Foreign Shareholder Suspects Related-Party Transactions in Turkey: How Can They Be Challenged? (2026 Updated Guide)

A foreign shareholder suspects that company assets are being transferred through related-party transactions in Turkey. Learn how transactions can be investigated, challenged and stopped, and how directors and controlling shareholders may face liability.

A foreign shareholder in a Turkish company may discover that the company’s money, assets, contracts or business opportunities are being transferred to businesses connected with the controlling shareholder, directors or their relatives. These related-party transactions can take many forms: excessive management fees, below-market asset sales, artificial consultancy agreements, loans to affiliated companies, unusual purchases, intellectual-property transfers or payments to companies controlled by insiders. A related-party transaction is not automatically unlawful merely because the parties are connected. The critical questions are whether the transaction was properly authorized, whether corporate decision-making rules were followed, whether the company received fair value, whether directors complied with their duties and whether the transaction caused loss to the company or unfairly benefited another person.

For a foreign minority shareholder, early access to corporate records and preservation of evidence can be decisive. Once company assets have been transferred, money moved abroad or valuable property sold to third parties, recovering the loss can become substantially more difficult.

What Is a Related-Party Transaction?

A related-party transaction generally involves a company entering into a commercial or financial relationship with a person or entity connected with shareholders, directors, managers or other insiders.

Examples can include a company purchasing services from another company controlled by its majority shareholder, transferring property to a director’s affiliate, lending money to a group company or selling valuable assets to a related business.

The existence of the relationship itself is only the beginning of the legal analysis.

Are Related-Party Transactions Automatically Illegal?

No. Companies can legitimately transact with affiliates and other related businesses.

The legal problem arises when the arrangement violates applicable corporate rules, conflicts with directors’ duties, lacks proper authorization, transfers value away from the company, disguises distributions or otherwise causes legally actionable harm.

Warning Signs Foreign Shareholders Should Watch

Repeated payments to companies connected with management deserve careful review, particularly where the commercial purpose is unclear.

Other warning signs include unusually high consultancy fees, transactions without written contracts, below-market asset transfers, interest-free loans, unexplained receivables from affiliates, excessive rental payments, sudden intellectual-property transfers and contracts awarded to insiders without an apparent commercial justification.

Compare the Transaction With Market Conditions

One of the first practical questions is whether an independent company would have entered into the same transaction on comparable terms.

A shareholder investigating a suspicious asset sale, service agreement or loan should therefore obtain evidence concerning market value and commercially comparable transactions.

Examine Who Actually Controls the Counterparty

The counterparty’s formal company name may conceal the relationship.

Investigate shareholders, directors, beneficial ownership, family connections and other corporate relationships where legally relevant. A company that appears independent may actually be controlled directly or indirectly by the same individuals controlling the Turkish company.

Follow the Money

Banking records can be particularly important.

Identify the recipient, payment date, amount, invoice description and contractual basis for each disputed payment. Repeated transfers can reveal a pattern that is not apparent from a single transaction.

Review the Company’s Accounting Records

General ledgers, account statements, invoices and financial statements can help identify transactions with affiliates.

Particular attention should be paid to related-party receivables and payables, shareholder current accounts, consultancy expenses, management charges, loans and unusual asset movements.

Foreign Shareholders Should Use Their Information Rights

Shareholders should evaluate the information and inspection rights available to them according to the company’s legal form and the circumstances.

Formal requests can help establish both the underlying facts and management’s response to legitimate shareholder concerns.

What If Management Refuses to Provide Information?

An unexplained refusal can become important.

The shareholder should preserve written requests and responses and evaluate the corporate and judicial remedies available for obtaining information rather than relying indefinitely on informal requests.

Obtain General Assembly Records

General assembly minutes can reveal whether disputed transactions were disclosed, discussed or approved.

Review attendance records, voting results, resolutions and supporting documentation.

Examine Board and Management Decisions

For significant transactions, determine whether a board or management resolution exists and who participated in the decision.

The absence of proper authorization may become relevant depending on the nature of the transaction.

Conflict-of-Interest Rules May Matter

Where a director or manager has a personal interest in a transaction, applicable corporate restrictions and duties should be examined carefully.

A person should not assume that controlling the company gives them unrestricted authority to use company assets for personal or affiliated interests.

Majority Ownership Does Not Mean Ownership of Company Assets

This distinction is fundamental.

A shareholder owns shares in the company. The company’s money, property, receivables and commercial opportunities belong to the company itself.

Even a controlling shareholder cannot simply treat corporate assets as personal property.

Minority Shareholders Can Challenge Abuse

Minority status does not mean that the shareholder has no remedies.

Depending on the company’s structure and facts, possible remedies can include corporate information proceedings, challenges to resolutions, director-liability claims, special audit mechanisms and urgent judicial measures.

Can a General Assembly Resolution Be Challenged?

Potentially. If a disputed transaction depends on a general assembly resolution that violates mandatory rules, the articles of association, good-faith principles or shareholder rights, the legal validity of the resolution should be examined.

Procedural deadlines can be important, so the resolution date and notification circumstances should be recorded immediately.

Special Audit Can Be Important

Where suspicious transactions cannot be adequately investigated through ordinary information channels, the possibility of a special audit should be evaluated under the applicable corporate framework.

A properly focused request can target specific transactions rather than demanding an unlimited investigation into every company activity.

Define the Suspicious Transactions Precisely

Instead of alleging generally that “management is stealing money,” identify concrete transactions.

For example: a particular property sold to a related company, monthly consultancy payments to an affiliate or a loan advanced to a company controlled by the majority shareholder.

Specific allegations are easier to investigate and prove.

Director Liability May Arise

Directors and managers can face civil liability where they breach duties imposed by corporate law, the articles of association or other applicable obligations and cause legally compensable loss.

The analysis should identify the duty, breach, damage and causal relationship rather than assuming liability merely because the transaction was unsuccessful.

Business Loss Is Not Automatically Misconduct

Companies sometimes make poor commercial decisions.

A transaction that later becomes unprofitable is not automatically evidence of wrongdoing. The distinction between an unsuccessful business decision and an abusive related-party transaction should be supported by objective evidence.

Market Valuation Can Be Critical

Suppose company property worth substantially more is transferred to another company controlled by the majority shareholder at an unusually low price.

Independent valuation evidence can become central to demonstrating the economic effect of the transaction.

Artificial Service Agreements Should Be Investigated

Consultancy, management, marketing and licensing agreements can be legitimate. They can also be used to transfer company funds to related entities.

Ask what service was actually provided, who performed it, whether deliverables exist and whether the price corresponds with market conditions.

Examine Related-Party Loans

Loans between affiliated companies should be reviewed for amount, maturity, interest, security, repayment history and commercial purpose.

A large unsecured and interest-free transfer that remains unpaid for years may require closer examination.

Intellectual Property Transfers Can Remove Major Company Value

Brands, software, patents, domain names and other intellectual property may represent substantial corporate value.

If these assets are transferred or licensed to an insider-controlled company, examine valuation, authorization and commercial justification carefully.

Business Opportunities Can Also Be Diverted

Not every harmful transaction involves money leaving a bank account.

Management may redirect customers, contracts, suppliers or investment opportunities to another company controlled by insiders.

Emails, proposals, customer communications and tender documents may help establish what occurred.

Related Companies Can Be Used to Shift Profits

A profitable operating company may be required to purchase expensive services from an affiliate, pay excessive rent or transfer valuable contracts.

The economic substance of the entire arrangement should therefore be examined rather than considering each invoice in isolation.

Tax and Corporate Issues Can Overlap

Related-party transactions may also create transfer-pricing, tax and accounting consequences.

However, a transaction’s tax treatment does not necessarily resolve whether directors complied with their corporate duties toward the company and shareholders.

Preserve Digital Evidence

Emails, accounting exports, board documents and business correspondence can become important evidence.

Shareholders should preserve material lawfully available to them and avoid unauthorized access to company systems or personal accounts.

Do Not Secretly Alter Company Records

Evidence preservation should never become evidence manipulation.

Original documents and electronic records should remain intact, with copies organized separately for legal review.

Bank Records May Require Judicial Procedures

A minority shareholder may not personally have unrestricted access to company bank accounts.

Where necessary, relevant banking evidence may need to be obtained through appropriate corporate or judicial mechanisms.

Can an Injunction Stop an Asset Transfer?

Potentially. Where a valuable company asset is about to be transferred and delay could make effective legal protection difficult, interim judicial protection should be considered urgently.

The requirements depend on the remedy sought and facts of the case.

Timing Is Critical for Emergency Measures

An injunction sought after property has been sold and transferred may provide less practical protection than an application made before completion.

Foreign shareholders who learn of an imminent transaction should therefore obtain legal review quickly.

Can Company Shares Be Diluted Through Related Transactions?

Related-party abuse can sometimes occur alongside capital increases or other corporate actions that weaken a minority shareholder’s economic position.

Capital decisions should be reviewed separately for their legal basis, commercial justification and effect on shareholder rights.

Falsified Minutes Require Immediate Attention

If a foreign shareholder discovers a resolution bearing a signature they deny making, or minutes recording attendance that allegedly never occurred, the issue extends beyond an ordinary shareholder disagreement.

Preserve originals and consider appropriate civil and criminal-law implications based on the evidence.

Do Not Sign Retroactive Corporate Documents Without Review

A shareholder may be asked to sign a resolution months after a transaction occurred.

Before signing, determine what the document confirms, whether it retroactively approves the transaction and whether it could affect future claims.

Independent Expert Analysis Can Help

Complex related-party cases often require financial analysis.

An accountant, valuation expert or sector specialist may help determine whether prices, fees, loans or asset transfers departed materially from market conditions.

Calculate the Company’s Loss

Identify the economic damage caused by each disputed transaction.

This may involve excessive payments, undervalued assets, unpaid loans, lost profits or diversion of commercial opportunities.

Shareholder Loss and Company Loss Should Be Distinguished

A reduction in the value of shares may result from loss suffered directly by the company.

The correct claimant and legal remedy should therefore be determined carefully rather than automatically treating every corporate loss as a personal shareholder claim.

Review the Articles of Association

The articles may contain provisions concerning management authority, reserved matters, voting thresholds, transfer restrictions and shareholder rights.

These provisions can materially affect the analysis.

Review the Shareholders’ Agreement

Foreign investors frequently negotiate contractual protections beyond statutory corporate rights.

Reserved matters, related-party transaction restrictions, information rights, veto rights, valuation mechanisms, deadlock provisions and dispute-resolution clauses may all be relevant.

Contractual and Corporate Remedies Can Operate Together

A transaction may breach both corporate duties and a shareholders’ agreement.

The foreign shareholder should therefore analyze statutory and contractual claims simultaneously.

Arbitration Clauses Require Careful Analysis

If the shareholders’ agreement contains arbitration provisions, determine which disputes fall within the clause and which corporate-law remedies may require proceedings before Turkish courts.

Do not assume that every dispute between shareholders belongs automatically in one forum.

Criminal Allegations Should Not Replace Corporate Analysis

Related-party transactions can sometimes involve conduct raising criminal-law concerns, but commercial disagreements should not automatically be characterized as crimes.

The evidence and legal elements of any alleged offense should be evaluated independently.

Review Transactions With Relatives

Payments to businesses formally owned by a director’s spouse, relative or other connected person may warrant examination where evidence suggests the director or controlling shareholder benefits from the arrangement.

The actual relationship and economic benefit should be proved rather than assumed.

Check Whether the Company Received Anything in Return

For each disputed payment, ask a simple question: what did the company receive?

Contracts, deliverables, reports, products, services and economic benefits should be identified and valued.

Historical Transactions Should Be Mapped

Create a chronological table showing the transaction date, counterparty, relationship, amount, approval, invoice, payment and suspected loss.

Patterns often become visible only when several years of transactions are considered together.

Limitation Periods Must Be Considered

Historical claims may be subject to limitation or corporate-law time restrictions depending on the legal basis.

Foreign shareholders should not postpone review merely because negotiations with the majority shareholder remain ongoing.

Negotiation Can Still Be Valuable

Not every dispute needs to proceed immediately to full litigation.

Once the shareholder has reliable evidence and understands available remedies, negotiation may produce repayment, cancellation of related-party contracts, governance reforms, share purchase arrangements or an orderly shareholder exit.

Do Not Negotiate Without Preserving Rights

Negotiations should not cause the shareholder to miss statutory challenge periods or allow further assets to disappear.

Urgent corporate or judicial measures may need to proceed alongside settlement discussions.

Shareholder Exit May Become an Alternative

Where trust has collapsed permanently, the dispute may ultimately require a restructuring of ownership rather than continued joint management.

Any share sale or exit arrangement should address valuation, historic claims, releases, guarantees and payment security carefully.

2026 Practical Defense Strategy for Foreign Shareholders

A foreign shareholder who suspects related-party transactions should first identify specific transactions, preserve company records, exercise available information rights and investigate the relationship between the company and counterparties. The shareholder should then examine authorization, market value, accounting treatment, management conflicts, company loss and contractual protections. Where assets are about to be transferred, urgent interim relief should be evaluated immediately.

Lawyer Fırat Fesih Kaya assists foreign investors in structuring these disputes around evidence rather than general accusations. A well-prepared file should demonstrate who benefited, what the company transferred, what it received in return, how the transaction was approved and what measurable loss resulted.

Frequently Asked Questions

Are related-party transactions illegal in Turkey?

Not automatically. Their legality depends on the transaction, authorization, applicable corporate duties, economic terms and other circumstances.

Can a minority foreign shareholder inspect company records?

Shareholders have information and inspection rights subject to the company’s legal form and applicable rules. The appropriate procedure should be determined for the specific company.

Can a majority shareholder sell company assets to another company they control?

Control of the company does not give a shareholder unlimited ownership over corporate assets. The transaction must be examined under applicable corporate rules and duties.

Can suspicious payments to an affiliate be challenged?

Potentially. The contractual basis, actual services, authorization, pricing and economic benefit to the company should be investigated.

Can directors be personally liable?

Potentially, where the legal requirements for liability are established, including breach of applicable duties, loss and causation.

Can an asset transfer be stopped before completion?

Interim judicial protection may potentially be available where the applicable requirements are satisfied and urgent action is necessary.

What if management refuses to provide documents?

The shareholder should preserve the refusal and evaluate available corporate and judicial mechanisms for obtaining information.

Can a foreign shareholder challenge a general assembly decision approving the transaction?

Potentially. The validity of the resolution, voting process, legal grounds and applicable challenge periods should be examined immediately.

Can the shareholder recover money personally?

The answer depends on whether the alleged loss belongs directly to the shareholder or primarily to the company. The correct claimant and remedy must be identified.

What should a foreign shareholder do first?

Identify the suspicious transactions precisely, preserve available evidence and determine whether company assets are still at risk. If an imminent transfer could make recovery difficult, urgent protective measures should be evaluated before relying on lengthy negotiations.

Client-Focused Legal Support for Foreign Shareholder and Related-Party Transaction Disputes

Related-party disputes can involve asset diversion, excessive management fees, affiliate loans, undervalued transfers, hidden conflicts of interest, shareholder oppression, falsified corporate records and director liability. Fırat Fesih Kaya Law Office assists foreign shareholders and international investors facing corporate governance and shareholder disputes involving Turkish companies. Lawyer Fırat Fesih Kaya provides legal assistance in investigating suspicious transactions, exercising shareholder information rights, challenging corporate resolutions, seeking urgent protective measures, pursuing director-liability claims and developing litigation or shareholder-exit strategies.

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