A shareholders’ agreement .is a contract that is subject to the “freedom of agreement” as defined in Article 12 of Turkish Code of Obligations (“TCO”).

Those matters that may be governed in such an agreement are surely not limited to it; nevertheless, a framework has been set throughout the years in line with the general operation of companies.

In light of the foregoing, a shareholders’ agreement generally addresses the following matters but their contents may vary, depending on investor requests and their expectations from the company:

  1. Provisions applicable to shareholding rights
  2. Provisions applicable to the company management and operation
  3. Provisions applicable to financial matters
  4. Non-competition clauses, Confidentiality and Settlement of Disputes and alike



We can categorize shareholding rights into three groups:

  1. Rights options to restrict share transfer
  2. Managerial rights and privileges
  3. Profit-related rights and privileges



A. Pre-emption Right

B. First Option & First Refusal

C. Tag-Along

D. Drag-Along

E. Call-Option

F. Put-Option

G. Anti-Dilution

As we noted in our previous instalments, if these rights are defined in an articles of association, this will be, inter alia, a breach of single debt principle, meaning that a joint-stock company shareholder may not assume any obligation other than subscribing capital to the company, and therefore it is not possible. The fact that provisions of articles of association that force shareholders to sell or buy shares are in conflict with the imperative provisions of the law is commonly adopted in both the doctrine and the Supreme Court stare decisis.

In the event that these rights find their way into articles of association, trade registries have justifiably started to reject registration applications in recent times. It should be noted for articles of association that already feature these provisions that these kinds of restrictions over corporate shares may not, as a rule, qualify to be effective on a corporate level (specific to the legal person and effective at the shareholding level) even if they appear there on paper, and in the case of any breach, there may be sanctions under the law of obligations only. We will be talking about the consequences that one may face in the case of breach of such rights in a shareholders’ agreement in our future instalments.

To sum it up, pursuant to the currently applicable legal regulations, if it is intended to grant these kind of rights to shareholders in a company, this objective may be fulfilled by incorporating applicable provisions to the shareholders’ agreement.

There is no dispute over how important these rights are for those investors investing in a company for various purposes. Therefore, investors are recommended to make their investments by signing a shareholders’ agreement, which lay down all these rights or any of them in line with their requests.