What Should Foreign Investors Do in a 50-50 Shareholder Deadlock in Turkey? (2026 Updated Guide)

Foreign investors facing a 50-50 shareholder deadlock in a Turkish company can consider corporate resolutions, injunctions, exit mechanisms, share transfers, dissolution proceedings and contractual remedies. This 2026 guide explains the main options.

A 50-50 shareholder deadlock in a Turkish company can quickly transform an otherwise profitable investment into a serious corporate dispute. When two shareholders hold equal voting power and disagree over management, budgets, financing, dividend distributions, appointments, investments or the future direction of the business, neither side may have sufficient voting power to implement its strategy. The situation becomes particularly difficult for a foreign investor whose local partner controls management, accounting systems, bank relationships, employees or day-to-day operations. The appropriate response depends on the type of company, articles of association, shareholders’ agreement, management structure and seriousness of the conflict. Fırat Fesih Kaya Law Office advises foreign shareholders on corporate deadlocks, shareholder rights, management disputes and exit strategies in Turkey, while Lawyer Fırat Fesih Kaya emphasizes that the first objective should generally be protecting the company and shareholder’s economic position before the dispute destroys enterprise value.

What Is a 50-50 Shareholder Deadlock?

A deadlock occurs when shareholders with equal or effectively equal decision-making power cannot reach the majority necessary for an important corporate decision.

A typical example involves a foreign investor owning 50% of a Turkish company while a Turkish business partner owns the remaining 50%. If the parties fundamentally disagree and neither can obtain the required majority, corporate decision-making can become blocked.

Why Are 50-50 Companies Particularly Vulnerable?

A 50-50 structure provides both investors with substantial protection against unilateral control, but the same structure can create paralysis.

Neither shareholder should assume that owning half of the company means they can independently control management, company assets or corporate decisions. The applicable rights depend on the company’s legal form, governing documents and allocation of management powers.

Common Causes of Shareholder Deadlock

Disputes frequently concern appointment or removal of managers, board composition, annual budgets, capital increases, new borrowing, dividend distributions, related-party transactions, investments, sale of significant assets, employment of relatives, shareholder loans, company bank accounts, executive compensation and proposed sale of the business.

A deadlock can also arise when one shareholder believes the other is diverting customers, competing with the company or using corporate assets for personal purposes.

First Review the Articles of Association

The articles of association should be examined immediately.

The foreign investor needs to understand voting rights, management structure, representation authority, meeting requirements, share-transfer provisions and any special rights granted to particular shareholders or share groups.

Review the Shareholders’ Agreement Separately

Foreign investors frequently enter into shareholders’ agreements containing more detailed governance arrangements than the company’s articles.

The agreement may contain deadlock provisions, reserved matters, veto rights, escalation procedures, buy-sell mechanisms, call or put options, valuation provisions, non-compete obligations, dispute-resolution clauses or arbitration agreements.

These provisions can fundamentally change the available strategy.

Check Whether There Is a Contractual Deadlock Mechanism

A well-drafted shareholders’ agreement may specify what happens when the shareholders cannot agree.

The mechanism might require negotiations between senior representatives, mediation, a buyout procedure or another agreed exit mechanism.

Before commencing litigation, determine whether contractual steps must first be completed.

Determine Who Actually Controls Management

A 50% shareholder does not necessarily control 50% of daily management.

One shareholder may control the board, hold managerial authority or possess company representation powers. The foreign investor should identify exactly who can sign contracts, instruct banks, employ personnel and bind the company.

Check the Trade Registry and Representation Authorities

Do not rely solely on the shareholders’ understanding of the governance structure.

The current corporate records should be examined to determine who is registered with management and representation authority and whether representation is individual or joint.

Secure Access to Corporate Information

Information becomes critical once a deadlock begins.

The foreign shareholder should preserve access to financial statements, accounting records, contracts, bank information, tax records, shareholder resolutions, board or manager decisions and other corporate documentation to the extent legally available.

Do Not Wait Until Records Disappear

A shareholder dispute sometimes escalates into allegations that documents have been concealed, deleted or altered.

Important records should therefore be identified and lawfully preserved at an early stage.

Review Company Bank Movements

Where there are concerns about misuse of company assets, review available evidence concerning transfers to shareholders, managers, related companies, employees and third parties.

Unusual payments do not automatically prove wrongdoing, but they may justify deeper examination.

Related-Party Transactions Require Particular Attention

A shareholder controlling management may cause the company to transact with another business connected to that shareholder.

The foreign investor should examine whether goods, services, loans, leases or other transactions were entered into on commercially defensible terms and with proper corporate authority.

Can One 50% Shareholder Remove the Other From Management?

Not automatically.

Share ownership and management status are distinct legal questions. Whether a manager or board member can be removed depends on the company’s legal form, corporate documents, applicable voting requirements and circumstances of the particular case.

Can One Shareholder Empty the Company’s Bank Account?

Management authority does not provide unlimited freedom to use corporate funds for personal purposes.

Company assets belong to the company. Suspicious transfers should be investigated promptly and appropriate corporate, civil or other remedies considered according to the facts.

Can the Foreign Investor Freeze Company Assets?

In serious disputes involving an imminent risk of asset dissipation, unauthorized transfers or irreparable harm, interim judicial measures may potentially become relevant.

However, a shareholder should not assume that an injunction will automatically be granted merely because a disagreement exists. Urgency, legal interest, evidence and proportionality can become important.

Emergency Injunctions Can Be Critical

If the local partner is allegedly attempting to transfer valuable property, dispose of shares, divert receivables or remove significant assets, waiting for final judgment may make subsequent relief ineffective.

Lawyer Fırat Fesih Kaya evaluates whether the circumstances support an urgent protective application before the disputed transaction is completed.

Document the Deadlock

Keep written evidence showing which decisions were proposed, how the other shareholder responded and why the company cannot proceed.

Meeting notices, minutes, emails and formal correspondence may later help establish that a genuine and continuing deadlock exists.

Continue Calling Corporate Meetings Properly

A shareholder should generally avoid abandoning corporate governance merely because previous meetings failed.

Properly documented attempts to convene meetings and resolve issues can become important evidence concerning the conduct of both parties.

Avoid Informal Corporate Decisions

When relationships deteriorate, shareholders sometimes begin operating the company through messages and verbal instructions.

Important decisions should continue to follow applicable corporate procedures.

Negotiated Separation May Preserve the Most Value

Litigation is not always the economically optimal solution.

If the shareholders can no longer work together but the underlying business remains profitable, a negotiated purchase of one shareholder’s interest may preserve significantly more enterprise value than prolonged corporate paralysis.

Determine the Real Value of the Shares

A 50% interest should not automatically be valued at half of nominal capital.

Depending on the circumstances, relevant factors may include assets, liabilities, receivables, debt, profitability, cash flow, customer relationships, intellectual property, pending litigation and contingent liabilities.

Obtain an Independent Valuation

Where one shareholder proposes buying the other, an independent valuation can reduce disputes over price.

The valuation date and methodology should be defined carefully because a prolonged deadlock can itself reduce company value.

Beware of Artificially Depressed Company Value

A controlling manager might theoretically attempt to reduce apparent profitability through related-party expenses, unusual management fees or diversion of business.

The valuation exercise should therefore examine normalization issues where justified by the evidence.

Shareholder Loans Must Be Included in the Exit Analysis

Foreign investors often finance Turkish companies through both equity and shareholder loans.

A share-sale agreement should clearly determine what happens to outstanding shareholder loans, accrued interest and other intercompany balances.

Can the Foreign Investor Sell Its 50% Share?

Potentially, but transfer restrictions must be examined.

The company’s legal form, articles, shareholders’ agreement and applicable corporate rules may impose approval requirements or contractual restrictions.

A third-party buyer may also be reluctant to purchase 50% of a company that remains controlled by a hostile shareholder.

Right of First Refusal Provisions Should Be Checked

The shareholders’ agreement may require the selling shareholder to offer the shares to the other shareholder before selling them to an outsider.

Failure to follow the agreed procedure can create another dispute.

Put and Call Options Can Provide an Exit

Some investment agreements give one party the right to require the other to buy or sell shares when specified events occur.

Review the trigger events, valuation formula, exercise period and payment mechanism carefully.

Deadlock Buy-Sell Clauses Can Be Powerful

Some agreements contain mechanisms under which one shareholder proposes a price and the other must either buy or sell at that price, or use another structured bid mechanism.

Such clauses can resolve deadlock efficiently but can create significant financial pressure on a shareholder with less access to financing.

Financing the Buyout Should Be Considered Early

A shareholder may win the commercial argument but still be unable to fund the purchase of the other 50%.

Before triggering a contractual buy-sell mechanism, evaluate liquidity and financing realistically.

Can the Company Increase Capital During a Deadlock?

Capital increases can become highly contentious.

A proposed increase may be commercially necessary, but it may also affect shareholder percentages if one shareholder cannot participate. The legal and contractual requirements should therefore be examined carefully before any capital restructuring.

Be Alert to Dilution Strategies

A foreign investor should react quickly if a proposed capital increase appears designed primarily to dilute its ownership or weaken its corporate rights rather than meet a genuine company financing need.

The factual and legal basis of the decision should be investigated.

Dividend Deadlock Is Common

One shareholder may want profits distributed while the other prefers retaining them.

Dividend rights, distributable profits, corporate resolutions and the company’s genuine financial needs should be analyzed together.

Can One Shareholder Establish a Competing Business?

Competition by shareholders or managers can create serious legal and contractual issues.

Review non-compete obligations, management duties, confidentiality provisions and evidence concerning diversion of customers or business opportunities.

Customer Diversion Can Destroy Company Value Quickly

If one shareholder begins transferring customers to another company, the dispute is no longer merely about voting.

Preserve contracts, correspondence, invoices and other lawful evidence showing how business relationships are being redirected.

Intellectual Property Must Be Protected

Determine who legally owns trademarks, software, domain names, patents, designs, databases and other intellectual property used by the company.

Foreign investors sometimes discover during a deadlock that critical assets were registered personally in the name of the local partner or another related entity.

Protect Access to Digital Systems

Accounting platforms, corporate email, cloud storage, websites and operational software may be essential to the business.

Access rights and preservation of corporate data should be addressed lawfully before the dispute escalates.

Manager Liability May Arise

Where directors or managers breach duties and cause loss to the company, liability claims may potentially arise depending on the corporate structure and facts.

A shareholder dispute should therefore distinguish ordinary commercial disagreement from conduct that allegedly causes damage to the company.

Corporate Claims and Personal Shareholder Claims Are Different

If money was taken from the company, the primary loss may belong to the company rather than directly to the shareholder.

The correct claimant and legal cause of action should therefore be identified carefully.

Can the Shareholder Seek Removal of a Manager?

Potential remedies depend on the type of company, governing documents and alleged conduct.

Where serious misconduct is alleged, removal and liability strategies should be considered together rather than treated as isolated issues.

Can the Company Be Dissolved Because of Deadlock?

In severe cases, judicial dissolution may become relevant under Turkish corporate law where statutory conditions are satisfied.

However, dissolution is a major remedy and should generally be evaluated alongside less destructive alternatives.

Dissolution Can Destroy Going-Concern Value

A profitable operating business may be worth substantially more as a going concern than through liquidation.

Before pursuing dissolution, compare the expected litigation and liquidation outcome with a negotiated shareholder exit.

Courts May Consider Alternative Solutions

Depending on the company type and applicable statutory framework, a court dealing with a justified dissolution request may have alternatives to simply terminating the company.

This makes valuation and exit analysis particularly important.

Mediation Can Be Useful in Commercial Deadlocks

Even highly contentious shareholder disputes may be capable of settlement if negotiations focus on valuation, payment security, release of claims, management transition and allocation of liabilities.

A structured separation agreement can resolve several disputes simultaneously.

Arbitration Clauses Must Be Reviewed

International shareholders’ agreements frequently contain arbitration provisions.

Before commencing court proceedings, determine which claims fall within the arbitration agreement and which corporate or interim matters may require separate consideration.

Jurisdiction Clauses Matter

A foreign investor should not assume that every dispute must automatically be filed before a Turkish court merely because the company is Turkish.

Contractual dispute-resolution provisions and mandatory corporate-law rules must be considered together.

Preserve Evidence Before Litigation

Maintain copies of corporate records lawfully available to the shareholder, correspondence, financial information, contracts, resolutions and evidence of disputed transactions.

Evidence preservation should begin before relations deteriorate further.

Do Not Use Unauthorized Access

A shareholder dispute does not justify unlawfully accessing another person’s private email, device or account.

Evidence strategy should remain legally defensible.

Consider the Tax Consequences of an Exit

A share sale, company restructuring, dividend distribution or liquidation can create tax consequences for both Turkish and foreign parties.

The legal structure of the settlement should therefore be coordinated with tax analysis.

Foreign Exchange and Payment Mechanics Matter

An international shareholder exit may involve payment abroad, foreign-currency consideration, escrow arrangements or staged payments.

The settlement documentation should address currency, payment dates, security and consequences of default.

Use Escrow or Security Where Appropriate

If one shareholder purchases the other’s interest through installments, the selling investor should consider appropriate payment security.

A signed share-transfer agreement is of limited commercial value if the purchase price cannot ultimately be collected.

Mutual Releases Should Be Carefully Drafted

A comprehensive settlement may include releases concerning management disputes, shareholder loans, dividends, warranties and pending claims.

Unknown liabilities and regulatory matters should be considered before broad releases are granted.

Conduct Due Diligence Before Accepting an Exit Price

Before selling, determine whether significant company assets, receivables or claims have been omitted from the valuation.

A rushed exit during a hostile dispute can result in substantial value being surrendered.

Foreign Investors Should Prepare a Deadlock File

A strong file should include the articles of association, shareholders’ agreement, trade registry information, corporate resolutions, management authorities, financial statements, bank records lawfully available, related-party transactions, shareholder loans, important contracts, asset information and correspondence documenting the deadlock.

2026 Practical Strategy for a 50-50 Deadlock

The most effective response is usually not a single lawsuit. A foreign investor should develop a coordinated strategy covering corporate control, asset protection, information rights, evidence preservation, interim measures, valuation, contractual remedies and exit options.

The first days of a serious shareholder conflict can be decisive. If there is evidence of asset transfers, customer diversion or manipulation of corporate records, protective measures may need to be considered before ordinary negotiations continue.

Frequently Asked Questions

Can a 50% shareholder control a Turkish company alone?

Not automatically. Control depends on the company’s legal form, voting rules, management structure, representation authorities and contractual arrangements.

Can the other 50% shareholder remove the foreign investor from the company?

A shareholder cannot simply erase another shareholder’s ownership because of a disagreement. Any removal, squeeze-out, transfer or similar mechanism requires an applicable legal or contractual basis.

Can a foreign shareholder inspect company records?

Information and inspection rights depend on the company’s legal form and circumstances. The shareholder should use the appropriate corporate and legal mechanisms rather than unauthorized access.

Can company bank accounts be protected during a shareholder dispute?

Potentially, where the legal requirements for interim protection are satisfied and there is evidence of a genuine risk requiring urgent intervention.

Can one shareholder force the other to sell?

Potentially, if an enforceable contractual mechanism or applicable legal remedy permits it. A 50% ownership position alone does not automatically create a right to force a sale.

Can a deadlocked Turkish company be dissolved?

Potentially, in serious circumstances where the statutory requirements are satisfied. Dissolution should be evaluated against alternatives that may preserve the company’s going-concern value.

What if the local shareholder transfers company assets to another company?

The transactions should be investigated immediately. Depending on the facts, corporate liability, interim measures and other claims may need to be considered.

Can the foreign investor sell its shares to a third party?

Potentially, subject to applicable corporate rules, articles of association and contractual transfer restrictions.

Is mediation useful in a 50-50 shareholder dispute?

Yes. A structured negotiation can be particularly effective where both parties recognize that continued deadlock will reduce company value.

What should the foreign investor do first?

Secure the corporate documents and financial evidence lawfully available, determine the actual management and representation structure, review the shareholders’ agreement for deadlock and exit provisions, identify any immediate threat to company assets and then decide whether the priority should be an injunction, governance action, negotiated buyout, share sale or judicial remedy.

Client-Focused Legal Support for Foreign Investors in Shareholder Deadlocks

Fırat Fesih Kaya Law Office assists foreign investors facing 50-50 shareholder deadlocks, management exclusion, related-party transactions, suspected asset diversion, share-transfer disputes and corporate exit negotiations in Turkey. Lawyer Fırat Fesih Kaya provides legal assistance in developing coordinated strategies involving corporate governance, interim protection, manager liability, valuation, shareholder agreements, negotiated buyouts, share transfers, dissolution proceedings and commercial dispute resolution.

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