Turkey: Squeeze Out Merger In Joint-Stock Companies

Last Updated: 30 August 2013
Article by Ertugrul Bayramogullari


A merger not only affects the companies in all aspects, but it is also of consequence to the shareholders involved. While the acquiring or merged company may face various managerial risks in case the shareholders who do not want to be a part of the post-merger structure or oppose the merger operation itself maintain their presence after the merger, existence of such a dissident group may also lead to receiving less benefit from the merger than has been originally anticipated. Under certain conditions, therefore, the need to relinquish the principle of ownership continuity, which is among fundamental tenets of a merger, may arise in an attempt to decrease the impact of this and similar unfavorable conditions. Accordingly, a number of national legislations give the shareholders opposing the merger the right to exit from the company and the other shareholders the right to squeeze out such shareholders, subject to certain requirements.

In this regard; as per Article 141 of the new Turkish Commercial Code nr. 6102 ("TCC"), while the companies involved in the merger may stipulate in a merger contract that only the compensation payment is granted, they can also provide shareholders with the option to choose either to acquire shares and shareholding rights in the acquiring company or to receive compensation payment equal to the actual value of the company shares to be acquired.1

Squeeze-Out Merger

Paragraph (2) of Article 141 of TCC, which governs squeeze-out mergers, does not set forth any necessity to justify squeezing out shareholders from the shareholding through merger, not does it cover any extra requirement such as the squeezed out shareholder causing problems. Rationalé of paragraph 2 of Article 141 of TCC, however, includes expressions such as squeezing out the minority and/or shareholder who "always causes problems", "disturbs the peace", "is unwanted" etc. Therefore, it is justified to assess that the legislator's intention has not been reflected in the article's text in the way as described in the rationalé.

To squeeze out shareholders following the merger, the contract for merger must cover the provision that squeezed out partners shall be paid compensation payments.2 Otherwise, it will not be possible to squeeze out any partner from the company in case such a provision is absent in the contract for merger, even if the resolution for merger is adopted with an affirmative 90% of the present votes.3

In cases where the compensation payment is not covered in the contract for merger, subparagraph (a) of paragraph 1 of Article 151 of TCC requires that the resolution for merger be adopted by a decision quorum equivalent to ¾ of the current votes in the general assembly provided that the majority of the registered and issued capital are represented. In cases where the compensation payment is mandatorily covered in the contract for merger, as per paragraph 2 of Article 141 of TCC, the resolution for merger as set forth in paragraph 5 of Article 151 of TCC should be adopted by an affirmative vote representing 90% of all voting rights of the company. This requirement is based on the fact that adoption by the general assembly of a contract for merger covering compensation payment translates into termination of the title of shareholder held by certain shareholder(s). For this reason, the resolutions for merger that result in squeeze out has been made conditional upon such a very high 90% affirmative quorum vote. Securing such a quorum vote leads to terminating shareholding rights of all or a part of the remaining shareholders, therefore preventing the partner(s) not wanted by at least 90% of a joint-stock company from maintaining the title of shareholder.

Compensation Payment

In a merger operation, a shareholder may not be squeezed out unless their compensation payment is paid. Although Article 141 of TCC does not put any requirement as to what the compensation will be, it has been stated therein that a non-monetary asset may be granted as compensation for withdrawal. Consequently, the compensation payment which will be given to the shareholders intended to be squeezed out may be either a certain amount of money, or shares/other types of securities (convertible bonds etc.) of another company. On the other hand, compensation payment should absolutely reflect the actual value of the acquired company shares. Although the law does not govern calculation of the actual value, this matter has been left to the course that the execution of the law will follow, provided that a "standing company" has been taken as basis.


1 ARTICLE 141-(1) In a merger contract, companies participating in the merger can provide shareholders with the option to choose either to have shares and shareholding rights in the transferee or to receive a compensation payment equal to the actual value of the company shares to be acquired. (2)Companies participating in the merger can set forth in the merger contract that only the compensation payment is granted.

2 "Basically, Paragraphs (1) of Article 141 of TCC gives the shareholder the right to exit from the company and paragraph (2) of the same Article provides the majority with the right to squeeze out. Çoştan, Hülya, Yeni Türk Ticaret Kanunu'na Göre Birleşme, Bölünme ve Tür Değiştirme Kararları (Resolutions for Merger, Spin-off and Conversion According to the New Turkish Commercial Code), Updated 3rd Print, February 2013, pg. 111.

3 Çelik, Aytekin, Anonim Şirketlerde Ortaklıktan Çıkarılma (Squeeze-Out in Joint-Stock Companies), 2nd Print, January 2012, pg.261-262.

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
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”

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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.