Turkish Business Partner Opens a Competing Company: Rights of Foreign Shareholders and Legal Remedies – 2026 Updated Guide

Learn what foreign shareholders can do when a Turkish business partner opens a competing company, including injunctions, director liability, customer protection, evidence, and damages.

A Turkish business partner opening a competing company may create serious risks for foreign shareholders and the existing company. The conduct may involve misuse of confidential information, diversion of customers, employee solicitation, use of company funds, transfer of business opportunities, or unfair competition.

Opening another company is not automatically unlawful for every shareholder. The legal assessment depends on the partner’s position, the company agreement, shareholder arrangements, management duties, confidentiality obligations, and the way the competing business was established.

Is Opening a Competing Company Automatically Illegal?

Not necessarily. An ordinary shareholder may not always be prohibited from investing in or operating another business unless a valid restriction applies.

The situation is different when the partner is also a director, manager, authorized signatory, or executive. Such persons may have duties of loyalty and may be prohibited from competing with the company or using corporate opportunities for personal benefit.

A shareholders’ agreement, employment contract, management agreement, company articles, confidentiality agreement, or non-compete clause may also restrict competition.

When May the Conduct Become Unlawful?

The competing business may create legal liability if the partner uses the existing company’s customer list, pricing, contracts, trade secrets, employees, equipment, money, brand, software, or business opportunities.

Other warning signs include transferring customers to the new company, directing payments away from the existing company, using company employees during working hours, copying commercial documents, or signing contracts with related companies at unfair prices.

A court will usually examine the partner’s actual conduct rather than only the fact that a new company was established.

What Should Foreign Shareholders Do First?

Foreign shareholders should preserve company records immediately. Important documents may include bank statements, customer lists, contracts, invoices, accounting records, board minutes, emails, messages, employment records, access logs, software data, and payment instructions.

Shareholders should avoid deleting data, changing accounting records, secretly accessing private accounts, or confronting the partner in a way that may lead to evidence destruction.

A lawyer and forensic accountant may help determine whether the competing company received company assets, customers, payments, or confidential information.

Can an Injunction Be Requested?

The company or an eligible claimant may request urgent interim measures where there is a serious risk of continuing harm.

Depending on the facts, the application may seek to prevent the use of confidential information, stop the transfer of company assets, protect customer records, preserve evidence, or prevent further misuse of company property.

The applicant generally needs to show a legal claim, urgency, and a risk of serious or difficult-to-recover damage. The court may require security.

Can the Partner Be Removed as Director or Manager?

Foreign shareholders may consider corporate measures such as calling a general assembly, removing or replacing a director, changing signing authority, requesting information, or seeking a special audit.

The available remedy depends on the company structure, voting rights, shareholder percentages, and the company’s articles.

If the partner controls the company or blocks decision-making, additional remedies may include management liability proceedings, challenge of corporate resolutions, deadlock remedies, or dissolution-related claims in appropriate cases.

Can the Company Claim Damages?

The company may seek compensation for losses caused by diverted customers, lost contracts, unauthorized payments, misuse of assets, employee departures, confidential information breaches, or unfair competition.

The company may also seek the return of profits obtained through the competing activity where legally available.

A foreign shareholder’s personal loss is not always the same as the company’s loss. The correct claimant and legal procedure must be determined carefully.

Can a Criminal Complaint Be Filed?

If the partner misuses company property, steals confidential data, falsifies records, deceives the company, or transfers money without authority, criminal allegations may arise.

Possible allegations may include breach of trust, fraud, unlawful use or dissemination of data, falsification, or another financial offense. A criminal complaint should be supported by specific documents and transaction records.

A criminal complaint does not automatically recover the company’s money. Commercial claims and interim measures may also be necessary.

What If Customers and Employees Are Transferred?

The transfer of customers or employees may be lawful in some circumstances, but it may create liability if confidential information, company resources, contractual restrictions, or unfair methods were used.

The company should review customer communications, CRM access, employee contracts, resignation timing, pricing records, and communications from the new company.

The legal response may include cease-and-desist demands, injunction applications, damages claims, confidentiality enforcement, and protection of trade secrets.

Can a Non-Compete Clause Be Enforced?

A non-compete clause may be enforceable if it is valid, clear, proportionate, and connected with a legitimate business interest. Its duration, geographic scope, prohibited activities, and contractual basis are important.

A restriction that is excessively broad may be challenged. The partner’s role and whether the restriction concerns an employee, director, manager, or shareholder should be reviewed separately.

The company should not rely on a general verbal promise when written agreements and corporate records are available.

Foreign Shareholders Living Abroad

A foreign shareholder may often begin legal action from abroad by appointing a Turkish lawyer through a valid power of attorney.

The lawyer may review company documents, communicate with the business partner, request corporate records, file commercial or criminal applications, seek interim measures, and represent the shareholder before Turkish authorities.

The shareholder should provide passport documents, shareholder records, agreements, company correspondence, and all evidence of the competing activity.

Tax, Accounting, and Corporate Risks

Payments to the competing company, related-party transfers, undocumented expenses, false invoices, and personal use of company funds may create accounting and tax risks.

The company should preserve financial records and obtain professional advice before altering its books or making public accusations. Criminal, commercial, tax, and shareholder remedies should be coordinated.

2026 Legal Considerations

In 2026, electronic banking records, e-invoices, cloud accounting systems, CRM access logs, corporate emails, digital signatures, and employee communication records may be decisive.

Foreign shareholders should act quickly when a Turkish business partner begins competing with the company. Lawyer Fırat Fesih Kaya assists foreign shareholders with corporate investigations, director liability, unfair competition, injunctions, evidence preservation, and damages claims.

Frequently Asked Questions (FAQs)

Can a Turkish business partner legally open a competing company?
Not always. The answer depends on the partner’s role, agreements, management duties, confidentiality obligations, and use of company resources.

Is a shareholder automatically prohibited from competing?
No. An ordinary shareholder may not face a general prohibition unless a valid contractual or statutory restriction applies.

What if the partner is also a director or manager?
Directors and managers may have loyalty and non-compete duties and may face liability if they divert company opportunities or misuse company assets.

Can foreign shareholders request an injunction?
The company or an eligible claimant may request urgent interim measures if there is a serious risk of continuing damage.

Can the partner be removed from management?
Corporate remedies may include removal, replacement, restriction of signing authority, information requests, or a special audit, depending on voting rights and company structure.

Can the company claim damages?
Yes. The company may seek compensation for lost customers, diverted contracts, unauthorized payments, misuse of assets, and unfair competition.

Can a criminal complaint be filed?
A criminal complaint may be possible where the conduct involves misuse of company property, fraud, false records, or unlawful use of confidential data.

Can customers or employees be transferred to the new company?
The legal effect depends on whether confidential information, company resources, contractual restrictions, or unfair methods were used.

Can a non-compete clause be enforced?
It may be enforceable if it is clear, proportionate, valid, and protects a legitimate business interest.

Can a foreign shareholder act from abroad?
A foreign shareholder may often appoint a Turkish lawyer through a valid power of attorney and begin legal procedures without immediately travelling to Turkey.

This article is for general informational purposes only, and we recommend consulting a lawyer about your specific circumstances to avoid any loss of rights.

Expert Legal Support for Foreign Shareholders

Expert legal support is essential to avoid loss of rights. By working with a lawyer experienced in shareholder disputes, competing companies, director liability, unfair competition, corporate investigations, injunctions, and evidence preservation who serves throughout Turkey and internationally, you can protect your legal interests.

Fırat Fesih Kaya Law Office provides professional legal support to foreign shareholders in management disputes, unauthorized transactions, corporate record reviews, criminal complaints, interim measures, damages claims, and company restructuring.

Call Now: +90 312 434 22 22
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Email: info@firatfesihkaya.av.tr
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