Transferring Company Shares in Türkiye: What Happens If Share Transfers Are Not Approved?

At Bayraktar Attorneys, we regularly advise foreign investors, company owners, and shareholders on business structuring and share transfer procedures in Türkiye. One area where we see recurring confusion and conflict is when a shareholder attempts to transfer their shares, but the company refuses to approve or register the transfer.

This article explains how share transfers work in both joint stock and limited liability companies in Türkiye, and what options are available when a transfer is not approved.

What Is a Share and Why Is It Important?

A share represents a unit of ownership in a company. Being a shareholder gives you financial and administrative rights in proportion to your investment. These may include:

• The right to receive dividends or liquidation proceeds

• The right to vote and attend general assemblies

• The right to inspect company records

• The right to challenge unlawful decisions or exit the company for just cause

In joint stock companies, shareholders are only obligated to contribute capital. In limited liability companies, additional obligations may exist depending on the company’s articles.

Can Turkish Companies Issue Share Certificates?

Yes, but the structure differs depending on the type of company:

• Joint stock companiesmay issue registeredor bearershare certificates. Bearer shares require full capital payment.

• Limited liability companiesmay issue registered certificates, though these are non-circulable and primarily used as evidence.

The type of certificate significantly affects how the shares can be transferred.

How to Transfer Joint Stock Company Shares

Registered Share Certificates

These require endorsement and physical delivery, but also face potential restrictions. According to the Turkish Commercial Code (TCC):

• If shares are not fully paid, the company must approve the transfer (TCC 491).

• Even if fully paid, the articles of associationmay require approval (TCC 492).

• Refusal must follow lawful reasons. If not, the transferee can sue to be recognized as a shareholder.

Exceptions include transfers through inheritance, divorce settlements, enforcement, or court orders.

Bearer Share Certificates

Transferred via physical possession, but the transferee must notify the Central Registry System (MKK) to exercise rights. No approval is needed.

Naked Shares

These are uncertificated shares. Although not covered directly in the law, Turkish courts accept their transfer via written agreement. Legal drafting is crucial to avoid disputes.

What Happens If My Joint Stock Share Transfer Is Rejected?

Because the transfer involves three parties (transferor, transferee, and company), rejection can trigger disputes. If the company refuses to record the transfer unlawfully:

• The transferee or transferor may file a lawsuit

• The court can recognize the transfer and order the company to register the new shareholder

The court evaluates whether the rejection violates the articles of association or general principles of good faith.

Transferring Shares in Limited Liability Companies

How It Works:

1. Draft and notarize a share transfer agreement

2. Notify the general assembly

3. The general assembly has 3 monthsto respond

4. If silent, the transfer is automatically approved

Before approval, the transferor retains all rights and obligations.

After approval, the company records the transfer in the share ledger.

What If the General Assembly Rejects the Transfer?

Unless the articles say otherwise, the general assembly may reject the transfer without any justification.

If rejected:

• The share ownership remains with the transferor

• The agreement becomes unenforceable

• Parties may claim compensation

However, under TCC Article 595, the shareholder has the right to exit the company for just cause if transfer is rejected. This right may require court approval if not explicitly provided in the company’s articles.

Comparison Table

| Topic | Joint Stock Company (A.Ş.) | Limited Liability Company (Ltd. Şti.) |

| ---------------------- | -------------------------------- | ------------------------------------- |

| Certificate Types | Bearer, Registered, None | Registered only |

| Legal Form of Transfer | Endorsement or written agreement | Notarized agreement |

| Company Approval | May be required | Always required unless waived |

| Dispute Option | Lawsuit to register transfer | Exit for just cause or legal claim |

Bayraktar Attorneys Can Assist You With:

• Drafting or reviewing share transfer agreements

• Filing lawsuitsto compel company registration of the transfer

• Advising on exit rightsand internal company disputes

• Preparing and negotiating articles of association

• Assisting with due diligencein company share purchases

We work with clients around the globe who seek to acquire, restructure, or divest company ownership in Türkiye. Our team provides bilingual legal support and court representation for both transactional and contentious matters.

📍 Contact Us

Bayraktar Attorneys
📌 Kolektif House, Esentepe, Talatpaşa Cad No:5/1, 34394 Şişli, İstanbul, Türkiye
📧 [email protected]
🌐 www.bayraktarattys.com
📱 +90 539 935 2875 (Phone & WhatsApp)