On 28 November 2017, at the Corporate Governance Association’s panel “Corporate Governance in Entrepreneurship: Venture Capital with Legislation and Practice Examples,” Vircon Legal co-founder Erdem Mümtaz Hacıpaşaoğlu, alongside Mehmet Buldurgan and Cenk Bayraktar, examined an often-overlooked but critical topic for startups: corporate governance.
Governance is what a company does between board meetings
Founders tend to treat governance as paperwork that arrives with institutional money. In practice it is the set of habits that determine whether decisions can be evidenced later: who was authorised to sign, whether the board actually met, whether a conflict was disclosed, and whether the minutes reflect what happened. A company with good habits and one with bad habits look identical until something is contested.
The moment investors arrive, those habits become contractual. Reserved matters, information rights and board composition move decision-making from informal to formal, and a founder who has never operated a board finds that ordinary decisions now require a process. Building the process early makes the transition uneventful.
The shareholders’ agreement does the real work
Articles of association set the constitutional frame; the shareholders’ agreement sets the commercial one. Transfer restrictions, tag-along and drag-along, pre-emption, deadlock resolution and what happens on a founder’s departure all live there. These provisions are negotiated when relations are good and consulted when they are not, which is exactly why vague drafting is expensive: an ambiguous exit clause is discovered at the worst possible moment.
Minority protection deserves particular attention in venture-backed companies, where founders often become minority holders over successive rounds without noticing the shift. The exit mechanics that follow from these terms are set out in Who Gets Paid First at Exit.
Go deeper
- Corporate Governance
- Startup Law in Türkiye: from formation to exit
- Founder & Investor Legal Glossary
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