Share Transfer in Limited Liability Companies in Türkiye

Foreign investors who establish or acquire shares in a Limited Liability Company (Limited Şirket) in Türkiye often assume that transferring ownership of their shares is a straightforward contractual matter.

However, under Turkish law, a share transfer in a limited company is not merely a private agreement between two parties. It is a structured legal transaction governed primarily by:

• Turkish Commercial Code No. 6102 (TTK)

• Article 593 and subsequent provisions

• Article 595 (Share Transfer Procedure)

• Article 620 (General Assembly Voting)

• Article 596 (Inheritance Related Share Transfer)

Failure to comply with statutory formalities may render the transfer legally ineffective particularly against third parties and public authorities.

This guide explains how the share transfer process works in Türkiye, what liabilities may continue after the transfer, and why foreign shareholders should conduct legal due diligence prior to any transaction.

How to Transfer Shares in a Limited Company in Türkiye

A valid share transfer in a Turkish limited company requires three mandatory steps:

Step 1: Execution of a Notarized Share Transfer Agreement

Pursuant to TTK Article 595, the share transfer agreement must:

• Be executed in writing

• Be notarized

• Include signatures certified by a Turkish notary public

Without notarization, the agreement is deemed invalid.

The agreement should ideally address:

• Additional payment obligations

• Non competition clauses

• Pre-emption or buy-back rights

• Penal clauses

Although omission of such clauses does not invalidate the agreement, it may expose the transferring shareholder to post transfer liability.

Step 2: Approval by the General Assembly

Unless the company’s Articles of Association provide otherwise:

• Share transfer must be approved by the General Assembly
  as per TTK Article 595/2

Approval is granted by:

• Simple majority of votes represented at the meeting
  according to TTK Article 620

The General Assembly has the right to:

• Reject the transfer without providing justification

If no rejection is issued within:

• Three months from the application date
  the transfer is deemed approved under TTK Article 595/7

Step 3: Registration and Announcement

Following approval:

• Company managers must register the transfer with the Trade Registry within 30 days

Required documentation includes:

• Notarized share transfer agreement

• General Assembly resolution

• Updated share ledger

• Identification details of the new shareholder

Failure to register the transfer means:

• The transfer does not take legal effect against third parties

• Public authority liabilities may remain with the former shareholder

Additionally, administrative fines may apply pursuant to TTK Article 33

Liability for Company Debts After Share Transfer

Although limited companies are capital companies, shareholders may remain liable for:

• Public debts

This includes obligations towards:

• Tax authorities

• Social Security Institution (SGK)

Transferring Shareholder Liability

The transferring shareholder remains:

• Jointly liable for public debts incurred before the transfer date

Acquiring Shareholder Liability

The acquiring shareholder becomes liable for:

• Public debts incurred both before and after the transfer

Therefore, financial due diligence prior to acquisition is critical.

Two Year Liability in Full Company Transfer

If the entire company is transferred rather than a single share:

• The transferring party remains jointly liable for company debts for two years

under:

• Turkish Code of Obligations No. 6098 Article 202

This liability includes:

• Public obligations

Contractual agreements between parties cannot eliminate this liability against third parties.

Share Transfer Due to Death or Enforcement

In cases involving:

• Death of a shareholder

• Matrimonial property division

• Enforcement proceedings

Shares may pass automatically to heirs or creditors.

According to:

• TTK Article 596

General Assembly approval is generally not required unless:

• The Articles of Association impose qualification requirements for shareholders.

Taxation of Share Transfers

Share transfer in limited companies may trigger:

Capital Gains Tax

Pursuant to:

• Income Tax Law Article 80

Capital gains from share transfer are taxable regardless of holding period.

Unlike joint stock companies:

• No exemption exists based on duration of ownership.

VAT Implications

• Share transfers by individuals are exempt from VAT

• Corporate shareholders may be subject to VAT if shares were held for less than two years

Post Transfer Actions

After registration:

• Company internal records must be updated

• Banks should be notified of ownership change

• Public institutions must be informed

• Commercial counterparties must be notified

Existing personal guarantees of former shareholders towards banks may continue unless formally released.

Key Considerations for Foreign Investors

Foreign investors should ensure:

• Legal due diligence regarding company debts

• Review of Articles of Association for transfer restrictions

• Evaluation of pre-emption rights

• Proper drafting of transfer agreements

Professional legal assistance is strongly recommended due to:

• Continuing public debt liability

• Registration formalities

• Tax implications

Conclusion

Share transfer in a Turkish limited company is a legally regulated process requiring notarization, General Assembly approval, and Trade Registry registration.

Improperly executed transfers may leave the transferring shareholder exposed to public debt liability and administrative sanctions.

Foreign shareholders considering share transfer in Türkiye are advised to seek legal assistance prior to execution of any agreement.