With new Turkish Commercial Code no. 6102, pre-emption
rights of the shareholders have been renewed and extended with
safeguarding provisions; the scope of limitations is explicitly
defined. But the right of first refusal is still not regulated
under legislation and is still subject to Code of Obligation
What is a pre-emptive right?
A pre-emptive right grants the shareholder priority to purchase
(i) newly issued shares pro rata to its shareholding in case of
capital increase, based on statute (pre-emption right) or (ii) the
existing shares of other shareholders before third parties, by
contract (right of first refusal).
Turkish Commercial Code no. 6102 dated 14 February 2011
(Türk Ticaret Kanunu; TCC) explicitly grants existing
shareholders the right to purchase new shares to be issued by means
of a capital increase pro rata to their shareholdings in the
company (pre-emption right; rüçhan
hakkı). The shareholder may thus maintain its existing
participation in the company's share capital – a dilution
risk is eliminated.
Exercise of the pre-emption rights of a shareholder may not be
restricted or prohibited with a provision inserted in the articles
of association (ana sözleşme) of the
company. According to Art 461 of the TCC, pre-emption rights
may be fully or partially restricted or prohibited only by adopting
a resolution of the shareholders' meeting. However, such
resolution requires the affirmative vote of at least 60% of the
share capital at the shareholders' meeting. In addition, there
should be a written report prepared by the board of directors
justifying such restriction or prohibition, and the report should
be announced and registered at the Trade Registry.
In each case, the restriction or prohibition of pre-emption
rights must be based on a justifiable reason, and the restriction
or prohibition decision must be in the company's best interest
– and it may not lead to an advantage/disadvantage to someone
for unjust reasons. The relevant TCC provision lists examples that
can be deemed as justifiable reasons, such as a public offering;
acquisition of the enterprise, parts of enterprise or subsidiaries;
and participation of employees in the company.
The Board of Directors is required to define the specifics of
the right to acquire new shares in its resolution, and give at
least 15 days' notice to the shareholders in order to exercise
the relevant right.
Right of first refusal
The right of first refusal (ön alım
hakkı) is a contractual right that grants the holder to
the right to purchase existing shares of other shareholders before
third parties. It is not regulated under Turkish legislation.
However, a right of refusal may be agreed by the parties in
shareholders' agreements and articles of association. According
to an executed shareholders' agreement, the right of first
refusal can be exercised with the delivery of a unilateral
statement from the holder of the right. In such case, the other
shareholder must make the share transfer to the holder of such
Contractual v statutory pre-emptive rights
Pre-emption rights are regulated under the TCC as a statutory
provision that may lead to cancellation of the share transfer upon
request of the shareholder if his/her right is infringed. Such
request would lead to an invalid share transfer and annulment of
the shareholders' meeting.
On the other hand, shareholders' agreements are contracts
executed between shareholders in accordance with the principles of
the Code of Obligations. In case of an infringement of the right of
first refusal, unlike with pre-emption rights, transferred shares
would still be valid, but the breaching shareholder would be liable
for damages; that is, the share transfer would become the subject
of an action for damages.
Quote: Exercising pre-emptive rights may
lead to different results depending on the nature of the right:
statutory or contractual.
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