Turkey: Shareholder Agreements

Last Updated: 19 December 2013
Article by Ezgi Babur

Based on their wide usage, shareholders' agreements ("SHAs") are of great importance in the sphere of corporate law practice. Their popularity is based on the elasticity they grant to shareholders in order to regulate their relations among each other and with a company. Considering this importance, we shall first analyze the legal relationship formed under SHAs and their effects at the corporate level. Finally, we shall look at the consequences of breaching SHAs.

In General

SHAs are agreements executed by the shareholders of a company, or those aiming to hold shares in a company, whose purpose is to regulate their relationship with each other, the company, and especially the structural and procedural order to be applied within the company. In terms of their usage in legal practice, SHAs provide a level of elasticity that cannot be obtained via the articles of association, and assure confidentiality among shareholders.

SHAs are binding and subject to the freedom of contract under the law of obligations. They impose on shareholders an obligation to exercise their rights arising out of shareholding status in conformity with the realization of the objectives set forth under the SHA1.

The Legal Relationship Formed under SHAs Between the Parties

As is known, one of the principal elements in partnerships is the affectio societatis element2. This element implies working in solidarity while associating over an equal foundation in order to reach a common purpose. It is stated that affectio societatis is stronger and more visible in real person partnerships ("kişi ortaklıkları") and is weakened in equity companies; however, it should be emphasized that it does not completely disappear3.

In view of the above-mentioned issue, the execution of a SHA may be decisive in practice. Under Turkish doctrine, it is stated that SHAs give rise to the emergence of a simple partnership relationship between the parties thereto4. Accordingly, when a SHA is concluded in order to regulate the relations within a joint stock company, its execution gives rise to a dual contractual relationship, which is formed by the joint stock company on one side, and a simple partnership on the other side5.

With regard to simple partnerships, the element of common purpose is stated among the basic elements of simple partnerships. This common purpose element requires that the participants in the simple partnership gather around a common goal to be established through this relationship. This element requires that every shareholder considers the common purpose as his own purpose in the establishment of the partnership, and that the pursuit of the common purpose is a means in the realization of his personal purpose6.

Consequently, the parties are under a duty to participate in the activities geared towards the realization of the common purpose, to cooperate with other shareholders and to make efforts to achieve the purpose.

Effects of SHAs at Corporate Level

Since they regulate the relations between the shareholders and the exercise of their shareholding rights, SHAs do not have corporative nature. The obligations arising out of agreements not having a corporative nature, such as SHAs, are not within the scope of the sole obligation principle, which is a valid principle in joint stock companies. The sole obligation principle limits obligations tied to shareholder status, and does not prevent shareholders from assuming binding obligations. Therefore, shareholders may assume obligations subject to the law of obligations, which would be binding among the shareholders.

Shareholders' agreements are valid and enforceable among the parties thereto, and do not impose obligations or give rise to rights to third parties or the company itself. The company is in the position of a third party with regard to legal implications of the agreement; therefore, the agreement is outside of the scope of a joint stock company, and may not be asserted against the company or the organs of the company7.

Claims concerning the performance of the agreement depend on the fact that the provisions of the agreement may not be asserted against the company or its organs. Concerning the performance of the SHA, in some cases, the subject matter of a provision may be within the scope of the authority of corporate organs. In such a case, corporate organs that are in the position of a third party may not be held accountable for the performance of the relevant provision.

Consequences of the Breach of SHAs

Based on its specific nature and its close proximity with the corporate level, the consequences for breaching an SHA shall be analyzed.

The first issue to consider is whether the sanctions set forth under the Turkish Commercial Code No. 6102 may be imposed on the breaching party for breach of the SHA. It is argued by Turkish scholars that, since the sanctions have been regulated for the circumstances as set forth under the law, they are only valid for said circumstances and therefore, may not be imposed on the breaching shareholder in case of breach of the SHA8.

In light of this determination, the sanctions that may be imposed in case of breach of the SHA are sanctions set forth under the law of obligations. These sanctions may be listed as specific performance, compensation, rescission of the agreement for synallagmatic agreements and termination on just grounds in cases where the agreement is of corporative nature. It should be noted that the preference between these possibilities is based on the nature of the breach.

Based on the compensation principles of the law of obligations, in case the performance of the obligation is still possible, the specific performance is considered as the principal remedy. However, in case the specific performance is not possible anymore, the remedies are based on Articles 112 et seq. of the Turkish Code of Obligations No. 6098 that set forth the infringement of contractual obligations.

It should be emphasized that specific performance and the possibility to request specific performance are of great importance here, since SHAs are closely related to the corporative sphere as well, and whether this performance is possible or not is based on these effects on the corporative sphere9.


The wide usage of SHAs in practice is based on the need to form a structure that better suits shareholders' needs. Shareholders may provide detailed provisions with regard to their rights and obligations within the scope of their shareholding status in the SHA. On the other hand, SHAs' close proximity with the corporate sphere may give rise to some level of complexity and a variety of disputes. In conclusion, with the need to regulate the relationship between shareholders, SHAs do not seem to lose their popularity in practice.


1 Gül Okutan Nilsson, Anonim Ortaklıklarda Paysahipleri Sözleşmeleri, İstanbul 2004, p. 4.

2 Reha Poroy/Ünal Tekinalp/Ersin Çamoğlu, Ortaklıklar ve Kooperatif Hukuku, Güncelleştirilmiş 9. Basıdan 10. Tıpkı Basım, İstanbul 2005, p. 26-27.

3 H. Ercüment Erdem, "Les rapports entre la société et le contrat en droit turc", le Contrat, Travaux de l'Association Henri Capitant – Des Amis de la Culture Juridique Française, Tome LV, 2005, p. 218.

4 Please see Poroy/Tekinalp/Çamoğlu, p. 91 ; Okutan Nilsson, p. 80 ; Anlam Altay, Anonim Ortaklıklar Hukuku'nda Sermayeye Katılmalı Ortak Girişimler [Equity Joint Ventures], İstanbul 2009, p. 244. It should also be noted that some authors in the doctrine do not support this view. Please see İsmail Esin/Tunç Lokmanhekim, Uygulamada Birleşme ve Devralmalar, İstanbul 2004, p. 67.

5 Poroy/Tekinalp/Çamoğlu, p. 586-587.

6 Nami Barlas, Adi Ortaklık Temeline Dayalı Sözleşme İlişkileri, 2. Bası, İstanbul 2008, p. 25.

7 Okutan Nilsson, p. 278. On the other hand, it should be noted that recently, opinions criticizing this strict classification emerged in the doctrine, and the interaction between the company law and law of obligations of this legal relationship is emphasized.

8 Okutan Nilsson, p. 344.

9 Okutan Nilsson, p. 346.

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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