Exiting a Business in Turkey: Legal Guide for Investors

Exiting a Business in Turkey: What Investors Need to Know

Corporate partnerships in Turkey are growing rapidly, attracting foreign investors to joint ventures and new companies. However, with growth comes risk — particularly when a partner decides to exit the business while attempting to withdraw funds or assets.

Such situations can lead to financial losses, legal disputes, and prolonged conflicts. Understanding Turkish corporate law and establishing a proper company structure from the start is crucial for protecting investments.

Why Partner Exits Lead to Disputes

Common causes of corporate conflicts in Turkey include:

• Lack of clearly defined exit procedures
• Insufficient notarization of key decisions
• Unequal access to company bank accounts
• Unauthorized transfers of funds
• Absence of independent legal support

Case in Point

A foreign shareholder owning 40% of a Turkish company faced a situation where a Turkish partner transferred company funds to a personal account without notice, declared a "voluntary exit" from the business, and attempted to modify corporate documents.

The court intervened with a protective measure (tedbir), freezing the partner's shares and assets until the dispute was resolved. The misappropriated funds were subsequently returned, highlighting the importance of a robust corporate structure.

Legal Protections Available in Turkey

Turkish corporate law provides several mechanisms to minimize risk:

• Protective Measures (Tedbir): Freeze shares, assets, or prevent unauthorized corporate changes.
• Notarization: Key decisions — share transfers, fund withdrawals, director appointments, partner exits — must be notarized.
• Independent Legal Support: Having a lawyer not connected to the other partner ensures proper documentation and protects investor interests.
• Financial Controls: Define account access, signature rights, transfer limits, and dual approval procedures.

Practical Steps for Investors

To prevent disputes, investors should implement:

1. Clear partner exit procedures in the company charter, including share valuation, notification, deadlines, payment terms, and conflict resolution steps.
2. Notarization of all critical decisions to prevent fraud or unauthorized actions.
3. Legal review of documents related to ownership, director appointments, and share allocations.
4. Financial safeguards like dual approvals, audits, and transparent accounting.

Why Corporate Structure Matters

A properly structured company in Turkey protects investors from illegal partner actions, reduces financial risk, accelerates dispute resolution, and strengthens the company's reputation.

Considering Business in Turkey?

Before registering a company, allocating shares, appointing directors, or signing agreements, foreign investors should familiarize themselves with Turkish corporate regulations and potential risks.

Proper preparation helps avoid disputes and secures your investment.