority warranties;
- Allocation of transaction costs;
- Power-of-attorney mechanisms;
- Remedies for non-cooperation.
A drag-along mechanism should not permit the controlling shareholder to transfer disproportionate liability to minority shareholders. Minority sellers commonly seek limitations so that their liability does not exceed the sale proceeds they receive, except in cases involving title to their own shares, authority, fraud or wilful misconduct.
Capital Increases and Anti-Dilution Protection
Future financing is a central issue in start-ups and investment transactions.
The agreement should regulate:
- Who is required to provide additional funding;
- Whether funding will be equity or shareholder debt;
- Conditions for capital calls;
- Consequences of failure to fund;
- Rights to participate in new share issuances;
- Valuation method;
- Dilution;
- Conversion of shareholder loans;
- External investor admission.
Minority investors may request anti-dilution protection where new shares are issued at a lower valuation.
Common contractual mechanisms include:
- Full-ratchet adjustment;
- Weighted-average adjustment;
- Additional share allocation;
- Price adjustment;
- Founder compensation.
These mechanisms must be structured consistently with Turkish corporate law. New shares cannot simply be issued or transferred through contractual wording alone. The required corporate resolutions, capital procedures and registry formalities must also be completed.
Dividend Policy
Shareholders may agree on principles governing profit distribution.
The agreement may provide that, subject to applicable law, financial requirements and corporate approvals, a certain percentage of distributable profit will be distributed annually.
The clause should account for:
- Statutory reserves;
- Previous-year losses;
- Working-capital needs;
- Bank covenants;
- Investment plans;
- Solvency;
- Tax liabilities;
- Mandatory corporate approvals.
The final decision on the use of annual profit and dividend distribution belongs to the general assembly within the framework of the TCC and the articles. A contractual dividend policy cannot require an unlawful distribution or eliminate the general assembly’s statutory authority. (Kayseri Ticaret Müdürlüğü)
Information and Inspection Rights
Minority investors frequently require information rights broader than the minimum statutory framework.
Contractual information rights may include:
- Monthly management accounts;
- Quarterly financial statements;
- Annual budgets;
- Cash-flow forecasts;
- Tax filings;
- Bank statements;
- Material contracts;
- Litigation reports;
- Compliance reports;
- Board minutes;
- Access to auditors and senior management.
The agreement should regulate confidentiality and data protection, particularly where a shareholder is also a competitor or strategic investor.
Information rights should not be drafted so broadly that they expose the company’s trade secrets without restriction. Access may be subject to confidentiality undertakings, clean-team procedures or limitations on use.
Non-Compete and Non-Solicitation Clauses
Shareholders may be restricted from competing with the company, soliciting employees or approaching customers.
A non-compete clause should clearly define:
- Restricted activities;
- Geographical scope;
- Duration;
- Relevant products and services;
- Exceptions for passive investments;
- Existing business activities;
- Consequences of breach.
Excessively broad restrictions may face enforceability challenges. The restriction should protect a legitimate commercial interest and remain proportionate in duration, subject matter and geographical reach.
Special attention is required where the shareholder is also an employee, director, manager or seller under a separate share purchase agreement, because different legal rules may apply to each relationship.
Deadlock Mechanisms
Deadlock is a major risk in companies with equal or near-equal ownership.
A deadlock may arise when shareholders or board members cannot approve:
- The annual budget;
- A capital increase;
- Appointment of executives;
- Major investments;
- Additional financing;
- Sale of material assets;
- Business strategy.
A well-drafted agreement should define when a disagreement becomes a formal deadlock.
The mechanism may include several stages:
- Referral to senior representatives;
- Good-faith negotiation;
- Mediation;
- Independent expert determination;
- Buy-sell mechanism;
- Sale of the company;
- Liquidation as a last resort.
Russian roulette mechanism
One shareholder offers either to buy the other shareholder’s shares or sell its own shares at the same stated price per share. The recipient chooses whether to buy or sell.
This mechanism may resolve deadlock quickly but can disadvantage a shareholder with weaker financing capacity.
Texas shoot-out
Each shareholder submits a sealed bid stating the price at which it is willing to acquire the other’s shares. The highest bidder purchases the other party’s shares at the price determined under the agreed procedure.
Put and call options
One party may receive the right to sell its shares to the other party or acquire the other party’s shares following a defined deadlock event.
The agreement should establish a clear valuation formula, payment timetable and security mechanism. A contractual option still requires completion of the applicable share transfer formalities.
Events of Default and Compulsory Transfer
A shareholders’ agreement may provide for compulsory share transfer following specified events.
Possible trigger events include:
- Material breach;
- Insolvency;
- Bankruptcy;
- Attachment of shares;
- Loss of required licence;
- Fraud;
- Serious regulatory violation;
- Unauthorised share transfer;
- Death or incapacity;
- Termination of employment of a founder;
- Change of control over a corporate shareholder.
The agreement should distinguish between “good leaver” and “bad leaver” events where founders or employee-shareholders are involved.
The transfer price may differ according to the event, but penalty-like discounts should be drafted carefully. An excessive discount may create enforceability risk and may be reduced or disregarded depending on the circumstances.
Contractual Remedies
The agreement should clearly regulate the consequences of breach.
Available contractual remedies may include:
- Specific performance;
- Damages;
- Contractual penalty;
- Suspension of contractual rights;
- Call option;
- Compulsory transfer;
- Indemnification;
- Injunctive relief;
- Termination.
A shareholders’ agreement cannot always guarantee the reversal of a completed corporate action. For that reason, preventive mechanisms are often more effective than relying only on a damages claim after the breach.
Relevant provisions may include:
- Irrevocable powers of attorney, to the extent legally valid;
- Escrow arrangements;
- Share pledges;
- Written voting undertakings;
- Closing deliverables;
- Pre-signed transfer documents, subject to enforceability review;
- Interim relief and arbitration provisions.
Governing Law and Dispute Resolution
The parties should determine the law governing the agreement and the forum for disputes.
For Turkish companies, Turkish law is commonly selected because many issues involve mandatory Turkish corporate-law rules.
Disputes may be submitted to:
- Turkish commercial courts;
- Domestic arbitration;
- International arbitration;
- Institutional arbitration;
- Ad hoc arbitration.
Arbitration is often preferred in foreign-investment and joint-venture agreements because it offers confidentiality, procedural flexibility and the possibility of selecting arbitrators with corporate expertise.
However, not every corporate dispute is necessarily arbitrable. Matters relating to the validity of trade registry entries, dissolution, certain general assembly resolutions and rights of third parties may require proceedings before Turkish courts.
The dispute resolution clause should distinguish contractual disputes under the shareholders’ agreement from corporate proceedings that must be brought before competent courts.
Accession by New Shareholders
A new shareholder should not acquire shares without becoming bound by the shareholders’ agreement.
The agreement should require the incoming shareholder to sign a deed of adherence before the transfer is approved or registered.
The existing shareholders may undertake not to recognise or approve a transfer unless the buyer has acceded to the agreement, to the extent permitted by law.
The accession document should confirm that the new shareholder assumes the rights and obligations of the transferring shareholder, subject to any agreed exceptions.
Corporate Records and Electronic Systems
Contractual governance arrangements must be reflected in properly adopted and recorded corporate resolutions.
Depending on the company, this may require updates to:
- Share ledger;
- General assembly minutes;
- Board or managers’ resolutions;
- Articles of association;
- Trade registry records;
- MERSİS;
- Signature authorities.
From 1 January 2026, companies newly registered in Turkey must keep their share ledger and general assembly meeting and discussion book through the Electronic Commercial Ledger System. Companies subject to Ministry approval are also included in the mandatory electronic-ledger framework, while electronic maintenance of the board resolution book is generally optional. (Ticaret Bakanlığı)
MERSİS also supports certain electronic corporate decisions, including circular board resolutions in joint-stock companies and electronic circulation of qualifying limited-company general assembly resolutions. (Ticaret Bakanlığı)
Common Drafting Mistakes
The most common problems in Turkish shareholders’ agreements include:
- Copying a foreign-law template without adapting it to the TCC;
- Assuming the agreement automatically binds the company;
- Failing to align the agreement with the articles of association;
- Giving shareholders powers legally belonging to the board;
- Creating reserved matters so broad that the company cannot operate;
- Omitting transfer procedures from tag and drag clauses;
- Failing to regulate indirect transfers;
- Using unclear valuation formulas;
- Providing no solution for deadlock;
- Failing to require new shareholders to accede;
- Ignoring limited company transfer formalities;
- Using unenforceable or disproportionate non-compete provisions;
- Failing to coordinate the agreement with financing documents;
- Omitting remedies for breach.
Practical Checklist
Before signing a shareholders’ agreement in Turkey, the parties should ordinarily:
- Determine the company type and ownership structure.
- Review the articles of association and corporate records.
- Identify the commercial expectations of each shareholder.
- Establish board and management nomination rights.
- Define reserved matters and approval thresholds.
- Regulate budgets, financing and capital increases.
- Include information and inspection rights.
- Establish a clear dividend policy.
- Draft transfer restrictions and permitted-transfer rules.
- Include pre-emption, tag-along and drag-along rights.
- Establish deadlock and exit mechanisms.
- Regulate events of default and compulsory transfers.
- Include confidentiality and proportionate non-compete provisions.
- Align contractual rights with corporate formalities.
- Determine governing law and dispute resolution.
- Require accession by future shareholders.
- Update the articles and corporate records where necessary.
Conclusion
A shareholders’ agreement is essential for defining the commercial relationship between the owners of a Turkish company. It can provide minority protection, management balance, transfer control, financing rules, exit rights and solutions for future disputes.
Its effectiveness depends on careful coordination with the Turkish Commercial Code, the articles of association and the company’s corporate decision-making structure. A contractual provision cannot automatically replace a board or general assembly resolution, override mandatory law or produce corporate consequences against non-parties.
The strongest structure therefore combines a detailed shareholders’ agreement with properly drafted articles of association, valid corporate resolutions and accurate share-ledger and trade registry records. This coordinated approach reduces uncertainty and helps prevent management disputes, unauthorised transfers, minority oppression and deadlock.
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