Majority Shareholder Diverts Business to Another Company in Turkey: Minority Shareholder Remedies (2026 Updated Guide)

A majority shareholder diverts customers, contracts, revenue or business opportunities to another company in Turkey. Learn about minority shareholder remedies, director liability, damages, evidence, injunctions and corporate litigation.

A serious shareholder dispute can arise when a majority shareholder uses control over a Turkish company to divert customers, contracts, employees, suppliers, revenue or commercial opportunities to another business. The competing company may belong directly to the majority shareholder, a family member, another shareholder or a related corporate group. From the minority shareholder’s perspective, the problem is particularly serious because the controlling shareholder may possess enough voting power to influence management while simultaneously transferring economic value away from the company. Turkish corporate law provides several potential remedies depending on the company’s legal form, management structure, nature of the transactions and evidence available. A minority shareholder facing suspected business diversion should act quickly to preserve corporate records, identify related-party transactions, quantify the company’s losses and consider corporate, judicial and interim remedies before the business value disappears.

What Does Diversion of Company Business Mean?

Business diversion can occur where commercially valuable opportunities belonging to one company are redirected to another enterprise connected with the controlling shareholder or management.

It may involve existing customers, new customer inquiries, tenders, distribution rights, contracts, employees, suppliers, intellectual property, equipment or other business resources.

The legal analysis depends on what was transferred, who authorized the transaction, whether the company received adequate consideration and whether management duties were breached.

A Majority Shareholder Does Not Own the Company’s Assets Personally

Owning a majority of the shares does not mean that the shareholder personally owns the company’s customers, bank accounts, contracts, machinery or commercial opportunities.

The company is a separate legal entity.

A controlling shareholder therefore cannot simply treat corporate property as personal property merely because they control shareholder voting.

Majority Control Has Legal Limits

A shareholder holding more than half of the voting rights may exercise substantial influence over general assembly decisions, subject to the applicable statutory and articles-of-association requirements.

However, majority voting power does not create unlimited authority to damage the company or use corporate structures solely for personal benefit.

The legality of each action must be examined separately.

How Does Business Diversion Usually Occur?

The diversion may be obvious or concealed.

A majority shareholder may establish another company and begin invoicing customers through the new entity. Employees may be instructed to transfer customer relationships. New orders may be redirected. Profitable products may be sold through the related company while expenses remain with the original business.

In other cases, the diversion occurs gradually through related-party contracts.

Customers May Be Redirected to a Related Company

One of the clearest warning signs is a sudden decline in customer revenue while a company controlled by the majority shareholder begins dealing with the same customers.

The minority shareholder should investigate when the customer relationship moved, who communicated with the customer and whether the original company had an existing contractual or commercial relationship.

New Business Opportunities Can Also Be Relevant

The dispute is not necessarily limited to existing signed contracts.

A valuable tender, distribution opportunity, acquisition opportunity or customer inquiry may raise legal issues if management redirects it to another entity despite the opportunity properly belonging to the company.

The factual connection between the opportunity and the company is critical.

Related-Party Transactions Should Be Investigated

A majority shareholder may attempt to shift value through contracts rather than direct transfers.

Examples can include excessive consultancy payments, below-market sales, artificial service agreements, unfavorable leases, interest-free financing or transfers of valuable assets to a related company.

The economic substance of these arrangements should be examined.

Directors and Managers May Face Separate Responsibility

Where the majority shareholder also serves as a director, board member or manager, management duties become especially important.

Corporate decision-makers may face liability where breaches of their statutory or contractual obligations cause loss to the company, shareholders or creditors under the circumstances recognized by Turkish corporate law.

The majority shareholder’s voting rights and management responsibilities should therefore be analyzed separately.

Duty of Loyalty Can Become Central

Directors and managers are expected to act consistently with their obligations toward the company.

Using management authority to transfer valuable business to a competing enterprise can raise serious questions concerning loyalty, conflicts of interest and misuse of corporate opportunities.

The precise claim depends on the company’s structure and facts.

Competition With the Company Should Be Examined

Where a director or manager owns or operates another company conducting competing business, applicable non-compete rules and corporate approvals should be reviewed.

Do not assume that the existence of a second company is automatically unlawful.

The relevant question is whether the competing activity violates statutory, contractual or corporate restrictions and whether company resources or opportunities were improperly diverted.

Examine the Articles of Association

The company’s articles may contain important provisions concerning management authority, reserved matters, representation, transfer restrictions, board appointments and shareholder rights.

These provisions should be reviewed together with Turkish Commercial Code requirements.

Review the Shareholders’ Agreement

Foreign investors frequently rely on shareholders’ agreements containing additional protections.

These may include reserved matters, related-party transaction restrictions, non-compete obligations, information rights, board nomination rights, veto rights, deadlock procedures, put options, call options and exit mechanisms.

A business-diversion dispute can therefore create both statutory and contractual claims.

Minority Shareholders Should Preserve Evidence Immediately

Evidence can disappear quickly once a shareholder dispute becomes hostile.

Relevant materials may include:

customer correspondence, invoices, bank records, accounting entries, general ledgers, board resolutions, general assembly minutes, contracts, emails, corporate messaging records, employee communications and documents concerning the related company.

Evidence should be obtained through lawful means.

Compare Revenue Before and After the Suspected Diversion

Financial analysis can reveal patterns that ordinary corporate documents do not immediately show.

Compare monthly revenue, customer concentration, gross margins and transaction volumes before and after the alleged diversion.

A sharp decline in the original company accompanied by corresponding growth in a related company can justify deeper investigation.

Customer-Level Analysis Can Be Particularly Powerful

Create a customer matrix identifying:

the original company’s customer history, last invoice date, new supplier entity, relationship between the new entity and majority shareholder, employees involved and relevant communications.

This can transform a general suspicion into a transaction-specific case.

Examine Bank Transactions

Payments may reveal whether corporate value is being transferred through unusual channels.

Review payments to shareholders, directors, related companies and family-controlled entities where legally accessible.

Descriptions such as consultancy fees, management charges or advances should be checked against actual underlying services.

Accounting Records Are Critical

Corporate books may reveal related-party receivables, unusual expense increases, asset transfers, unexplained write-offs or revenue movements.

A forensic accounting review can be particularly useful in complex shareholder disputes.

Minority Shareholders Have Information Rights

Depending on the type of company and circumstances, shareholders have statutory mechanisms relating to information and examination.

The exact procedure should be selected according to the corporate form and the information sought.

A shareholder should document requests and refusals carefully.

What If Management Refuses to Provide Information?

A refusal should not simply be accepted as the end of the matter.

The shareholder should identify the statutory and contractual basis of the information request, preserve evidence of the refusal and evaluate the appropriate corporate or judicial procedure.

Repeated obstruction may also become relevant to the broader shareholder dispute.

General Assembly Rights Can Be Important

Minority shareholders meeting the applicable legal thresholds may have rights concerning the calling of the general assembly or addition of matters to the agenda, subject to the relevant corporate structure and requirements.

These mechanisms can help bring disputed transactions formally before the company.

Challenge Unlawful General Assembly Resolutions

If the business diversion is supported by a general assembly resolution, the resolution should be reviewed immediately.

Depending on the circumstances, resolutions contrary to law, articles of association or principles governing shareholder rights may be subject to judicial challenge.

Procedural deadlines are critical.

Board Decisions Should Also Be Examined

Not every diversion is authorized through the general assembly.

Related-party transfers may instead originate from board or management decisions.

Determine who voted, whether conflicts existed, whether authority was properly exercised and whether the transaction served the company’s interests.

Can the Minority Shareholder Seek an Injunction?

Potentially.

Where there is an immediate risk that assets, customer relationships, intellectual property or other business value will be transferred before a final judgment, interim judicial protection may become strategically important.

The applicant generally needs a sufficiently concrete factual and legal basis for urgent relief.

Evidence Preservation May Be Urgent

Sometimes the first emergency is not stopping a payment but preserving proof.

If digital records, accounting data or corporate documents are at risk of disappearing, available evidence-preservation mechanisms should be evaluated promptly.

Can Asset Transfers Be Stopped?

Potentially, depending on the proposed transaction, authority, urgency and evidence.

A shareholder who learns that valuable machinery, trademarks, real estate or receivables are about to be transferred to a related company should seek legal review before the transaction becomes difficult to reverse.

Company Loss and Shareholder Loss Must Be Distinguished

This distinction is extremely important.

If business diversion causes direct loss to the company, the legal claim may fundamentally belong to the company even though the minority shareholder suffers indirectly because the value of their shares declines.

Direct shareholder loss and corporate loss should therefore be analyzed separately.

Director Liability Claims May Be Available

Where directors or managers breach their obligations and cause compensable loss, liability proceedings may become relevant.

The correct claimant, defendant, type of loss and requested remedy must be determined carefully.

Damages Must Be Quantified

It is not enough to prove that the majority shareholder behaved improperly.

The financial consequences should be calculated.

Potential evidence may include lost customer revenue, diverted profits, below-market asset transfers, excessive related-party payments and other measurable losses.

Lost Profit Claims Require Strong Evidence

Claims based on future profits can be more difficult than claims based on completed transfers.

Historical customer orders, recurring contracts, margins and actual transactions completed by the competing company can strengthen the analysis.

The Related Company May Need to Be Investigated

The dispute may not be limited to the majority shareholder personally.

Determine who owns and manages the competing company, when it was established, whether it uses the same address, employees, suppliers, telephone numbers, equipment or customer base and whether it received assets from the original company.

Family-Owned Related Companies Require Particular Attention

Sometimes business is diverted to an entity formally owned by a spouse, relative or associate.

Formal share ownership alone should not end the investigation.

The actual commercial relationships and transactions should be examined through lawful evidence.

Employees May Have Been Transferred

If key employees suddenly resign and begin working for the majority shareholder’s new company, review employment contracts, confidentiality provisions, trade-secret protections and circumstances surrounding the transfers.

Employee movement alone is not necessarily unlawful, but coordinated transfer of staff together with customers and business assets can be significant evidence.

Intellectual Property May Also Be Diverted

Check whether trademarks, domain names, software, designs, customer databases or other intellectual property belonging to the company have been transferred or used by the related business.

Ownership and licensing documentation should be reviewed.

Foreign Minority Investors Should Check Bank Authority

A controlling shareholder may attempt to consolidate control by changing signature authority or removing minority-appointed representatives from bank access.

Obtain current corporate representation records and bank authority information where legally available.

Unauthorized Guarantees and Loans Should Be Reviewed

Business diversion can occur alongside other value transfers.

Check whether the company has guaranteed debts of a related business, provided loans, transferred cash or pledged assets for obligations that do not serve the company’s legitimate interests.

Capital Increases Can Be Used in Shareholder Conflicts

A minority shareholder should also monitor whether the majority is pursuing a capital increase that could dilute the minority position.

Capital increases can be legitimate and commercially necessary, but their purpose, procedure and treatment of shareholder rights should be examined where they occur during a broader oppression dispute.

Dividend Policy May Provide Additional Evidence

A company may remain profitable while refusing distributions and simultaneously transferring value to related entities.

Dividend decisions should be considered together with salaries, management fees, related-party payments and other financial movements.

Majority Abuse Can Support Broader Corporate Remedies

Persistent exclusion from management, denial of information, diversion of assets, related-party transactions and manipulation of corporate governance can collectively create a more serious shareholder dispute than any single transaction viewed in isolation.

The entire pattern should be documented chronologically.

Can a Minority Shareholder Exit the Company?

Depending on the corporate form, articles, shareholders’ agreement and circumstances, exit mechanisms may exist.

These can include contractual put options, negotiated share sales or statutory remedies available in sufficiently serious circumstances.

The appropriate strategy depends heavily on valuation and evidence.

Share Valuation Becomes Critical in Exit Disputes

If the shareholder seeks to leave, the company should not necessarily be valued after the alleged diversion has artificially reduced its revenue.

Historical performance, diverted business and related-party transactions may need to be considered when evaluating the economic value of the shares.

Termination of the Company May Be an Exceptional Remedy

In serious shareholder disputes, Turkish corporate law may provide exceptional remedies involving termination or alternative solutions determined by the court where statutory requirements are met.

Such proceedings should not be treated as the automatic first response to every majority-minority disagreement.

Foreign Investors Should Review Arbitration Clauses

The shareholders’ agreement or investment agreement may contain arbitration provisions.

Determine whether particular contractual claims belong in arbitration while statutory corporate claims may require different proceedings.

Forum analysis should occur before litigation begins.

Multiple Proceedings May Be Necessary

A serious business-diversion dispute can involve corporate proceedings, director-liability claims, interim measures, contractual claims and potentially other legal consequences.

The strategy should coordinate these proceedings rather than filing disconnected actions.

Avoid Retaliatory Corporate Conduct

Minority shareholders should not respond by taking corporate documents unlawfully, accessing accounts without authorization or interfering with company operations.

Evidence should be preserved through lawful procedures.

Send a Carefully Drafted Formal Notice

Where appropriate, a formal notice can identify disputed transactions, demand preservation of records, request information and reserve legal rights.

The wording should be prepared strategically because it may later become evidence.

Consider Whether a Negotiated Solution Is Commercially Better

Litigation is not always the economically optimal outcome.

Where the parties’ relationship has become impossible, a structured buyout may preserve more value than prolonged corporate paralysis.

However, negotiation should take place with reliable financial information and protection against further asset diversion.

2026 Strategy for Minority Shareholders

A minority shareholder who suspects that a majority shareholder is diverting Turkish company business should move from suspicion to evidence quickly. The investigation should identify which customers, contracts, employees, assets or opportunities were transferred; which related company received them; who authorized the transactions; what the original company lost; and which immediate transactions still need to be prevented.

Lawyer Fırat Fesih Kaya advises foreign investors and shareholders facing corporate-control and shareholder disputes involving related-party transactions, management exclusion, diversion of business and loss of company value.

Frequently Asked Questions

Can a majority shareholder legally establish another company?

Potentially, but the existence of another company does not authorize unlawful diversion of the first company’s assets, opportunities or business. Management duties, non-compete obligations and contractual restrictions must be examined.

Can a majority shareholder transfer customers to another company?

The legality depends on the circumstances. Where company resources, existing relationships or corporate opportunities are diverted for personal or related-party benefit, substantial corporate-law issues can arise.

Can the minority shareholder inspect company records?

Turkish corporate law provides information and examination mechanisms, but the applicable procedure depends on the corporate form and circumstances.

What if the majority shareholder refuses to provide accounting records?

The refusal should be documented and the shareholder should evaluate statutory, contractual and judicial mechanisms for obtaining information.

Can related-party transactions be challenged?

Potentially. The authority, corporate purpose, consideration, conflicts of interest and resulting company loss should be examined.

Can the minority shareholder obtain an injunction?

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

Can directors be personally liable for diverted business?

Potentially. Directors or managers who breach applicable duties and cause compensable loss may face liability depending on the circumstances.

Can the minority shareholder claim lost profits?

Potentially, but causation and amount must be proven. Historical transactions, customer relationships and actual profits earned through diverted business can become important evidence.

Can the minority shareholder leave the company?

Depending on the company type, contractual arrangements and seriousness of the dispute, negotiated or legal exit mechanisms may be available.

What should a foreign minority shareholder do first?

Preserve evidence before the corporate structure changes further. Obtain corporate records, identify related companies and transactions, map diverted customers and revenue, quantify the company’s losses and assess whether urgent judicial protection is needed to prevent additional transfers.

Client-Focused Legal Support for Minority Shareholder Disputes in Turkey

A majority shareholder’s diversion of business can rapidly reduce company value and leave a foreign minority investor holding shares in a business whose customers, revenue and assets have been transferred elsewhere. Fırat Fesih Kaya Law Office assists foreign investors and shareholders in disputes involving majority abuse, business diversion, related-party transactions, management exclusion, unauthorized asset transfers, director liability, corporate information rights, interim measures, damages and shareholder exit strategies.

Lawyer Fırat Fesih Kaya

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