When two or more partners—especially foreigners—come together to start a company in Turkey, the most important step is not just incorporating the company but setting the rules of the game. A Shareholder Agreement (SHA) defines the rights, responsibilities, and decision-making process between partners. While not mandatory under Turkish law, a properly drafted SHA prevents disputes, protects minority shareholders, and ensures business continuity. At ER&GUN&ER, our English Speaking Turkish Lawyers draft tailor-made shareholder agreements fully compliant with Turkish Commercial Code.
What Is a Shareholder Agreement?
A shareholder agreement is a private legal contract between shareholders of a company that supplements the official Articles of Association. It regulates internal management, voting rights, dividend policies, exit procedures, non-compete clauses, and dispute resolution mechanisms.
Is a Shareholder Agreement Mandatory in Turkey?
No. Turkish law does not require an SHA. However, for any company with two or more shareholders—especially involving international partners—an SHA is strongly recommended. Without one, partners must rely solely on statutory rules, which are often insufficient to resolve complex or unique issues.
Which Company Types Use Shareholder Agreements?
- Limited Liability Companies (Ltd. Şti.): Used for most SME and startup operations
- Joint Stock Companies (A.Ş.): Used for large ventures, M&A deals, or companies planning to raise capital
In both types, SHA provides a private mechanism for shaping management, exit rules, and capital rights outside of the public registry.
Key Clauses in a Turkish Shareholder Agreement
1. Capital Contribution and Shareholding Structure
Defines each partner’s percentage share, capital injection timeline, and contribution method (cash, property, know-how).
2. Management and Voting Rights
Sets how the board or manager is appointed, decision-making thresholds, veto rights, and delegation of authority.
3. Dividend and Profit Distribution Policy
Outlines whether profits will be reinvested or distributed, frequency of payments, and tax impact for foreign shareholders.
4. Transfer of Shares and Right of First Refusal (ROFR)
Prevents shares from being sold to third parties without offering them to existing partners first.
5. Non-Compete and Confidentiality Clauses
Prevents shareholders from engaging in competing businesses or disclosing sensitive information during and after their partnership. This is especially crucial in tech startups, import/export, and IP-driven sectors.
6. Exit Strategy and Share Buyback Mechanism
Explains how a shareholder can sell their stake, the valuation method, whether other partners have the right to refuse or match an offer, and what happens if one party wants to exit early.
7. Deadlock and Dispute Resolution Clauses
In case of equal voting rights and disagreement, the SHA should include dispute resolution procedures. This may involve escalation to a third-party mediator, an advisory board, or arbitration.
8. Governing Law and Jurisdiction
Foreign partners may want international arbitration, but for enforceability in Turkey, we usually suggest Turkish law and ISTAC or ICC arbitration seated in Istanbul or Geneva.
Can a Shareholder Agreement Be Prepared Without Coming to Turkey?
Yes. At ER&GUN&ER, we prepare shareholder agreements based on your business model and partner profile remotely. By granting us a notarized Power of Attorney (POA), we can:
- Negotiate terms with the Turkish partner
- Prepare bilingual SHA drafts
- Coordinate with the notary or Trade Registry
- Send the final document for international execution
Why You Need a Turkish Law Firm to Draft an SHA
- To ensure full compliance with Turkish Commercial Code (TTK) and avoid unenforceable clauses
- To reflect your economic goals, exit plan, and partnership dynamics accurately
- To prevent vague or conflicting language that may lead to litigation
- To protect against forced dilution or hostile takeover tactics
- To ensure the SHA matches your Articles of Association, not contradicts it
Sample Cases We Have Advised
- 🇫🇷 French-Turkish joint venture where SHA included deadlock buyout clause that saved €700,000 in future arbitration
- 🇬🇧 UK tech investor in Istanbul startup—SHA included vesting, IP ownership, and dispute resolution via ISTAC
- 🇩🇪 German investor in manufacturing company—included exit clause based on market valuation adjusted annually
Frequently Asked Questions (FAQs)
- Is a shareholder agreement filed with any public authority? No. It is a private contract and not submitted to the Trade Registry.
- What happens if there is a conflict between the SHA and Articles of Association? The Articles will prevail in official dealings. That’s why both must be aligned.
- Can I enforce the SHA in Turkish courts? Yes, as long as it complies with Turkish law and does not contradict public order.
- Can foreign law be selected in the SHA? Yes, for certain parts—but we advise using Turkish law for easier enforcement in Turkish courts.
- Can I add a buy-sell clause or drag-along/tag-along rights? Absolutely. These clauses are common in SHA and strongly advised in joint ventures and startup investments.
- Is SHA valid if only signed in English? No. For use in Turkey, we provide bilingual SHA versions signed in both English and Turkish.
- Can I revoke or amend an SHA later? Yes. Amendments must be made in writing and signed by all parties.
- What if my Turkish partner refuses to sign an SHA? You can still proceed with company formation, but you’ll lack protection. We recommend not investing without an SHA in place.
- Do you provide fixed-fee SHA drafting? Yes. We offer transparent packages including full legal strategy, negotiation, bilingual drafting, and delivery.
Conclusion: Secure Your Investment Through Clear Partnership Terms
Working with a Turkish Law Firm to draft a customized shareholder agreement gives you control, clarity, and legal protection in a foreign jurisdiction. Our English Speaking Turkish Lawyers help international partners navigate cultural, legal, and commercial risks through robust contracts that prevent conflict before it starts. Whether you’re setting up a startup, acquiring a company, or launching a joint venture, let the Best Lawyer in Turkey ensure your shareholder agreement is legally sound and strategically aligned.