What can a foreign shareholder do if dividends are not paid by a company in Turkey? Learn about dividend rights, shareholder resolutions, payment claims, financial records, majority abuse, director liability, court proceedings and enforcement options.

A foreign shareholder who has not received dividends from a company in Turkey should first determine whether a legally enforceable dividend entitlement has actually arisen. This distinction is essential. Owning profitable company shares does not always mean that a shareholder can immediately demand a proportional amount of the annual profit in cash. The company must prepare its financial statements, determine distributable profit, complete the appropriate corporate decision-making process and comply with statutory and contractual rules governing profit distribution. Once a valid dividend entitlement has arisen, however, the company cannot simply refuse payment without consequence. The foreign shareholder may be able to demand payment, claim default interest where legally available, commence enforcement or court proceedings and investigate whether company profits have instead been diverted to controlling shareholders through excessive compensation, related-party payments, management fees, loans, asset transfers or other transactions. In serious disputes, unpaid dividends may therefore be only one part of a larger conflict involving minority shareholder rights, financial transparency, abuse of control, company valuation and shareholder exit.

Does a Foreign Shareholder Have the Right to Receive Dividends in Turkey?

Foreign nationality does not, by itself, reduce the economic rights attached to shares in a company established in Turkey.

A foreign shareholder may therefore participate in profit distributions according to the applicable corporate rules, the company’s constitutional documents, the rights attached to the relevant shares and valid shareholder resolutions.

The critical issue is whether distributable profit exists and whether the corporate steps necessary to create an enforceable dividend receivable have been completed.

Company Profit and Dividend Receivable Are Not the Same Thing

This is one of the most important distinctions in shareholder disputes.

Suppose a company earns the equivalent of EUR 3 million during a financial year.

A foreign shareholder owns 30%.

It would be incorrect automatically to conclude:

Company profit: EUR 3 million

Foreign shareholder immediately owed: EUR 900,000

Corporate profit belongs to the company until it is dealt with through the applicable corporate process.

The amount available for distribution may also differ from the accounting profit shown in a preliminary financial statement.

Why Might Accounting Profit Differ From Distributable Profit?

Company losses from previous periods may matter.

Mandatory reserves may need to be considered.

Statutory and corporate restrictions can affect the amount available for distribution.

The financial statements and valid corporate decisions therefore need to be examined before calculating the shareholder’s claim.

When Does an Unpaid Dividend Become a Legal Debt?

A shareholder’s position becomes substantially stronger when the competent corporate body has validly decided to distribute a specified amount of profit and the shareholder’s payment entitlement has become due.

At that point, the issue may no longer be merely:

“The company should distribute more profit.”

It may instead become:

“The company has already created a dividend obligation but has failed to pay it.”

That distinction affects the available legal remedies.

Example: Dividend Approved but Not Paid

Assume a company has two shareholders:

Foreign Shareholder: 40%

Local Shareholder: 60%

The shareholders approve a distributable dividend of EUR 1 million.

The foreign shareholder’s entitlement is EUR 400,000, assuming equal economic rights attached to the shares.

The company pays EUR 600,000 to the majority shareholder but does not pay the foreign shareholder.

This creates a very different dispute from a situation in which no dividend resolution was ever adopted.

Selective Dividend Payment Is Particularly Serious

If shareholders holding the same class of rights are treated differently without a legitimate basis, equal-treatment principles and other corporate-law protections may become relevant.

The company should not ordinarily be used as a mechanism for distributing economic benefits selectively to favored shareholders while denying equivalent rights to another shareholder.

What If No Dividend Resolution Was Adopted?

This is more complicated.

A shareholder generally cannot transform company profit directly into a personal receivable merely because the shareholder wants cash distribution.

The corporate decision concerning allocation of profit must be examined.

However, repeated refusal to distribute profits can become legally significant where it forms part of a broader pattern of majority abuse.

Companies Can Legitimately Retain Profit

Not distributing profit is not automatically unlawful.

A company may have valid reasons to retain earnings.

For example, the company may need cash for expansion, debt repayment, working capital, investment, regulatory capital requirements or anticipated expenses.

The decision must therefore be examined commercially and legally.

Repeated Non-Distribution Can Still Become Suspicious

Consider a company that earns substantial profits for eight consecutive years.

No dividends are paid.

At the same time, the controlling shareholder receives very large management fees, related companies controlled by the same shareholder receive substantial consulting payments and company assets are used for that shareholder’s personal benefit.

The foreign investor receives no meaningful economic return.

The issue is no longer simply whether the company retained profits.

The entire method by which corporate value is distributed should be examined.

Dividend Suppression Can Be a Minority Shareholder Problem

A controlling shareholder may seek to pressure a minority investor into selling shares cheaply.

One possible strategy is to prevent ordinary dividend distributions while extracting company value through other channels.

The foreign shareholder becomes economically trapped.

The majority shareholder then says:

“Your shares generate no income, so they are not worth much.”

This type of situation requires financial investigation before the foreign shareholder accepts a distressed buyout.

Examine Payments to the Controlling Shareholder

A company may officially distribute no dividends while paying substantial amounts to the controlling shareholder through other categories.

These payments should be analyzed individually.

Management Compensation

A shareholder who also serves as a director or manager may legitimately receive compensation.

However, unusually high compensation can require examination where it materially reduces distributable profits.

Consultancy Fees

The majority shareholder may own another company that invoices the operating company for consulting services.

The questions become:

What services were provided?

Was the price commercially reasonable?

Who approved the transaction?

Was the arrangement genuine?

Related-Party Rent

The company may rent property from the controlling shareholder or a related business.

Again, the payment may be legitimate.

But the rent level and transaction terms should be examined if they significantly reduce company profits.

Loans to Shareholders

Company funds may also be transferred to shareholders as alleged loans.

The legal and accounting basis of such transactions should be verified.

Related-Party Loans

A company may lend substantial money to another business controlled by the majority shareholder.

That can reduce available cash and potentially affect dividend distributions.

Company Assets Used Personally

Personal use of corporate vehicles, property or other assets may create another form of economic benefit that does not appear as dividend income.

Follow the Economic Benefit

A strong shareholder investigation does not examine only the dividend resolution.

It asks:

Who ultimately receives the economic value generated by the company?

Obtain the Financial Statements

The foreign shareholder should determine whether the company genuinely generated distributable earnings.

Review the balance sheet, income statement and other relevant financial information.

Compare Several Years

One financial year rarely tells the complete story.

A multi-year comparison can reveal whether dividend policy changed after a shareholder dispute began.

Example

Year 1: Profit EUR 1.2 million, dividend EUR 600,000.

Year 2: Profit EUR 1.5 million, dividend EUR 750,000.

Year 3: Foreign shareholder dispute begins.

Year 3: Profit EUR 2 million, no dividend.

Year 4: Profit EUR 2.4 million, no dividend.

Year 5: Profit EUR 2.7 million, no dividend.

During Years 3–5, management fees paid to a company controlled by the majority shareholder increase dramatically.

This pattern should be investigated as a whole.

Obtain the Relevant Shareholder Resolutions

The shareholder should review how annual profits were allocated.

What amount was retained?

What amount was placed in reserves?

Was any dividend approved?

Who voted for the resolution?

What reason was given for retaining earnings?

General Meeting Minutes Can Be Critical

Minutes may establish the foreign shareholder’s objection to the dividend policy.

A shareholder who believes that the decision is unlawful should preserve the relevant record carefully.

Record Formal Objections

Where appropriate, objections should be reflected in the corporate record rather than remaining informal complaints between shareholders.

Can a Dividend Resolution Be Challenged?

Potentially, depending on the nature of the resolution and the alleged legal defect.

A shareholder may need to consider remedies concerning unlawful shareholder resolutions where a decision violates mandatory legal rules, the company’s constitutional documents or protected shareholder rights.

Deadlines can be critical.

Do Not Wait for Several Years Before Reviewing the Resolution

Corporate resolution challenges may be subject to specific procedural periods.

The shareholder should obtain legal review promptly after receiving the decision.

What If the Majority Uses Voting Power Abusively?

Majority control is not unlimited.

Corporate voting rights must be exercised within the legal framework.

A majority shareholder cannot automatically use voting power solely to divert value to themselves or destroy the economic rights of another shareholder.

Equal Treatment Can Become Relevant

The company should respect the rights attached to shares in accordance with the applicable corporate structure.

Selective economic treatment requires legal scrutiny.

Different Share Classes Must Be Checked

Not every shareholder necessarily has identical dividend rights.

The company may have different classes or privileged rights.

Before alleging discrimination, the shareholder should confirm what economic rights attach to each share.

Review the Company’s Constitutional Documents

These documents may contain important provisions concerning profit distribution, privileges and economic rights.

Review the Shareholders’ Agreement

A shareholders’ agreement may also contain contractual commitments regarding dividend policy.

For example, the agreement may provide that a minimum percentage of distributable annual profit will be distributed unless both shareholders agree otherwise.

Contractual Dividend Policy

If the majority shareholder repeatedly breaches such a clause, contractual remedies may exist in addition to corporate-law remedies.

Minimum Distribution Clauses

These clauses are especially common in joint ventures where one investor expects regular cash returns.

The exact wording matters.

Can the Foreign Shareholder Directly Sue for an Unpaid Dividend?

Potentially, where a valid and due dividend receivable has already arisen.

The case then differs from a lawsuit seeking to force the company to adopt a dividend resolution in the first place.

The shareholder should establish the resolution, amount, entitlement and due date.

Evidence of the Dividend Debt

Important evidence may include the relevant shareholder resolution, financial statements, share ownership records, dividend calculation, payment schedule and evidence showing whether other shareholders were paid.

Bank Records

If the company claims that payment was made, banking evidence becomes important.

Partial Payment

Record any amount already received.

The claim should concern the actual unpaid balance.

Currency Issues

Where the economic rights are calculated in one currency but payment is made in another, the applicable corporate resolution and legal framework must be reviewed carefully.

Default Interest

Where a monetary dividend obligation has become due and remains unpaid, default and interest issues may arise under the applicable legal framework.

The exact calculation depends on the nature of the obligation and relevant circumstances.

Formal Payment Demand

A written demand can help establish the shareholder’s position.

The demand should identify the relevant dividend resolution, amount due and unpaid balance.

Do Not Make a Vague Demand

Instead of:

“Pay my dividends immediately.”

a stronger demand identifies the corporate decision and precise amount.

Enforcement Proceedings

Where the dividend receivable is sufficiently established and due, enforcement mechanisms may potentially be considered.

The proper procedure depends on the evidence and circumstances.

Company May Object

If the company disputes the receivable, further proceedings may become necessary.

Civil Court Proceedings

A shareholder may need to pursue a monetary claim before the competent commercial court where the dividend debt is disputed.

Mandatory Commercial Mediation May Be Relevant

Because a payment claim may constitute a commercial monetary dispute, pre-litigation mediation requirements should be checked before commencing the relevant court claim.

The precise procedural route should be determined according to the claim being asserted.

Dividend Claim and Resolution Challenge Can Be Different Proceedings

This distinction is important.

One dispute may concern:

“The dividend was validly declared but not paid.”

Another may concern:

“The majority unlawfully prevented a proper dividend distribution.”

The legal theories are different.

Hidden Financial Records

If the shareholder cannot determine whether distributable profit exists because management withholds company accounts, information and inspection rights may need to be exercised first.

Joint Stock Company

A shareholder in a joint stock company has statutory information rights concerning company affairs subject to the applicable corporate framework.

Limited Liability Company

A shareholder in a limited liability company also has information and inspection rights under the provisions governing that company form.

Bank Records May Become Important

Where unexplained payments appear to reduce company profits, banking evidence can help identify where the money went.

Accounting Records

The bank movements should be compared with the general ledger.

Related-Party Accounts

Balances involving shareholders and related companies require particular attention.

Special Audit

For a joint stock company, a special audit concerning specific events may become relevant where the statutory conditions are satisfied.

For example, the foreign shareholder may seek investigation of large payments to companies controlled by the majority shareholder that allegedly reduced distributable earnings.

Special Audit Should Be Targeted

The issue should be defined clearly.

For example:

Payments made to related companies during the last two financial years and their commercial basis.

Director and Manager Liability

Suppose management intentionally causes the company to incur excessive related-party expenses in order to prevent profits from reaching minority shareholders.

Depending on the facts, director or manager liability may need separate examination.

The claim should identify the duty breached, conduct, company damage and causal connection.

Company Damage Is Not the Same as Unpaid Dividend

This distinction is extremely important.

Suppose management improperly transfers EUR 1 million of company money to a related party.

That EUR 1 million may represent a loss suffered by the company.

It does not automatically become a personal EUR 300,000 dividend claim merely because the foreign shareholder owns 30%.

Different legal claims may need to be pursued.

Shareholder Direct Loss

Certain conduct may also cause direct damage to the shareholder.

The correct characterization depends on the particular facts.

Do Not Double Count Losses

The same economic event should not automatically be claimed simultaneously as company damage, unpaid dividend and direct shareholder loss without examining the legal basis.

Dividend Dispute Can Affect Share Valuation

A company that pays no dividends may be more difficult to sell as a minority investment.

This can become relevant if the foreign shareholder later seeks an exit.

Majority May Use Dividend Pressure to Force a Cheap Exit

A foreign shareholder should be cautious where the majority says:

“You receive no dividends and nobody wants the shares, so sell them to me cheaply.”

The investor should first determine whether the company’s profits have been retained legitimately or diverted through other transactions.

Exit From a Limited Company

Where non-payment of dividends forms part of a much broader and serious shareholder conflict, statutory withdrawal or dissolution remedies may require consideration in a limited liability company.

Non-payment alone should not automatically be treated as sufficient.

The complete pattern matters.

Just-Cause Dissolution

Severe shareholder oppression involving dividend suppression, financial misconduct and systematic exclusion may also become relevant to just-cause remedies where statutory conditions exist.

Joint Stock Company Minority Remedy

Qualifying minority shareholders facing sufficiently serious circumstances may need to consider the statutory just-cause dissolution framework and possible alternative judicial exit.

Again, repeated non-payment of dividends must be assessed together with the entire corporate relationship.

Do Not File the Most Drastic Lawsuit First

If a valid dividend debt already exists, a payment claim may be considerably more direct than seeking dissolution of the company.

The remedy should correspond with the actual problem.

What If the Company Says It Has No Cash?

Profitability and liquidity are different concepts.

A company may have accounting profit but insufficient immediate cash because receivables have not been collected or funds have been invested.

The financial records should be examined.

What If the Company Has Cash but Refuses Payment?

That creates a different factual position where a valid and due dividend obligation exists.

What If Other Shareholders Were Paid?

Selective payment should be documented immediately.

Obtain the relevant evidence lawfully.

What If the Majority Received Money Under Another Label?

Payments described as salary, consulting fees, rent or loan repayment should be investigated on their own legal basis.

Do not simply reclassify every payment as a hidden dividend without evidence.

Dividend Advance Issues

Any advance distribution mechanism must comply with the applicable legal and corporate framework.

The shareholder should distinguish ordinary annual profit distribution from any legally recognized advance mechanism.

What If the Company Is in Financial Difficulty?

Distributing funds in circumstances inconsistent with mandatory capital-protection rules can create separate legal problems.

A shareholder cannot demand distribution of amounts that cannot legally be distributed.

Capital Protection Matters

The company is not simply a pool of money belonging proportionately to shareholders.

Corporate assets also protect creditors and company continuity.

Dividend rights therefore operate within mandatory corporate-capital principles.

Distribution of Fictitious Profits

Payments described as dividends without a legitimate distributable basis may themselves create legal risks.

Foreign shareholders should not demand unlawful distributions merely because cash is available.

Can Improperly Paid Dividends Be Recovered?

Depending on the circumstances and the recipient’s position, repayment issues may arise where unlawful distributions were made.

This is another reason to distinguish a lawful dividend claim from informal shareholder withdrawals.

Tax Withholding

Dividend payments to foreign shareholders can also have tax consequences.

The shareholder’s net receipt may differ from the gross dividend approved by the company because applicable withholding and treaty considerations may need to be reviewed.

Tax analysis should be carried out separately from the corporate entitlement.

Foreign Corporate Shareholder

Where the shareholder is an overseas company, corporate ownership and tax documentation may become relevant to distribution and payment.

Foreign Individual Shareholder

The shareholder’s personal tax position can require separate analysis depending on residence and applicable tax rules.

Cross-Border Dividend Payment

International bank-transfer information should be preserved.

Payment Instructions

The foreign shareholder should ensure that the company has accurate banking details.

Company Cannot Use Administrative Excuses Indefinitely

Where a valid dividend debt exists, repeated claims that international payment is “being processed” should be verified against actual banking evidence.

First 24 Hours After Discovering a Dividend Has Not Been Paid

Obtain the relevant shareholder resolution and determine whether a dividend was actually approved. Confirm the amount, payment date, share rights and whether other shareholders have been paid.

First 48 Hours

Review the financial statements and corporate records supporting the dividend calculation. Identify any explanation offered by the company and preserve all written communications.

First 72 Hours

Determine whether the issue is a straightforward unpaid monetary debt or part of a broader shareholder conflict involving profit suppression, related-party transactions or denial of financial information.

Build a Dividend Entitlement Matrix

Financial Year → Distributable Amount → Resolution → Total Dividend → Shareholder Percentage → Amount Due → Payment Date → Amount Paid → Outstanding Balance.

Build a Profit Allocation Matrix

Year → Company Profit → Reserves → Retained Earnings → Dividend Approved → Dividend Paid → Reason for Non-Distribution.

Build a Related-Party Payment Matrix

Recipient → Relationship → Payment Type → Amount → Contract → Approval → Commercial Basis → Effect on Profit.

Build a Shareholder Treatment Matrix

Shareholder → Share Rights → Dividend Entitlement → Amount Paid → Payment Date → Unpaid Difference.

Build a Litigation Matrix

Issue → Payment Demand → Resolution Challenge → Information Rights → Special Audit → Director Liability → Exit Remedy.

Common Mistakes Foreign Shareholders Should Avoid

Do not assume annual company profit automatically belongs proportionately to shareholders. Do not confuse nominal share ownership with an immediately payable dividend. Do not assume every decision to retain profit is abusive. Do not ignore shareholder resolutions and the due date of payment. Do not accept selective non-payment without investigation. Do not overlook management fees, related-party payments and shareholder loans that may reduce profits. Do not calculate a personal dividend claim based on company losses caused by directors. Do not sign a broad exit release before investigating unpaid dividend rights. Do not rely only on verbal promises that payment will arrive later. Most importantly, distinguish a dividend that was never declared from a dividend that was validly declared and remains unpaid.

2026 Legal Strategy for Foreign Shareholders Facing Unpaid Dividends in Turkey

The correct strategy begins by determining whether the shareholder already has an enforceable dividend receivable or is instead challenging the company’s refusal to distribute profits. Obtain the relevant financial statements, shareholder resolutions and share records. Establish the exact dividend amount and payment date. Determine whether the company paid other shareholders and whether different share classes or privileges justify any difference. If a valid dividend debt exists, consider a formal payment demand followed by the appropriate monetary recovery procedure. If no dividend was declared, investigate the commercial and legal reasons profits were retained. Compare several financial years and review whether controlling shareholders received economic benefits through management compensation, related-party consulting payments, rent, loans or other transactions. Exercise information and inspection rights where the financial basis cannot be verified. Where specific related-party transactions require independent investigation in a joint stock company, consider whether the special-audit mechanism may be available. Separately evaluate director or manager liability where corporate value has allegedly been diverted. If dividend suppression forms part of a broader and severe shareholder conflict, consider whether shareholder exit or just-cause remedies may be available according to the company form. The practical roadmap is therefore: confirm share ownership → identify share rights → obtain financial statements → identify distributable profit → obtain the profit-allocation resolution → determine whether a dividend was declared → calculate the shareholder’s entitlement → establish the due date → verify payments to other shareholders → send a formal demand where appropriate → calculate the unpaid balance → assess interest → pursue the appropriate recovery procedure → investigate repeated non-distribution → review related-party payments → exercise information rights → evaluate special audit where available → assess director liability → preserve separate shareholder claims → evaluate buyout or judicial exit if the dividend dispute forms part of serious shareholder oppression.

Frequently Asked Questions

1. Does a profitable company have to pay all profits to shareholders?

No. Company profit does not automatically become an immediately payable personal dividend. Applicable corporate rules concerning reserves, retained earnings and profit allocation must be followed.

2. When can a foreign shareholder sue for an unpaid dividend?

A payment claim becomes significantly stronger where a valid corporate decision has created a specific dividend entitlement that has become due but remains unpaid.

3. Can a company pay one shareholder but refuse to pay another?

Different treatment requires legal scrutiny, particularly where shareholders have equivalent economic rights and the same distribution decision applies to them.

4. Can a majority shareholder repeatedly vote against dividends?

A decision to retain profits is not automatically unlawful. However, persistent non-distribution can require closer examination where it forms part of a broader pattern of abusive control or diversion of corporate value.

5. Can a foreign shareholder request company financial records to investigate unpaid dividends?

Potentially, yes, through the information and inspection mechanisms applicable to the company’s legal form.

6. What if the majority shareholder receives large management fees while no dividends are distributed?

The payments should be examined for their legal basis, commercial justification and effect on company profitability. They are not automatically unlawful, but they may become highly relevant in a shareholder dispute.

7. Can unpaid dividends be pursued through enforcement proceedings?

Potentially, where a due and sufficiently established monetary dividend receivable exists. The appropriate procedure depends on the documents and whether the company disputes the debt.

8. Can unpaid dividends justify dissolution of the company?

Non-payment by itself does not automatically justify dissolution. However, systematic dividend suppression combined with serious shareholder-right violations or other misconduct may become relevant to broader just-cause remedies.

9. Is a shareholder loan the same as an unpaid dividend?

No. A shareholder loan is a separate creditor claim arising from funds loaned to the company, while a dividend arises from the shareholder’s economic rights and the applicable profit-distribution process.

10. What should a foreign shareholder do first when dividends are not paid?

Obtain the financial statements and relevant shareholder resolution and determine whether a dividend was actually declared, how much became payable, when it became due and whether other shareholders received payment.

Legal Support for Foreign Shareholders With Unpaid Dividends in Turkey

Foreign shareholders dealing with unpaid or suppressed dividends may require assistance with profit-distribution disputes, shareholder resolutions, financial information rights, related-party payments, dividend recovery claims, director liability, minority shareholder disputes and shareholder exit strategies.

Firat Fesih Kaya Law Office assists foreign investors, minority shareholders and international companies in disputes involving profit distributions and shareholder rights in Turkey. Firat Fesih Kaya can assist with determining whether a dividend receivable has become enforceable, investigating corporate financial records, pursuing unpaid amounts, challenging improper corporate decisions where appropriate and evaluating broader remedies where dividend suppression forms part of a serious shareholder dispute.

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