Founder vesting in a Turkish joint-stock company cannot be copied from a Delaware template, because Turkish law does not know “unvested stock”. Once a founder’s shares are issued and paid, they are fully the founder’s; the articles of association cannot attach a condition that makes them evaporate. What Turkish law does allow is a set of contractual and corporate tools that together produce the same economic result: a call option in favour of the other founders or the company, a transfer restriction in the articles that stops the departing founder selling around the option, a pre-signed transfer instrument or an escrow arrangement that makes the option enforceable without a lawsuit, and a price formula that distinguishes the good leaver from the bad leaver. This article sets out how the four pieces fit and where each one belongs: the articles of association or the shareholders’ agreement. It follows on from our piece on the departing founder’s shares and feeds the SHA anatomy reference.
Why “unvested shares” do not exist under Turkish law
Two provisions of the Turkish Commercial Code No. 6102 (TCC) shape everything. Article 340 says the articles of association may deviate from the Code’s joint-stock company rules only where the Code expressly allows it. Article 480 says that, save for the exceptions in the Code, the articles may impose no obligation on a shareholder other than paying the share price and any premium. Together they close the door on the American mechanism, where the company’s certificate of incorporation or a restricted stock agreement gives the company a right to repurchase unvested shares at cost and the shares are simply forfeited. In Türkiye the founder who has paid for shares owns them, votes them and receives dividends on them from day one. Vesting therefore has to be built as an obligation to sell back, not as a condition on ownership.
That obligation lives in the shareholders’ agreement (SHA), which is an ordinary contract under the Code of Obligations. It binds the founders who sign it, and it is enforceable against them, but it does not bind the company as an organ and it does not automatically follow the shares into a third party’s hands. The corporate layer, in the articles, has one job: to make sure the shares cannot leave the founder’s hands without the company’s consent, so that the contractual layer always has someone to bite.
The four building blocks
The first block is the call option. The SHA grants the continuing founders, or a nominee they designate, the right to buy a defined portion of the leaver’s shares if the leaver ceases to work for the company before a set date. The vested and unvested portions are described as a schedule: typically a one-year cliff, then monthly or quarterly accrual over four years, exactly as in a US plan. What differs is that the “unvested” portion is simply the portion subject to the option at that date.
The second block is the transfer restriction. Under Article 490 registered shares are freely transferable unless the articles provide otherwise; under Article 492 the articles may make the transfer of registered shares subject to the company’s approval, and Article 493 lets the company refuse approval for an important reason stated in the articles or by offering to buy the shares at their real value. A restriction of this kind requires a 75 per cent capital majority to introduce later (Article 421(3)(c)), so it should be in the articles from incorporation. Without it, a departing founder can transfer the shares to a spouse or a friendly company and the call option becomes a damages claim against a person who no longer holds anything.
The third block is the enforcement mechanism. An option is only as good as the ability to perform it without a court order. Two techniques are used. In the first, each founder signs at closing an undated share transfer and endorsement, and the certificates or the interim share certificates (ilmühaber) are deposited with an escrow agent, usually a law firm or a notary, under written release instructions tied to the option’s trigger. In the second, the SHA contains an irrevocable power of attorney to execute the transfer and to instruct the board to record it in the share ledger; Turkish courts are cautious about irrevocable powers of attorney, so the escrow route is preferred for any meaningful stake.
The fourth block is the price. For a good leaver (death, incapacity, dismissal without cause, agreed departure), the unvested shares are bought at fair market value or, in many Turkish deals, at the price of the last round; for a bad leaver (resignation before the cliff, termination for cause, breach of non-compete or IP undertakings), at nominal value or the lower of nominal value and cost. The formula must be written in the SHA in full: a court asked to enforce a “price to be agreed” will not agree it for you.
Can the company itself be the buyer?
Often the founders do not want to fund the buy-back personally and would rather the company acquire the shares. Turkish law allows this only within Article 379: a company may acquire its own shares up to 10 per cent of its share capital, only with a general-assembly authorisation valid for at most five years that specifies the number of shares and the price range, only out of assets exceeding share capital and non-distributable reserves, and only if the shares are fully paid. Shares acquired in breach must be disposed of within six months (Article 385). Article 380 separately voids any advance, loan or security the company gives to a third party to finance an acquisition of its own shares, with a carve-out for employees. In practice this means the company can be a fallback buyer for small unvested blocks, but the primary buyer in a founder vesting clause should be the other founders, an investor, or a special purpose vehicle they control.
Articles or SHA: the placement map
The general rule of Turkish practice is to put into the articles only what the Code permits and what needs to bind future shareholders and the company as an organ, and to put everything else into the SHA. Applied to vesting: the approval requirement for share transfers (Article 492) and, if the founders want it, the “important reasons” for refusal (Article 493(2)) go into the articles. The vesting schedule, the call option, the good and bad leaver definitions, the price formula, the escrow arrangement and the power of attorney go into the SHA. An attempt to write the option itself into the articles would fail under Articles 340 and 480 and could give a departing founder an argument that the whole clause is void; keeping it contractual keeps it enforceable.
There is also a labour-law interface. A founder who is also an employee under the Labour Law No. 4857 has a termination that is governed by that Law, and a “bad leaver” definition that penalises the exercise of statutory employment rights can be attacked. Draft the triggers around corporate facts (ceasing to hold office, ceasing to provide services, breach of the SHA) rather than around the employment contract alone.
What investors will ask for
Institutional investors entering a Turkish company will expect founder vesting to exist or to be re-set at closing, and they will expect three things in the drafting: that the option is exercisable by the company’s board on the investors’ instruction or by the investors themselves, not only by the co-founders; that the vested portion accelerates on a change of control, usually on a double trigger; and that the escrow release instructions are workable without a founder’s fresh signature. They will also ask that the SHA’s vesting clause survive the founder’s departure as a shareholder, since Turkish SHAs commonly terminate for a party who ceases to hold shares.
A drafting checklist
Before you sign, check the following against your documents. The articles contain an Article 492 approval requirement and, ideally, Article 493 refusal grounds. The SHA contains a vesting schedule with dates, not percentages alone; defined good and bad leaver events; a call option with a named holder, an exercise window and a price formula that can be computed from the company’s accounts; an escrow or power-of-attorney mechanism with release instructions; a survival clause; and acceleration terms. The share ledger records the transfer restriction. And the founders’ employment or service contracts do not contradict the SHA’s triggers. If all of that is in place, a Turkish company can run vesting exactly as its Delaware cousin would, just with two more signatures at closing.
Can vesting be added to an existing company?
Yes. The SHA can be signed at any time and the call option applies to shares already held. Adding an Article 492 transfer restriction to the articles later requires a general-assembly resolution with the 75 per cent capital majority under Article 421(3)(c), and dissenters have no statutory way out of the new restriction: Article 421(6), which lets registered shareholders ignore transfer restrictions for six months, applies only to those who voted against a complete change of the business purpose or the creation of privileged shares.
Does the option holder need to pay the price in cash?
Under the general rules of the Code of Obligations the price can be set off, deferred or paid in instalments if the SHA so provides. What matters is that the transfer is completed and recorded in the share ledger when the option is exercised; disputes about payment should not hold up the transfer itself.
What if the founder never received share certificates?
Uncertificated registered shares can be transferred by written assignment and ledger entry rather than by endorsement, so the absence of certificates does not defeat the mechanism, but the escrow route works far better with certificates or interim certificates. Issue them at closing; our note on the cost of never printing share certificates explains why.
Related: good leaver / bad leaver · call option · SHA anatomy: articles or shareholders’ agreement.
Sources. Turkish Commercial Code No. 6102 (Articles 340, 379–385, 421, 480, 490–493); Turkish Code of Obligations No. 6098; Labour Law No. 4857. 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.
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