Shareholder loans are one of the most commonly used—yet least understood—methods of financing private companies in Turkey. These loans, typically issued by company owners or directors to fund operations, cover urgent cash needs, or replace capital increases, are often documented loosely or not at all. As a result, disputes over repayment, interest, and legal enforceability are widespread. In many cases, a shareholder loan agreement is treated informally—only to become the focus of litigation or tax inspection years later.
At ER&GUN&ER Law Firm, we advise company founders, minority shareholders, and corporate finance teams on the legal and tax structuring of shareholder loan agreements in Turkey. As a leading Turkish Law Firm in company law and debt financing, our English speaking Turkish lawyers draft, localize, and enforce shareholder loan contracts with full alignment to the Turkish Commercial Code, corporate tax laws, and Central Bank regulations. Whether you are funding a startup, recapitalizing a family business, or facilitating an intra-group transfer, we ensure your loan is legally recognized and repayment is secured.
What Is a Shareholder Loan and Why Is It Used?
A shareholder loan is a private debt arrangement between a company and one or more of its shareholders. Unlike a capital increase—which changes the company’s registered capital and shareholder ratios—a shareholder loan does not alter company equity. Instead, it provides flexible funding that can be repaid, often with interest, and does not require Trade Registry approval. In Turkey, such loans are especially common in SMEs, joint ventures, and family-owned businesses where formal banking loans may be impractical or expensive.
Our Turkish Law Firm structures these loans to clarify terms such as maturity date, interest rate, repayment priority, and subordination to third-party lenders. We ensure all contracts comply with Article 358 of the Turkish Commercial Code, which prohibits certain types of loans in joint stock companies, and avoid potential classification as hidden capital. For related legal guidance, see our content on company formation in Turkey and corporate tax planning for Turkish entities.
Tax Treatment and Hidden Capital Risks
In Turkey, shareholder loans are subject to close scrutiny by the Turkish Revenue Administration (TRA). Loans provided to companies by shareholders—especially in joint stock companies (A.Ş.)—can be reclassified as “hidden capital” under Article 12 of the Corporate Tax Law. This occurs when the loan exceeds a shareholder’s equity participation, lacks commercial basis, or is not properly documented. If reclassified, the interest paid on the loan may be non-deductible, subject to transfer pricing adjustments, and trigger withholding tax liabilities.
Our Turkish Law Firm structures shareholder loan agreements in Turkey with built-in tax defense strategies. We draft documentation that aligns with the Ministry of Treasury’s guidelines and prepare justification reports showing commercial purpose. We also ensure interest is calculated at arm’s length and properly invoiced. For more on tax optimization, see our related guide on corporate tax obligations in Turkish companies.
Interest Clauses and Regulatory Restrictions
Unlike capital contributions, shareholder loans may bear interest—creating additional tax and compliance risks. The Central Bank of Turkey requires all Turkish lira-denominated loan agreements to respect benchmark interest rates. If the interest is too high or not declared, it may lead to classification as disguised profit distribution. Similarly, failure to issue withholding tax (stopaj) on interest payments may result in financial penalties.
We help clients include lawful interest clauses and explain the difference between simple, compound, fixed, or variable rate structures. Our English speaking Turkish lawyers ensure interest is declared, taxed, and structured to avoid common audit triggers. This is particularly important for intra-group loans involving foreign parent companies. Related content: Asset purchase agreements and intra-company finance strategy.
Repayment Terms and Capital vs. Loan Distinction
One of the biggest risks with shareholder loans is ambiguity between what constitutes equity and what is treated as repayable debt. If the repayment terms are vague—or if repayments are delayed for years—the loan may be considered equity in practice. This affects company valuation, bankruptcy priority, and creditor rights. Turkish courts consider factors like fixed maturity, enforceable repayment rights, and periodic interest payments to determine classification.
As a best lawyer firm in Turkey for shareholder arrangements, we draft clauses that clearly separate capital from debt and secure repayment rights through collateral or performance-based milestones. For company founders facing disputes over shares and finance, our article on shareholder deadlock resolution in Turkish companies explains how internal funding conflicts often lead to voting paralysis.
Notarization, Trade Registry, and Corporate Books
While shareholder loans do not require Trade Registry approval, Turkish best practice dictates that all loan agreements be notarized and reflected in the company’s board minutes or shareholder resolutions. This documentation is crucial for internal accounting, future enforcement, and legal clarity among multiple stakeholders. Failure to document the loan properly may result in its exclusion from financial statements, or worse, challenge its recoverability in court.
Our firm prepares bilingual loan agreements, board resolutions, and shareholding disclosures tailored to small, medium, and family-owned enterprises. To understand how share ownership and finance intersect in succession planning, see our long-form article on restructuring family-owned businesses in Turkey.
Enforcement and Debt Recovery for Shareholder Loans
Shareholder loans may be private in nature, but when disputes arise—especially in ownership transitions or liquidation scenarios—they often require enforcement before Turkish courts. If the borrower company defaults, the shareholder-creditor must initiate a debt recovery process (icra takibi) based on the written agreement. However, without clear maturity terms, interest structure, or board approval, enforcement becomes complex. In some cases, other shareholders challenge repayment, arguing the loan was a capital injection or conditional gift.
Our Turkish Law Firm represents clients in loan enforcement claims through execution offices and commercial courts. We also assist in securing notarized recognition or collateral agreements. For enforcement strategy aligned with Turkish court procedures, refer to our article on contract enforcement in Turkish commercial litigation.
Inheritance and Shareholder Exit Risks
In many SMEs and family companies, shareholder loans are issued without long-term planning. If the lender dies, their heirs may inherit the receivable—but the company may dispute it. In exit scenarios, loans may be confused with capital contributions, affecting buyout value or liquidity events. These ambiguities often lead to litigation, especially in companies without written shareholder agreements.
Our English speaking Turkish lawyers help structure shareholder loan agreements with inheritance clauses, assignability terms, and alignment with estate planning. For further reading, explore inheritance law in Turkey for foreign heirs.
Collateralization and Security Options
Shareholder loans can be secured through pledges, mortgages, or corporate guarantees. While rare in small businesses, this is a standard practice in joint ventures or where the lending shareholder is a foreign entity. Providing security helps improve legal enforceability and creditor ranking in insolvency.
We advise clients on all forms of loan collateral, including moveable pledges and third-party guarantees. As a best lawyer firm in Turkey for cross-border structuring, we tailor security packages to protect lender rights in both domestic and international disputes.
Court vs. Arbitration in Shareholder Loan Disputes
Most shareholder loan disputes are resolved in Turkish commercial courts. However, arbitration may be more effective in international shareholder structures. ISTAC or ICC arbitration clauses in loan contracts offer confidentiality, faster resolution, and enforceability abroad.
Our firm drafts arbitration-ready shareholder loan contracts and represents clients in both Turkish court and arbitration settings. To explore dispute resolution choices, see legal risks in Turkish joint ventures.
Final Thoughts: Protect Your Investment Through Legal Structure
Shareholder loans may seem informal, especially among founders or family partners—but without a solid legal structure, they become uncollectible, taxable, or vulnerable in conflict. As Turkish regulatory scrutiny and shareholder litigation increase, protecting intra-company debt must be treated as seriously as third-party financing.
At ER&GUN&ER Law Firm, our English speaking Turkish lawyers ensure your shareholder loan is enforceable, tax-compliant, and aligned with corporate governance. Whether you're an investor, co-founder, or exit-stage shareholder, we help you draft, document, and defend your rights with clarity and legal strength. Trust a Turkish Law Firm that understands both company law and courtroom dynamics.