Leaving a Turkish limited company is nothing like selling listed shares. A share transfer needs general assembly approval, a willing buyer is usually nowhere to be found, and once the relationship sours a partner is trapped holding a stake that is valuable on paper but impossible to cash. Turkish law’s answer is the regime of exit and expulsion: a shareholder may leave the company under certain conditions, and the company may force a shareholder out under others. Both sound straightforward; in practice, both can turn into litigation measured in years.
The misconception we encounter most often in dispute work is the partners’ assumption that once the relationship breaks down, a court will release them quickly and at a fair price. In reality the threshold for just cause is high, the calculation of the severance payment is fiercely contested, and the departing shareholder may spend the entire proceeding locked out of management. This article looks at how the exit and expulsion regime under the Turkish Commercial Code (TCC) actually operates, and what should be dealt with at the drafting stage.
The right to exit does not arise by itself
Article 638 of the TCC opens two separate doors for a shareholder in a limited şirketi. The first is contractual: the articles of association may grant shareholders an exit right and attach conditions to its exercise. The second is judicial: absent such a clause, a shareholder can only ask the court to order their exit on the basis of just cause. The difference is fundamental. A contractual exit right is exercised by unilateral declaration once its conditions are met; the judicial route means a lawsuit of uncertain outcome that can run for years.
Few founding teams appreciate this distinction at incorporation. Articles of association are usually lifted from the standard template the trade registry accepts; the exit right, the valuation formula and the payment schedule are never written down. While relations are good, nobody wants to discuss these clauses; once relations break down, the majority needed to amend the articles no longer exists. Writing the exit scenario while everyone still has bargaining power is the cheapest insurance against the court route.
Just cause is narrower than people think
In judicial practice, just cause is read as the collapse of the relationship of trust underlying the partnership, to a degree that makes its continuation intolerable. A single argument, being outvoted at one general assembly, or a year without the expected dividend will not, on its own, clear that bar. What courts look for is a sustained and objectively documented pattern: systematic obstruction of the shareholder’s information requests, company resources being channelled to one faction, de facto exclusion from management, or profits being withheld for years without justification, all assessed together.
In practical terms this means a shareholder contemplating an exit claim must start building a record long before filing. General assembly minutes, unanswered information requests, formal notices and correspondence form the backbone of the case. The distance between feeling wronged and proving just cause in law is where most of these cases are lost.
Expulsion works through two doors as well
The other side of the coin is the company expelling a shareholder, and Article 640 of the TCC mirrors the dual structure. The articles of association may specify in advance the grounds on which a shareholder can be expelled; in that case a general assembly resolution suffices, and the expelled shareholder may challenge it in court. If no grounds are written into the articles, the company can only apply to the court for expulsion based on just cause.
In a startup context, contractual expulsion grounds are especially useful. Breach of a full-time commitment, violation of a non-compete, refusal to complete a promised transfer of intellectual property to the company, or a sustained failure to contribute to operations can all be drafted in measurable terms. Where such grounds are missing, the company is squeezed between a founder who no longer works but still holds equity, and the uncertainty of a long just-cause action. Founder separation planning exists precisely to keep that scenario off the cap table.
A word of caution on proportion: stretching expulsion grounds too wide can render the clause unusable. Vague wording, such as “conduct contrary to the company’s interests”, invites argument at the resolution stage and works against the company in any annulment claim. A well-drafted expulsion clause contains a small number of concrete, provable grounds.
Do not let the severance payment stay theoretical
The amount due to an exiting or expelled shareholder, the severance payment (ayrılma akçesi), is calculated under Article 641 of the TCC on the basis of the real value of the capital share. That sounds clean; in practice there are two major battlegrounds. The first is valuation method: the gap between book value and real value can be enormous, particularly in a growing technology company. Court-appointed experts tend to blend several methods, and each report draws fresh objections from both sides. The second is timing: the statute ties actual payment to the company having available equity to fund it, which in a cash-strapped venture means the claim gets stretched over years.
Drafting practice manages this uncertainty with two tools. A valuation formula is written into the articles or the shareholders’ agreement in advance, referencing the last financing round valuation, a determination by an independent valuer, or an agreed multiple. Payment terms, instalments and interest are fixed at the same time. The formula can also differentiate by the nature of the departure; a shareholder expelled for breach and one leaving for health reasons receiving the same price strikes most teams as unfair, and that distinction is built on good leaver / bad leaver logic.
A realistic picture of the court route
Exit and expulsion claims are heard by the commercial courts of first instance and typically involve more than one round of expert examination: first on whether just cause exists, then on the calculation of the severance payment. Every report can be challenged, and once the appellate stages are added the process is measured in years. Throughout, the partnership formally continues: the claimant keeps receiving assembly invitations and remains bound by resolutions, while the company has to face investors with a shareholder whose future is unresolved.
The cost side should not be underestimated either. Monetary claims attract proportional court fees, so the higher the share value, the higher the upfront cost of suing. Expert fees and attorney fees come on top. The figures vary from file to file, but the direction never does: the case runs longer and costs more than either side expected at the outset. For a company preparing a financing round, a pending shareholder dispute is a due diligence finding in its own right and directly shapes investor risk appetite.
To pull the threads together: exit and expulsion in the limited company are safety valves provided by statute, but they operate slowly and expensively unless shaped by contract. The task at incorporation or at the first investment round is clear: write into the articles and the shareholders’ agreement the conditions of the exit right, concrete expulsion grounds, the severance payment formula and the payment schedule. Nobody drafting these clauses plans to use them; when they are needed, the difference they make is the difference between a few paragraphs of text and years of litigation.
Sources. Turkish Commercial Code No. 6102. Statute links open the official Turkish texts on mevzuat.gov.tr.
This article is provided for general information only and does not constitute legal advice. Please seek legal support for an assessment of any specific matter.
Author
If this is on your desk
Templates and checklists are free in the Founder Academy; for a specific situation, book a 30-minute intro call.
Founder AcademyBook an intro call