Can a Turkish company pay dividends to some shareholders but not others? Learn about unequal dividend payments, minority shareholder rights, unpaid dividend claims, shareholder resolutions, financial records, majority abuse and legal remedies for foreign investors.

A company in Turkey generally cannot arbitrarily distribute profits to selected shareholders while withholding the corresponding economic rights of other shareholders who are legally entitled to the same distribution. For a foreign minority shareholder, discovering that majority shareholders or insiders have received company profits while their own payment has been withheld can indicate much more than a simple accounting delay. The dispute may involve an unpaid dividend receivable, unequal shareholder treatment, an unlawful corporate resolution, misuse of majority control, disguised distributions through related-party transactions or, in serious cases, a broader strategy designed to deprive the minority shareholder of the economic benefit of the investment. However, unequal payments are not automatically unlawful in every situation. The shareholder must first examine whether the relevant shares carry identical economic rights, whether different share classes or valid privileges exist, whether a proper profit-distribution decision was adopted and whether the amounts received by other shareholders were actually dividends. The legal strategy therefore begins with identifying exactly what was distributed, under which corporate decision, to whom, when and on what legal basis.

Can a Company Pay Dividends to Only Some Shareholders?

The answer depends on the legal rights attached to the shares and the corporate decision governing the distribution. If shareholders hold shares carrying the same economic rights and a valid decision provides for distribution according to those rights, the company generally cannot simply decide to pay favored shareholders while refusing payment to another entitled shareholder without a legally sustainable basis. The situation must nevertheless be distinguished from companies with different share classes or valid privileges concerning participation in profits. Before alleging discriminatory treatment, the foreign investor should therefore obtain the articles of association, relevant share records and profit-distribution decision.

Equal Treatment of Shareholders

Equal treatment is an important principle of Turkish company law. It does not mean that every shareholder must receive the same amount regardless of ownership percentage or the rights attached to their shares. A shareholder owning 60% and another owning 20% will ordinarily have different economic entitlements where distribution follows ownership percentages. The principle becomes particularly important when shareholders who are legally in comparable positions receive different treatment without an adequate legal basis.

For example, suppose two shareholders each own ordinary shares carrying identical dividend rights. A valid corporate resolution approves a distribution. One shareholder receives the full amount while the other receives nothing. The company would need a legally sustainable explanation for the difference.

First Determine Whether a Dividend Was Actually Declared

This is the most important starting point. Company profit and a shareholder’s enforceable dividend receivable are not necessarily the same thing. A profitable company may retain part of its earnings according to applicable corporate rules. The existence of accounting profit alone does not automatically mean every shareholder already has a personal monetary claim against the company.

The foreign shareholder should therefore obtain the relevant annual financial statements and corporate resolution concerning the allocation of profits. If a dividend was validly declared and became payable, the legal position is substantially different from a situation where the shareholder is challenging a decision not to distribute profits at all.

Example: Dividend Declared but Minority Shareholder Not Paid

Assume a company has three shareholders. Shareholder A owns 50%, Shareholder B owns 30% and the foreign minority shareholder owns 20%. A valid decision provides for distribution of EUR 1 million according to the economic rights attached to the shares. Shareholder A receives EUR 500,000 and Shareholder B receives EUR 300,000, while the foreign shareholder receives nothing.

Assuming there are no different rights, lawful set-offs or other circumstances explaining the difference, the foreign shareholder should investigate an unpaid EUR 200,000 dividend claim.

The company cannot ordinarily convert an already established shareholder entitlement into a discretionary payment merely because management has a dispute with that shareholder.

What If Management Says Payment Will Be Made Later?

The shareholder should request a precise explanation. When did the dividend become payable? Was the corporate resolution intended to establish different payment dates? Were other shareholders paid? Why was the foreign shareholder excluded? Is the company claiming a set-off? Is there a banking or administrative issue?

Repeated statements that payment will be made “soon” should not replace proper documentation where substantial amounts are involved.

Different Share Classes Can Produce Different Results

Unequal amounts do not necessarily establish unlawful discrimination. A company’s articles may validly provide different economic rights or privileges for particular shares where legally permitted. The shareholder must therefore compare the actual rights attached to each share before asserting unequal treatment.

The relevant question is not simply whether shareholders received different amounts. It is whether shareholders entitled to equivalent treatment under the applicable corporate structure were treated differently without a sufficient legal basis.

Majority Ownership Does Not Create a Right to Take Company Profits Freely

A majority shareholder may mistakenly treat company money as personal money. Owning 70% of a company does not ordinarily mean that the shareholder can simply withdraw 70% of the company’s bank balance whenever desired. Company assets belong to the company. Economic value must be transferred to shareholders through a legally valid basis.

This distinction becomes critical where the minority shareholder discovers large payments to the majority shareholder but cannot identify any dividend resolution supporting them.

Were the Payments Really Dividends?

Sometimes the problem is not selective dividend payment but something more complicated. The majority shareholder may have received substantial payments categorized as management compensation, consulting fees, loan repayments, rent, expense reimbursement or payments to a related company.

The minority shareholder should not automatically label every transfer a dividend. Instead, the legal and commercial basis of each transaction should be investigated.

Disguised Profit Distribution

A company may officially declare little or no dividend while economic benefits are transferred to controlling shareholders through other mechanisms. This can become particularly significant in closely held companies.

For example, the controlling shareholder may own a second company. The operating company pays that second company unusually high consulting fees every month. As a result, the operating company’s reported profit falls substantially and little remains available for ordinary dividend distribution.

The commercial basis and pricing of those transactions may require detailed examination.

Excessive Director or Manager Compensation

A shareholder who genuinely works as a director or manager can receive legitimate remuneration. The existence of compensation is not itself suspicious. The issue becomes more serious where compensation increases dramatically during a shareholder dispute, bears little relationship to actual services and effectively transfers company profits to the controlling shareholder.

Related-Party Rent

A company may rent premises from a shareholder or a business connected with that shareholder. Such an arrangement can be legitimate. However, an excessive rent substantially above commercially reasonable levels may require examination where it drains corporate earnings.

Shareholder Loans and Repayments

The majority shareholder may claim that payments represent repayment of money previously loaned to the company. The foreign shareholder should verify the alleged debt. The relevant questions include when the loan was made, how much money entered the company’s account, how it was recorded, whether documentation exists and whether the repayment corresponds to an actual corporate liability.

Personal Expenses Paid by the Company

Another warning sign is the payment of expenses that appear unrelated to company business. The legal basis of payments for personal property, travel, vehicles or other private expenditure may require investigation.

Why Selective Profit Distribution Often Appears During Shareholder Disputes

Dividend disputes frequently arise after the relationship between shareholders deteriorates. A controlling shareholder may have little incentive to purchase the minority shareholder’s interest at fair value. Instead, the minority shareholder may be deprived of cash returns for several years in the hope that financial pressure will force a cheap sale.

The foreign shareholder should be particularly cautious where the majority says that the shares are worth little because they “produce no income” while the majority itself continues receiving substantial economic benefits from the company.

Dividend Suppression and a Forced Cheap Exit

Consider a foreign investor holding 25% of a profitable company. For several years, ordinary dividends were distributed. A dispute then begins. Dividend distributions stop, but the controlling shareholder’s salary triples and substantial payments begin flowing to another company controlled by that shareholder. Two years later, the majority offers to purchase the foreign investor’s shares at a very low valuation.

The investor should investigate the company’s true financial position before accepting the offer. Artificial suppression of distributable profits can also distort share valuation.

Review at Least Several Financial Years

A multi-year analysis can reveal patterns that one year’s accounts conceal. Compare company revenue, operating profit, net profit, retained earnings, dividend decisions, management compensation, related-party payments, shareholder loans and major asset transactions before and after the dispute began.

A sudden change occurring immediately after relations deteriorated may deserve particular attention.

General Meeting Records Are Essential

The shareholder should obtain and preserve the relevant corporate records. These can establish whether profits were available, how they were allocated, whether a distribution was approved and how shareholders voted.

Where the foreign shareholder objected to the treatment, the existence and form of that objection may become important in subsequent proceedings.

Challenging an Unlawful Corporate Resolution

If unequal treatment results from an allegedly unlawful shareholder resolution, the foreign shareholder should promptly determine whether the decision can be challenged. Corporate decision challenges can be subject to important procedural requirements and time limits. Delay can therefore materially damage the shareholder’s position.

The exact remedy depends on the nature of the resolution and the alleged legal defect.

Unpaid Dividend Claim

A different situation arises where the resolution itself is valid and favorable to the shareholder, but the company simply refuses to make payment. In that scenario, the shareholder may already have a monetary receivable.

The legal strategy can therefore focus more directly on recovery of the unpaid amount rather than challenging the underlying corporate decision.

Establish the Exact Amount

The foreign shareholder should prepare a clear calculation identifying the total approved distribution, rights attached to the shares, ownership percentage or applicable entitlement, amount due, due date, amount actually paid and outstanding balance.

This calculation should be supported by corporate records rather than estimates.

Formal Payment Demand

Where an enforceable dividend receivable has become due, a properly documented demand can place the dispute on a clearer legal footing. It should identify the relevant corporate decision and the precise unpaid amount.

A vague statement that the company “owes profits” is considerably less useful than a claim tied to a specific resolution and payment entitlement.

Default and Interest

Where a monetary obligation has become due and remains unpaid, questions concerning default and applicable interest may arise. The specific legal consequences should be calculated according to the characteristics of the receivable and the circumstances of the case.

Enforcement and Court Proceedings

A due dividend receivable may potentially be pursued through the appropriate debt-recovery mechanisms. If the company disputes the debt, commercial court proceedings may become necessary. Applicable pre-litigation procedural requirements should also be considered before commencing the relevant monetary claim.

The foreign shareholder should distinguish a straightforward debt-recovery case from a wider corporate dispute requiring several parallel remedies.

Information Rights When the Company Refuses to Explain the Payments

A minority shareholder may discover that others received money without knowing why. Information and inspection rights can therefore become critical. The exact mechanism depends on whether the company is structured as a joint stock company or limited liability company.

The shareholder should identify the specific information required rather than merely demanding “every company document.”

Request Information About Specific Transactions

A focused investigation may ask for the corporate and accounting basis of payments made to particular shareholders or related businesses during a defined period, together with the relevant decisions and accounting records.

Specific requests are often more useful in building a later case.

Can the Foreign Shareholder Obtain Company Bank Information?

Access to company banking information is not simply a matter of asking the bank directly because the shareholder owns shares. The company’s representation structure, shareholder information rights and procedural mechanisms must be distinguished.

Where litigation is commenced and banking transactions are directly relevant to the dispute, the court may address necessary evidentiary requests according to procedural rules.

Compare Bank Movements With Accounting Records

If access to relevant records is lawfully obtained, bank movements should be compared with accounting entries. A transfer may be described differently in accounting records, and unexplained discrepancies can be important.

Special Audit in a Joint Stock Company

Where statutory requirements are satisfied, a special audit may become relevant for investigating defined corporate events. This may be useful where a shareholder has specific concerns about payments to controlling shareholders or related companies.

A narrowly defined investigation is generally more effective than an attempt to investigate every transaction in the company’s history.

Director and Manager Liability

Selective profit distribution may also raise management-liability issues if directors or managers breach duties and cause damage to the company or shareholders.

The analysis must identify who made the decision, what duty allegedly existed, what conduct breached that duty, who suffered the legally recognized damage and how the damage should be calculated.

Company Loss and Minority Shareholder Loss Are Different

This distinction should never be overlooked. If EUR 2 million is improperly removed from the company, the immediate loss may belong to the company. A shareholder owning 25% does not automatically obtain a personal EUR 500,000 damages claim.

By contrast, if a valid EUR 500,000 dividend was specifically payable to that shareholder and the company failed to pay it, the analysis is different.

Correct characterization of the claim is therefore essential.

What If the Majority Shareholder Received the Same Dividend but the Minority Did Not?

This is one of the clearest situations requiring immediate investigation. Obtain proof of the corporate resolution and, where lawfully available, proof showing payment to the majority shareholder. Determine whether the minority shareholder’s entitlement became due on the same terms.

If equivalent shareholder rights existed, the company should explain the unequal treatment.

What If the Company Claims a Set-Off?

The company may allege that the minority shareholder separately owes money and that the dividend was set off against that debt. The alleged receivable and legal requirements for set-off should be examined rather than automatically accepted.

What If the Shareholder Is Also a Director?

Shareholder rights and management relationships must be separated. A dispute concerning director compensation, liability or expenses does not automatically eliminate a valid dividend entitlement.

What If the Shareholder Has a Shareholder Loan?

A shareholder loan is also separate from dividend rights. If the foreign investor loaned EUR 1 million to the company and is additionally entitled to EUR 300,000 in dividends, those amounts should ordinarily be analyzed as distinct claims.

Can Unequal Dividend Treatment Support a Shareholder Exit?

Potentially, where it forms part of a serious and persistent broader dispute. A single payment delay should not automatically be transformed into a judicial exit case. However, systematic denial of economic rights combined with financial misconduct, information obstruction and majority abuse may become relevant to more substantial shareholder remedies.

Limited Liability Company Exit

A shareholder in a limited liability company facing serious circumstances may need to evaluate statutory withdrawal and just-cause remedies under the applicable company-law framework.

The strength of the case depends on the entire relationship, not simply one unpaid dividend.

Joint Stock Company and Just-Cause Remedies

Qualifying shareholders in a joint stock company may also have extraordinary remedies where sufficiently serious circumstances exist. Systematic economic exclusion and abuse of corporate control may form part of the overall factual assessment.

Dissolution remains an extraordinary remedy and should not automatically be the first response to a payment dispute.

Court-Ordered Exit May Become More Important Than Dissolution

In severe shareholder conflicts, the investor’s real objective is often not to destroy a profitable company but to leave it at a fair value. Where the applicable statutory framework permits an alternative judicial solution, company valuation can therefore become central to the dispute.

Unequal Distributions Can Affect Company Valuation

If profits are systematically diverted to the controlling shareholder before valuation, reported earnings may understate the company’s true economic capacity.

An independent valuation should examine whether related-party expenses or unusual management payments require normalization.

Example of Valuation Distortion

Assume the company historically generates EUR 2 million in annual operating earnings. After the shareholder dispute begins, EUR 800,000 annually is paid to a related company for vaguely described consulting services. Reported earnings fall to EUR 1.2 million.

If the majority then attempts to value the foreign shareholder’s interest using the reduced earnings figure, the commercial basis of the EUR 800,000 expense becomes highly relevant.

Interim Protection in Serious Cases

Where there is evidence of ongoing asset dissipation or continued transfers that may cause substantial harm, interim judicial protection may need to be evaluated. Such measures are not automatic and should be proportionate to a concrete legal risk.

The shareholder should avoid seeking an indiscriminate freeze of all corporate activity where a narrower measure can adequately protect the disputed right.

Evidence the Foreign Shareholder Should Preserve

The strongest case is usually built from the articles of association, share records, shareholders’ agreement, annual financial statements, profit-allocation decisions, general meeting minutes, payment notices, shareholder correspondence, lawfully available bank information, accounting records, shareholder current accounts, related-party agreements, management compensation records and evidence showing payments made to other shareholders.

A chronological file should be maintained from the beginning of the dispute.

Create a Dividend Comparison

The shareholder should compare each shareholder’s economic rights against the amounts actually paid. This can immediately reveal whether the problem is a simple outstanding balance or systematic unequal treatment.

Create a Related-Party Transaction Review

Every material payment to the controlling shareholder or a connected business should be classified according to its stated legal basis, amount, approval and commercial justification.

Foreign Shareholders Living Outside Turkey

Residence outside Turkey does not by itself prevent a foreign shareholder from pursuing corporate or monetary claims concerning a company established in Turkey. Representation documents and procedural formalities should be arranged properly where the investor acts through counsel.

Foreign Corporate Shareholders

Where the shareholder is itself an overseas company, authority documents demonstrating corporate representation may be required. Cross-border documentation should be prepared carefully to avoid unnecessary procedural delays.

Do Not Sign a Buyout Before Investigating the Dividend History

A distressed shareholder may be offered a quick exit immediately after being denied distributions. The proposed agreement may contain a broad release covering all historic claims.

Before signing, determine whether unpaid dividends, shareholder loans or other receivables exist and whether company value has been transferred to insiders.

Broad Releases Can Eliminate Valuable Claims

A settlement stating that the shareholder releases the company and other shareholders from all existing claims should be reviewed carefully. The shareholder should understand exactly what rights are being surrendered.

2026 Legal Strategy for a Foreign Minority Shareholder Facing Unequal Profit Distribution

The legal strategy should begin by identifying whether the disputed payments were genuine dividends or another form of transfer to shareholders. The foreign investor should verify the rights attached to each share, review the articles of association and obtain the relevant financial statements and profit-allocation decision. If a valid dividend was declared, calculate the exact amount payable to the minority shareholder and determine whether the obligation has become due. Compare the minority shareholder’s treatment with payments made to other shareholders holding equivalent rights. If the dividend debt exists but remains unpaid, consider a formal payment demand and the appropriate monetary recovery procedure. If the corporate resolution itself unlawfully discriminates against the minority shareholder, evaluate the available challenge promptly because procedural deadlines may apply. Where the company claims that no distributable profit exists, review several years of financial information and investigate management compensation, related-party payments, shareholder loans and other transactions that may have diverted economic value. Exercise applicable information and inspection rights where necessary. Consider management liability separately if company assets have been improperly transferred. Where unequal distributions form part of a persistent pattern of serious shareholder oppression, evaluate whether broader exit or just-cause remedies are available according to the company form. The practical roadmap is therefore: identify share rights → obtain the profit-distribution decision → verify distributable profit → determine whether a dividend was declared → calculate the exact entitlement → identify the due date → compare payments among shareholders → investigate any claimed justification → preserve evidence → demand payment where appropriate → evaluate interest and recovery proceedings → challenge unlawful corporate decisions where necessary → investigate related-party transactions → exercise information rights → evaluate management liability → determine the company’s real value → consider negotiated buyout or judicial exit if systematic economic exclusion continues.

Frequently Asked Questions

1. Can a company distribute dividends to some shareholders but not others?

Different treatment may be lawful where shareholders genuinely have different economic rights or another valid legal basis exists. Arbitrary non-payment to one shareholder who has the same established dividend rights as others can create a serious corporate and monetary dispute.

2. What if the majority shareholder was paid but the foreign minority shareholder was not?

The foreign shareholder should obtain the relevant distribution decision, establish the amount due and determine whether both shareholders were subject to equivalent payment terms. If so, the reason for selective non-payment should be investigated immediately.

3. Does every shareholder have to receive the same amount?

No. The amount generally depends on the rights attached to the shares and the applicable distribution structure. Equal treatment does not necessarily mean identical monetary payments.

4. Can the foreign shareholder sue for the unpaid amount?

Potentially, yes, where a valid dividend entitlement has arisen and become due. The exact recovery procedure depends on the circumstances and whether the company disputes the receivable.

5. What if the company never formally declared a dividend?

That is different from an unpaid declared dividend. The shareholder may instead need to examine the legality of the profit-allocation decision and whether repeated non-distribution forms part of abusive majority conduct.

6. What if the majority shareholder receives large salaries instead of dividends?

Legitimate management compensation is possible. However, excessive or commercially unjustified payments should be investigated where they substantially transfer company value to the controlling shareholder while minority investors receive nothing.

7. Can payments to another company owned by the majority shareholder be investigated?

Yes, their commercial and legal basis may become highly relevant to a shareholder dispute, particularly where substantial related-party payments reduce company profits.

8. Can unequal profit distribution justify leaving the company?

Potentially, when it forms part of a sufficiently serious and persistent broader shareholder conflict. An isolated payment dispute will not necessarily justify extraordinary exit remedies.

9. Can the minority shareholder request company financial information?

Shareholders have information and inspection mechanisms under the corporate framework applicable to the particular company type. The appropriate procedure and scope should be determined according to the circumstances.

10. Should a minority shareholder accept a buyout while unpaid dividends remain disputed?

Not without first identifying the unpaid amounts and understanding the effect of the proposed settlement. The share purchase price, unpaid dividends, shareholder loans and other receivables should be analyzed separately before broad releases are signed.

Legal Support for Minority Shareholders Facing Unequal Profit Distribution in Turkey

Foreign shareholders facing selective dividend payments, profit suppression or unequal economic treatment may require assistance with unpaid dividend recovery, minority shareholder rights, corporate resolution disputes, financial information requests, related-party transactions, management liability, company valuation and shareholder exit proceedings.

Firat Fesih Kaya Law Office assists foreign investors and international shareholders in disputes involving companies in Turkey. Firat Fesih Kaya can assist with investigating unequal distributions, establishing unpaid dividend receivables, examining corporate and financial records, challenging improper corporate decisions, pursuing monetary claims and evaluating broader shareholder remedies where selective profit distribution forms part of systematic minority oppression.

Phone: +90 312 434 22 22
Mobile Phone: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Address: Mevlana Boulevard No: 221, Yildirim Tower, Balgat, Cankaya / Ankara, Turkey