Can Foreign Shareholders Request Dissolution of a Turkish Company for Just Cause? (2026 Updated Guide)

Can a foreign shareholder seek dissolution of a Turkish company for just cause? Learn when serious shareholder conflict, exclusion from management, abuse of majority power and financial misconduct may justify dissolution or alternative remedies in Turkey.

A foreign shareholder investing in a Turkish company may eventually face a situation in which continuing the shareholder relationship becomes commercially or legally intolerable. The majority shareholder may completely exclude the foreign investor from the company, refuse access to information, divert company assets, prevent profit distributions, conduct related-party transactions or operate the business exclusively for the benefit of the controlling group. In serious cases, the question becomes whether the foreign shareholder can ask a Turkish court to dissolve the company for just cause.

Under Turkish company law, dissolution for just cause is an exceptional remedy. For joint stock companies, Article 531 of the Turkish Commercial Code provides an important statutory mechanism for qualifying minority shareholders. However, filing a dissolution action does not mean that the court must necessarily terminate a viable company. Depending on the circumstances, the court may consider other appropriate solutions, including payment of the fair value of the claimant shareholder’s shares and termination of their shareholder status.

Can a Foreign Shareholder File a Dissolution Case in Turkey?

Foreign nationality does not, by itself, prevent a shareholder from using shareholder remedies available under Turkish company law. The central issues are the type of company, percentage of shares held, shareholder’s legal position and facts constituting the alleged just cause.

Accordingly, a foreign investor holding shares in a Turkish company may potentially pursue dissolution or another appropriate judicial remedy if the statutory requirements are satisfied.

What Is Dissolution for Just Cause?

Dissolution for just cause is designed for situations where serious circumstances make continuation of the corporate relationship unreasonable or where persistent abuse has fundamentally damaged the shareholder relationship.

It is not intended to allow a shareholder to terminate a company merely because the investment has become disappointing or disagreements have arisen.

Article 531 of the Turkish Commercial Code

For joint stock companies, Article 531 permits shareholders representing at least one-tenth of the capital—and one-twentieth in publicly held companies—to request dissolution of the company for just cause.

Importantly, the court is not restricted to either dismissing the case or dissolving the company. Instead of dissolution, it may order payment of the real value of the claimant’s shares and their removal from the company or decide upon another appropriate and acceptable solution.

This flexibility is extremely important in shareholder disputes.

Does a Foreign Shareholder Need at Least 10% of the Shares?

For the statutory action under Article 531 involving a non-public joint stock company, the general threshold is one-tenth of the capital.

Therefore, shareholding percentage should be checked before litigation begins.

The company’s articles of association, shareholder structure and whether special contractual rights exist should also be reviewed.

What Can Constitute “Just Cause”?

There is no single factual situation that automatically establishes just cause in every company. Courts evaluate the overall shareholder relationship and seriousness, duration and consequences of the alleged misconduct.

A combination of persistent violations can be substantially more significant than one isolated disagreement.

Complete Exclusion From Company Management

A foreign shareholder may have invested on the expectation of meaningful involvement in the business but later find themselves systematically excluded.

Exclusion from management alone does not automatically require dissolution, particularly where the shareholder has no contractual or corporate right to a management position. However, systematic exclusion combined with other abuses can become important.

Denial of Information and Inspection Rights

Repeated obstruction of a shareholder’s statutory information rights may indicate broader governance problems.

If management refuses financial statements, conceals material transactions or systematically prevents the shareholder from understanding the company’s financial position, those facts should be documented carefully.

Majority Shareholder Uses the Company for Personal Benefit

One of the most serious scenarios occurs where the controlling shareholder treats corporate assets as personal property.

Examples may include company funds being used for private expenses, assets being transferred to related persons, company opportunities being redirected or transactions being structured primarily for the controlling shareholder’s benefit.

Related-Party Transactions Can Become Critical Evidence

Transactions between the company and entities controlled by the majority shareholder should be examined carefully.

The relevant questions include whether the transactions had genuine commercial purposes, whether consideration was reasonable and whether the company suffered loss.

Company Assets Are Transferred to Another Group Company

Suppose the profitable activities of the Turkish company are gradually transferred to another business controlled by the majority shareholder.

Employees, customers, intellectual property, equipment or contracts may be shifted while the original company is left economically weakened.

Such conduct can become highly relevant to a just-cause dispute.

Persistent Refusal to Distribute Profits

Failure to distribute dividends does not automatically justify dissolution. Companies can legitimately retain earnings for investment, liquidity or business needs.

The situation becomes more serious where a profitable company systematically refuses dividends while controlling shareholders extract economic value through salaries, related-party payments or other mechanisms unavailable to the minority shareholder.

Artificially High Management Payments

Excessive salaries, bonuses, consultancy payments or management fees paid to controlling shareholders or related persons can require investigation.

The issue is not simply whether management receives compensation, but whether payments have a legitimate commercial basis or function as a mechanism for transferring company profits.

Manipulation of General Assembly Decisions

Repeated use of majority voting power does not automatically constitute abuse. Majority shareholders are generally entitled to exercise voting control.

However, resolutions adopted solely to harm minority shareholders or obtain unjustified advantages may create grounds for separate corporate challenges and contribute to a broader just-cause case.

Foreign Shareholder Is Prevented From Attending Meetings

If notices are intentionally sent incorrectly, meeting information is withheld or other methods are used to prevent participation, preserve all evidence concerning the irregularities.

Depending on the circumstances, individual general assembly resolutions may also be challenged through the appropriate legal mechanisms.

Capital Increases Used to Dilute the Foreign Investor

A capital increase may be commercially legitimate. But if the controlling shareholder uses repeated capital increases primarily to dilute a foreign investor or eliminate their influence, the purpose, financial necessity and procedural compliance should be examined.

A dilution dispute may generate several remedies beyond dissolution.

No Dividends but Majority Shareholder Receives Money

This pattern deserves particular scrutiny.

Bank records, management payments, expense reimbursements, related-party invoices, loans and transfers should be examined to determine whether value is being extracted indirectly.

Deadlock Can Become a Just Cause Issue

A 50-50 shareholder structure can create a different problem. If neither shareholder can obtain necessary corporate approvals, appoint management or make fundamental business decisions, prolonged deadlock may threaten the company’s operation.

Whether deadlock justifies dissolution depends heavily on its seriousness and whether another workable solution exists.

Ordinary Shareholder Conflict Is Not Enough

Shareholders frequently disagree over strategy, hiring, investments, financing and dividends.

A court is unlikely to treat every commercial disagreement as sufficient reason to destroy an otherwise functioning company.

The claimant should demonstrate why the conflict has moved beyond normal corporate disagreement.

Evidence Is Critical

A dissolution case should be built around objective evidence.

Relevant evidence may include general assembly minutes, board decisions, financial statements, bank records, accounting ledgers, correspondence, shareholder notices, related-party agreements, invoices, asset-transfer documents and expert financial analysis.

Preserve Emails and Messages

Correspondence can demonstrate attempts to obtain information, objections to transactions, exclusion from management or admissions concerning the treatment of the minority shareholder.

Evidence should be collected lawfully and preserved in its original form where possible.

Financial Expert Analysis May Be Necessary

Complex disputes frequently require analysis of the company’s accounting records.

An expert may need to examine related-party transactions, asset transfers, shareholder accounts, management payments, company valuation and possible diversion of profits.

Should the Foreign Shareholder Immediately Request Dissolution?

Not necessarily.

Because dissolution is a severe remedy, the shareholder should first map all available corporate, contractual and judicial options.

The strongest strategy may involve several coordinated remedies rather than relying exclusively on Article 531.

Challenging General Assembly Resolutions

If the dispute involves unlawful or abusive shareholder resolutions, the possibility of challenging those resolutions should be considered separately.

The applicable procedural deadlines can be important, so shareholders should not postpone reviewing a resolution merely because they are considering a dissolution action.

Directors’ Liability May Be a Separate Remedy

If directors have caused damage by breaching their duties, liability claims may arise independently of the dissolution dispute.

The responsible persons, damage suffered and procedural standing should be analyzed separately.

Special Audit Rights May Be Important

Where the shareholder suspects concealed transactions or financial irregularities, mechanisms concerning information, inspection and special audit may become strategically important.

Obtaining reliable information before valuation or exit negotiations can materially change the shareholder’s position.

Can the Court Force the Majority Shareholder to Buy the Foreign Shareholder’s Shares?

Article 531 gives the court flexibility to order an alternative solution instead of dissolving the company. One particularly important possibility is payment of the real value of the claimant’s shares followed by termination of their shareholder status.

However, a shareholder should not assume before judgment that a specific buyout structure or valuation will automatically be ordered.

How Is the Share Value Determined?

Valuation can become one of the most contested parts of the litigation.

Book value alone may not represent the economic value of a profitable operating company. Depending on the business, valuation may involve assets, liabilities, profitability, cash flows, market position and other company-specific factors.

Expert examination is often important.

Hidden Assets and Related Companies Must Be Investigated

Before accepting a proposed share value, determine whether company assets, revenue or business opportunities have been transferred elsewhere.

A valuation performed after value has been improperly diverted may produce a misleading result unless the underlying transactions are properly analyzed.

Can the Majority Offer a Low Price to End the Case?

The parties can negotiate an exit, but the foreign shareholder should distinguish a negotiated commercial offer from the judicial determination contemplated by Article 531.

Independent valuation can be especially important where information asymmetry exists.

Interim Measures May Be Necessary

If there is an immediate risk that company assets will be transferred, records destroyed or the financial position materially altered during litigation, interim judicial protection may need to be evaluated.

The appropriate measure depends on the specific risk and legal requirements.

Dissolution Should Not Be Used Merely as Negotiating Pressure

A claimant should be prepared to substantiate the alleged just cause.

Filing an inadequately supported dissolution action solely to pressure other shareholders can weaken the claimant’s position and increase litigation costs.

Shareholders’ Agreement Must Also Be Reviewed

Foreign investors frequently enter Turkey through a shareholders’ agreement containing reserved matters, board nomination rights, information rights, put or call options, deadlock provisions, transfer restrictions and dispute-resolution clauses.

A breach of that agreement may create contractual remedies alongside statutory company-law remedies.

Articles of Association Are Equally Important

Not every contractual shareholder right is necessarily reflected in the company’s articles of association.

The legal effect of each provision should therefore be analyzed according to where the right is established and against whom it can be enforced.

Arbitration Clause Does Not Automatically Resolve Every Corporate Issue

International shareholders’ agreements frequently contain arbitration clauses. However, statutory corporate remedies and disputes concerning corporate resolutions may raise separate questions concerning jurisdiction and arbitrability.

The dispute-resolution strategy should therefore be designed before parallel proceedings are started.

Foreign Investors Should Review Their Exit Rights

Put options, tag-along rights, drag-along rights, share-transfer mechanisms and deadlock procedures can provide alternatives to dissolution.

Contractual exit rights should be examined together with statutory remedies.

Limited Liability Companies Require Separate Analysis

The legal framework applicable to limited liability companies is not identical to Article 531 governing joint stock companies.

If the foreign investor owns shares in a Turkish limited liability company, the relevant provisions governing just-cause dissolution, withdrawal and related shareholder remedies should be analyzed according to that company type.

Can a Shareholder Exit Instead of Dissolving a Limited Liability Company?

Depending on the circumstances, withdrawal for just cause and other remedies may become relevant in a limited liability company.

The company’s articles, shareholder relationships and specific facts should therefore be examined before choosing between dissolution and exit-based remedies.

What If the Company Is Still Profitable?

Profitability does not necessarily eliminate the possibility of serious shareholder abuse.

A company may be financially successful while a minority shareholder is systematically deprived of lawful rights and economic participation.

At the same time, the existence of a viable profitable business may strengthen the argument for an alternative remedy rather than dissolution of the entire company.

Negotiated Shareholder Exit May Be More Efficient

Where valuation can be agreed, a negotiated buyout may preserve the company’s business while allowing the foreign investor to exit.

Negotiations should nevertheless be conducted with adequate financial information and awareness of litigation alternatives.

Immediate Strategy for a Foreign Shareholder

A foreign shareholder considering dissolution should first identify the company type and shareholding percentage, obtain the articles of association and shareholders’ agreement, preserve general assembly and board records, request available corporate information, investigate related-party transactions, analyze dividend history and management payments, preserve communications, obtain financial and valuation advice and determine whether dissolution, withdrawal, resolution challenges, liability claims or a negotiated exit provides the strongest strategy.

Frequently Asked Questions

Can a foreign shareholder sue to dissolve a Turkish company?

Potentially, yes. Foreign nationality does not itself prevent a shareholder from using available Turkish company-law remedies.

What percentage is required under Article 531?

For a non-public joint stock company, shareholders representing at least one-tenth of the capital may request dissolution for just cause. Different rules apply to publicly held companies.

Does filing the case mean the company will definitely be dissolved?

No. Dissolution is not the only possible outcome. The court may consider another appropriate solution instead.

Can exclusion from management constitute just cause?

Potentially, particularly where it forms part of persistent and serious abuse. Exclusion alone does not automatically establish just cause in every case.

Can refusal to pay dividends justify dissolution?

Not automatically. However, systematic withholding of dividends combined with extraction of company value by controlling shareholders can materially strengthen the dispute.

Can misuse of company assets support the claim?

Yes, alleged diversion of assets or related-party transactions can be highly relevant if supported by evidence.

Can the court order payment for the foreign shareholder’s shares?

Article 531 permits the court, instead of dissolution, to consider payment of the real value of the claimant’s shares and termination of their shareholder status, or another appropriate solution.

What if the company has two 50% shareholders?

Persistent deadlock may become legally significant where it prevents effective corporate operation, but the complete factual circumstances must be examined.

Should the shareholder agreement be reviewed before filing?

Yes. It may contain contractual exit, deadlock, valuation, transfer or dispute-resolution mechanisms that materially affect strategy.

What is the most important evidence?

A documented pattern of serious corporate abuse is generally far stronger than allegations of personal disagreement. Financial records, corporate resolutions, related-party transactions, information requests and evidence showing economic prejudice to the foreign shareholder should be organized before litigation begins.

Client-Focused Legal Support for Foreign Shareholder and Company Dissolution Disputes

Foreign shareholder disputes in Turkey can involve exclusion from management, denial of information, dividend suppression, related-party transactions, asset diversion, shareholder deadlock, abusive majority decisions, company valuation and requests for dissolution or shareholder exit. Fırat Fesih Kaya Law Office assists foreign investors and international shareholders in disputes concerning Turkish joint stock and limited liability companies. Lawyer Fırat Fesih Kaya provides legal assistance in evaluating just-cause dissolution claims, shareholder exit strategies, company valuation disputes, challenges to corporate resolutions, management liability and negotiated shareholder separations.

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