Put and Call Options in Turkish Shareholder Agreements: Are They Enforceable? (2026 Updated Guide)

Are put and call options enforceable in Turkish shareholder agreements? Learn how option clauses should address share transfers, pricing, corporate approvals, deadlock, default, foreign investors and enforcement risks.

Put and call options are frequently used in shareholder agreements to create a contractual exit mechanism between investors, founders and strategic shareholders. A put option generally gives one party the right to require another party to purchase its shares, while a call option generally allows the option holder to require another shareholder to sell shares under predetermined conditions. In Turkish corporate transactions, these clauses can be particularly important in joint ventures, private equity investments, founder-investor arrangements, deadlock structures and foreign investments. However, stating that one shareholder “may buy” or “may sell” shares is not enough to guarantee a commercially effective exit. Enforceability depends on the drafting of the contractual obligation, the type of company, mandatory corporate-law rules, share-transfer formalities, pricing mechanics and the remedies available when the counterparty refuses to perform.

What Is a Put Option in a Shareholder Agreement?

A put option gives the option holder a contractual mechanism to require another party to purchase specified shares when the agreed conditions are satisfied. The option may become exercisable on a particular date or after a defined triggering event.

For a foreign investor, a put option can function as an exit mechanism where the Turkish business relationship deteriorates or predetermined investment conditions are not achieved.

What Is a Call Option?

A call option operates in the opposite direction. The option holder may require another shareholder to transfer specified shares to it when contractual conditions occur.

Call options are frequently considered where a founder breaches important obligations, a shareholder defaults, deadlock occurs or an investor becomes entitled to increase its ownership.

Are Put and Call Options Generally Possible Under Turkish Law?

They can be structured contractually under Turkish law. However, enforceability should not be analyzed solely under general contract law. The underlying company type, mandatory corporate rules and requirements applicable to the transfer of the relevant shares must also be considered.

The distinction between a valid contractual obligation and a completed corporate share transfer is particularly important.

Shareholder Agreement and Articles of Association Are Different

One of the most important issues is the distinction between the shareholders’ agreement and the company’s articles of association.

A shareholders’ agreement primarily creates contractual obligations among its parties. The articles of association operate within the corporate-law framework and can have different effects.

A provision binding two shareholders contractually should not automatically be assumed to bind the company or third parties in the same way.

Company Type Matters

The legal mechanics of transferring shares in a joint stock company can differ materially from transferring shares in a limited liability company.

A put or call clause should therefore be drafted around the exact company structure rather than copied from a generic international shareholders’ agreement.

The Option Should Identify the Shares Clearly

The agreement should determine which shares are subject to the option.

Important issues can include the number or percentage of shares, share class, voting rights, privileged rights and whether shares acquired after execution of the agreement are also included.

Ambiguity at this stage can make enforcement considerably more difficult.

Trigger Events Must Be Defined Precisely

An option may become exercisable following events such as deadlock, material breach, failure to achieve agreed milestones, change of control, insolvency, prohibited share transfer, founder departure or expiration of a specified investment period.

The trigger should be objectively identifiable whenever possible.

Deadlock Options Require Careful Drafting

A joint venture may provide a put or call right after deadlock. The agreement should define what constitutes deadlock and specify the corporate process that must occur before the option becomes available.

A single disagreement should not unintentionally trigger a multimillion-value exit mechanism unless that is what the parties intended.

Material Breach Should Be Defined

If a call option arises from shareholder default, the contract should identify which breaches qualify.

It may also specify notice requirements and a cure period before the option becomes exercisable.

Exercise Procedure Should Be Unambiguous

The agreement should explain how the option is exercised.

It should address the form of notice, recipient, exercise period, effective date and information required in the option notice.

A poorly drafted exercise notice can itself become the subject of litigation.

Option Periods Matter

An option should generally have a clearly identifiable exercise window or mechanism for determining when it can be used.

An indefinite and poorly defined option structure can create uncertainty concerning the parties’ obligations.

Price Is Often the Main Source of Dispute

The agreement should explain exactly how the purchase price will be determined.

Possible mechanisms include a predetermined amount, formula, fair market value, EBITDA-based calculation, independent valuation or another commercially agreed methodology.

Fixed Prices Can Become Commercially Distorted

A fixed option price agreed years earlier may bear little relationship to the company’s value when the option is eventually exercised.

For long-term shareholder agreements, a valuation formula may reduce this risk.

Independent Valuation Can Be Used

The parties can establish a mechanism under which an independent valuation professional determines the value of the shares.

The agreement should specify appointment procedures and what happens if the parties cannot agree on the valuer.

Define the Valuation Date

A fair-market-value clause can still produce disputes if the valuation date is unclear.

The agreement should specify whether valuation occurs on the trigger date, exercise date, transfer date or another defined date.

Minority and Control Adjustments Should Be Addressed

The parties should determine whether minority discounts, control premiums or similar adjustments are permitted in the valuation.

Leaving this issue unresolved can produce materially different valuations.

Bad-Leaver Pricing Requires Particular Attention

Some shareholder agreements provide a discounted call-option price when a founder or shareholder becomes a “bad leaver.”

Such clauses require careful legal analysis. An excessively punitive economic consequence may generate enforceability disputes depending on the structure and circumstances.

Foreign Currency Pricing Requires Planning

International investors frequently negotiate option prices in foreign currency or use foreign-currency-based formulas.

The payment mechanics should be reviewed in light of mandatory rules applicable to the particular transaction and parties at the relevant time.

Payment Terms Should Be Defined

The agreement should specify whether the price is paid at closing, in installments or through another mechanism.

Interest, security, escrow and consequences of non-payment should also be addressed where appropriate.

A Valid Option Does Not Automatically Transfer the Shares

This distinction is fundamental.

Exercise of an option may create or activate contractual obligations to sell and purchase shares, but the corporate transfer must still comply with the legal requirements applicable to the particular company and shares.

Joint Stock Company Share Transfers

For a Turkish joint stock company, the transfer analysis can depend on whether shares are represented by certificates, the type of certificate, restrictions in the articles and other corporate-law circumstances.

The shareholders’ agreement should therefore be coordinated with the actual share structure.

Limited Liability Company Transfers Require Special Attention

Transfers of participation interests in Turkish limited liability companies are subject to specific statutory formalities and corporate requirements.

A contractual call option should not be drafted as though exercise alone automatically completes every legal step required for transfer.

Articles of Association May Restrict Transfers

Before granting an option, review transfer restrictions in the articles of association.

An investor may possess a strong contractual claim against another shareholder while still encountering corporate obstacles to registration or completion of the transfer.

Corporate Approvals Should Be Anticipated

Where a corporate approval may be necessary, the shareholders’ agreement should allocate responsibility for obtaining it.

Parties may also undertake to vote or take other lawful actions necessary to implement the agreed transfer.

Pre-Emption and Other Transfer Rights Must Be Coordinated

A put or call option may interact with rights of first refusal, pre-emption rights, tag-along rights, drag-along rights or transfer restrictions.

The agreement should establish which mechanism prevails when several rights are triggered simultaneously.

Tag-Along Rights Can Conflict With Call Options

Suppose one investor exercises a call option against a controlling shareholder while another shareholder claims tag-along rights.

The agreement should establish the hierarchy between these provisions rather than leaving the issue for litigation.

Drag-Along Provisions Should Also Be Coordinated

If a third-party sale and a call option can occur at the same time, the agreement should specify which process takes priority.

Transaction documents should function as one integrated system.

Regulatory Approvals May Affect Closing

Certain companies operate in regulated industries where share transfers or changes of control may require regulatory approval.

The option agreement should account for such conditions rather than requiring an impossible immediate closing.

Competition Approval May Also Become Relevant

A sufficiently large transaction may require merger-control analysis.

The parties should allocate responsibility for filings, cooperation and the consequences of approval being delayed or denied.

Foreign Investment Structure Should Be Reviewed

Foreign investors should consider whether the option changes control, governance or ownership in a way that affects sector-specific regulatory obligations.

The analysis should be completed before exercise whenever possible.

Power of Attorney Structures Require Caution

Some agreements attempt to secure future transfer obligations through irrevocable powers of attorney or similar mechanisms.

Such arrangements require careful legal analysis concerning scope, duration, conflicts of interest and mandatory transfer requirements.

They should not be treated as a universal substitute for properly drafted enforcement provisions.

Security Can Improve Practical Enforceability

Depending on the transaction, parties may consider escrow arrangements, share-related security, guarantees or other lawful mechanisms designed to reduce performance risk.

The appropriate structure depends on the company and transaction.

What Happens If the Seller Refuses to Transfer?

The option holder should first determine whether the option was validly exercised and whether all contractual conditions were satisfied.

The available remedy then depends on the contract, company type, transfer formalities and dispute-resolution clause.

Specific Performance May Become Central

The option holder may seek enforcement of the contractual transfer obligation where legally available and appropriate.

Whether a court or tribunal can effectively produce the desired corporate outcome depends on the particular structure of the shares and obligations.

Damages May Also Be Claimed

If the counterparty breaches a valid option obligation and specific performance is unavailable or insufficient, damages may become relevant.

The claimant must establish breach, loss and causation under the applicable framework.

Interim Measures Can Be Critical

A shareholder refusing to honor a call option may attempt to transfer the shares to another party or alter the corporate position before the dispute is resolved.

Urgent interim protection may therefore be strategically important in certain cases.

Preserve Evidence of Option Exercise

Keep the original agreement, amendments, trigger-event evidence, notices, delivery records, valuation documents and correspondence.

The claimant should be able to prove both the contractual right and proper exercise of that right.

Dispute Resolution Clauses Matter

International shareholder agreements frequently use arbitration.

The dispute-resolution clause should be broad enough to cover option exercise, valuation disputes, breach and related shareholder claims.

Arbitration Does Not Eliminate Corporate-Law Requirements

An arbitral tribunal may determine contractual rights between the parties, but the parties should still consider how the resulting decision will interact with mandatory corporate steps and registrations.

This issue should be considered when the agreement is drafted, not only after a dispute begins.

Governing Law Must Be Coordinated With Turkish Corporate Law

International investors sometimes select foreign law for the shareholders’ agreement.

That choice does not necessarily displace mandatory Turkish corporate rules governing a Turkish company and its shares.

Cross-border shareholder agreements therefore require coordinated contractual and corporate-law analysis.

Option Clauses Should Survive Relevant Events

The agreement should address whether the option survives termination of the shareholders’ agreement, change of control, death, insolvency or other significant events where appropriate.

Otherwise, the contractual exit mechanism may disappear precisely when it is most needed.

Tax Consequences Should Be Reviewed Before Exercise

A put or call transaction can create tax consequences for the seller and potentially other parties.

The tax structure should be reviewed before the option is exercised rather than after the transfer price has already been fixed.

Foreign Investors Should Conduct a Pre-Exercise Review

Before serving an option notice, a foreign investor should verify the trigger event, exercise period, notice requirements, share ownership, transfer restrictions, corporate approvals, regulatory approvals, valuation method, financing and dispute-resolution mechanism.

A defective exercise notice can transform a strong contractual position into a procedural dispute.

Immediate Strategy When an Option Dispute Begins

When a shareholder refuses to honor a put or call option, the investor should immediately preserve evidence, verify that the option was validly exercised, review the articles of association and company records, identify corporate transfer requirements, calculate the option price under the contractual formula, assess interim protection, prevent unauthorized disposal of the shares where legally possible and initiate the contractual dispute-resolution mechanism without unnecessary delay.

Frequently Asked Questions

Are put options enforceable in Turkish shareholder agreements?

They can create enforceable contractual rights when properly structured, but enforceability depends on the wording of the agreement, applicable law, company type, mandatory rules and share-transfer requirements.

Are call options enforceable in Turkey?

Potentially, yes. The clause should clearly establish the triggering event, shares, exercise mechanism, price and obligations necessary to complete the transfer.

Does exercising a call option automatically make the investor the shareholder?

Not necessarily. Contractual exercise and completion of the legally required share-transfer steps should be distinguished.

Can a foreign investor use a put option to exit a Turkish company?

Potentially. The effectiveness of the exit depends on the agreement, pricing mechanism, counterparty’s ability to pay and applicable corporate formalities.

Can the option price be predetermined?

Yes, parties can establish pricing mechanisms contractually, but the structure should be reviewed carefully for long-term commercial and legal risks.

What if the parties disagree about share value?

The shareholders’ agreement can provide for an independent valuation mechanism. The appointment process, valuation date and methodology should be defined clearly.

What if the shareholder refuses to sell after a call option is exercised?

The option holder may need to pursue contractual enforcement, interim measures or damages depending on the circumstances and dispute-resolution mechanism.

Can the articles of association prevent implementation of an option?

Transfer restrictions and corporate requirements in the articles can materially affect implementation. They should therefore be reviewed when the option is drafted and again before exercise.

Can a foreign-law shareholders’ agreement override Turkish company law?

Mandatory Turkish corporate rules applicable to a Turkish company cannot simply be ignored because the shareholders selected foreign law for their contract.

What should foreign investors check before exercising an option?

Confirm the trigger event, exercise deadline, notice requirements, pricing formula, ownership of the shares, corporate transfer restrictions, regulatory approvals and enforcement mechanism before serving the option notice.

Client-Focused Legal Support for Put and Call Option Disputes

Put and call option disputes can involve share transfers, deadlock, valuation, shareholder default, corporate approvals, transfer restrictions, interim injunctions, arbitration and enforcement of exit rights. Fırat Fesih Kaya Law Office assists foreign investors, international companies, founders and shareholders in structuring and enforcing option rights relating to Turkish companies. Lawyer Fırat Fesih Kaya provides legal assistance in reviewing shareholder agreements, assessing option triggers, preparing exercise notices, handling valuation and transfer disputes, seeking urgent protective measures and pursuing litigation or arbitration arising from shareholder exit mechanisms.

Phone: +90 312 434 22 22

Mobile / WhatsApp: +90 532 769 22 22

Email: info@firatfesihkaya.av.tr

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