Turkey: Squeeze-Out In Group Companies


The Turkish Commercial Code No. 61021 ("TCC") enables squeeze-out and exit rights of shareholders from joint stock companies in certain circumstances.

These rights are important in ensuring a balance of interest within the company. The legislative policy aims on the one hand to audit and control competition, and to control companies in a given market, but on the other hand encourages strong companies with a strong presence in the international arena (for example facilitated mergers and acquisition processes and tax incentives)2. The right to squeeze-out a minority with a material dissent of opinion also serves to establish a peaceful environment within a corporation and serves to establish a strong, concentrated company.

The TCC regulates the right to squeeze-out in company mergers and within group companies. Moreover, in the event the minority requests dissolution of a company for just cause, the TCC enables the courts to rule on squeezing out the claimant minority. One of the squeeze-out rights regulated under the TCC is specific to group companies. This newsletter article is in relation to the squeeze-out right regulated under Art. 208 granted to controlling companies.

In General

Apart from the annulment of shares in the event shareholders failed to fulfill the obligation to fully pay up the share capital subscription, the TCC regulates for the first time the right to squeeze-out a shareholder from a joint stock company.

TCC Art. 208 grants a squeeze-out right specific to group companies. A controlling (dominant, parent) company in a group, which directly or indirectly owns at least ninety percent of the shares and of the voting rights of its subsidiary, may squeeze-out the remaining minority if such minority violates the good faith principle, causes trouble and acts recklessly, by purchasing its shares in the company.

This squeeze-out right may be exercised only if there is just cause. The legislative justification of the article states that it serves to end the disturbing actions of shareholders who continuously block the decision making of the company for various reasons, and to ensure peace within the company.

Relevance with Full Dominance

The right of the dominant company to squeeze-out the minority is regulated among provisions governing group companies right after those related to full dominance.

Full dominance is directly or indirectly owning all shares and voting rights in a company. In principle, in a group of companies the dominant company may not exercise its dominance over its subsidiary in such a manner that results in a loss incurred by the subsidiary; otherwise, any such loss must be compensated. Nevertheless, in the event there is full dominance, the dominant company may give instructions to its subsidiary even if such instructions may result in losses3. The legislative justification for TCC Art. 203 emphasizes that as a precondition of this article being applied, the dominant company must own one-hundred percent of the shares and rights of its subsidiary, and the justification further states that the squeeze-out right granted under Art. 208 completes this provision.

Indeed, Art. 208 grants the dominant company, which directly or indirectly owns ninety percent of the shares and voting rights of its subsidiary, the right to buy out the minority shares and thereby achieve full dominance. The TCC enables companies to achieve the freedom of management granted under Art. 2084.


TCC Art. 208 requires the fulfillment of certain pre-conditions in order to exercise squeeze-out rights.

  • Only commercial corporations may exercise squeeze-out rights.

The article does not mention dominant undertakings along with dominant companies. Therefore, a squeeze-out right is granted to a dominant company, which owns ninety percent of the shares and voting rights in a subsidiary.

  • The dominant company should directly or indirectly hold ninety percent of the shares and voting rights in its subsidiary.

Indirectly owned shares and voting rights should be construed as shares and voting rights held by the dominant company through its subsidiaries.

  • There should be a just cause for squeezing-out the minority.

TCC Art. 208 considers reasons such as the minority preventing the operation of the company, acting against the good faith principle, causing substantial difficulties and acting recklessly as just causes for squeeze-out. Examples may be given such as abusing shareholding and minority rights, and harassing company managers. Nevertheless, it is very difficult to conclude when the exercise of rights, such as initiating annulment lawsuits against corporate body decisions and resolutions, casting negative votes regarding matters necessitating unanimity, postponing negotiations on the balance sheets and similar rights are to be construed as an abuse of such rights which violate the good faith principle5.

The Characteristics and Means of Exercise of this Right

The TCC foresees the squeeze-out right as an innovative right. The dominant company, through exercise of this right, may purchase the minority shares without obtaining the minority's consent or approval.

It is not explicit and clear from the wording of the article whether this right may be exercised through a unilateral declaration or whether it necessitates the issuance of a court order. The legislative justification of the article states that the decision is left to the courts in order to prevent any misuse; nevertheless the wording of the article is different than that of the draft commercial code of 2005, the year when its legislative justification was drafted. Nonetheless, Art. 208 refers to Art. 202/2 regarding how the purchase price should be determined, and the sell-out right regulated under Art. 202/2 may be exercised through a court order. Hence, the squeeze-out right granted under Art. 208 is an innovative lawsuit. The court should especially determine whether there is a just cause, as well as the share purchase price6.

The purchase price of the shares is the market price, in the absence of which the value should be determined in accordance with Art. 202/2. Pursuant to Art. 202/2, in the absence of a market share or if the market share is not equitable, the shares will be purchased based on their actual value or their value should be determined in accordance with a generally accepted valuation method.


TCC Art. 208 regulates the right of a dominant company within a group of companies to purchase minority shares and squeeze-out the minority, in order to achieve peace within the company. As specified in the legislative justification of the article, this provision aims to establish peace within the company and enables squeezing-out a problematic minority from the company. Simultaneously, dominant companies are granted an opportunity to obtain full control over their subsidiaries through this right.


1 Official Gazette, 14 February 2011, No. 27846. TCC entered into force on 1 July 2012.

2 Assit. Prof. Akın, TTK m. 208 Kapsamında Anonim Şirketlerde Azlığın Ortaklıktan Çıkarılması (Squeeze-Out of Minority from Joint Stock Companies under TTK Art.. 208), Gazi Üniversitesi Hukuk Fakültesi Dergisi (Gazi University Journal of the Faculty of Law) V. XVII, Year 2013, No. 1-2, p. 2.

3 Pursuant to TCC Art. 203 and Art. 204, the instruction should be compatible with the determined and concrete policies of the company group and it should not manifestly exceed the payment capacity of the subsidiary, endangering its existence or resulting in the loss of material assets.

4 (Assist.) Assoc. Prof. Okutan Nilsson, Türk Ticaret Kanunu Tasarısın Göre Şirketler Topluluğu Hukuku (Law of Group Companies Pursuant to the Draft Turkish Commercial Code), Levha Yayınları, Istanbul 2009, p. 437.

5 Akın, ibid, p. 14.

6 Okutan Nilsson, ibid. p. 442-444.

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.

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.