Company Manager Signs Contracts Without Shareholder Approval in Turkey: Are the Contracts Valid? – 2026 Updated Guide

Can a company manager bind a Turkish company without shareholder approval? Learn about representation authority, contract validity, director liability, and shareholder remedies.

A company manager may sign contracts without obtaining prior shareholder approval, but this does not automatically make the contracts invalid. The decisive issue is usually whether the manager had valid representation authority and whether shareholder approval was legally required for that particular transaction.

Many foreign and minority shareholders assume that every major contract requires their consent. In practice, ordinary commercial contracts may be signed by an authorized manager or director. However, transactions involving company assets, conflicts of interest, related parties, extraordinary financial commitments, or matters reserved for shareholders may create separate legal consequences.

Is Shareholder Approval Required for Every Contract?

No. Shareholder approval is not normally required for every day-to-day commercial agreement. A manager or director may generally sign contracts within the company’s ordinary business activities if they have valid authority to represent the company.

The company’s articles of association, board resolutions, signature rules, shareholder agreements, and registered representation powers should be reviewed to determine the scope of that authority.

Shareholder approval may become important where the transaction concerns the sale of substantial company assets, a related-party arrangement, a major loan or guarantee, a fundamental change in the business, a conflict of interest, or another matter reserved for the shareholders or general assembly.

The absence of shareholder approval must therefore be assessed together with the type of contract and the manager’s formal authority.

When Is a Contract Binding on the Company?

A contract may bind the company if it was signed by a person who had valid and externally recognizable representation authority. This may remain the case even when the manager violated an internal instruction requiring prior shareholder approval.

This creates an important distinction between the company’s relationship with the other contracting party and the manager’s internal responsibility to the company.

If the counterparty acted in good faith and reasonably relied on the manager’s authority, the company may still be required to perform the contract. The company may then seek compensation from the manager for violating internal approval rules or causing damage.

If the counterparty knew that the manager lacked authority, knew that the transaction was abusive, or participated in a conflict-of-interest arrangement, the company may have stronger grounds to challenge the contract or seek remedies against both parties.

What If the Manager Had No Representation Authority?

If the manager had no valid authority to represent the company, the contract may not automatically bind the company. The company may later ratify the contract, reject it, or dispute its enforceability depending on the circumstances.

The person who signed without authority may face personal responsibility toward the counterparty if the transaction is not ratified and the legal requirements for unauthorized representation are met.

The company should examine the signature circular, trade registry records, power of attorney, board resolutions, internal authorizations, and the signatures appearing on the contract.

A shareholder should not rely solely on the manager’s job title. Being called a “manager” does not always mean that the person has unlimited authority to bind the company.

Can a Manager Exceed Internal Limits?

A manager may have internal limits concerning contract value, borrowing, asset sales, supplier selection, or related-party dealings. These limits may arise from the articles of association, board resolutions, shareholder agreements, or written company policies.

If the manager exceeds an internal limit, the company may still be bound toward a good-faith third party in certain circumstances. However, the manager may become liable to the company for the damage caused by violating the internal instructions.

The situation may be different if the limitation was properly registered, clearly disclosed, or known to the counterparty. Evidence that the counterparty participated in the unauthorized transaction may also affect the company’s ability to challenge the contract.

Can Minority Shareholders Challenge the Contract?

Minority shareholders generally cannot cancel a contract simply because they were not consulted. The shareholder must identify a legal basis, such as lack of authority, fraud, conflict of interest, abuse of control, violation of mandatory corporate rules, or damage to the company.

Minority shareholders may request information about the contract, examine corporate records, question the manager, demand that the matter be discussed by the competent corporate body, and consider a director-liability claim.

If a corporate resolution was used to approve or conceal an abusive contract, that resolution may also be subject to challenge under the applicable corporate procedures.

A shareholder should distinguish between damage to the company and personal damage. If the contract harmed company assets, the primary claim generally belongs to the company, while the shareholder may need to use corporate or derivative remedies.

What Evidence Should Be Preserved?

Important evidence may include the signed contract, signature circular, power of attorney, trade registry records, board minutes, shareholder resolutions, internal approval policies, e-mails, messages, financial documents, and communications with the counterparty.

The company should preserve records showing when the contract was negotiated, who gave instructions, whether the manager disclosed the transaction, and whether the counterparty knew that approval was missing.

Financial evidence may demonstrate that the contract was below market value, transferred to a related company, commercially unnecessary, or harmful to the company.

Electronic evidence such as digital signatures, corporate e-mail, cloud records, online approvals, accounting entries, and messaging applications may be particularly important in 2026 disputes.

Can the Contract Be Suspended or an Injunction Be Requested?

An interim court measure may be considered where the contract creates an immediate risk of asset transfer, payment, disposal of property, disclosure of confidential information, or irreversible commercial harm.

The court may assess whether the contract is apparently unauthorized, whether the manager acted in bad faith, whether the counterparty participated in the conduct, and whether waiting for the main proceedings would cause serious damage.

An injunction is not automatic. The application should identify the specific contract, the legal defect, the threatened loss, and the evidence supporting the request.

The company may also take internal protective measures by suspending the manager’s signing authority, changing bank permissions, requiring dual signatures, or appointing a new authorized representative.

Can the Manager Be Held Personally Liable?

A manager may be personally liable if they sign a contract outside their authority, violate corporate duties, conceal a conflict of interest, transfer a corporate opportunity, or cause measurable damage to the company.

Potential losses may include unnecessary contractual payments, penalties, lost profits, below-market asset transfers, legal expenses, and the cost of terminating or replacing the contract.

The manager’s personal liability does not depend solely on whether the contract remains valid against the company. A contract may bind the company while still creating a separate compensation claim against the manager.

Can the Company Claim Compensation?

The company may seek compensation for losses caused by the manager’s unauthorized or negligent conduct. The amount may include the difference between the contract price and market value, lost profits, unnecessary expenses, contractual penalties, and costs caused by the manager’s breach of duty.

The company must establish the wrongful conduct, actual damage, and causal connection. A contract that later becomes unprofitable is not automatically evidence of misconduct.

An independent financial or commercial expert may be needed to assess whether the contract was commercially reasonable and how much damage the company suffered.

Can a Criminal Complaint Be Filed?

A criminal complaint may be considered where the facts involve fraud, falsified documents, breach of trust, unauthorized asset use, deliberate concealment, or another criminal offense.

The simple fact that shareholder approval was not obtained does not automatically create criminal liability. Intent, authority, financial benefit, concealment, and the manager’s conduct before and after signing will be important.

A criminal investigation does not automatically invalidate the contract or recover the company’s money. Commercial proceedings, compensation claims, and interim measures may also be necessary.

What Can Foreign Shareholders Do from Abroad?

Foreign shareholders can generally appoint a Turkish lawyer through a power of attorney. The document may be issued before a consulate or local notary and may require legalization, apostille, and an official translation.

A lawyer can review representation authority, obtain corporate documents, assess contract validity, send formal notices, seek interim protection, challenge corporate decisions, and pursue director-liability or compensation claims.

Lawyer Fırat Fesih Kaya assists foreign shareholders with unauthorized contracts, corporate governance disputes, director liability, contract enforcement, and urgent commercial remedies.

2026 Legal Considerations

In 2026, contract disputes increasingly depend on digital evidence. Electronic signatures, corporate e-mail, online approval systems, cloud documents, digital meeting records, and trade registry information may show whether the manager had authority and whether shareholder approval was required.

Companies should maintain clear signature rules, approval limits, delegation records, conflict-of-interest procedures, and accessible corporate minutes. Foreign shareholders should request prompt notice of major transactions and preserve electronic records as soon as a dispute arises.

Frequently Asked Questions (FAQ)

1. Can a company manager sign a contract without shareholder approval in Turkey?

Yes, if the manager has valid representation authority and the contract falls within ordinary company activities. Shareholder approval may be required for specific extraordinary transactions.

2. Is a contract invalid if shareholders were not consulted?

Not automatically. The contract may remain binding on the company if the manager had external authority and the counterparty acted in good faith.

3. What happens if the manager exceeded an internal limit?

The company may still be bound in some circumstances, but the manager may be liable internally for damage caused by violating company instructions.

4. Can shareholders personally cancel the contract?

Usually not merely because they were excluded. A legal basis such as lack of authority, fraud, conflict of interest, or violation of mandatory corporate rules is generally required.

5. Can a minority shareholder sue the manager?

A claim may be possible depending on the company structure, the shareholder’s rights, and whether the manager caused damage to the company or directly violated the shareholder’s personal rights.

6. What documents prove whether the manager had authority?

The signature circular, power of attorney, trade registry records, board resolutions, articles of association, shareholder agreements, and internal authorization documents may be important.

7. Can the company refuse to perform a contract signed without approval?

The answer depends on the manager’s authority, the nature of the contract, the counterparty’s knowledge, and whether the company later ratified the transaction.

8. Can the company obtain an injunction against the contract?

An interim measure may be available where the contract creates an immediate risk of serious and irreversible harm.

9. Can the manager be personally liable even if the contract binds the company?

Yes. Contract validity toward the counterparty and the manager’s internal liability to the company are separate issues.

10. Can a foreign shareholder handle the dispute without traveling to Turkey?

Usually, a foreign shareholder can appoint a Turkish lawyer under a valid power of attorney to investigate the contract and pursue legal remedies.

This article is provided for general informational purposes only and does not constitute legal advice. We recommend consulting a lawyer about your specific circumstances to avoid any loss of rights.

Expert Legal Support for Unauthorized Company Contracts

Expert legal support is essential to avoid loss of rights. By working with a lawyer experienced in contract validity, representation authority, shareholder disputes, director liability, corporate governance, and interim commercial remedies, serving clients throughout Turkey and internationally, you can protect your legal interests.

Fırat Fesih Kaya Law Office provides professional legal support to foreign shareholders and companies facing unauthorized contracts, internal approval disputes, manager misconduct, contract enforcement risks, and compensation claims.

Phone: +90 312 434 22 22
Mobile/WhatsApp: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Address: Mevlana Boulevard No:221, Yildirim Tower No:148, Balgat, Cankaya, Ankara, Turkey