Squeezing Out Minority Shareholders in Türkiye: The 90% Rule in TCC 208, Its Hidden Conditions, and the Other Ways a Minority Leaves
Foreign investors who have consolidated control of a Turkish company tend to ask the same question in the same words: we hold more than ninety per cent, so when can we buy out the rest? The honest answer surprises many of them. Turkish law contains no general squeeze-out right of the kind found in the German Aktiengesetz or in the takeover chapter of the UK Companies Act. What the Turkish Commercial Code (Law No. 6102, the TCC) offers instead is a set of narrower instruments, each with its own threshold, its own trigger and its own valuation rule. The best known of them, Article 208, is available only to a controlling company, only against a minority that behaves in one of four listed ways, and never in a publicly held company at all. This guide explains what Article 208 does and does not permit, how the minority's mirror-image rights in Articles 202(2) and 531 work, how a cash exit can be built into a merger under Articles 141 and 151(5), and how the commercial court fixes the price under Article 191 when a shareholder says the exit was underpaid. Every provision cited below was read in full in the current text of the Code before this article was written; the thresholds and deadlines are those in force in September 2026.
1. The Starting Point: Türkiye Has No General Squeeze-Out, Only Narrow Doors
In many jurisdictions a shareholder who reaches a high threshold, typically 90% or 95%, may compel the remaining shareholders to sell at a fair price, subject only to a court or regulator checking the price. The Turkish Commercial Code took a different path. Its drafters regulated groups of companies in Articles 195 to 209 and, within that chapter, gave the controlling company a purchase right in Article 208 that is conditional on the conduct of the minority rather than on the size of the majority alone. Outside the group-of-companies chapter, the Code offers exits that are initiated by the minority (Articles 202(2) and 531), a cash exit that can be built into a merger (Articles 141 and 151(5)) and a price-review action (Article 191). Publicly held companies are carved out and handed to the Capital Markets Law.
The practical consequence is that a buy-out strategy in Türkiye is rarely a single filing. It is a choice between routes, each with a different actor, a different trigger, a different price formula and a different clock. The table below summarises the routes discussed in this article; the sections that follow examine each of them against the text of the Code.
| Route | Who initiates | Threshold or trigger | Price | Time limit |
|---|---|---|---|---|
| Purchase of the minority's shares (TCC 208) | Controlling company | Direct or indirect holding of at least 90% of shares and voting rights in a capital company, plus one of four grounds: obstruction, breach of good faith, noticeable difficulty, reckless conduct | Stock exchange value; otherwise the value determined under Article 202(2) | None stated in the Code |
| Minority's claim for purchase (TCC 202(2)) | Dissenting shareholder | Merger, division, conversion, dissolution, securities issue or material amendment carried out through control without a clearly understandable justification; vote against recorded in the minutes or written objection to the board resolution | At least stock exchange value; otherwise real value or a generally accepted method; data closest to the judgment | Two years from the general assembly resolution or the announcement of the board resolution |
| Dissolution for just cause with court-ordered exit (TCC 531) | Holders of at least 10% (5% in publicly held companies) | Just cause; the court may order payment of the real value of the plaintiffs' shares and their removal instead of dissolution | Real value closest to the date of the decision | None stated in the Code |
| Separation payment in a merger (TCC 141(2), 151(5)) | Merging companies | Merger agreement providing only for a separation payment, approved by 90% of the voting rights in the transferring capital company | Amount corresponding to the real value of the shares | Two months to challenge under Article 191 |
| Equalisation payment (TCC 191) | Any shareholder of a merging, dividing or converting company | Shares or membership rights not duly protected, or the separation consideration not appropriately determined | Appropriate equalisation payment fixed by the court; the 10% cap in Article 140(2) does not apply | Two months from the announcement in the Trade Registry Gazette |
| Squeeze-out and sell-out in publicly held companies (Capital Markets Law 27) | Shareholder reaching the Board's threshold / remaining minority | Voting rights reaching the ratio set by the Capital Markets Board after a tender offer or otherwise | Determined under Article 24 of the Capital Markets Law | Periods set by the Board |
2. Article 208: Who Qualifies as a Controlling Company and What 90% Means
Article 208(1) reads, in substance, that if a controlling company holds, directly or indirectly, at least ninety per cent of the shares and the voting rights of a capital company, and the minority obstructs the company's operations, acts contrary to the rule of good faith, creates noticeable difficulty or behaves recklessly, the controlling company may purchase the minority's shares at their stock exchange value or, if there is none, at the value determined in the manner set out in the second paragraph of Article 202. Four elements of that sentence decide most disputes.
A controlling company, not a controlling person. The provision speaks of a hâkim şirket, a controlling company. Article 195 defines control: a company controls another where, directly or indirectly, it holds the majority of the voting rights, has the right to elect the number of members of the management organ needed to form a majority, holds the majority of votes alone or together with other shareholders under an agreement, or otherwise keeps the other company under its control. Article 195 also brings controlling enterprises whose seat is abroad within the group-of-companies rules, so a foreign parent is caught. What the wording does not obviously cover is a natural person who holds 90% in his or her own name. Foreign investors who hold through a personal holding company rather than personally should therefore check which entity is the shareholder of record before building a strategy on Article 208.
A capital company as the target. The company whose minority is to be bought out must be a capital company: a joint stock company (anonim şirket), a limited liability company (limited şirket) or a partnership limited by shares. Partnerships are outside the provision.
Ninety per cent of shares and of votes, directly or indirectly. Both ratios must be met. A parent holding 92% of the capital but, because of privileged voting shares, only 85% of the votes does not qualify; nor does one holding 95% of the votes on 80% of the capital. Indirect holdings through subsidiaries count, which allows the ratio to be computed at group level, but it also means that every link in the chain must be a holding the controlling company can actually attribute to itself.
No procedure in the text. Article 208 says the controlling company "may purchase"; it does not say how. Because the purchaser must establish one of the four grounds against a shareholder who will by definition dispute them, the right is exercised in practice through an action before the commercial court of first instance (asliye ticaret mahkemesi), which decides whether a ground exists and, if so, at what price the transfer takes place. A unilateral notice to the minority followed by a payment into an account does not transfer the shares.
3. The Four Grounds in Article 208: Obstruction, Bad Faith, Noticeable Difficulty, Recklessness
The four grounds are not defined further in the Code. They are behavioural standards, and each is narrower than a majority shareholder would like. Three observations help to apply them.
First, using statutory minority rights is not, in itself, a ground. A shareholder holding 10% of the capital has a strong statutory position in a Turkish joint stock company. Under Article 411 holders of one tenth of the capital (one twentieth in publicly held companies) may require the board, through a notary, to call a general assembly or add items to the agenda. Under Article 439, if the general assembly rejects a request for a special audit, holders of one tenth of the capital (one twentieth in publicly held companies) or of shares with a total nominal value of at least one million Turkish lira may within three months ask the commercial court to appoint a special auditor, which the court does where the applicants show convincingly that the founders or company organs have caused loss to the company or the shareholders by breaching the law or the articles. Under Article 531 the same 10% may seek dissolution for just cause. Exercising these rights is exactly what the Code intended a 10% minority to do. Article 208 is aimed at the abuse of that position, not at its use.
Second, the grounds mirror the rule of good faith. "Acting contrary to the rule of good faith" imports the general standard of Article 2 of the Turkish Civil Code into the shareholder relationship. Repeatedly challenging every resolution regardless of merit, conditioning consent to routine matters on unrelated personal demands, or using information rights to feed a competitor are the kinds of pattern that courts examine under this head. "Obstructing the company's operations" and "creating noticeable difficulty" point to effects on the company itself; "reckless conduct" points to the minority's attitude. In each case the controlling company must plead concrete facts, not a general complaint that the minority is inconvenient.
Third, the evidence is built long before the claim. Because the grounds concern conduct over time, the file that wins or loses an Article 208 case consists of general assembly minutes recording the minority's votes and statements, notarised requests and their responses, board minutes noting written objections, and correspondence. A controlling company that anticipates the claim should keep that record deliberately and should avoid conduct of its own that would let the minority reply with an Article 202 claim, discussed below.
4. The Price: Stock Exchange Value, Real Value and the Article 202(2) Method
Article 208 gives the price in two steps. If the shares have a stock exchange value, that value applies. If they do not, the value is determined "in the manner set out in the second paragraph of Article 202". That paragraph, written for the minority's own claim, provides that the shares are purchased at least at their stock exchange value or, where no such value exists or the exchange value is not equitable, at their real value or at a value determined according to a generally accepted method, and that the data closest to the date of the court's decision are taken as the basis of the valuation.
Three consequences follow for a company that is not listed, which after Article 27(3) of the Capital Markets Law is the only company to which Article 208 applies in practice. First, the price is the real value of the shares, which Turkish practice generally derives from the value of the company as a going concern rather than from its book value; the choice of method is a matter for expert evidence before the court. Second, the valuation date is anchored to the judgment, not to the date the claim was filed or the date the 90% threshold was crossed, so a long proceeding shifts the price with the company's fortunes. Third, because the Code refers to a generally accepted method as an alternative to real value, the parties are free to agree a method in a shareholders' agreement, and a well-drafted agreement will do so, together with a mechanism for appointing the valuer.
Nothing in Article 208 requires a premium, and nothing allows a discount for lack of control. The minority receives the value of its shares as determined by the court, no more and no less. Where the parties settle, the same yardstick is the natural reference point for negotiation.
5. The Mirror Image: The Minority's Rights Under Articles 202 and 531
The group-of-companies chapter protects the minority as much as it arms the majority, and two provisions give the minority an exit on its own initiative.
Article 202(2): the right to be bought out after an abusive group transaction. Where a merger, division, conversion, dissolution, issue of securities or material amendment of the articles is carried out through the exercise of control and has no clearly understandable justification from the subsidiary's point of view, shareholders who voted against the general assembly resolution and had their dissent recorded in the minutes, or who objected in writing to the corresponding board resolution, may ask the court to order the controlling enterprise either to compensate their loss or to purchase their shares. The purchase price is at least the stock exchange value or, where there is none or it is not equitable, the real value or a value fixed by a generally accepted method, on the data closest to the judgment. The claim is time-barred two years from the date of the general assembly resolution or the announcement of the board resolution.
Two features of Article 202 matter in practice. Under paragraph (3), once the claim is filed the court orders the controlling enterprise to deposit with a bank, in the court's name, a sum covering the plaintiffs' probable loss or the purchase value of their shares, and until that security is deposited no step may be taken to implement the general assembly or board resolution. A minority claim under Article 202(2) therefore has a suspensive effect that the controlling company must price into its timetable. The same paragraph allows a defendant faced with a claim brought in bad faith to demand joint and several compensation and security from the plaintiffs. Under paragraph (1)(b), where the controlling company has caused the subsidiary a loss that is not compensated within the financial year, any shareholder may claim compensation for the company, and the court may, where equitable, order the purchase of the plaintiff shareholders' shares by the controlling company instead of damages.
Article 531: dissolution for just cause converted into an exit. Shareholders holding at least one tenth of the capital (one twentieth in publicly held companies) may ask the commercial court at the company's seat to dissolve the company for just cause. The court may, instead of dissolution, order that the plaintiff shareholders be paid the real value of their shares as at the date closest to the decision and be removed from the company, or adopt another appropriate and acceptable solution. For a locked-in minority in a company whose majority holds less than 90%, or whose conduct does not fit Article 208, this is frequently the more realistic route to a paid exit.
6. Cashing Out Through a Merger: Articles 141 and 151(5)
The merger provisions of the Code contain the closest thing Turkish law has to a majority-initiated cash-out that does not depend on the minority's conduct. Under Article 141(1) the merging companies may give the shareholders of the transferring company a choice, in the merger agreement, between shares and membership rights in the acquiring company and a separation payment (ayrılma akçesi) corresponding to the real value of the shares they would otherwise receive. Under Article 141(2) the merger agreement may provide only for the separation payment, in which case the shareholders of the transferring company receive cash and no shares.
The Code does not leave that power unchecked. Article 151(5) provides that where the merger agreement provides for a separation payment, the agreement must be approved, in a transferring company that is a capital company, by the affirmative vote of ninety per cent of the voting rights existing in the company; in a partnership, by the partners entitled to vote. This is a quorum computed on all existing votes, not on votes present at the meeting, and it is markedly higher than the ordinary merger quorum in Article 151(1) of three quarters of the votes present representing the majority of the capital in a joint stock company. A group that holds 90% of the votes of a subsidiary can therefore merge it into another group company and pay the minority out, without having to prove obstruction or bad faith. A group that holds 89% cannot.
Three safeguards accompany the route. The separation payment must correspond to the real value of the shares, and Article 191 allows any shareholder to have that amount reviewed by the court. Article 202(2) remains available to a shareholder who voted against the merger if the transaction lacks a clearly understandable justification from the subsidiary's point of view, with the suspensive security mechanism of Article 202(3). And the ordinary merger formalities of Articles 136 to 158, from the merger report to the creditors' protection, apply in full.
7. Article 191: Two Months to Challenge the Price Without Unwinding the Deal
Article 191 is the price-review action of Turkish restructuring law. Where, in a merger, division or conversion, the shareholders' shares or membership rights have not been duly protected or the separation consideration has not been appropriately determined, every shareholder may, within two months of the announcement of the merger, division or conversion resolution in the Turkish Trade Registry Gazette, ask the commercial court of first instance at the seat of one of the participating companies to fix an appropriate equalisation payment (denkleştirme akçesi).
The article has four features that shape strategy on both sides. First, the cap in Article 140(2), which limits equalisation payments in a merger agreement to one tenth of the real value of the shares allotted, does not apply to the payment fixed by the court; the court may award whatever amount is appropriate. Second, under paragraph (2) the judgment also takes effect for all shareholders of the participating companies who are in the same legal position as the plaintiff, so a single well-prepared claimant can raise the price for the whole minority. Third, under paragraph (3) the costs of the action are borne by the acquiring company, unless special circumstances justify placing them wholly or partly on the plaintiff. Fourth, and most important for the majority, under paragraph (4) the action does not affect the validity of the merger, division or conversion. The deal closes; only the money is adjusted.
Two months is short. The period runs from the Gazette announcement, not from the shareholder's actual knowledge, and a minority that intends to contest the separation payment must have its valuation evidence in progress before the resolution is registered. For the acquiring company, the corresponding discipline is to commission a defensible valuation before the general assembly and to document the method, because that report will be the first exhibit in any Article 191 proceeding.
8. Listed Companies, Strategy and a Checklist for Both Sides
Publicly held companies follow a different law. Article 27(3) of the Capital Markets Law states that Article 208 of the Commercial Code does not apply to publicly held companies. Article 27(1) instead gives a shareholder whose voting rights, after a tender offer or otherwise, reach the ratio set by the Capital Markets Board the right, within the period set by the Board, to require the company to cancel the minority's shares and sell newly issued shares to it, at a price determined under Article 24 of that Law; Article 27(2) gives the minority a corresponding sell-out right at a fair price. The threshold, the periods and the procedure are set by the Board's communiqué and should be checked against the current text at the time of the transaction.
For the controlling company. Confirm which entity is the shareholder of record and whether it is a company. Compute the 90% ratio on both shares and votes, including indirect holdings, and identify any privileged shares that distort the vote count. If the minority's conduct fits Article 208, build the evidential record before filing. If it does not, consider a merger with a separation payment under Articles 141(2) and 151(5), which requires 90% of all existing votes in the transferring company and a defensible real-value valuation. In either case, avoid group transactions that lack a clear justification from the subsidiary's point of view, because they hand the minority the Article 202(2) claim and its suspensive security.
For the minority. Have every dissenting vote recorded in the minutes and object in writing to board resolutions; without that record the Article 202(2) claim is lost. Diary the two-year limitation period from the resolution and the two-month period under Article 191 from the Gazette announcement. Where the majority is below 90% or its conduct is the problem, consider Article 531, which lets the court order a paid exit at real value instead of dissolution. And treat any valuation offered by the majority as the opening of a negotiation that the Code allows a court to reopen.
The consistent thread through these provisions is that Turkish law protects the minority's price rigorously while giving the majority only conditional power over the minority's presence. Investors who plan a Turkish acquisition on the assumption that the last ten per cent can be collected at will should plan instead for one of the routes described here, and for the timetable that goes with it.
Frequently asked questions
Does Turkish law have a squeeze-out right at 90% or 95% like Germany or the United Kingdom?
No general right. Article 208 of the Turkish Commercial Code allows a controlling company that holds, directly or indirectly, at least 90% of both the shares and the voting rights of a capital company to purchase the minority's shares, but only where the minority obstructs the company's operations, acts contrary to the rule of good faith, creates noticeable difficulty or behaves recklessly. Crossing the threshold alone does not create the right, and Article 27(3) of the Capital Markets Law excludes publicly held companies from the provision altogether.
Can an individual majority shareholder use Article 208?
The wording of Article 208 refers to a controlling company (hâkim şirket), and Article 195 defines control by reference to a company controlling another. A natural person who holds 90% personally does not fit that wording. Investors who hold through a company should check that the company, not the individual, is the shareholder of record before relying on the provision, and should seek advice on the specific structure.
How is the price fixed when a minority is bought out under Article 208?
At the stock exchange value of the shares or, where there is none, in the manner set out in Article 202(2): at least the exchange value, and where no such value exists or it is not equitable, the real value or a value determined according to a generally accepted method, using the data closest to the date of the court's decision. No control premium is required and no minority discount is allowed by the text.
Can a minority shareholder force the majority to buy its shares?
In defined situations. Under Article 202(2) a shareholder who voted against a merger, division, conversion, dissolution, securities issue or material amendment carried out through the exercise of control without a clearly understandable justification, and who had the dissent recorded, may ask the court to order the controlling enterprise to compensate the loss or purchase the shares; the claim is time-barred two years after the resolution. Under Article 531 shareholders holding at least 10% of the capital may seek dissolution for just cause, and the court may instead order that they be paid the real value of their shares and leave the company.
Can a merger be used to pay the minority out in cash?
Yes, within limits. Article 141(2) allows the merger agreement to provide only for a separation payment corresponding to the real value of the shares, but Article 151(5) requires that agreement to be approved by 90% of the voting rights existing in the transferring capital company. Any shareholder may then ask the court within two months of the Trade Registry Gazette announcement to fix an appropriate equalisation payment under Article 191, and a dissenting shareholder may bring the Article 202(2) claim if the merger lacks a clear justification from the subsidiary's point of view.
What happens if a shareholder challenges the separation payment under Article 191?
The commercial court at the seat of one of the participating companies fixes an appropriate equalisation payment; the 10% cap in Article 140(2) does not apply to it. The judgment also benefits all shareholders in the same legal position, the costs are borne by the acquiring company unless special circumstances justify otherwise, and the action does not affect the validity of the merger, division or conversion. The claim must be filed within two months of the announcement in the Turkish Trade Registry Gazette.
