Turkey: The Squeeze Out Right In Joint Stock Companies

Last Updated: 19 July 2013
Article by Ertugrul Bayramogullari


Although the squeeze out right has a longstanding presence in the international legal system, it has been introduced into Turkish Law for the first time with the New Turkish Commercial Code ("TCC") No. 6102 under Article 2081 of the TCC. The aforesaid right has been regulated under the general provisions regarding the commercial companies within the TCC and may also be used for corporate groups.

Purpose of the Regulation

The right approach for presenting the purpose of the controlling shareholder's squeeze out right may be through the subject of the controlling-minority shareholder(s) relationship. In this respect, the main purpose of this regulation is to provide for the efficient management of the business in question with fewer obstacles and costs, through the purchase of shares of the minority, who has not been an efficient part of the company, at a reasonable price, by the majority shareholder2.

Terms of Exercising the Squeeze Out Right in Turkish Law

a) The Controlling Company holding at least 90% of the shares and voting rights within capital companies

As per Article 208 of the TCC, the controlling company that would like to use the squeeze out right should directly or indirectly hold at least 90% of the shares and voting rights of the capital company. Since the squeeze out right can solely be implemented by a court decision, this percentage must be preserved until the date of the court decision3. On the other hand, share and voting right criteria shall be taken into consideration together while calculating the ratio determined by TCC. From the perspective of exercising the squeeze out right, it does not matter how the ratio is exceeded. Consequently, the ratio may be exceeded by methods such as dealing with the target company, collecting shares from the market, tender offer etc.4

b) Prevention of operation of the company by minority shareholder(s)'s actions against good faith

The minority shareholder(s) might abuse their provided minority rights in order to obtain benefits that are disproportionate to their legal status. To that end, they may file lawsuits regarding the annulment of general assembly resolutions, they may choose to not attend the meetings when the qualified majority is required to do so, or they may obstruct the decision making process by continually voting against resolutions. The behaviours which may result in a squeeze out of the minority shareholder(s) are illustrated through examples under Article 208 of the TCC. According to this provision, the controlling shareholder may apply to the court for the squeeze out of the minority shareholder(s), if the minority shareholder(s) prevent the company from running its business, do not act in good faith, create perceptible disruption or act in a reckless manner. The judge may evaluate whether the said actions are against good faith or not and the controlling shareholder shall have the burden of proof during the litigation.

c) Purchase of the Minority Shares

The share value to be paid to the minority shareholder(s) determined by the court is taken into consideration by the TCC when the controlling shareholder exercises its right of squeeze out. Article 208 of the Turkish Commercial Code states that, if available, the controlling shareholder may purchase the shares of the minority shareholder at stock-exchange value, and if such a value does not exist, they may be purchased at the value stated under Article 202/2. The second clause of Article 202 states that while the share value may be determined through the stock-exchange value, if this is not possible or if the stock exchange value does not correspond to a fair value, the share value may be determined through the net value (the balance sheet value)5, or through a value to be determined based on a commonly accepted method.

d) Decision of Squeeze Out and Transfer of Shares

Pursuant to Article 208 of the TCC, in the event of the specified conditions met, the controlling shareholder shall apply to the court for the squeeze out of minority shareholder(s). Therefore, during the process, which is started by the controlling shareholder filing a lawsuit against the minority shareholder(s), the court shall examine two important points and render a positive judgment. The first of these points is whether or not the ratio determined by TCC is exceeded by the controlling shareholder, and the second point is whether or not the minority shareholder(s) acted against the good faith principle through some unfavourable actions. In cases where these two conditions are met together, the court may rule for the squeeze out of the minority shareholder(s). Together with this decision, the shares belonging to the minority shareholder(s) will be transferred to the controlling shareholder. Apart from that, upon transfer of the minority shares to the controlling shareholder, a regulation guaranteeing the payment of the share value payment to the minority shareholder(s) have not been set forth under Article 208 of the TCC. In other words, there is a danger that the minority shareholder(s) will not be able to get their share value after being squeezed out. In order to eliminate this kind of danger, we are of the opinion that the court should rule an interlocutory judgment about the payment of the share values within a determined time period and to a place of deposit determined by the court, before ruling the transfer of ownership6. Within this interlocutory judgment, a warning should also be stated that a non-suit sentence may be ruled by the court in case the share values are not deposited within the determined time period.


1 Article 208 of TCC – If the controlling company holds, directly or indirectly, at least 90 percent of shares and voting rights in a joint stock company and if the minority prevents the company from running its business, does not act in good faith, creates perceptible disruption or acts in a reckless manner, the controlling company can purchase the shares of the minority at stock exchange value, if any, or at the value determined in accordance with the method set forth in paragraph 2 of Article 202.

2 Aslan, Ayşegül, Hâkim Ortağın Azınlık Paylarını Satın Alma Hakkı (Squeeze-out Right), Sermaye Piyasası Kurulu Ortaklıklar Finansmanı Dairesi (Capital Markets Board Department of Corporate Finance), Yeterlilik Etüdü (Competence Study), Ankara 2005, p. 5.

3 There is no expression regarding the manner of exercising the squeeze out right in the text of the article. However, before the enactment of TCC No. 6102, within the draft dated November 2005, it is clearly stated that the right to purchase should be exercised through the court. Later, with the modification made by the Justice Commission, the expression "application to the court" has been removed from the text, and it is stated that the share value shall be determined according to Article 202/2 of the TCC. Hence, the provision text was adapted this way. Therefore, we are of the opinion that the right to purchase within the scope of Article 208 may only be exercised through court, due to the fact that the right enacted under referred Article 202/2 can only be exercised through the court, and, further, the supervision of the claimed just cause shall only be done by the court.

4 Çelik, Aytekin, Anonim Şirketlerde Ortaklıktan Çıkarılma (Squeeze Out in Joint Stock Companies), 2. Edition, January 2012, p. 226.

5 Real value is defined as the balance sheet value based on the possible sale value of the assets. Tekinalp, Ünal (Poroy, Reha/Çamoğlu, Ersin) Ortaklıklar ve Kooperatif Hukuku (Law of Companies and Cooperatives), Updated 11. Edition, Istanbul October 2009, N. 1185.

6 In this respect see Okutan Nilsson, Gül, Türk Ticaret Kanunu Tasarısına Göre Şirketler Topluluğu Hukuku (Law of Corporate Groups Pursuant to the Draft Turkish Commercial Code), August 2009, p. 443

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Ertugrul Bayramogullari
Similar Articles
Relevancy Powered by MondaqAI
ELIG Gürkaynak Attorneys-at-Law
Baspinar & Partners
Kolcuoglu Demirkan Kocakli Attorneys at Law
Elmadag Hukuk
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
ELIG Gürkaynak Attorneys-at-Law
Baspinar & Partners
Kolcuoglu Demirkan Kocakli Attorneys at Law
Elmadag Hukuk
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions