Turkey: The Rights Of Minority Share Holders

Last Updated: 18 September 2013
Article by Elmadag Hukuk

The New Turkish Commercial Code (New TCC) no: 6102 came into force on the first of July 2012. The present code is significantly amended and renewed by it .The rights of minority are one of these issues which are considered by the New Turkish Commercial Code. Although, the rights of minority were already stipulated in the previous code, these rights have been significantly improved by the New Turkish Commercial Code.

The meaning of the Minority shareholders is stipulated in the New Turkish Commercial Code Article 411/1 that the shareholders holding at least 10% percent of the share capital for closely held companies and 20% for publicly held companies are considered as "minority". In order to protect the minority shareholders against the negative influence of majority's power and balance the interest of the both shareholders on the serious matters, some rights are given to these minority shareholders according to The New Turkish Commercial Code. These rights have been mainly pointed out by the articles no: 360, 366, 411, 412, 428, 559 and 531.

The new articles and amendments with respect to Minority Shareholders may list as follows;

1. Exceptions of the Principle of Compliance with the Agenda

Pursuant to Article 411/1 of the New Turkish Commercial Code, the shareholders holding at least 10% percent of the share capital for closely held companies and 20% for publicly held companies are entitled to request the call of the General Assembly or the inclusion of the subjects they wish to be discussed in the General Assembly whereas General Assembly has already been called, to the agenda with mentioning the reason for it.

2. Representation of Specific Groups in the Board of Directors

The New TCC gives a right to certain groups to be represented in the board of directors. One of them is minority shareholders who have a right to be a member of the board of directors or have a right to offer a person to be board members if this right is accepted in the article of association. (Art. 360 of the Code). Pursuant to the article 360 "certain class of shareholder groups and minority shareholders are entitled to be represented in the board of directors if this right is mentioned in the article of association.

3. Procrastination of the Deliberations of the Financial Tables

As per the Article 420 of the New Turkish Commercial Code, Minority shareholders are entitled to request procrastination of the Financial Tables discussion for one month. There will be no need of Decision of General Assembly for this procrastination. The aim of this provision is to provide the minority shareholders to have more chance to review the financial tables in detail.

Minority shareholders may also request the procrastination of the financial tables for second time, if they are not satisfied with the provided explanation. If General Assembly approves the Financial Tables regardless of the minority shareholder request, the approval of financial tables may deem null or be cancelled by the court.

4. Right to Appoint an Independent Auditor

Article 428 of the New TCC, regulates the request for the appointment of an independent auditor. As per the article, each shareholder is entitled to request an appointment of independent auditor if there is a need for clarifications on the some issues. This request may be made, even it is not included to agenda. On the other hand, the right to obtain the information shall be exhausted prior to the request.

Nevertheless, If general meeting refuses a shareholder's request to special audit, minority shareholders -holding 1/10 of capital or 1/20 capital in public corporation or the amount of nominal value of shares is at least one million Turkish Liras- may apply to the court in order to appoint a special auditor.

5. Termination with Justified Reasons

Prior to The New Code entered into force, minority did not have a right to termination of corporation with the valid reasons. However, it is accepted that there can be a right to termination in the articles of association by doctrine. New TCC indicates this right if there are valid reasons to terminate. The code does not explain what valid reasons are, but it should be analyzed in every present case.

As per the article no 531 of The New TCC, the minority shareholders with justified reasons may request the dissolution of the company from the court where the company's head Office is located. (Art. 531 of the code) When the minority shareholders request to the court for termination of the corporation according to good reasons, the court may decide to eliminate these applicant shareholders after paying their shares' with real values or decide to acceptable and fairly solution.


On the other hand; not only New TCC intends to protect minority shareholders under some articles, but also it tries to balance the power of dominant shareholders against the minority ones with squeeze out. In another words, the situation called "Squeeze out "is used for the situation that the majority shareholders gets rid of a minority. This term is accepted by different countries such as Germany, United Kingdom and United States.

Pursuant to The New Turkish Commercial Code rule 208, In order to prevent the bad influence of the minor shareholders on the process of the company, Shareholders owning at least 90% of a company's shares directly or indirectly have the right to "squeeze out" the remaining minority of shareholders by buying their shares under some circumstances such as to hinder the company's business or to violate honestly rule or to make big troubles. The value of shares should be found by their stock market value or if there is not stock market value, it should be found by Article of 202 of the Code.

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.

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