1. Introduction
The Turkish Commercial Code No. 6102 (TCC) has developed specialized notification mechanisms aimed at ensuring transparency across capital markets and corporate groups, as well as making the control and ownership structures over equity and management publicly visible. Serving as a cornerstone of these mechanisms, Article 198 of the TCC mandates that the acquisition or disposal of shares exceeding or falling below certain thresholds in the capital or voting rights of a capital company must be disclosed both to the target company and to the public. The overarching rationale of this provision is to bring radical alterations in shareholding structures to light, identify the ultimate decision-makers underlying capital accumulations, and unveil hidden control dynamics.
The registration and announcement obligations triggered upon acquiring or disposing of specific equity thresholds in capital companies are governed under Article 198 of the TCC and Article 107 of the Trade Registry Regulation (TRR). In delineating the scope of this notification requirement, the legislature took into account direct and indirect shareholding and voting rights thresholds. This framework is designed to render ownership and management dynamics predictable for third parties, corporate creditors, and minority shareholders in capital companies (such as joint-stock and limited liability companies). Nonetheless, the systematic placement of the article within the Code, the ambiguity surrounding the terms employed in its text, and the implementation criteria introduced by secondary legislation (TRR) have sparked substantial scholarly debate and practical controversy.
2. Substantive Prerequisites and Scope of the Notification and Registration Obligation
Pursuant to Article 198, paragraph 1 of the TCC, whenever an enterprise directly or indirectly acquires shares representing five, ten, twenty, twenty-five, thirty-three, fifty, sixty-seven, or one hundred percent of the capital of a capital company, or whenever its shareholding falls below these thresholds, it is obligated to notify the company and the authorized authorities designated by law.
The percentage thresholds enumerated in the provision constitute a numerus clausus (an exhaustive list). Intermediate transactions that do not cross or drop below these statutory benchmarks are exempt from notification. The legal ground of the share acquisition is immaterial; the transfer may be effected through purchase, donation, inheritance, corporate merger, or subscription to a capital increase. Driven by the same objective of market transparency, the provision subjects both the acquisition of shares crossing above the thresholds and the alienation of shares falling below them to identical disclosure obligations.
The legislature did not limit the scope of the rule to direct share ownership; indirect shareholding is explicitly captured as well. An indirect acquisition refers to an enterprise holding an interest in the target company through an intermediary entity. To prevent the circumvention of disclosure requirements through tiered holding structures, pyramidal equity arrangements, or controlled intermediate holding vehicles, Article 198 of the TCC aggregates direct and indirect holdings when calculating the relevant statutory percentages.
3. The Concept Of "Enterprise" And the Scope of Application Regarding Corporate Groups
3.1. Definition and Legal Nature of the Concept of "Enterprise"
The term "enterprise" (teşebbüs), which remains undefined within the text of the TCC, has been a subject of doctrinal contention. Okutan Nilsson contends that the teleological purpose of Article 198 is to reveal participation percentages without drawing any arbitrary distinctions. Under this view, the concept of enterprise encompasses all natural persons, legal entities governed by private or public law, and non-legal entities, provided that they possess the capacity to make independent decisions; it is not required for the person or entity to engage in an independent commercial or economic activity to qualify as an enterprise (Yanlı/Okutan Nilsson, pp. 772-775).
Under this approach, an individual who does not engage in commercial or industrial operations is nevertheless deemed an "enterprise" and must fulfill the notification requirement once they attain the statutory thresholds in a capital company. What matters primarily is the public disclosure of the economic and governance influence generated by the acquired voting or equity stakes.
3.2. The Debate on Whether the Provision is Limited to Corporate Groups
Relying on the systematic placement of Article 198 of the TCC, one might argue that the existence of a group of companies (şirketler topluluğu) is an indispensable prerequisite for the notification obligation to arise, as the article is situated within the "Group of Companies" chapter of the Code. However, the prevailing view in Turkish legal doctrine maintains that the application of Article 198 is not restricted to corporate groups; consequently, the notification obligation also arises in independent entities where no corporate group exists (Tekinalp, N. 23-73; Okutan Nilsson, pp. 77-78; Aytaç, p. 89; Kendigelen, p. 179; Göktürk, pp. 40-41).
The rationale supporting the dominant view rests on the principle of transparency: corporate visibility cannot be confined strictly to parent-subsidiary relationships, given that acquiring a 20% or 50% stake in an isolated, standalone joint-stock company fundamentally shifts internal balances of power, justifying disclosure to other partners and third parties.
3.3. Article 107/2 of the Trade Registry Regulation and the Hierarchy of Norms
In contrast to the dominant academic opinion, Article 107, paragraph 2 of the TRR expressly stipulates that the notification obligation arises "only if the enterprise or commercial company acquiring or disposing of the shares is affiliated with a group of companies." Under this secondary instrument, membership in a corporate group was converted into an explicit condition precedent for the obligation to take effect.
Scholars have criticized this provision, asserting that the condition of being affiliated with a group of companies is not contemplated under Article 198/1 of the TCC, and that a substantive requirement not established by statute cannot be introduced through an administrative regulation (Aytaç, p. 89 ). A parallel critique has been raised against Article 105 of the TRR.
3.4. Evaluation of TRR Article 107/2 Through Purposive Interpretation
Although it remains debatable whether Article 198/1 of the TCC envisioned such a narrow scope, sound legal justifications support the conclusion that Article 107/2 of the TRR does not violate statutory authority. Specifically, Article 18, paragraph 2 of the Law on the Entry into Force and Implementation of the Turkish Commercial Code (Law No. 6103) explicitly delegated the authority to determine the principles and procedures governing the execution of Article 198 to secondary regulations. Located within the provisions governing corporate groups, Article 198 fails to provide definitive statutory clarity regarding the precise contours of an "enterprise" or the strict necessity of a corporate group framework.
The primary aim of the provision is not to burden every individual shareholder meeting these percentages with an unrestricted duty of registration and publication. Accordingly, if the concept of an enterprise is interpreted broadly to cover any natural person, the statutory intention to place reasonable limits on this disclosure regime can be achieved through the regulatory condition of affiliation with a corporate group.
Furthermore, considering that Article 198 constitutes an exception to the general principle of the free transferability of shares and the rule that share transfers in joint-stock companies are not subject to commercial registration and publication, and given that non-compliance results in severe consequences—namely, the total freezing of share-related rights which directly impacts property rights—it is legally appropriate to interpret this restriction strictly in favor of shareholders under the canon exceptions are to be construed strictly. Therefore, when determining the scope of application of Article 198/1 of the TCC, the requirement of being part of a corporate group as set forth in TRR Article 107/2 should be observed. As a result, it is argued that for the notification obligation under Article 198/1 to arise, the enterprise acquiring shares at the specified thresholds must be part of a group of companies consisting of at least three companies
4. Notification and Registration Procedure and Calculation of Time Periods
4.1. Statutory Ambiguity and the Two-Tier Period Under TRR Article 107/5
Article 198 of the TCC requires the enterprise subject to the obligation to submit the notification to the target company and regulatory authorities within a ten-day period starting from the date of the share transfer. Nevertheless, the statutory text leaves open whether the application for registration and gazette announcement at the Trade Registry must be carried out by the acquiring enterprise or by the target company itself, and whether a separate window of time is allocated for this subsequent registry application.
This procedural gap was resolved by Article 107, paragraph 5 of the TRR. Pursuant to this provision, the enterprise must notify the relevant capital company of the share transfer within ten days following the legal completion of the transaction; upon receipt, the company must submit the registration and announcement request to the competent Trade Registry Directorate within ten days of receiving the notice.
Consequently, the Trade Registry Regulation establishes two distinct ten-day periods. The first ten-day period is granted to the enterprise to serve notice on the company; the second ten-day period is granted to the company to complete the registration and announcement procedures before the Trade Registry.
5. Consequences of Non-Compliance: The Sanction of Suspension of Rights
5.1. Scope of the Suspension Sanction
Under Article 198, paragraph 3 of the TCC, as long as the notification and registration requirements remain unfulfilled, all shareholder rights arising from the relevant shares—including voting rights, the right to attend general assembly meetings, and the right to file annulment lawsuits—are suspended (donma yaptırımı). While the suspension remains active, the shareholder cannot exercise managerial and administrative powers attached to those shares (while financial entitlements such as dividend claims remain disputed in legal doctrine, administrative prerogatives are comprehensively barred).
The suspension takes effect by operation of law; it requires neither an antecedent court judgment nor a constitutive corporate resolution by the board of directors.
5.2. Inception Point of Suspension and the "Twenty-Day Period" Rule
The issue that has generated the greatest uncertainty in practice is the exact point in time at which the suspension of rights comes into effect. Article 107, paragraph 6 of the TRR clarifies this by stating that "if no application is made to the relevant directorate within the period prescribed for the registration and publication obligation," voting rights and other entitlements affiliated with the subject shares shall be suspended.
This clarifies that the sanction of suspension materializes only if the required filings are omitted throughout the designated twenty-day cumulative period. In other words, during the twenty-day window following the legal completion of the share transaction, the voting rights attached to the acquired shares remain legally exercisable.
Consequently, in the event of an omission to provide the required notice, the suspension takes effect not after the initial ten days, but at the expiration of the full twenty-day statutory period running from the completion of the share transfer. Therefore, votes cast at any general assembly convened within the initial ten-day notification period, or during the subsequent ten-day registration window, remain valid and legally sound (Yanlı/Okutan Nilsson, pp. 772-775).
5.3. Effect of Suspended Votes on General Assembly Resolutions
Where a shareholder attends a general assembly and casts votes associated with suspended shares without fulfilling the notification and registration requirements after the twenty-day grace period has elapsed, the legal validity of the resulting resolutions must be assessed under Article 445 et seq. of the TCC. Exercising suspended voting rights constitutes a direct breach of statutory provisions. In assessing the fate of resolutions adopted under these circumstances, the following distinctions apply:
Non-Decisive Votes (Absence of Causal Impact): If, upon deducting the suspended votes, the statutory attendance and voting quorums remain satisfied and the resolution would have passed in the same manner, the unauthorized participation of the shareholder does not result in the annulment of the resolution (the negative causation rule under TCC Article 445 and 446).
Decisive Votes (Material Impact on Quorums): If the deduction of the suspended votes causes the meeting or resolution quorum to fail, or alters the substantive outcome of the vote, the affected general assembly resolution must be annulled by the competent court. In exceptional scenarios involving flagrant and fundamental breaches of corporate law public policy, claims seeking a declaratory judgment of absolute nullity (butlan) may be brought.
6. Conclusion
The notification and registration regime established under Article 198 of the TCC serves the vital public interest of fostering transparency and exposing control relationships in capital companies. However, because the primary statute omitted a precise definition of the term "enterprise" and left procedural timeframes open to debate, Article 107 of the Trade Registry Regulation stepped in to operationalize these legal mechanics.
The prevailing legal framework can be synthesized as follows:
When the term "enterprise" under TCC Article 198 is interpreted expansively to encompass private individuals, the corporate group requirement introduced by TRR Article 107/2 (necessitating a group structure composed of at least three companies) serves as an appropriate substantive limitation that safeguards constitutional property rights against disproportionate restrictions. However it should be considered that it is a controversial issue in doctrine.
The compliance procedure is not a single-stage event; rather, it is divided into a consecutive two-stage process comprising ten days for the enterprise to notify the company, followed by an additional ten days for the company to apply to the trade registry, amounting to a total window of twenty days.
The statutory suspension of shareholder rights—most notably the right to vote—is triggered only when the full twenty-day period from the share transfer expires without a registration and publication filing having been lodged. Any votes exercised during this twenty-day statutory window remain legally valid.
Once the suspension period takes effect, any votes cast in violation of the freeze will impair the legal integrity of general assembly decisions, rendering them subject to annulment actions where those votes proved decisive to the outcome.
This regulatory coordination between primary and secondary legislation strives to reconcile the demand for corporate transparency with the fundamental need to insulate shareholders' constitutional property and membership rights from unwarranted legal disruption.
REFERENCES
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- Baş, Kadir: "Anonim Şirketlerde Pay Sahiplerinin Türk Ticaret Kanunu m. 198 Uyarınca Bildirim Yükümlülüğü ve Bu Yükümlülüğe Aykırılığın Sonuçları" Banka ve Ticaret Hukuku Dergisi (BATİDER), Vol. 36, No. 2, 2020, pp. 61-68.
- Göktürk, K.: Şirketler Topluluğunda Sorumluluk Esasları, Ankara 2015.
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- Okutan Nilsson, Gül: Türk Ticaret Kanunu Tasarısı'na Göre Şirketler Topluluğu Hukuku, On İki Levha Yayıncılık, Istanbul, 2009.
- Tekinalp, Ünal: Sermaye Ortaklıklarının Yeni Hukuku, Vedat Kitapçılık, Istanbul, 2020.
- Yanlı, Veliye / Okutan Nilsson, Gül: "Türk Ticaret Kanunu'nun 198. Maddesi Uyarınca Bildirim Yapılmamasının Anonim Şirketteki Oy Haklarına Etkisi" Prof. Dr. Hamdi Yasaman'a Armağan, On İki Levha Yayıncılık, Istanbul, 2017, pp. 772-775.
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