Related-Party Transactions Harm a Turkish Company: What Can Foreign Shareholders Do? – 2026 Updated Guide

Turkish Company Harmed by Related-Party Transactions: Legal Remedies

What can foreign shareholders do when related-party transactions harm a Turkish company? Learn about director liability, compensation, injunctions, and corporate remedies.

Related-party transactions can create serious financial and corporate risks for a Turkish company. Problems may arise when a director, manager, shareholder, or affiliated business transfers company assets, contracts, customers, or profits to another entity connected with them.

A related-party transaction is not automatically unlawful. However, undisclosed conflicts of interest, transactions below market value, misuse of company opportunities, and unauthorized transfers may give rise to compensation claims, director liability, unfair competition proceedings, and urgent court measures.

Foreign shareholders often face additional difficulties because they may live abroad, lack access to company records, or discover the transaction only after substantial financial damage has occurred. This 2026 guide explains the main legal remedies available.

What Is a Related-Party Transaction?

A related-party transaction exists when a company conducts business with a person or entity connected to its director, manager, shareholder, family member, parent company, subsidiary, or affiliated business.

Common examples include selling company assets to an affiliated entity at a low price, transferring profitable contracts to another company, paying excessive management fees, providing interest-free loans, assigning customers, purchasing goods from a company controlled by a director, or transferring company opportunities without fair compensation.

Such transactions may be legitimate if they are commercially justified, properly disclosed, approved by the competent corporate body, and completed on fair market terms. The primary legal question is whether the transaction served the company’s interests or improperly benefited the related party.

When Can a Related-Party Transaction Become Unlawful?

A transaction may become legally problematic when the director or shareholder conceals the relationship, fails to obtain the required approval, uses confidential information, acts outside their authority, or causes the company to suffer an unreasonable loss.

Suspicious circumstances may include a sale below market value, an unexplained payment to an affiliated company, a contract transferred immediately before completion, a sudden loss of customers, unusually high consultancy fees, repeated transactions without documentation, or payments made without a genuine commercial basis.

The company should also examine whether the transaction was recorded accurately in its accounts and whether the director participated in approving a transaction from which they or an affiliated business received a personal benefit.

Director Duties and Conflict of Interest

Company directors are expected to act with care, loyalty, and within the limits of their authority. They must not use their position to place a related company ahead of the company they manage.

A conflict of interest may exist when a director controls both sides of a transaction or has a personal financial connection with the counterparty. The existence of a conflict does not automatically invalidate the transaction, but it increases the importance of transparency, proper approval, fair pricing, and accurate documentation.

If a director transfers a business opportunity to an affiliated company without allowing the original company to benefit from it, the conduct may be treated as a breach of management duties. Personal liability may arise if the company suffers measurable damage.

What Can Foreign Shareholders Do First?

Foreign shareholders should act quickly and preserve all available information. The first step is usually to obtain corporate records, financial statements, contracts, board decisions, payment documents, accounting entries, and information about the related company.

The shareholder should create a timeline showing when the transaction occurred, who approved it, which companies were involved, what assets or contracts were transferred, and how the company was harmed.

It may also be necessary to secure company e-mail accounts, online banking access, cloud records, customer databases, and accounting systems. Passwords and signing authorities should be reviewed where there is a risk of further unauthorized transactions.

Shareholders should not access private accounts without authorization, delete records, threaten employees, or alter digital evidence. Such conduct may create additional legal problems and weaken the original claim.

Can Foreign Shareholders Request an Injunction?

In urgent cases, the company or an eligible shareholder may request interim judicial protection. An injunction may be considered where there is a risk of continuing asset transfers, destruction of evidence, misuse of confidential information, or further payments to related companies.

Depending on the facts, the requested measures may seek to prevent the disposal of company assets, restrict unauthorized use of corporate accounts, preserve electronic records, stop the use of confidential customer information, or prevent the continuation of a clearly harmful transaction.

The court will evaluate the urgency, evidence, proportionality, and potential damage. Security may also be required. A general request to stop all business with a related company may be too broad, so the application should identify the specific transaction and the immediate risk.

Compensation Claims for Company Losses

If a related-party transaction causes financial harm, the company may seek compensation for proven losses. Depending on the circumstances, the claim may include the difference between market value and the transaction price, lost profits, diverted contract revenue, unauthorized expenses, lost business opportunities, and costs incurred to repair the damage.

The company must establish causation. It is not enough to show that the company’s financial position declined. The evidence should demonstrate that the loss resulted from the specific transaction or the director’s conduct.

An accounting or financial expert may compare the company’s financial position before and after the transaction. Market prices, comparable contracts, expected profit margins, cancelled orders, payment records, and the company’s ability to perform the relevant contract may all be important.

A shareholder’s personal loss must be distinguished from the company’s loss. If the company’s assets or profits were reduced, the primary claim generally belongs to the company. A shareholder may need a separate legal basis to bring a direct claim or may need to use corporate remedies concerning director misconduct.

Can a Director Be Personally Liable?

A director may be personally liable where the transaction was carried out intentionally or negligently and caused damage to the company. Personal responsibility may be considered when the director concealed the conflict, diverted a corporate opportunity, used company assets for an affiliated business, approved an unfair price, or redirected company payments.

The director’s authority, the company’s internal documents, the existence of shareholder approval, the director’s financial benefit, and the evidence of damage will all be relevant.

Corporate protection does not automatically shield a director who personally commits wrongful conduct. However, personal liability is not presumed merely because a transaction involved a related company. The facts and supporting evidence must be evaluated carefully.

Corporate Remedies Against the Responsible Persons

Foreign shareholders may also pursue internal corporate remedies. Depending on the company structure and governing documents, possible actions may include requesting financial and corporate records, calling a general assembly, changing signing authority, removing or replacing a director, investigating related-party transactions, and seeking an independent review of the company’s accounts.

If a director refuses to provide records or continues approving harmful transactions, the shareholders may need to consider court proceedings concerning information rights, director liability, unlawful corporate decisions, or management deadlock.

Where the company has equal shareholders and the dispute prevents effective management, additional remedies may need to be assessed, including share valuation, exit arrangements, settlement negotiations, or dissolution-related proceedings.

What Evidence Is Important?

Important evidence may include contracts, invoices, bank statements, board minutes, shareholder resolutions, accounting records, corporate e-mails, WhatsApp messages, customer communications, valuation reports, internal approvals, and related-party payment records.

Digital evidence may reveal who created, accessed, downloaded, or transferred a contract. Cloud accounting records, electronic invoices, electronic signatures, CRM activity, corporate calendars, and online banking logs can be particularly useful in 2026 disputes.

Foreign shareholders should preserve original records and avoid relying only on screenshots. A forensic review may help establish the timing of the transaction, the persons involved, and the financial benefit received by the related company.

Can a Criminal Complaint Be Filed?

A criminal complaint may be considered if the facts involve fraud, breach of trust, unauthorized use of company assets, falsified documents, unlawful data use, concealment of funds, or deliberate diversion of payments.

A criminal investigation may assist in identifying evidence and responsible persons, but it does not automatically compensate the company. Commercial claims, interim measures, corporate proceedings, and settlement negotiations may also be necessary.

The complaint should be based on specific transactions, documents, amounts, and conduct. General accusations without supporting evidence may not be effective.

Can Foreign Shareholders Act from Abroad?

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

A lawyer can review company records, send formal notices, request urgent court protection, commence compensation proceedings, investigate director liability, coordinate evidence collection, and communicate with accountants, banks, directors, and other shareholders.

The company’s articles of association, shareholders’ agreement, management contracts, confidentiality provisions, dispute-resolution clauses, and arbitration agreements should be reviewed before any proceedings are started.

2026 Legal Considerations

In 2026, related-party disputes increasingly depend on electronic corporate records. E-mail correspondence, cloud platforms, online banking, electronic invoices, digital signatures, accounting software, customer databases, and messaging applications may reveal the true purpose and financial consequences of a transaction.

Companies should maintain clear approval procedures, conflict-of-interest declarations, internal payment controls, and access restrictions. Foreign shareholders should request regular financial reporting and promptly investigate unexplained transfers or sudden changes in profitability.

Customer and employee data must also be handled lawfully. Evidence should be preserved without unnecessary disclosure or unauthorized access.

Frequently Asked Questions (FAQ)

1. Are related-party transactions illegal in Turkey?

No. They may be lawful if properly disclosed, approved, commercially justified, and completed on fair terms. Hidden or abusive transactions may create liability.

2. What can a foreign shareholder do if company money was transferred to an affiliated business?

The shareholder may request corporate records, preserve evidence, seek interim protection, demand an internal investigation, and evaluate compensation or director-liability proceedings.

3. Can a foreign shareholder sue a Turkish company director?

Potentially. The legal basis may arise from breach of management duties, misuse of company assets, unfair competition, contractual violations, or other unlawful conduct.

4. Can the company recover the difference between market value and the transaction price?

If the loss and causation are proven, the company may seek compensation for the financial difference and other recoverable damage.

5. Can an injunction stop further payments to a related company?

An interim measure may be available where there is a serious and immediate risk of continuing financial harm or asset dissipation.

6. What documents should foreign shareholders request?

Important documents may include contracts, board minutes, accounting records, invoices, bank statements, related-party agreements, valuation reports, and electronic communications.

7. Can the director be removed after an undisclosed related-party transaction?

Depending on the company structure and applicable corporate documents, shareholders may be able to remove or replace the director through the competent corporate procedure.

8. Can a criminal complaint be filed for a related-party transaction?

Yes, if the facts may involve fraud, breach of trust, unauthorized asset use, false documents, payment diversion, or another criminal offense.

9. Can a shareholder personally claim the company’s lost profits?

Usually, the company’s loss belongs to the company. A shareholder may need a separate legal basis for a direct claim or may use corporate procedures to protect the company.

10. How quickly should a foreign shareholder contact a lawyer?

As soon as the transaction is discovered. Delay may result in additional transfers, deleted records, limitation problems, and increased financial damage.

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 Related-Party Transaction Disputes

Expert legal support is essential to avoid loss of rights. By working with a lawyer experienced in related-party transactions, director liability, shareholder disputes, corporate investigations, unfair competition, and compensation claims, 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 undisclosed transactions, unauthorized transfers, director misconduct, corporate losses, injunction applications, and compensation proceedings.

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