A Practical Legal Guide for Foreign Investors and Minority Shareholders in Turkish Companies

A foreign investor acquiring shares in a Turkish company does not surrender control over their legal rights simply because another shareholder holds the majority of the voting power.

In Turkish corporate law, the general assembly is one of the company’s most important decision-making bodies. It may approve financial statements, elect or dismiss directors, decide on profit distribution, amend the articles of association, increase or decrease capital and adopt many other decisions affecting the economic value of a shareholder’s investment.

However, majority ownership does not give shareholders unlimited authority.

A general assembly resolution that violates Turkish law, the company’s articles of association or the principle of good faith may be challenged before the Turkish courts.

Depending on the seriousness of the violation, the shareholder may request:

annulment of the resolution,

declaration that the resolution is null and void,

or, in particularly serious cases involving the absence of fundamental elements of a valid corporate resolution,

a declaration that the resolution is legally non-existent.

The main rules are contained in Articles 445–451 of the Turkish Commercial Code No. 6102 (TCC).

Foreign investors generally enjoy the same corporate-law protections as domestic investors. Article 3 of the Foreign Direct Investment Law No. 4875 provides that foreign investors are, subject to special laws and international agreements, treated equally with domestic investors.

1. Can a Foreign Shareholder Sue Against a General Assembly Resolution in Türkiye?

Yes.

A foreign shareholder may challenge an unlawful resolution adopted by the general assembly of a Turkish company.

Foreign nationality does not prevent the shareholder from bringing proceedings before Turkish commercial courts.

For example, suppose a UK investor owns 30% of a Turkish technology company while the Turkish founders collectively own 70%.

The founders call a general assembly and use their majority to:

• approve questionable financial statements;
• release themselves from liability;
• refuse profit distribution without a legitimate corporate reason;
• approve a capital increase designed primarily to dilute the foreign investor;
• restrict the investor’s statutory information rights; or
• adopt another resolution contrary to the law or articles of association.

The fact that the founders hold 70% of the votes does not automatically make those decisions lawful.

Majority rule operates within the boundaries of the Turkish Commercial Code.

2. What Is an Annulment Action?

Article 445 TCC provides the principal mechanism for challenging unlawful general assembly resolutions.

A resolution may be challenged where it violates:

the law,

the company’s articles of association,

or particularly,

the principle of good faith.

The action must generally be filed before the Commercial Court of First Instance (Asliye Ticaret Mahkemesi) located at the company’s registered headquarters within three months from the date of the general assembly resolution.

This three-month period is extremely important.

It is a statutory limitation period of a strict nature. A shareholder who waits too long may lose the right to seek annulment even if there was a genuine irregularity.

3. What Types of General Assembly Resolutions Can Be Annulled?

There is no closed list.

The question is whether the resolution violates the law, articles of association or good-faith principles.

Depending on the facts, disputes may arise concerning:

• approval of financial statements;
• profit distribution;
• release of directors;
• appointment or dismissal of directors;
• remuneration of directors;
• capital increases;
• amendments to the articles of association;
• restrictions affecting shareholder rights;
• related-party transactions;
• decisions benefiting the controlling shareholder at the expense of the minority;
• decisions adopted in breach of procedural rules;
• improper voting;
• violation of quorum requirements;
• decisions adopted following defective general assembly procedures.

The existence of a majority vote does not cure an unlawful resolution.

A resolution supported by 80% or even 99% of the votes can still be challenged if it violates mandatory corporate-law rules.

4. Can a Minority Shareholder Challenge the Decision?

Yes.

A shareholder does not need to own 50% of the company.

The right to challenge a resolution is not limited to controlling shareholders.

A minority foreign investor holding, for example, 5%, 10%, 20% or 30% may bring an annulment action provided that the requirements of Article 446 TCC are satisfied.

The precise procedural requirements depend heavily on whether the shareholder attended the meeting and what happened during the meeting.

5. What Should a Shareholder Do During the General Assembly?

This is one of the most important practical issues.

Under Article 446 TCC, a shareholder who attends the general assembly and wants to challenge a resolution under the ordinary annulment regime should normally:

vote against the resolution,

and

have their objection recorded in the meeting minutes.

Turkish court practice treats these requirements seriously. Courts have rejected annulment claims where shareholders participated in the meeting but failed to vote against the relevant resolution or failed to have their opposition properly reflected in the minutes.

Accordingly, a foreign shareholder should not merely say:

“I disagree.”

The record should clearly establish that the shareholder:

cast a negative vote and formally opposed the resolution.

This is why legal representation at a contentious general assembly can be crucial.

6. What Should Be Written in the Opposition Statement?

The objection should preferably be specific.

For example:

“We vote against this resolution because the financial statements do not adequately disclose the related-party payments made to companies controlled by the majority shareholder, our requests for information have not been answered, and the resolution therefore violates the Turkish Commercial Code and the principle of good faith.”

A short objection may preserve procedural rights, but a properly drafted objection can also help establish the factual foundation of later litigation.

Where several separate resolutions are disputed, it is prudent to make clear which resolutions are opposed.

7. What If the Foreign Shareholder Was Not Allowed to Attend the Meeting?

Article 446 also protects shareholders affected by certain procedural irregularities.

A shareholder may have standing even if they:

did not attend the meeting,

did not vote against the resolution,

or did not enter an opposition statement,

where the shareholder alleges certain fundamental procedural defects and establishes that those defects were effective in the adoption of the resolution.

These may include circumstances where:

• the general assembly was not properly called;
• the agenda was not properly announced;
• persons without authority to participate attended and voted;
• the shareholder was unlawfully prevented from attending; or
• the shareholder was unlawfully prevented from voting.

Article 446 expressly recognizes these circumstances.

This protection is particularly important for foreign investors because one common shareholder-dispute strategy is to attempt to exclude the foreign investor from the meeting altogether.

8. Example: The Foreign Shareholder Was Never Invited

Assume that a foreign investor owns 35% of a Turkish company.

The majority shareholder organizes a general assembly without properly notifying the foreign investor.

At that meeting, the majority:

removes the existing board,

appoints its own directors,

approves the previous year’s accounts,

and adopts important corporate resolutions.

The foreign investor discovers the meeting several weeks later through the Trade Registry Gazette.

The investor should immediately investigate:

whether the meeting was properly called,

whether notice requirements were complied with,

whether the shareholder had a legally valid opportunity to attend,

whether the meeting quorum was satisfied,

and whether the procedural violation affected the resolutions.

Depending on the seriousness of the defect, the remedy may involve annulment, nullity or even legal non-existence.

9. What Is the Difference Between Annulment and Nullity?

This distinction is critical.

Annulment – İptal

An annulable resolution exists and produces legal effects unless and until it is successfully challenged.

Article 445 generally applies where the resolution violates:

the law,

the articles of association,

or good faith.

The action is subject to the three-month period.

Nullity – Butlan

Some violations are so serious that the resolution is considered legally invalid from the outset.

Article 447 TCC specifically identifies important examples.

A general assembly resolution is particularly vulnerable to nullity where it:

restricts or removes shareholders’ indispensable statutory rights;

improperly restricts shareholders’ information, inspection or audit rights;

destroys the fundamental structure of the joint stock company; or

violates capital-maintenance rules.

Therefore, not every unlawful resolution should automatically be classified as an ordinary annulment case.

Correct classification can completely change the litigation strategy.

10. Why Does the Classification Matter?

Because an ordinary annulment claim is subject to the strict three-month period.

By contrast, Turkish case law recognizes that claims concerning nullity or legal non-existence are not subject to the same three-month limitation applicable to ordinary annulment claims.

Yargıtay has repeatedly distinguished annulment from the more serious categories of nullity and non-existence and has recognized that legally non-existent or fundamentally void resolutions can be raised independently of the ordinary three-month annulment period.

However, this does not mean that every shareholder who misses the three-month deadline can simply rename their claim as a “nullity action.”

The court examines the actual nature of the alleged defect.

If the alleged illegality only creates an annulment ground, the three-month period remains applicable. Yargıtay has upheld the rejection of claims where the circumstances did not amount to nullity or non-existence and the ordinary annulment period had already expired.

11. What Is a Legally Non-Existent General Assembly Resolution?

Turkish corporate-law doctrine and case law also recognize the concept of yokluk — legal non-existence.

This concerns situations where a fundamental constitutive element necessary for a valid general assembly resolution is absent.

A typical example may arise where there was legally no valid general assembly meeting at all.

Turkish courts have dealt with situations involving serious defects in convening a meeting, forged participation documents or meetings allegedly held without the conditions necessary for a legally valid meeting.

Yargıtay recognizes that legal non-existence may be invoked by persons having a legal interest and may also be considered by the court ex officio.

For a foreign shareholder who has been completely excluded from a fabricated or fundamentally defective corporate meeting, this distinction can be extremely important.

12. Can a Resolution Restrict the Foreign Shareholder’s Information Rights?

There are strict limits.

Article 447 specifically provides that resolutions restricting shareholders’ information, inspection and audit rights beyond what the law permits may be null and void.

For example, a controlling shareholder should not assume that it can simply adopt a general assembly resolution stating:

“The minority shareholder shall no longer receive company financial records.”

Statutory shareholder rights cannot be removed merely through majority voting.

Such a resolution may give rise to a nullity claim rather than merely an ordinary annulment claim.

13. Can a Capital Increase Be Challenged?

Potentially, yes.

Capital increases are legitimate and common corporate transactions.

A startup may genuinely require additional capital to hire employees, enter a new market or fund product development.

However, problems may arise where the controlling shareholder uses a capital increase primarily as a mechanism to weaken a minority investor.

For example:

Foreign investor: 40%

Founder: 60%

The founder causes a substantial capital increase to be adopted knowing that the foreign investor cannot immediately participate.

The founder subscribes for the new shares and the foreign investor’s percentage falls dramatically.

Whether such a decision can be challenged will depend on matters such as:

the company’s genuine financing needs,

the structure of the capital increase,

pre-emption rights,

the economic justification for the transaction,

the treatment of existing shareholders,

the articles of association,

and whether the majority has acted consistently with good faith.

The existence of dilution alone does not automatically prove illegality.

But a capital increase engineered predominantly to eliminate or weaken a minority shareholder may create serious corporate-law issues.

14. Can a Decision Not to Distribute Profits Be Challenged?

Potentially.

A company is not necessarily required to distribute all available profit every year.

Legitimate corporate reasons may justify retaining profits.

The company may need cash for growth, investment, financing obligations or operational requirements.

However, the majority’s discretion is not unlimited.

If profits are systematically withheld while the majority shareholder extracts economic value through salaries, related-party payments, management fees or other mechanisms, a minority shareholder may argue that corporate powers are being exercised contrary to good faith.

The specific financial circumstances of the company must be examined.

A dispute concerning profit distribution is therefore rarely resolved merely by asking:

“Was there profit?”

The deeper question may be:

“Was the majority’s decision based on legitimate company interests or was it designed to deprive the minority shareholder of the economic benefit of their investment?”

15. What If Directors Are Released from Liability?

General assemblies frequently adopt resolutions concerning the release — ibra — of directors.

A foreign minority shareholder may be concerned where majority shareholders approve the release of directors despite:

unexplained transactions,

missing corporate records,

related-party payments,

asset transfers,

or potential director misconduct.

The validity and effect of the release resolution should then be examined carefully.

If the resolution was adopted in breach of the law, articles of association or good-faith principles, an annulment claim may be considered.

Separately, director liability under Article 553 TCC may also become relevant depending on the alleged misconduct.

The validity of a general assembly resolution and the personal liability of directors are related but legally distinct questions.

16. Can the Court Stop the Resolution from Being Implemented While the Case Is Pending?

Yes, this is one of the most important procedural protections.

Under Article 449 TCC, once an annulment or nullity action has been filed, the court may, after obtaining the views of the board members, order that implementation of the disputed general assembly resolution be suspended.

This can be crucial.

Corporate litigation may continue for a considerable period. If the disputed resolution is implemented immediately, winning the lawsuit later may sometimes provide insufficient practical protection.

For example, the disputed resolution may concern:

the appointment of new management,

a major corporate restructuring,

a capital-related decision,

or another transaction capable of changing control over the company.

In appropriate circumstances, the shareholder should therefore consider requesting suspension of implementation together with the main proceedings.

Turkish appellate practice includes examples where execution of a disputed corporate resolution has been suspended during litigation.

17. Does Filing the Lawsuit Automatically Suspend the Resolution?

No.

This is an important distinction.

Simply filing an annulment or nullity lawsuit does not automatically stop the company from implementing the resolution.

A separate request should be made and the court must decide whether implementation should be suspended under Article 449.

Accordingly, where urgent corporate consequences are expected, the foreign shareholder’s litigation strategy should address provisional protection from the beginning.

18. Which Court Has Jurisdiction?

Under Article 445, the action is brought before the Commercial Court of First Instance at the company’s registered headquarters.

For example:

If the company’s registered headquarters are in Istanbul, the competent court will ordinarily be the relevant Istanbul Commercial Court of First Instance.

The foreign shareholder’s residence abroad does not transfer the dispute to the courts of the shareholder’s home country merely because the shareholder is foreign.

The litigation concerns the validity of a corporate resolution adopted by a Turkish company and is governed principally by Turkish corporate law.

19. What Happens If the Court Annuls the Resolution?

Article 450 TCC provides that once the judgment declaring annulment or nullity becomes final, it has effect regarding all shareholders.

The result is not limited only to the shareholder who filed the lawsuit.

The board must also arrange registration of the judgment with the Trade Registry and place it on the company’s website where applicable.

This collective effect makes general assembly litigation particularly significant.

The claimant is not simply enforcing a private contractual right.

The validity of a corporate decision affecting the entire company is being judicially determined.

20. Can the Company Demand Security from the Shareholder?

Under Article 448 TCC, the court may, upon the company’s request, order plaintiffs in an annulment action to provide security against potential losses suffered by the company.

The nature and amount of that security are determined by the court.

There is also a separate issue specifically relevant to foreign claimants.

Under Article 48 of the Turkish International Private and Procedural Law No. 5718 (MÖHUK), foreign natural and legal persons bringing proceedings before Turkish courts may in principle be required to provide security for litigation expenses and potential losses.

However, the foreign claimant may be exempt where reciprocity exists between Türkiye and the relevant foreign state, including reciprocity arising through international treaties or actual legal practice. Turkish appellate jurisprudence confirms that the reciprocity analysis must be carried out where relevant.

Therefore, foreign shareholders should distinguish between:

security that may arise under corporate litigation rules,

and

foreign-plaintiff security under international procedural law.

Whether security will actually be required depends on the circumstances and the investor’s home jurisdiction.

21. Can the Foreign Shareholder Appoint a Turkish Lawyer?

Yes.

A foreign individual or foreign corporate shareholder does not normally need to travel to Türkiye personally to conduct every stage of litigation.

The shareholder may appoint a Turkish lawyer through a properly executed power of attorney.

Where the power of attorney is issued abroad, apostille or consular legalization and Turkish translation/notarization requirements may need to be completed depending on the country and manner of execution.

For foreign corporate shareholders, documents proving the authority of the individual granting the power of attorney may also be required.

This should be organized early because the three-month annulment period continues to run while the shareholder is preparing documents abroad.

22. Are the Same Rules Applicable to a Turkish Limited Liability Company?

Largely, yes.

This is especially important because many Turkish startups are initially incorporated as limited liability companies — Ltd. Şti.

Article 622 TCC expressly provides that the provisions applicable to the nullity and annulment of joint stock company general assembly resolutions apply by analogy to limited liability companies.

Therefore, shareholders in a Turkish limited company may also challenge unlawful general assembly resolutions.

Court practice confirms the application of Articles 445–447 to limited liability companies through Article 622.

Consequently, the issue should not be dismissed simply because the investment was made into an Ltd. Şti. rather than an A.Ş.

23. Can the Shareholder Challenge Only Part of the General Assembly Meeting?

Yes.

It is not always necessary to challenge every decision adopted during the meeting.

Suppose the annual general assembly adopts eight separate resolutions.

The shareholder may agree with:

approval of one procedural item,

appointment of an auditor,

and another administrative matter,

but oppose:

approval of the financial statements,

release of directors,

profit distribution,

and directors’ remuneration.

The litigation can be directed against the specific resolutions allegedly affected by illegality.

This is another reason why accurately identifying agenda items and opposition statements in the meeting minutes is important.

24. What Evidence Should a Foreign Shareholder Preserve?

Before litigation, the shareholder should immediately secure:

• the general assembly invitation;
• agenda;
• meeting minutes;
• attendance list;
• voting records;
• opposition statements;
• Trade Registry Gazette publications;
• articles of association;
• shareholders’ agreement;
• financial statements;
• board reports;
• audit reports;
• previous information requests;
• emails and correspondence with management;
• documents showing refusal of access to corporate records;
• capital increase documents;
• share ledger records;
• documents concerning related-party transactions;
• evidence demonstrating economic harm.

Evidence should preferably be collected before relationships between the shareholders deteriorate further.

Corporate information that is easily accessible today may become considerably harder to obtain after management realizes that litigation is imminent.

25. Can a Shareholders’ Agreement Create Additional Claims?

Yes.

Foreign investors frequently acquire additional contractual protection through a Shareholders’ Agreement (SHA).

The agreement may contain:

reserved matters,

veto rights,

board appointment rights,

information rights,

anti-dilution rights,

pre-emption rights,

tag-along rights,

contractual quorum requirements,

and limitations on related-party transactions.

A general assembly resolution may therefore create two different legal problems.

First, it may violate Turkish corporate law.

Second, it may breach contractual commitments under the Shareholders’ Agreement.

These two claims should not automatically be treated as identical.

Depending on the drafting of the SHA, the investor may have contractual remedies in addition to corporate-law remedies.

26. Example: Majority Shareholder Attempts to Remove the Foreign Investor

Consider the following structure:

Foreign investor: 30%

Turkish founder: 70%

Relations deteriorate.

The founder uses the general assembly to:

remove the foreign investor’s nominated board member,

increase capital,

approve transactions with another company owned by the founder,

refuse dividend distribution,

and release the founder-appointed directors from liability.

The foreign shareholder should not treat these events as a single vague complaint that:

“The majority is treating me unfairly.”

Each corporate resolution should be analyzed separately.

One resolution may be perfectly lawful.

Another may be annulable.

Another may be null and void.

Another may create director liability.

Another may breach the Shareholders’ Agreement.

Another may justify a special audit.

An effective litigation strategy therefore requires resolution-by-resolution legal analysis.

27. What Should the Foreign Shareholder Do Immediately?

Where a contentious general assembly is expected, legal action should begin before the meeting, not three months afterwards.

The shareholder should review the agenda and corporate documents beforehand.

At the meeting, the shareholder or representative should:

vote carefully,

make information requests,

object to unlawful procedures,

ensure negative votes are properly counted,

and place necessary opposition statements in the minutes.

After the meeting, the minutes and resolutions should be examined immediately.

Where annulment is required, the three-month deadline must be protected.

If implementation of the resolution could cause immediate harm, suspension under Article 449 should be considered at the beginning of the case.

Frequently Asked Questions

Can a foreign shareholder sue a Turkish company?

Yes. Foreign shareholders may exercise shareholder remedies before Turkish courts.

Is there a minimum shareholding percentage required to challenge a resolution?

Ordinary annulment rights are not generally dependent on holding a minimum percentage. The shareholder must instead satisfy the standing requirements under Article 446.

How long does the shareholder have to file an annulment action?

Generally three months from the date of the general assembly resolution.

Where is the lawsuit filed?

Before the Commercial Court of First Instance at the company’s registered headquarters.

Does the shareholder have to vote against the decision?

A shareholder who attends the meeting and relies on the ordinary rule under Article 446/1(a) should vote against the resolution and have the opposition recorded in the minutes.

Different rules can apply where the shareholder relies on procedural defects specifically identified in Article 446/1(b).

What if the shareholder was not invited?

Improper notice or wrongful exclusion from the meeting may provide grounds for challenge, provided the applicable statutory conditions are established.

Is every unlawful resolution subject to the three-month period?

No. The three-month rule applies to annulment actions. Fundamental nullity or legal non-existence is treated differently. However, a shareholder cannot avoid the deadline merely by labelling an ordinary annulment ground as “nullity.”

Can the court stop implementation of the resolution?

Yes. Article 449 allows the court, after hearing the board members, to suspend implementation of the disputed resolution.

Can the majority eliminate minority shareholder rights through voting?

No. Mandatory shareholder rights cannot simply be abolished through majority voting. Certain resolutions restricting indispensable shareholder or information rights may be null and void under Article 447.

Does the same system apply to limited liability companies?

Yes. Article 622 extends the joint stock company rules on annulment and nullity to limited liability companies by analogy.

Conclusion

A foreign shareholder can challenge an unlawful general assembly resolution adopted by a Turkish company.

The controlling shareholder’s majority voting power does not place its decisions beyond judicial review.

Under Turkish Commercial Code Articles 445–451, resolutions violating the law, articles of association or good faith may be subject to annulment, while particularly serious violations may result in nullity.

Turkish law also recognizes situations where a purported corporate resolution is legally non-existent because the fundamental elements required for a valid general assembly decision were never present.

For foreign investors, three issues are particularly important:

First: act quickly.

An ordinary annulment action must generally be filed within three months from the date of the resolution.

Second: preserve procedural rights during the general assembly.

Where the shareholder attends the meeting, voting against the disputed resolution and ensuring that the opposition is recorded in the minutes can be decisive.

Third: prevent irreversible implementation where necessary.

Where the resolution could fundamentally change management, capital or the position of the investor before the court reaches a final judgment, suspension of implementation under Article 449 should be evaluated.

The central principle is simple:

A majority shareholder has the power to make corporate decisions, but it does not have the power to disregard Turkish corporate law or eliminate the statutory rights of a foreign minority investor.