The week after the founder’s second operation, a question was asked out loud for the first time at a machinery maker owned by four siblings: who runs the company now? Two had spent years in the factory, one ran sales, one had never been involved. A son-in-law headed exports. Profits had gone undistributed for years, always for reinvestment. Nobody raised it, because raising it counted as a move against the founder.
What these questions have in common is that their answers get sought at the worst possible moment. Who leads the company, whether the son-in-law keeps his post, why nothing has been paid out — none of it belongs in a hospital corridor or at the first meeting about the estate. A family constitution is written to pull those decisions forward.
The obvious objection arrives at once: no court will enforce this document. Correct. A family constitution is not an enforceable contract, and treating it as one does damage. Enforceability was never the point. Its value lies in forcing every subject the family avoids onto the table before a dispute erupts.
A family constitution is not a company law instrument
The family constitution (aile anayasası) is not a document type regulated under the Turkish Commercial Code (Türk Ticaret Kanunu, TTK). It is neither the articles of association (esas sözleşme) nor a shareholders’ agreement (pay sahipleri sözleşmesi). The articles are registered and announced, and bind the company, its organs and every shareholder, present and future. A shareholders’ agreement binds only its signatories, and breach is a damages question. A family constitution reaches people neither instrument addresses: children who hold no shares yet, those who joined by marriage, the generation that draws no salary but expects profit.
That does not make it legally inert. It records the negotiation behind the agreements, share transfer undertakings and amendments signed afterwards. When someone asks years later why a clause exists, the parties’ shared intention is read from this text. Dating it, recording who took part and having it signed are worth the trouble.
Presenting it as a binding contract backfires. A member who signs believing they gave an enforceable undertaking learns otherwise in the first dispute, and confidence in the exercise ends there.
The gap does not stay empty
Questions a family declines to answer do not go unanswered. The statute’s default rules answer them, and if the parties press on, a court does. The family need not like that answer.
Profit distribution shows this most plainly. Under TTK Article 507 each shareholder shares in the net profit resolved for distribution in proportion to their holding. The general assembly (genel kurul) resolves, and the reserve regime of Article 519 comes first: the general statutory reserve takes 5% of the annual profit until it reaches 20% of the paid-in capital. Once the majority wing votes against distribution, that statutory skeleton is all the sibling expecting a dividend (temettü) has left. A family understanding is no substitute for votes.
Information rights follow the same logic. Article 437 requires the financial statements, the annual activity report, the audit reports and the profit distribution proposal to be open to shareholder inspection at least fifteen days before the general assembly meeting, and states that this right cannot be removed or restricted by the articles or by any organ’s decision. Shareholders representing at least one tenth of the capital can call a meeting and place items on its agenda under Article 411. These tools get used after the relationship breaks down, and by then the family meeting is long over.
Succession works the same way. “Shares must stay inside the family” is easy to say over dinner. Its legal counterpart is a transfer restriction in the articles for registered shares (nama yazılı pay). Under TTK Article 493/4, where shares were acquired through inheritance, division of an estate, the matrimonial property regime between spouses or enforcement proceedings, the company can withhold approval only by offering to take them at their real value. Stopping the transfer therefore costs cash, and if nobody has settled who funds it, the clause stays on paper.
Where the relationship locks up entirely, the heaviest option remains: dissolution for just cause (haklı sebeple fesih) under TTK Article 531 for a joint stock company and Article 636 for a limited company. A court is presented with shareholders and a partnership relationship, not a family history.
The document’s real function is to move the decision ahead of the crisis
The worth of a family constitution comes from the moment it is written, not from enforcement. It does three things, each only before a crisis.
First, it makes expectations visible. That the sibling who quietly absorbed years of deferred distributions treats this as a breach surfaces only once a written policy is discussed. Silence gets mistaken for agreement, when it usually means each person assumes their own answer is shared.
Second, it takes the sting out of refusal. Telling a nephew he cannot have a management post wounds the relationship while the answer belongs to the uncle delivering it. Resting it on a rule agreed in advance moves the argument onto the rule, which can be changed, but through a procedure.
Third, the discussion happens while the roles are unassigned. A rule set before anyone knows who will lead comes out balanced, because each person can picture themselves in that chair. Attempt it after the successor is known and the argument is about a person, not a principle. Founders face the identical dynamic: founder departures in startups turn destructive less because someone leaves than because the terms were never written in advance.
Which subjects belong on the table?
A family constitution is not a sentimental text but a list of postponed company decisions. The headings below feed one another, and leaving one blank leaves the rest incomplete.
- Separating ownership from management. Holding shares entitles nobody to a board seat, and a board seat creates no privilege over profit. Saying that openly changes the ground of every later argument.
- Rules on family employment. On what terms a family member joins, how their pay is set, who assesses performance and how a departure is handled.
- The expected profit distribution policy. When distribution is expected, when reinvestment takes priority, and how undistributed profit is reported to shareholders.
- Share transfers and sales outside the family. How the price is fixed on an internal transfer, who gets a right of first refusal (önalım hakkı) or similar mechanism, and what conditions attach to a sale outside.
- Dispute procedure and the succession timetable. Which forum is approached in which order, what triggers the handover, and which rights the outgoing generation keeps.
Each of these, once agreed, either moves into a legally binding instrument or stays as a declaration of intent. That sorting is a separate, technical exercise, and during the negotiation it is enough to know it comes.
The process does not finish in one meeting
A lawyer drafting the document alone and circulating it for signature is the easiest version of this work and the least useful. Value that sits in the negotiation cannot survive skipping it, and a rule the family did not build in its own words gets abandoned the first time it bites.
- Draw the circle first. Shareholders only, the whole generation, or spouses and those who married in — leave that for later and the first crisis opens with an argument about who belonged in the room.
- Start from the data. Who holds what, who occupies which post, what the company pays to whom, whose name the properties sit under. Debating principles before that is clear wastes time.
- Leave interim versions. The text does not close in a single sitting. Each round records what was agreed, marks the open points as open, and carries them forward.
- Define the lawyer’s role. Counsel is not the author but the person who says which sentence can be made legally binding and which stays an expression of intent.
The length of the process is the work, not a defect in it. The distance between the meeting where the family first hears each other’s expectations and the one where everyone accepts the same sentence decides whether the document survives.
If the constitution contradicts the articles of association, which one prevails?
The articles do. A family constitution has no priority in a conflict, and an internal understanding does not displace a registered provision. Nor can every undertaking the family agrees on go into the articles: under TTK Article 340 they deviate from the Code’s provisions on joint stock companies only where the Code expressly permits it.
The break usually shows on share transfers. The constitution says shares cannot be sold outside the family, no restriction was built into the articles, and the company has no ground to refuse approval. The family learns that a rule it believed in for years never existed, and learns it after the transfer has gone through.
The second risk emerges over time. The articles are amended, capital is increased, the shareholder base widens, and the constitution stays put. Reviewing the two texts against each other at regular intervals costs far less than writing the document did, and is neglected far more often.
A family constitution does not replace the work of producing legal instruments. It prepares it. Before writing, settle three things: who will be in the room, which subjects get discussed, and which parts of the text are meant to become binding. The family will not end up with an enforceable contract. It will hold answers to questions nobody had asked, and the material to carry them into the articles, a shareholders’ agreement and the transfer documents. That is what counts on the day a crisis arrives.
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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