Company Property Sold to a Director or Shareholder in Turkey: Conflict of Interest Rules Explained (2026 Updated Guide)

Can a Turkish company sell property to its director or shareholder? Learn about conflict of interest, corporate approvals, fair value, related-party transactions, director liability, shareholder remedies and cancellation risks.

A Turkish company may have legitimate commercial reasons to sell real estate, machinery, vehicles, intellectual property or other valuable assets to a director, shareholder or a company connected with them. However, the transaction becomes legally sensitive when the person participating in the decision is also the person receiving the economic benefit. A sale at an artificially low price, an undisclosed related-party transaction, manipulation of corporate approvals or transfer of valuable company property for the benefit of controlling shareholders can expose directors and other responsible persons to corporate liability, compensation claims, shareholder litigation and, in serious cases, separate criminal-law allegations. The transaction should therefore be examined not merely as an ordinary sale but also from the perspective of conflicts of interest, management duties, corporate authority and protection of company assets.

Can a Turkish Company Sell Property to Its Director or Shareholder?

A transaction with a director or shareholder is not automatically invalid merely because the counterparty is connected with the company. The decisive questions include who approved the transaction, whether the company was properly represented, whether conflict-of-interest restrictions were respected, whether the consideration was commercially defensible and whether the transaction harmed the company or improperly benefited a particular shareholder or manager.

The legal analysis can also differ according to whether the company is a joint-stock company, limited-liability company or another corporate structure.

Why Are Related-Party Asset Sales Legally Sensitive?

Directors and managers exercise powers over property belonging to the company rather than their personal assets. When a director influences the company to sell an asset to themselves, a family member, shareholder or affiliated business, their personal interest may conflict directly with the company’s interest.

That conflict does not automatically prove wrongdoing, but it requires closer examination of the decision-making process and economic terms.

The First Question Is Whether the Sale Was in the Company’s Interest

The commercial rationale should be identifiable. Why was the asset sold? Why was it sold at that particular time? Why was the director or shareholder selected as purchaser? How was the price determined? Were independent buyers considered?

A legitimate disposal of an unnecessary asset can look very different from transferring a profitable property to a controlling shareholder at a fraction of its market value.

Fair Market Value Can Become Central

Where valuable company property is transferred to an insider, valuation evidence can become one of the most important parts of a later dispute.

Independent appraisal reports, comparable sales, accounting records and market evidence should be preserved. A substantial unexplained difference between the transaction price and market value can support allegations that the company suffered loss.

Selling Below Market Value Is Particularly Risky

A below-market transaction may effectively transfer economic value from the company to the insider purchaser.

Minor differences can sometimes have legitimate commercial explanations. A dramatic undervaluation without a credible reason creates much greater litigation risk.

An Independent Valuation Can Protect the Company

Obtaining an independent valuation before the transaction can help demonstrate that the board or management acted on an informed basis.

The valuation should correspond to the asset actually transferred and the relevant transaction date.

Conflict of Interest Should Be Disclosed

A director involved personally in the transaction should not treat the relationship as irrelevant.

The nature of the interest should be documented transparently so that the appropriate corporate body can evaluate the transaction with knowledge of the conflict.

Can the Interested Director Participate in the Decision?

Turkish company law contains restrictions concerning participation by board members in discussions involving conflicts between their personal interests and the company’s interests.

Whether a particular director could participate should therefore be examined against the company’s legal form, transaction structure, corporate documents and applicable provisions.

Board Minutes Are Important Evidence

The board record should show what was proposed, the commercial rationale, relevant valuations, the interested person’s relationship with the counterparty and how the decision was made.

Minutes created only after litigation begins will rarely provide the same evidentiary value as properly maintained contemporaneous records.

Articles of Association Should Be Reviewed

The company’s articles may contain additional rules concerning asset disposals, representation, signature authority, reserved matters or shareholder approval.

A transaction that appears acceptable under general company law can still encounter problems if internal approval requirements were ignored.

Shareholders’ Agreements May Impose Additional Restrictions

Foreign investors should also review any shareholders’ agreement.

Reserved-matter provisions may require investor consent before significant real-estate transfers, related-party transactions or disposals above a specified financial threshold.

Representation Authority Must Be Checked

Even if the company validly decides to sell the asset, the contract must be executed by persons authorized to represent the company.

Particular attention is necessary where the same individual appears effectively on both sides of the transaction.

Self-Dealing Creates Additional Concerns

Where a manager or director represents the company while simultaneously acting for themselves or a connected counterparty, the transaction should be examined carefully for representation conflicts and applicable corporate restrictions.

The safest approach is generally to establish independent authorization before signing.

Shareholder Status Does Not Create a Right to Company Assets

A shareholder owns shares in the company; they do not personally own individual company assets.

A controlling shareholder therefore cannot simply treat corporate real estate, vehicles, cash or equipment as personal property.

Majority Control Does Not Eliminate Fiduciary Responsibilities

Holding 51%, 75% or even a larger percentage of shares does not necessarily permit the controlling shareholder to extract company value without regard to corporate rules and minority rights.

The company remains a separate legal person.

Minority Shareholders Can Challenge Suspicious Transactions

Minority shareholders who discover that valuable company assets were transferred to controlling shareholders or directors should obtain the corporate records quickly.

Possible remedies depend on the company’s legal form and facts but may include challenges concerning corporate resolutions, director liability, information rights and other protective mechanisms.

Information Rights Can Be Critical

A shareholder may first need to establish what actually happened.

Relevant information may include the sale agreement, board minutes, shareholder resolutions, appraisal reports, payment records and accounting entries.

Follow the Money

A transaction is not commercially genuine merely because a written sale agreement exists.

Determine whether the purchase price was actually paid, when it was paid, where the money went and whether it was later returned to the purchaser through another transaction.

Payment Through Related Companies Requires Scrutiny

If the purchaser claims to have paid through an affiliate, shareholder loan account or set-off arrangement, examine the underlying accounting entries carefully.

Complex accounting treatment can sometimes conceal the real economic effect.

Set-Off Should Be Supported by Genuine Debt

A director cannot necessarily justify acquiring a valuable company asset by simply asserting that the company owed them money.

The existence, amount and enforceability of the alleged debt should be verified.

Real Estate Transfers Require Special Attention

Where company-owned real estate is transferred to an insider, obtain the title records, sale documentation, declared consideration, appraisal evidence and payment records.

The transaction date may also be important because real-estate values can change substantially over time.

Machinery and Vehicles Can Also Be Misused

Asset-stripping disputes are not limited to real estate.

Production machinery, vehicles, inventory, trademarks, licenses and other valuable assets can be transferred to related companies in ways that weaken the original business.

Intellectual Property Transfers Can Be Especially Significant

A company may appear financially intact while its trademark, software, domain, customer database or other commercially important rights are moved to an affiliated company.

The economic substance of the transfer should therefore be examined rather than focusing only on physical assets.

Related-Party Companies Should Be Identified

The purchaser may not be the director personally. It may instead be a company owned by the director, their family or another shareholder.

Corporate registry records and ownership structures can help establish the relationship.

Transactions Before a Shareholder Dispute Deserve Particular Review

Asset transfers immediately before or during a shareholder conflict can become highly contentious.

If profitable assets are transferred shortly before a minority shareholder is excluded from management or before a share-valuation dispute, the timing may become important evidence.

Transactions Before Insolvency Can Create Additional Risks

Selling valuable assets to insiders while the company is financially distressed can affect creditors as well as shareholders.

The transaction may need to be examined under company, enforcement, insolvency and potentially criminal-law principles depending on the circumstances.

Director Liability May Arise

Directors, board members or managers who breach applicable duties and cause company loss may face civil liability under Turkish corporate-law principles.

The precise claim depends on the company’s legal form, conduct, damage, causation and the person bringing the action.

Company Loss Must Be Calculated Properly

If an asset worth substantially more than the sale price was transferred, the difference may be relevant to assessing loss.

However, valuation should be evidence-based rather than speculative.

Subsequent Increase in Value Does Not Automatically Prove Original Undervaluation

Suppose property is sold and its value doubles several years later. The later value alone does not establish that the original sale price was improper.

The relevant market circumstances at the transaction date should be examined.

Can the Sale Be Cancelled?

There is no universal rule that every conflicted related-party transaction is automatically cancelled.

The available remedy depends on the defect alleged: invalid corporate authority, defective resolution, unauthorized representation, breach of management duties, collusion or another legal basis may lead to different claims.

Third-Party Rights Can Complicate Recovery

If the director purchases company property and subsequently transfers it to another person, recovery can become more difficult.

The subsequent purchaser’s knowledge, transaction structure and type of asset may become important.

Interim Measures May Be Necessary

If there is a serious risk that disputed property will be sold again, mortgaged or otherwise transferred while litigation is pending, the availability of interim judicial protection should be evaluated quickly.

Delay can materially affect the practical value of a successful lawsuit.

Accounting Records Should Be Preserved

General ledgers, fixed-asset registers, shareholder current accounts, bank statements and financial statements can help reconstruct the transaction.

Electronic accounting data should also be preserved before access changes during a corporate dispute.

Emails and Messages Can Become Evidence

Internal communications may show why the asset was sold, who proposed the price and whether objections were raised.

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

Independent Directors and Managers Should Record Objections

A board member who believes a proposed related-party transaction harms the company should ensure that their objection is properly documented.

Remaining silent while participating in an obviously problematic transaction can create unnecessary future exposure.

Foreign Investors Should Include Related-Party Controls in Governance Documents

Foreign shareholders investing in Turkish companies can reduce future disputes by requiring advance approval for major related-party transactions.

Reserved matters can cover real-estate sales, intellectual property transfers, loans to shareholders, guarantees and transactions above specified thresholds.

Due Diligence Should Examine Historical Insider Transactions

An investor acquiring shares in a Turkish company should review previous transactions involving directors, shareholders and affiliated companies.

A company’s current balance sheet may not reveal assets that were transferred away shortly before the investment.

Tax Consequences Should Be Reviewed Separately

A related-party transaction may also generate tax issues, particularly where the consideration differs materially from market conditions.

Corporate-law validity and tax treatment are separate questions and should both be examined.

Criminal Liability Is Not Automatic

A disputed related-party sale is primarily a corporate and commercial issue in many cases.

The existence of a conflict, undervaluation or shareholder disagreement does not by itself establish a criminal offense. Criminal exposure depends on additional facts satisfying the elements of a specific offense.

Fraudulent Documents Change the Risk Significantly

If minutes, signatures, invoices, valuations or payment records were fabricated, the dispute may move beyond ordinary corporate governance.

Original documents and digital records should therefore be preserved.

2026 Practical Approach to Related-Party Asset Sales

A company planning to transfer valuable property to a director or shareholder should establish the commercial rationale before the transaction, obtain an independent valuation where appropriate, disclose conflicts, follow applicable approval and representation rules, document the decision properly and ensure that the agreed consideration is genuinely paid.

A shareholder challenging an existing transaction should work in the opposite direction: obtain corporate and title records, determine the relationship between the parties, establish the market value at the transaction date, examine approvals and representation authority, trace payment and evaluate whether urgent measures are required to prevent another transfer.

Frequently Asked Questions

Can a company sell real estate to its shareholder in Turkey?

Potentially, but the transaction must be examined for proper authority, corporate approvals, conflicts of interest, consideration and possible harm to the company.

Can a director buy company property?

Potentially, but a director’s personal interest creates significant conflict-of-interest concerns and the applicable corporate procedures should be followed carefully.

Is a related-party sale automatically invalid?

No. The legal effect depends on the particular conflict, approval process, representation authority and other circumstances.

What if the property was sold below market value?

A substantial unexplained undervaluation may support claims that the company suffered loss and that responsible managers breached their duties.

Can minority shareholders challenge the sale?

Potentially. Available remedies depend on the company’s legal form, the decision challenged and the nature of the alleged misconduct.

Can the property be frozen during litigation?

Where the legal requirements are satisfied and there is a risk of further transfer or other irreparable consequences, interim judicial measures may be considered.

What evidence is most important?

Corporate resolutions, board minutes, valuation reports, title or asset records, sale agreements, bank records and accounting entries can be particularly important.

Can a majority shareholder sell company assets to themselves?

Majority ownership does not turn company property into the shareholder’s personal property. Corporate authority, management duties and minority rights remain relevant.

Can directors be personally liable for the company’s loss?

Potentially, where the applicable requirements for director or manager liability are established.

What should a shareholder do after discovering a suspicious sale?

Secure the transaction documents immediately, determine the asset’s value at the transaction date, examine corporate approvals and representation authority, trace the purchase price and evaluate urgent judicial protection if the property may be transferred again.

Client-Focused Legal Support for Related-Party Transactions and Shareholder Disputes

Transactions involving company assets and insiders can lead to conflict-of-interest claims, director liability, minority shareholder disputes, asset recovery proceedings, valuation disputes and urgent interim-measure applications. Fırat Fesih Kaya Law Office assists foreign investors, shareholders, directors and companies involved in corporate disputes and related-party transactions in Turkey. Lawyer Fırat Fesih Kaya provides legal assistance in reviewing corporate approvals and asset transfers, investigating suspected undervaluation or asset stripping, protecting shareholder rights, pursuing director liability claims and seeking urgent judicial measures where valuable company property is at risk.

Phone:
+90 312 434 22 22

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+90 532 769 22 22

Email:
info@firatfesihkaya.av.tr

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