Turkish Company Pays Artificial Consulting Fees to a Shareholder: Minority Investor Remedies 2026 Updated Guide

A Turkish company pays excessive or artificial consulting fees to a shareholder. Learn how minority investors can challenge related-party payments, demand company records, seek repayment, claim damages and pursue director liability in 2026.

A serious shareholder dispute may arise when a Turkish company pays substantial amounts to a controlling shareholder, director, related company or family member under agreements described as “consulting,” “management,” “advisory” or “service” contracts. The existence of a consulting agreement does not by itself establish wrongdoing. The critical questions are whether genuine services were actually provided, the company received a real commercial benefit, the fees were commercially reasonable, corporate approvals were properly obtained and the transaction harmed the company or minority shareholders.

For a minority investor, unexplained consulting payments can be particularly important because they may function economically as a method of transferring company value to the controlling side without distributing profits proportionately among shareholders.

When Can a Consulting Fee Become Suspicious?

Warning signs can include unusually high monthly payments, vague descriptions such as “strategic consultancy,” payments without reports or deliverables, contracts signed with controlling shareholders or related companies, repeated round-number invoices, substantial increases in fees despite declining company performance, retroactive agreements or payments continuing even when no identifiable services are performed.

None of these facts alone proves illegality. They are signals requiring closer examination.

A Shareholder Can Legitimately Provide Consulting Services

Turkish corporate law does not mean that every payment made to a shareholder is unlawful. A shareholder may genuinely provide management, engineering, marketing, financial or other professional services.

The real issue is whether the arrangement represents an authentic transaction conducted in the company’s interests.

First Question: Were Services Actually Provided?

The minority shareholder should examine the economic substance of the arrangement.

Relevant evidence may include consulting reports, presentations, correspondence, meeting records, project files, timesheets, invoices and evidence showing what work was actually performed.

A contract accompanied by invoices but no identifiable work product may justify closer scrutiny.

Compare the Fee With the Services

Even genuine services can raise questions where compensation appears substantially disproportionate.

The company should be able to explain how the consulting fee was determined and why the amount was commercially justified.

Comparable market pricing may become useful evidence.

Related-Party Transactions Require Particular Attention

If the consultant is also a shareholder, director or company controlled by the majority shareholder, conflicts of interest become important.

The corporate decision-making process should therefore be examined alongside the commercial substance of the contract.

Who Approved the Consulting Agreement?

Determine whether the agreement was approved by the board, managers, general assembly or another authorized corporate body as required by the company’s structure and the circumstances.

Obtain the relevant resolutions where accessible.

Examine Who Signed on Behalf of the Company

A particularly sensitive situation arises where essentially the same economic interests control both sides of the transaction.

The authority of the individuals signing the agreement and any conflict-of-interest restrictions should be reviewed carefully.

Minority Shareholders Should Request Information

Information rights can become an important first step. A shareholder may need information concerning the nature of the services, amounts paid, contractual basis and impact on the company’s accounts.

The precise scope and method of exercising shareholder information rights depend on whether the business is structured as a joint-stock company or limited liability company and on the circumstances of the dispute.

Accounting Records Can Reveal the Payment Structure

Review the general ledger, consulting-expense accounts, bank transactions, invoices and related-party accounts where legally accessible.

The objective is to determine how much was actually transferred and to whom.

Follow the Bank Payments

The written agreement may state one amount while actual transfers show something different.

Create a transaction table containing:

Date
Recipient
Invoice number
Invoice amount
Bank transfer amount
Payment description
Contractual basis
Corporate approval
Supporting service evidence

This can expose patterns that are difficult to see from individual invoices.

Look for Payments to Related Companies

The money may not be paid directly to the controlling shareholder. It may instead be transferred to a consulting company owned by the shareholder, spouse, relative or another related entity.

Corporate ownership records should therefore be examined where relevant.

Artificial Consulting Fees Can Reduce Distributable Profit

Suppose a company earns substantial operating income but pays unusually high consulting expenses to its controlling shareholder.

Those payments reduce accounting profit and may consequently reduce the amount potentially available for lawful dividend distribution.

This is why minority investors should analyze both the consulting transaction and its effect on company profitability.

Dividend Suppression May Be Part of the Dispute

Repeated consulting payments combined with repeated refusal to distribute profits can create a broader shareholder conflict.

The minority investor should examine whether company resources are being retained for legitimate business purposes or economically transferred to selected insiders.

Compare Several Financial Years

One year’s consulting expense may appear ordinary in isolation.

Prepare a multi-year comparison of:

Revenue
Operating profit
Consulting expenses
Management payments
Related-party payments
Dividends
Shareholder loans
Cash balances

A sudden increase in insider payments can become more visible when analyzed historically.

Artificial Invoices Require Separate Examination

If the concern goes beyond excessive pricing and the minority investor believes invoices relate to services that never existed, the issue becomes substantially more serious.

Accounting, tax, corporate and potentially criminal consequences may need to be evaluated separately based on the evidence.

Do Not Assume Every High Fee Is a Fake Invoice

This distinction is important.

An excessive but genuine consulting fee and an invoice for a completely fictitious service present different legal issues. Evidence should determine which allegation can actually be supported.

Board Member Liability May Arise

Directors and managers are expected to comply with duties imposed by law and the company’s governing documents.

If company assets are knowingly transferred through transactions contrary to the company’s interests, potential liability of the responsible decision-makers should be evaluated under the applicable provisions of Turkish corporate law.

The Company’s Loss Should Be Calculated

For a damages claim, it may be necessary to identify the actual loss suffered by the company.

If a service genuinely worth TRY 1 million was purchased for TRY 8 million, the analysis differs from a case in which no service was provided at all.

Financial expert evidence may therefore become necessary.

Can the Money Be Recovered?

Potentially, depending on the legal basis and evidence.

Possible claims may concern repayment to the company, damages against responsible directors or managers, invalidity or consequences of corporate decisions, unjustified transfers or other company-law remedies.

The correct claimant and remedy must be determined carefully because loss suffered by the company is not automatically identical to the minority shareholder’s personal loss.

Direct and Corporate Loss Must Be Distinguished

This distinction is crucial in shareholder litigation.

If the consulting payment directly depleted company assets, the primary economic loss may belong to the company. The shareholder’s reduced investment value may be an indirect consequence.

The procedural strategy should reflect this distinction.

General Assembly Decisions May Be Challenged

If a disputed related-party transaction is connected with a general assembly resolution, the validity of that resolution and the availability of cancellation or other remedies should be assessed promptly.

Corporate litigation deadlines can be strict.

Discharge Decisions Require Review

The majority may later attempt to approve management conduct or grant discharge.

A minority investor who disputes insider payments should examine the legal effect of the relevant resolution and preserve objections appropriately.

Special Audit Can Be Important

Where legally available and the required conditions are satisfied, a special audit mechanism may provide an important method of investigating specific corporate transactions.

A focused request concerning consulting payments can be more effective than a broad accusation that management has misused company funds.

Define the Questions Precisely

For example:

What services were provided?

Who approved the contract?

How was the fee calculated?

What amounts were actually paid?

Was the consultant related to directors or controlling shareholders?

Were comparable services available at materially different prices?

What deliverables exist?

A precise investigation is usually more useful than an unlimited request for every company document.

Expert Examination May Be Necessary

Corporate accounting disputes frequently require financial analysis.

An expert may compare consulting fees with market conditions, reconcile invoices with bank transfers and assess the effect of payments on company assets and profitability.

Preserve Electronic Evidence

Emails, internal messages, electronic invoices, accounting exports and board communications may become important.

Evidence should be preserved lawfully and without unauthorized access to private systems.

Do Not Secretly Access Company Accounts Without Authority

A shareholder’s status does not automatically permit unrestricted access to every company computer, employee account or private communication.

Evidence collection should respect applicable corporate, privacy and procedural rules.

Interim Measures May Be Considered

If substantial payments continue while litigation is being prepared, available interim judicial measures may need to be evaluated.

The requirements depend on the particular claim, evidence and urgency.

Risk of Asset Dissipation Should Be Documented

If there is evidence that recipients are transferring assets or that company funds are being rapidly depleted, preserve concrete evidence.

General fear that assets might disappear is different from demonstrable transactions showing an immediate risk.

Related Shareholder Loans Should Also Be Checked

Consulting payments sometimes exist alongside shareholder loans, advances, management fees, expense reimbursements or other transfers.

The investigation should therefore examine the entire financial relationship rather than one account code.

Personal Expenses Paid by the Company May Be Relevant

Company-funded vehicles, travel, accommodation, credit-card expenses or other personal benefits may reveal a wider related-party transaction pattern.

Each expenditure should nevertheless be analyzed separately rather than automatically treated as unlawful.

Tax Consequences Can Be Separate

Payments to shareholders or related companies can also raise tax issues, particularly where the commercial substance or pricing of the transaction is questioned.

Corporate-law remedies and tax consequences should be evaluated separately.

Criminal Liability Should Not Be Alleged Lightly

A suspicious related-party transaction does not automatically constitute a criminal offense.

Criminal allegations should be based on concrete evidence concerning the conduct, intent and elements of any relevant offense rather than used merely as leverage in a shareholder dispute.

Foreign Minority Investors Need Immediate Document Control

A foreign shareholder may be geographically distant from the company’s management and receive information only through majority-controlled channels.

The investor should preserve shareholder agreements, articles of association, financial statements, general assembly documents, board records, bank evidence lawfully available and correspondence concerning the consulting arrangement.

Review the Shareholders’ Agreement

The agreement may contain related-party transaction restrictions, reserved matters, consent rights, information rights, audit rights or minority veto mechanisms that provide remedies beyond statutory company law.

Reserved Matters Can Be Powerful

Some investment agreements require minority consent before the company can enter substantial related-party contracts.

If such approval was never obtained, contractual remedies may exist independently of statutory corporate claims.

Check Representation and Warranty Provisions

If the investor recently purchased its shares, artificial consulting payments predating the acquisition may also raise issues under warranties concerning financial statements, related-party transactions or undisclosed liabilities.

M&A Claims May Exist Separately

A shareholder dispute can therefore involve both corporate-law claims against current management and contractual claims against the seller under a share purchase agreement.

These routes should not be confused.

Consider Whether the Majority Is Extracting Value Outside Dividends

The economic question is straightforward: are all shareholders benefiting proportionately from company profits, or is one shareholder receiving additional value through consultancy, rent, salaries, related-company transactions or other arrangements?

This analysis can reveal the broader structure of the dispute.

Build a Related-Party Payment Map

A useful investigation should identify every material transfer between the company and:

Controlling shareholders
Directors and managers
Related companies
Family-controlled companies
Shareholder creditors
Consultants connected with insiders

The objective is to understand the complete financial relationship.

Minority Investor Remedies Depend on the Company Type

Remedies differ between joint-stock companies and limited liability companies.

The articles of association, shareholders’ agreement, corporate resolutions and precise ownership percentage should therefore be reviewed before choosing litigation.

Do Not Wait Until Records Disappear

Accounting and electronic evidence can become harder to obtain after management changes, employee departures or escalation of the shareholder dispute.

Early evidence preservation can materially affect the case.

Settlement May Include Governance Reform

Not every dispute must end only with damages.

A negotiated resolution may involve repayment, cancellation of consulting contracts, independent approval requirements, enhanced information rights, audit mechanisms, board representation or restrictions on future related-party transactions.

Future Related-Party Transactions Should Be Controlled

Minority investors negotiating new shareholder arrangements should consider contractual provisions requiring:

Advance disclosure
Independent approval
Market-based pricing
Supporting documentation
Annual reporting
Audit access
Minority consent above financial thresholds

These controls can prevent the same dispute from recurring.

Immediate Action Plan for Minority Investors

When a Turkish company appears to be paying artificial consulting fees to a shareholder or related party, the minority investor should identify the recipient, obtain the contractual basis, calculate total payments, examine corporate approvals, request information through the appropriate corporate procedure, compare payments with actual services, review bank and accounting records lawfully available, analyze several financial years, investigate related entities, preserve evidence, examine the shareholders’ agreement and articles of association, and evaluate corporate, contractual and interim judicial remedies before company assets are further depleted.

Frequently Asked Questions

Can a Turkish company pay consulting fees to one of its shareholders?

Yes. Shareholder status alone does not prevent a genuine consulting relationship. The transaction’s substance, approval, pricing and compliance with applicable duties remain important.

What if no consulting services were actually provided?

That can substantially strengthen concerns about the legitimacy of the payment. Contracts, invoices, deliverables, correspondence and bank records should be examined.

Can minority shareholders demand company information?

Turkish company law provides shareholder information mechanisms, although their scope and procedure depend on the company type and circumstances.

Can excessive consulting fees be recovered?

Potentially, depending on the legal basis, evidence, recipient and corporate decision-making process.

Can directors be personally liable?

Potentially, where the statutory requirements for director or manager liability are established. Liability is not automatic merely because the company entered an unfavorable contract.

Can the minority shareholder sue for the entire amount paid?

The distinction between loss suffered directly by the shareholder and loss suffered by the company must be examined. The correct claimant and remedy depend on the circumstances.

Can a special audit be requested?

Potentially, where the statutory requirements are satisfied. A carefully defined special audit can be particularly useful for investigating specific related-party transactions.

What if the majority shareholder approved the payments?

Majority approval does not automatically resolve every legal issue. The validity of the decision, conflicts of interest, management duties and other corporate-law requirements may still require examination.

Can criminal proceedings be started?

Potential criminal issues depend on concrete facts and statutory elements. An excessive or disputed consulting fee should not automatically be characterized as criminal conduct.

What is the most important first step?

Follow the money and connect every payment to its alleged commercial justification. The strongest minority-investor case usually combines the consulting contract, corporate approvals, invoices, bank transfers, actual deliverables, related-party relationships and financial impact on the company.

Client-Focused Legal Support for Minority Shareholder and Related-Party Transaction Disputes

Fırat Fesih Kaya Law Office assists domestic and foreign minority investors in disputes involving related-party payments, artificial consulting arrangements, profit diversion, management liability, information rights, special audits and shareholder litigation in Turkey. Lawyer Fırat Fesih Kaya provides legal assistance in analyzing company records, tracing disputed payments, evaluating director and manager liability, challenging corporate decisions and developing urgent litigation strategies where company assets may be at risk.

Phone:
+90 312 434 22 22

Mobile:
+90 532 769 22 22

Email:
info@firatfesihkaya.av.tr

Address:
Mevlana Boulevard No:221, Yıldırım Tower, Office No:148
06520 Balgat, Çankaya, Ankara, Turkey