Resignation of shareholders is regulated under Article 638 of the Turkish Commercial Code no. 6102 (“TCC”). According to Article 638 of the TCC, if the articles of association grants shareholders a right to resign (the exercise thereof may be conditioned), the shareholders shall have the right to resign from the company by exercising this right. In addition, even if there is no such provision in the articles of association, the shareholders may apply to the court and request their resignation from the company by good cause. A subsequent amendment in the articles of association which grants the shareholders the right to resign from the company and conditioning thereof shall be adopted by the decision of the shareholders representing two-thirds of the capital.
As for the exclusion, a limited liability company excludes a shareholder from the partnership by a general assembly decision. The reasons for which the company may exclude a shareholder may be stipulated in the articles of association. Similar to the resignation procedure, the company may also apply to the court in the presence of a good cause and demand that a shareholder be excluded. An amendment of the articles of association regarding the reasons for the exclusion of a shareholder from the company is possible only if such an amendment is resolved unanimously by all the shareholders. In order to exclude a shareholder, the company shall hold a general assembly, and the decision to exclude a shareholder shall be taken based on the provision in the articles of association. The decision to apply to the court for the exclusion of a shareholder for good cause and the decision to exclude a shareholder for a reason stipulated in the articles of association shall be taken by at least two-thirds of the votes represented in the relevant general assembly and an absolute majority of the total of principal capital shares with voting rights.
The shareholder who has resigned or has been excluded from the company loses its share of the company and the property and management rights conferred thereby. As compensation for this loss, the legislator has granted the leaving shareholder a right to request a financial settlement[3] in an amount corresponding to the true value[4] of its share. The one who is obliged to pay the financial settlement to the leaving shareholder is the limited liability company itself. The amount of the financial settlement shall be calculated based on the true value of the share of the leaving shareholder. In accordance with the preamble of the relevant article, the determination of the “true value” shall be no less than the “balance sheet value”. In addition, pursuant to Article 641/2 of the TCC, it is also possible to determine the way of calculating the financial settlement in the articles of association. However, this calculation method cannot be arbitrary, unjust, and in a manner that would lead to confiscation. On the other hand, if the leaving shareholder and the limited liability company have agreed on the value of the shares in question, this agreed value shall be taken as a basis for the financial settlement. In the event that the true value of the shares cannot be agreed upon, the true value shall be determined by the Commercial Court of First Instance where the company’s head office is located upon the request of one of the parties.
Having explained the concepts of resignation and exclusion, it is important to mention the rules regarding the company’s acquisition of its own shares; because it is the limited liability company itself that is going to acquire the shares as a result of a resignation or an exclusion. Normally, a limited liability company may acquire its own shares only where freely disposable equity capital is available in the required amount and the combined nominal value of all such shares does not exceed ten percent of the share capital. An exception to this rule is that this foregoing upper limit shall be applied as twenty percent in the case of the acquisition of shares due to a resignation or an exclusion from the company. However, the company’s own shares that exceed the threshold of ten percent of the share capital shall be sold or cancelled by means of a capital reduction within two years.
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[1] This term may also be translated as “withdrawal”, “exit” or “leave”. The translator of this article chooses the term “resignation” as it is preferred to be used in the unofficial translation of the Swiss Code of Obligations, which is the referenced code of the Turkish Commercial Code.
[2] This term may also be translated as “expulsion” or “dismissal”. The translator of this article chooses the term “exclusion” as it is preferred to be used in the unofficial translation of the Swiss Code of Obligations, which is the referenced code of the Turkish Commercial Code.
[3] This term may also be translated as “cash payment for withdrawal”. The translator of this article chooses the term “financial settlement” as it is preferred to be used in the unofficial translation of the Swiss Code of Obligations, which is the referenced code of the Turkish Commercial Code.
[4] This term may also be translated as “actual value”. The translator of this article chooses the term “true value” as it is preferred to be used in the unofficial translation of the Swiss Code of Obligations, which is the referenced code of the Turkish Commercial Code.