Can a foreign shareholder request dissolution of a Turkish company for just cause? Learn about TCC Articles 531 and 636, minority shareholder rights, 50/50 deadlock, buyout, real share value and court remedies in Turkey.

A foreign shareholder can request the dissolution of a Turkish company for just cause when the statutory conditions are satisfied. Foreign nationality does not, by itself, prevent a shareholder from exercising the corporate remedies available under Turkish law. The critical questions are the type of Turkish company, the shareholder’s percentage, the conduct complained of and whether the circumstances are sufficiently serious to constitute “just cause.” The two provisions particularly important for privately held capital companies are Article 531 of the Turkish Commercial Code (TCC) for joint stock companies (A.Ş.) and Article 636 for limited liability companies (Ltd. Şti.). Under Article 531, shareholders representing at least one tenth of the capital of a non-public A.Ş., or one twentieth in a publicly held company, may request dissolution for just cause. Importantly, the court does not necessarily have to dissolve the business: it may instead order payment of the claimant shareholders’ shares at their real value at a date closest to the judgment and remove them from the company, or adopt another appropriate and acceptable solution. (Kayseri Ticaret Müdürlüğü) For foreign investors trapped in a dysfunctional Turkish company, this means a dissolution lawsuit can sometimes result not in destruction of the business but in an economically meaningful judicial exit.

What Does “Dissolution for Just Cause” Mean in Turkey?

Dissolution for just cause is an extraordinary corporate remedy. It should be distinguished from an ordinary disagreement between shareholders.

A shareholder cannot generally obtain dissolution merely because they regret the investment, disagree with management strategy, believe another business would be more profitable or want immediate repayment of the money originally invested.

The dispute must reach a level at which continued corporate participation has become seriously problematic in light of the particular circumstances.

The Turkish Commercial Code deliberately gives courts significant discretion because shareholder disputes can take many different forms.

Foreign Shareholders Have Corporate Rights in Turkey

A shareholder does not lose the protection of Turkish company law merely because they are a citizen of another country or live outside Turkey.

A foreign individual or foreign corporate shareholder that validly owns shares in a Turkish company can, subject to the applicable statutory requirements, pursue shareholder remedies before Turkish courts.

This is particularly relevant for international investors involved in Turkish joint ventures.

The First Question Is Whether the Company Is an A.Ş. or Ltd. Şti.

The legal route changes depending on the company type. The Turkish Commercial Code recognizes both joint stock companies and limited liability companies as capital companies, but their shareholder exit and dissolution regimes are not identical. (https://ticaret.gov.tr)

Therefore, before filing a lawsuit, the foreign investor should determine the precise company form and obtain the current articles of association and corporate records.

Foreign Shareholder in an A.Ş.: TCC Article 531

Article 531 is one of the most important minority-shareholder remedies in Turkish corporate law.

For a non-public A.Ş., shareholders representing at least 10% of the capital can seek dissolution for just cause.

For a publicly held company, the statutory threshold is 5%.

The lawsuit is filed before the Commercial Court of First Instance at the company’s registered office. (Kayseri Ticaret Müdürlüğü)

Can a 50% Foreign Shareholder File the Lawsuit?

Potentially, yes.

A foreign investor owning 50% of a non-public A.Ş. clearly satisfies the statutory percentage threshold.

But ownership percentage is only the first condition.

The investor must still demonstrate circumstances amounting to just cause.

Can a 20% Foreign Shareholder File?

Again, the statutory capital threshold would be satisfied in a non-public A.Ş.

The remaining question would be whether just cause exists.

What About a 5% Shareholder?

In a non-public A.Ş., 5% does not meet Article 531’s statutory 10% threshold. The shareholder would therefore need to examine other shareholder, contractual or corporate remedies.

The position differs for publicly held companies because Article 531 provides the lower one-twentieth threshold. (Kayseri Ticaret Müdürlüğü)

What Can Constitute Just Cause?

The statute does not provide a closed checklist applicable mechanically to every company dispute.

This is deliberate.

Whether just cause exists depends on the complete circumstances.

Serious shareholder oppression, persistent violations of shareholder rights, abuse of majority control, corporate paralysis, misuse of company assets, systematic exclusion and severe breakdown of the corporate relationship may become relevant depending on the evidence.

Persistent Denial of Information

Suppose a foreign shareholder repeatedly asks for legally relevant financial information.

Management consistently refuses.

Financial statements are withheld.

Questions concerning major transactions remain unanswered.

The shareholder cannot understand where company money is going.

A single delayed response and years of systematic information obstruction are obviously different situations.

The court will examine the actual pattern.

Company Funds Used for Personal Purposes

Suppose the controlling shareholder also manages the company’s bank accounts.

Substantial amounts are transferred to personal accounts without an identifiable corporate basis.

This may raise questions extending beyond dissolution, including management liability and potential recovery claims.

But it may also contribute to the overall factual basis supporting a just-cause argument.

Company Assets Transferred to Related Parties

Consider a Turkish company owning commercial property worth EUR 4 million.

The controlling shareholder causes the property to be sold to another company they control for EUR 1.5 million.

The foreign shareholder objects.

Management refuses to explain the transaction.

Such circumstances should be investigated both as potential corporate misconduct and as part of the wider shareholder dispute.

Profits Diverted Through Related Companies

Value does not always leave a company through direct asset sales.

Suppose the company generates significant profits but pays unusually high “consultancy,” “management,” “licensing” or “service” fees to businesses controlled by the majority shareholder.

Reported profit disappears.

No meaningful dividends are distributed.

The economic substance of those transactions may require examination.

Repeated Failure to Distribute Profits

The mere fact that dividends are not distributed does not automatically establish just cause. A company may legitimately retain profits for investment, debt repayment or working capital.

The situation becomes more significant where non-distribution forms part of a broader pattern designed to prejudice minority shareholders while economic benefits are transferred to controlling shareholders through other channels.

Systematic Exclusion From Corporate Governance

A shareholder may also complain that corporate procedures are repeatedly manipulated to exclude them from legitimate participation.

Again, the court should be shown specific evidence rather than broad accusations.

50/50 Shareholder Deadlock

A severe 50/50 deadlock can create a particularly difficult situation.

Neither shareholder can effectively overcome the other.

Important decisions repeatedly fail.

Management appointments become impossible.

Budgets cannot be agreed.

Investment decisions stop.

The shareholders cannot agree on a buyout.

The company may become effectively ungovernable.

A persistent deadlock with serious consequences for corporate operations may therefore become highly relevant to a just-cause analysis.

One Disagreement Is Not Necessarily Deadlock

Suppose two 50% shareholders disagree about purchasing a new warehouse.

Everything else continues normally.

That does not automatically mean the company must be dissolved.

Compare that with a company in which essential decisions have failed for eighteen months and shareholder relations have irreversibly collapsed.

The second situation presents a fundamentally different legal problem.

Ltd. Şti.: TCC Article 636

Foreign shareholders in Turkish limited liability companies have a separate statutory framework.

Under TCC Article 636, where just cause exists, a shareholder can request judicial dissolution of the limited company.

This can be especially important in closely held companies where personal trust between a small number of shareholders has completely disappeared.

Does a Ltd. Şti. Shareholder Need 10%?

Article 636 should not be confused with Article 531.

The specific 10% threshold discussed above belongs to the Article 531 mechanism for a non-public A.Ş.

The limited-company just-cause dissolution regime is structured differently.

This distinction can be extremely important for a foreign investor holding a relatively small interest in a Ltd. Şti.

Court-Ordered Exit Instead of Dissolution

This is one of the most important features of the Turkish system.

The foreign shareholder may file a lawsuit requesting dissolution, but the ultimate outcome does not necessarily have to be liquidation of the company.

For an A.Ş., Article 531 expressly allows the court, instead of dissolution, to order payment to the claimant shareholders of the real value of their shares at a date closest to the judgment and their removal from the company, or to adopt another appropriate and acceptable solution. (Kayseri Ticaret Müdürlüğü)

A comparable alternative-remedy structure is important in limited-company just-cause disputes under Article 636.

This allows courts to consider whether separating the disputing shareholder from the company would solve the problem without destroying an otherwise viable business.

Why Would the Court Prefer a Buyout?

Imagine a successful Turkish manufacturing company employing 150 people.

The company itself is commercially healthy.

The shareholders’ relationship is not.

Liquidating the entire company could destroy going-concern value, affect employees and harm creditors and customers.

If the fundamental problem can be resolved by separating the disputing shareholders, an alternative solution may be more proportionate than dissolution.

Real Share Value Then Becomes Critical

A judicial exit creates another major dispute:

How much are the foreign shareholder’s shares worth?

The controlling shareholder may say:

“Your shares are worth EUR 500,000.”

The foreign shareholder may say:

“They are worth EUR 3 million.”

A proper company valuation may therefore become necessary.

Nominal Value Is Not Automatically Real Value

Suppose registered capital is TRY 10 million.

The foreign shareholder owns 30%.

The nominal figure associated with that holding is TRY 3 million.

But the company owns real estate, machinery, intellectual property and a profitable operating business worth substantially more.

The nominal figure does not automatically determine the economic value relevant to a statutory real-value exit.

Book Value May Also Be Inadequate

Company accounting records remain essential evidence, but book value can differ significantly from economic value.

Real estate purchased many years earlier is a classic example.

A building appearing in company records at a relatively low historical amount may have a dramatically higher current value.

What Should Be Examined During Valuation?

The valuation may need to consider the company’s real estate, machinery, inventory, bank balances, receivables, liabilities, profitability, customer relationships, intellectual property, contracts and other relevant economic factors.

The appropriate methodology depends on the nature of the company.

Hidden Company Assets

Foreign investors should pay particular attention to assets omitted from the other shareholder’s proposed valuation.

Artificial Company Liabilities

The opposite problem is equally serious.

Suppose the foreign investor announces an intention to seek judicial exit.

Shortly afterward, the accounts suddenly show:

EUR 2 million payable to the majority shareholder.

The alleged debt should be verified.

When was the money transferred?

Which bank account received it?

How was it previously recorded?

Was there a loan agreement?

Why did the liability appear when the shareholder dispute began?

Asset Stripping Before the Lawsuit

A foreign shareholder contemplating dissolution should consider whether company value is being removed before or during litigation.

Potential warning signs include sudden sales of major assets, unusual related-party payments, transfer of customers, movement of intellectual property and unexplained withdrawals.

These matters may require remedies separate from the dissolution claim.

Dissolution Is Not a Substitute for a Damages Claim

Suppose a director caused EUR 5 million in damage to the company.

A dissolution lawsuit does not automatically recover that EUR 5 million.

Management-liability and recovery claims may need to be pursued separately.

Company Loss and Shareholder Loss Must Be Distinguished

If company money is misappropriated, the immediate damage may belong to the company rather than directly to each shareholder.

A 30% shareholder cannot automatically calculate personal damages as 30% of every loss suffered by the company.

The correct claimant and legal remedy must be identified.

Dissolution Is Also Not a Substitute for Challenging Corporate Resolutions

If the dispute concerns an unlawful general assembly resolution, the appropriate remedy may involve challenging that specific resolution.

The foreign shareholder should not automatically seek the most drastic remedy when a narrower corporate action can adequately protect the right involved.

Judicial Withdrawal May Be More Appropriate for a Ltd. Şti.

A foreign shareholder in a limited company should also consider TCC Article 638.

Where just cause exists, a shareholder may request permission from the court to withdraw from the company.

This can provide a more directly targeted exit route where the investor’s objective is to leave rather than terminate the entire company.

Withdrawal Versus Dissolution

The strategic distinction is important.

Withdrawal: “I should be allowed to leave.”

Dissolution: “The circumstances justify terminating the company, subject to the court’s power to choose an appropriate alternative.”

The correct action depends on the factual and legal circumstances.

What If the Foreign Shareholder Simply Wants Their Investment Back?

That alone is generally insufficient.

Equity investment inherently involves commercial risk.

The fact that an investment has become inconvenient, unprofitable or difficult to sell does not automatically create just cause for dissolution.

There must be a legally sufficient basis.

What If the Other Shareholder Refuses to Buy?

Again, refusal to purchase the shares does not automatically establish just cause.

However, refusal may form part of a broader factual pattern where the foreign shareholder is simultaneously subjected to serious corporate misconduct or systematic obstruction.

What If No Third Party Will Buy the Shares?

Illiquidity alone does not automatically justify dissolution.

Private-company shares frequently lack an active market.

The shareholder should determine whether contractual or statutory exit mechanisms are available.

Shareholders’ Agreement Must Be Reviewed First

Foreign investors frequently enter Turkey through joint ventures governed by shareholders’ agreements.

The agreement may contain:

put options,

call options,

deadlock mechanisms,

buy-sell provisions,

valuation formulas,

rights of first refusal,

tag-along provisions,

or dispute-resolution mechanisms.

A contractual exit may sometimes be commercially preferable to dissolution litigation.

Deadlock Clause

If the agreement specifically defines deadlock, follow the agreed procedure carefully.

The contract may require negotiation, escalation or mediation before an exit mechanism can be triggered.

Buy-Sell Mechanism

Some agreements allow one shareholder to propose a price at which the other must either buy or sell according to the contractual formula.

Such mechanisms require substantial strategic caution because the initiating shareholder may need financing to become the buyer.

Foreign Shareholder Should Investigate the Company Before Giving Releases

A negotiated exit frequently ends with a settlement agreement containing broad releases.

This can become dangerous if the investor has not yet investigated company finances.

A clause releasing “all known and unknown claims” may affect future disputes concerning previously undiscovered transactions.

Shareholder Loans Must Be Treated Separately

Suppose the foreign investor owns 25% and has also loaned EUR 1 million to the company.

The shareholding and loan are different economic positions.

A judicial or negotiated exit from the equity investment does not necessarily mean the separate loan claim disappears.

Personal Guarantees Must Also Be Checked

Foreign investors frequently guarantee company loans.

A shareholder can successfully leave the company but remain liable to the bank.

Therefore, a complete exit plan should identify guarantees, mortgages, pledges and other security provided by the shareholder.

Director or Manager Position

The foreign shareholder may simultaneously be a director, board member or manager.

Termination of share ownership and termination of management status are legally distinct issues.

Both should be addressed.

Can the Court Protect the Company During the Lawsuit?

Depending on the nature of the dispute and the legal conditions for interim relief, protective measures may be requested where there is a concrete risk to the rights or assets at issue.

The request should identify the specific risk.

Example: Factory About to Be Sold

If there is reliable evidence that a company’s principal asset is about to be transferred during the dispute, the shareholder should immediately assess the available interim remedies.

Example: Company Accounts Being Emptied

Unusual and ongoing transfers may similarly require urgent legal analysis.

Interim Measures Must Be Proportionate

A shareholder should not assume that filing a dissolution lawsuit automatically freezes every company asset.

The requested measure must have an appropriate legal basis and satisfy the procedural requirements applicable to interim relief.

Can the Court Appoint a Trustee?

Appointment of a trustee or kayyım is an exceptional intervention.

A shareholder dispute or dissolution action does not automatically result in a trustee being appointed.

The need and legal basis must be demonstrated in the circumstances of the particular case.

Evidence Is Critical in a Just-Cause Dissolution Case

A foreign shareholder should build the case around specific events.

“Management is unfair” is weak.

A chronology supported by documents is much stronger.

Example of an Evidence Timeline

January: Financial records requested.

February: Request refused.

March: EUR 500,000 transferred to a related company.

April: Shareholder formally objects.

May: General assembly rights disputed.

June: Major company asset sold to an affiliate.

July: Independent buyout negotiations fail.

August: Further financial information withheld.

This demonstrates a pattern rather than an abstract accusation.

General Assembly Minutes

Preserve all relevant minutes.

Board and Manager Decisions

These may establish how disputed transactions were approved.

Bank Records

Lawfully available company bank information can be crucial where financial misconduct is alleged.

Accounting Records

General ledgers, trial balances and shareholder current accounts may reveal related-party movements.

Emails and Corporate Correspondence

These can establish information requests, objections and attempted settlements.

Shareholders’ Agreement

The agreement may substantially affect the strategy.

Valuation Reports

Independent valuation can become essential where a buyout is a realistic alternative.

Foreign Investment Documents

SWIFT records and shareholder-loan documentation can establish how the investment was originally funded.

What Happens If the Court Actually Orders Dissolution?

Where a capital company is dissolved, it generally enters liquidation and retains legal personality until liquidation is completed. The liquidation process involves identifying the company’s assets and financial position, collecting receivables, satisfying debts and ultimately distributing the remaining assets in accordance with the applicable rules. The Ministry of Trade describes the liquidation process in these terms for capital companies. (https://ticaret.gov.tr)

Accordingly, “dissolution” should not be understood as the company disappearing immediately on the date of judgment.

Dissolution Can Destroy Going-Concern Value

This is one reason the remedy should be approached strategically.

A profitable operating company may be worth EUR 10 million as a going concern but substantially less if its assets are sold individually during liquidation.

A foreign shareholder should therefore compare the economics of dissolution with a judicial or negotiated buyout.

2026 Position Under Turkish Company Law

As of 2026, the Ministry of Trade continues to list the 6102 Turkish Commercial Code as the governing primary legislation for companies and trade registry matters. (https://ticaret.gov.tr) The core distinction therefore remains essential: Article 531 governs the just-cause dissolution remedy for an A.Ş., while limited-company disputes require analysis under the Ltd. Şti. provisions, particularly Articles 636 and 638 depending on whether dissolution or shareholder withdrawal is sought.

For foreign investors, the practical issue is not simply whether a dissolution lawsuit is legally possible. The more important question is which remedy produces the best economic exit while protecting the value of the investment.

2026 Legal Strategy for a Foreign Shareholder Seeking Dissolution for Just Cause

A foreign shareholder considering dissolution should first identify the company as an A.Ş. or Ltd. Şti., determine the exact ownership percentage and review the articles of association and shareholders’ agreement. The shareholder should then distinguish ordinary commercial disagreements from persistent conduct potentially amounting to just cause. Financial statements and lawfully available corporate records should be preserved, and suspected related-party transactions, asset transfers, unexplained payments and shareholder-right violations should be documented chronologically. If the investor primarily wants to exit, a negotiated buyout, contractual exit mechanism or, in an appropriate Ltd. Şti. case, judicial withdrawal should be compared against dissolution proceedings. Where an A.Ş. case falls within Article 531, the possibility of a court-ordered real-value exit should form part of the strategy because Article 531 expressly authorizes the court to select such a remedy instead of dissolution. (Kayseri Ticaret Müdürlüğü) Any separate claims involving director liability, company losses or invalid corporate resolutions should be identified independently. If there is a concrete risk that important assets will disappear while litigation continues, proportionate interim protection should be evaluated immediately. The practical roadmap is therefore: identify company type → confirm ownership percentage → review corporate documents → review contractual exit rights → document just cause → preserve financial evidence → investigate related-party transactions → determine company value → calculate shareholder loans separately → identify guarantees → attempt a commercial exit where appropriate → evaluate Ltd. Şti. withdrawal → evaluate just-cause dissolution → evaluate Article 531 for an A.Ş. → seek appropriate interim protection → establish real share value → pursue separate corporate claims where necessary → obtain a negotiated or judicial exit while preserving company value whenever possible.

Frequently Asked Questions

1. Can a foreign shareholder request dissolution of a Turkish company?

Yes. Foreign nationality does not itself prevent a shareholder from pursuing the corporate remedies available under Turkish law. The applicable requirements depend primarily on the company type, shareholding and grounds relied upon.

2. What percentage is required to request dissolution of an A.Ş. for just cause?

Under TCC Article 531, shareholders representing at least 10% of the capital in a non-public A.Ş., or 5% in a publicly held company, may request dissolution for just cause. (Kayseri Ticaret Müdürlüğü)

3. Can a 50% foreign shareholder request dissolution?

Potentially, yes. A 50% shareholder in an A.Ş. exceeds the Article 531 percentage threshold, but still needs to establish just cause. A 50/50 deadlock can be highly relevant depending on its severity and consequences.

4. Can a foreign shareholder request dissolution of a Turkish Ltd. Şti.?

Yes. TCC Article 636 provides a just-cause dissolution mechanism for limited companies. The legal requirements and available alternative remedies should be assessed according to the specific facts.

5. Does filing a dissolution lawsuit mean the company will definitely be liquidated?

No. Particularly under TCC Article 531, the court has express authority to select an alternative remedy instead of dissolution, including payment of the claimant shareholders’ real share value and their removal from the company. (Kayseri Ticaret Müdürlüğü)

6. Is a shareholder deadlock enough for dissolution?

Not automatically. The duration, severity and consequences of the deadlock are important. Persistent paralysis preventing effective corporate governance presents a substantially stronger case than an isolated business disagreement.

7. Can misuse of company funds constitute just cause?

Serious financial misconduct may contribute to a finding of just cause depending on the evidence and surrounding circumstances. It may also create separate management-liability or recovery claims.

8. Can the foreign shareholder receive money instead of having the company dissolved?

Potentially. Article 531 expressly allows an alternative solution involving payment of the real value of the claimant shareholders’ shares and their exit instead of dissolution. (Kayseri Ticaret Müdürlüğü) Limited-company law also provides important alternative-remedy and exit mechanisms.

9. How is the foreign shareholder’s share value determined?

The legally relevant valuation depends on the remedy. Company assets, liabilities, profitability, real estate, receivables, debt, intellectual property and other economic factors may become important. Nominal capital alone does not necessarily represent real economic value.

10. What should a foreign shareholder do before filing the lawsuit?

Preserve corporate and financial evidence, review the shareholders’ agreement and articles of association, document the alleged just causes, investigate company value and determine whether dissolution, judicial withdrawal, a buyout or another shareholder remedy provides the strongest strategy.

Legal Support for Foreign Shareholders Seeking Dissolution of a Turkish Company

Foreign shareholders facing serious disputes in Turkish companies may require legal assistance concerning just-cause dissolution, shareholder deadlock, minority shareholder oppression, judicial withdrawal, company valuation, shareholder buyouts, related-party transactions, misuse of company assets and director liability.

Fırat Fesih Kaya Law Office assists foreign investors and shareholders in disputes involving Turkish companies. Fırat Fesih Kaya can assist with evaluating whether the circumstances constitute just cause, documenting corporate and financial misconduct, assessing dissolution and judicial-exit alternatives, determining an appropriate share-valuation strategy and pursuing proceedings before the competent Turkish commercial courts.

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