What Is the Equal Treatment Principle?
Article 357 TCC provides that the shareholders of a joint-stock company are to be treated equally under equal conditions. The principle prevents the company's organs from treating shareholders in the same legal and economic position differently in an arbitrary manner.
The Equality Is Relative, Not Absolute
It is not necessary to afford every shareholder the same right and benefit in every situation. Different share classes, privileged shares, non-performance of a capital commitment, a shareholder's conflict of interest, a statutory voting prohibition or objective grounds based on the company's interest may justify different treatment.
An equal treatment review rests on the following three questions:
- Are the compared shareholders in the same or a similar situation?
- Has different treatment been applied between them?
- Is the difference based on an objective, proportionate and lawful justification grounded in the company's interest?
The Principle Binds Not Only the General Assembly but Also the Board of Directors
Resolutions of the general assembly on profit distribution, capital increase, election of managers or privileges must comply with the equal treatment principle. The board of directors, too, may not make arbitrary distinctions in matters such as the provision of information, payments to shareholders, the exercise of pre-emption rights (rüçhan hakkı), entry in the share ledger and access to company facilities.
Article 391 TCC expressly lists board of directors resolutions that violate the equal treatment principle among the grounds of nullity. For general assembly resolutions, on the other hand, a violation of equal treatment and the rule of good faith may constitute a ground for annulment under Article 445 TCC; depending on the nature of the serious violation, a discussion of nullity may also arise separately.
The Equal Treatment Principle Does Not Abolish the Majority Principle
A joint-stock company is governed by the majority. The majority's adoption of its own commercial preferences does not mean that it must accept every demand of the minority. What is prohibited in law is the majority's use of its voting power, detached from the company's interest, to crush the minority economically or in terms of management, to obtain a special benefit for itself, or to render the minority's rights ineffective.
How Are an Individual Shareholder Right, a Minority Right and a Privilege Distinguished?
Minority protection does not consist solely of rights tied to a 10% or 5% threshold. Individual rights that a shareholder can exercise alone, minority rights that can be exercised by those who reach a certain percentage, and privileges arising from the articles of association must be assessed as separate institutions.
Individual Rights
Within the conditions in the law, every shareholder may attend the general assembly, vote, obtain information, demand a dividend (kâr payı), bring an action against a general assembly resolution and exercise other rights arising from shareholding. Reaching the minority percentage is not always necessary to exercise these rights.
Minority Rights
In non-public joint-stock companies, shareholders representing at least 10% of the capital, and in public companies at least 5%, benefit as a rule from minority rights. The articles of association may lower these percentages.
The principal minority rights are as follows:
- Calling the general assembly to a meeting and having an item added to the agenda,
- In certain cases, having the discussion of the financial statements postponed,
- Conducting the process of requesting the appointment of a special auditor,
- Requesting the printing of registered share certificates,
- Bringing an action for dissolution for just cause under Article 531 TCC.
Privileged Share Rights
A privilege gives a particular share a superior right in terms of dividend, liquidation share, pre-emption, voting or representation on the board of directors. A holder of a privileged share may exercise the privilege without holding the minority percentage. The equal treatment principle does not prevent the application of a privilege that complies with the law and the articles of association.
How Is the Abuse of Majority Power Determined?
Abuse of majority power is most often understood not from a single obvious act but from the whole of resolutions spread over years, obstruction of information, economic exclusion and related-party transactions.
The Company's Interest Must Be Distinguished from the Controlling Shareholder's Interest
A resolution may also benefit the majority shareholder; this alone is not unlawful. However, the likelihood of abuse increases if the resolution has no reasonable economic justification for the company, if the controlling shareholder or a connected person gains a benefit while the company suffers a loss, and if the minority is systematically excluded.
An Isolated Error and Systematic Pressure Differ
A single deficiency in a meeting call can be remedied by an annulment action. By contrast, the continual irregular holding of general assemblies, the repeated refusal of information requests, the non-distribution of profit and the use of company resources in favour of the controlling shareholder together may show a policy that pushes the minority out of the company.
The 11th Civil Chamber of the Court of Cassation (Yargıtay 11. Hukuk Dairesi) emphasises that the majority, in managing the company, must have regard to minority rights and the balance of the shareholding, and must not adopt resolutions that would crush the minority and render its rights ineffective.
Selective Disclosure and Obstruction of the Right of Inspection
A minority shareholder's ability to evaluate the financial statements, the annual report, related-party transactions and the management's explanations is a precondition for exercising the other rights.
Different Information May Not Be Given to Shareholders in the Same Situation
While giving certain shareholders detailed financial and commercial information, the management may not exclude other shareholders in the same position without justification. Under Article 437 TCC, information disclosed to one shareholder outside the general assembly must, on request, be given to the other shareholders with the same scope and detail.
The Trade Secret Defence Must Be Made Concrete
Company secrecy and the protection of the company's interest may limit an information request. However, a general and unreasoned use of the words “trade secret” is not sufficient. It must be shown what concrete harm the disclosure of the requested information would cause. More proportionate methods such as partial disclosure, data masking or inspection through an expert should be considered.
Order of Recourse in Case of a Violation of the Right to Information
The shareholder should:
- Put the request in writing by subject, period and document,
- Have the question and the answer recorded in the minutes at the general assembly,
- If necessary, apply to the court under Article 437/5 TCC,
- Consider a special audit request in order to clarify specific transactions,
- Prove the systematic obstruction in the annulment, liability or dissolution action.
Non-Distribution of Profit and Transfer of Hidden Benefits
The general assembly has discretion as to the extent to which distributable profit is distributed. The company's need for investment, debt repayment, working capital or reserves may justify leaving the profit in the company. On the other hand, this discretion cannot be turned into a means of starving the minority economically.
Non-Distribution of Profit for a Long Time Is Not Always Unlawful on Its Own
The company's growth, loan agreements or financial difficulties may require that no distribution be made. For this reason, a decision is not made by looking only at the number of years.
Conferring Benefits on the Controlling Shareholder by Other Means Is Decisive
If, while the company profit is not distributed, the controlling shareholder and relatives are provided with:
- Unusual remuneration or attendance fees,
- Rent or consultancy fees above the market comparable,
- Interest-free or unsecured loans,
- Use of company vehicles and immovable property free of charge,
- Transfer of goods or services to a connected company on advantageous terms
then a decision on non-distribution of profit may be part of majority pressure.
In the practice of the Court of Cassation, non-distribution of profit for a long time, high payments to managers, obstruction of information and the use of company resources in favour of the majority have been assessed together.
Other Claims Besides Annulment and Dissolution May Also Arise
Annulment of the decision not to distribute profit, return of payments to managers, a liability action, invalidity of a related-party transaction or compensation for the company's loss may constitute separate claims depending on the specific case. Not every dispute has dissolution for just cause as its sole solution.
Discriminatory Capital Increase and Dilution of the Shareholding Percentage
A capital increase is a legitimate instrument that meets the company's financing need. However, the majority may not use an unnecessary or excessive capital increase to reduce the minority's shareholding percentage, eliminate its representation in management, or force it to transfer its shares at a low price.
The Real Financing Need Must Be Examined
The justification for the capital increase must be explained through cash flow, the investment plan, the debt structure and alternative financing options. A sudden and large increase while the company holds high cash and undistributed profit may be questioned as to its purpose, particularly where persons close to the majority are ready to finance the increase.
The Exercise of the Pre-emption Right Must Be Practically Possible
Even if shareholders are granted the right to take new shares, deficiencies in notice, time limit, payment method or information may make it practically impossible for the minority to exercise its right. The statutory conditions and a just cause must exist for limiting or removing the pre-emption right.
Loss of the Right of Representation in Management Is Assessed Separately
If the capital increase practically terminates the right of a particular share group to be represented on the board of directors under Article 360 TCC, the special meeting of privileged shareholders and the protections in the articles of association may come into play.
In a 2026 decision of the 11th Civil Chamber of the Court of Cassation, the allegation that an unnecessary capital increase in a financially sound company aimed at intimidating the minority and reducing its shareholding percentage was subject to examination. In such actions, it is not only the existence of the increase but the reality of the need, the decision-making process and the minority's opportunity to participate that must be proved.
Obstruction of Attendance at the General Assembly and of the Right to Vote
A shareholder's attending the general assembly, discussing the agenda, asking questions and voting are fundamental rights.
Shareholding and Representation Documents May Not Be Interpreted Arbitrarily
The management may not reject a valid share or representation document simply because the minority could influence the resolutions. Entry in the share ledger, notification to the Central Securities Depository (MKK), power of attorney and call requirements must be correctly assessed according to the company type and the nature of the share.
The Place and Time of the Meeting Must Not Make Exercise of the Right Impossible
Holding the general assembly at a distant, unsuitable or inaccessible place; late provision of documents; a sudden change to the meeting; or electronic participation that does not in practice work may violate the right of participation.
The Dissenting Note and the Minutes Are Important
For an annulment action, it is in most cases important that the shareholder attending the meeting voted against and had their dissent recorded in the minutes. If participation was obstructed, how the obstruction took place should be documented with notary records, e-mails, images, witnesses and meeting records.
Representation on the Board of Directors and Institutional Protection of the Minority
Article 360 TCC permits representation on the board of directors to be granted to particular share classes, to shareholders forming a group defined by particular features and characteristics, or to the minority.
The Right of Representation Must Be Established in the Articles of Association
For representation on the board of directors to be binding on the company's organs, it must be expressly regulated in the articles of association. A nomination undertaking in a shareholders' agreement gives rise to an obligation between the parties; however, the institutional effect of the articles of association and the general assembly resolution is examined separately.
The Representative Has Regard to the Company's Interest
A member nominated by a particular group cannot, once elected, act merely as the group's agent. They owe a duty of care and loyalty to the whole company. When the group's interest and the company's interest conflict, the statutory duty takes priority.
Indirect Neutralisation of the Right of Representation
Changing the number of board members, reducing a share group below the threshold through a capital increase, or amending an article of association without a protective quorum may weaken the right of representation. These transactions must be examined in terms of privilege, equal treatment and the rule of good faith.
How Is a Special Audit Used in Minority Protection?
A special audit enables an independent examination to be made in order to clarify particular events. After exercising the right to obtain information or inspect, a shareholder may request a special audit from the general assembly.
The Request Must Focus on Specific Events
Instead of a vague request such as “let all the company's transactions be investigated,” concrete events should be indicated, such as a specific transfer of immovable property, a related-party payment, the financing of a capital increase or the basis for a manager's remuneration.
If the General Assembly Rejects the Request, a Court Route Exists
Shareholders holding the statutory percentage may apply to the court within the time limit if the general assembly rejects the special audit request. They must persuasively show that the founders or organs have caused loss to the company or the shareholders by violating the law or the articles of association.
A Special Audit Does Not Replace a Compensation Action
The special auditor's report helps bring the facts to light. After the report, separate claims such as annulment of a general assembly resolution, liability, restitution or dissolution may come into play.
How Does Annulment of a General Assembly Resolution Protect the Minority?
Under Article 445 TCC, annulment may be sought of general assembly resolutions that are contrary to the law, the articles of association and in particular the rule of good faith.
Which Resolutions May Be Annulled?
Resolutions on non-distribution of profit that discriminatorily exclude the minority, managers' remuneration, capital increase, release from liability (ibra), election of the board of directors, amendment of the articles of association or matters connected with a special audit may, under specific conditions, be the subject of an annulment action.
Three-Month Preclusive Period
The annulment action must be filed within three months from the date of the resolution. The period is preclusive (hak düşürücü süre); as a rule, it is neither suspended nor interrupted. For a shareholder who attended the meeting, the conditions of a negative vote and a dissenting note must also be taken into account.
Postponement of the Implementation of the Resolution
Filing the action does not by itself stop the implementation of the resolution. After obtaining the opinion of the board of directors, the court may order the implementation of the resolution to be postponed. A request for an interim injunction under the Code of Civil Procedure (HMK) is also assessed according to the specific dispute.
When Can Nullity of a Board of Directors Resolution Be Asserted?
A board of directors resolution contrary to the equal treatment principle may be null under Article 391 TCC. For example, resolutions that exclude the minority in the same conditions while providing certain shareholders, without justification, with share acquisition, information, payment or company facilities may be the subject of an action for nullity.
The three-month period applicable to a general assembly annulment action does not apply to a declaration of nullity under Article 391 TCC. However, since remaining silent for a long time may give rise to a discussion of legal interest and the rule of good faith, one should act without delay.
Liability of Managers and Compensation for the Company's Loss
If members of the board of directors and managers breach, through their fault, the obligations arising from the law and the articles of association, they may be liable for the loss they cause to the company, the shareholders and the company's creditors.
The Company's Loss Must Be Distinguished from the Shareholder's Direct Loss
A decrease in share value because of a reduction in the company's assets is in most cases the company's direct loss and the shareholder's indirect loss. In whose name and to whom compensation is to be claimed must be correctly determined.
Obstruction of the minority's right to vote, unlawful dilution of its shares or non-payment of its personal dividend may, on the other hand, constitute direct loss. The type of claim and the standing to be sued must be set up accordingly.
The Effect of a Release from Liability Resolution
The release of members of the board of directors from liability (ibra) may, within the framework of known transactions and statutory conditions, affect a liability action. A balance sheet contrary to the truth, a concealed transaction or the decisive vote of persons lacking voting rights may separately make the validity of the release contentious.
When Does Dissolution for Just Cause Become a Last Resort?
Article 531 TCC gives shareholders representing at least 10% of the capital in closed joint-stock companies, and 5% in public companies, the possibility to bring an action for dissolution for just cause.
A Single Ground for Annulment Is Not Always Sufficient for Dissolution
Dissolution is a serious remedy affecting the company's economic existence and third parties. If the violation can be remedied through annulment, information, special audit or a liability action, dissolution remains a last resort.
Systematic Pressure Strengthens the Just Cause
Non-distribution of profit for years, obstruction of information and supervision rights, conferring hidden benefits on controlling shareholders, transferring company facilities to connected enterprises and continually reducing the minority's influence in management may together constitute just cause.
The Court May Devise an Alternative Solution Instead of Dissolution
The court may decide that the claimant shareholders' shares be paid at their real value closest to the date of the decision and that they be removed from the company, or decide on another solution appropriate to the situation. The continuation of the company and the effective protection of the minority are considered together.
What Kind of Evidence File Should a Minority Shareholder Prepare?
- Current shareholding, the share ledger and MKK records.
- The articles of association, and the provisions on privileges and representation in management.
- General assembly calls, agendas, minutes and dissenting notes.
- Requests to obtain information and inspect, and the responses.
- Special audit requests and court files.
- Financial statements, annual reports and audit reports of recent years.
- Profit distribution decisions and payments of managers' remuneration/attendance fees.
- Related-party contracts, invoices, bank movements and collateral.
- The justification for the capital increase, the report on the use of funds and pre-emption notices.
- Records showing the use of company assets by the majority or connected companies.
- Board of directors resolutions, and the signature and representation arrangement.
- Previous annulment, information, liability and dissolution actions.
How Is the Appropriate Legal Route Selected?
| Violation | Primary instrument | Critical time limit/condition |
|---|---|---|
| General assembly resolution contrary to the law or the rule of good faith | Annulment action | 3 months from the resolution; claimant conditions |
| Board of directors resolution contrary to the equal treatment principle | Declaration of nullity | Legal interest; no special 3-month period |
| Information request refused | Application under Art. 437/5 TCC | Short periods according to the date of refusal and response |
| Specific transaction must be clarified | Special audit | First information request and the general assembly process |
| Company has suffered loss | Liability action | Type of loss, claimant and limitation period |
| Systematic majority pressure continues | Art. 531 TCC dissolution/alternative solution | Statutory minority percentage and just cause |
The Claims Do Not Replace One Another
Filing an annulment action does not by itself include an application for information; a special audit does not include a compensation action; and a dissolution action does not include a request for postponement of implementation of the resolution. For each claim, the party, the time limit, the proof and the outcome must be set up separately.
Evidence Must Be Preserved Before the Decision
E-mails, electronic general assembly records, MERSİS/MKK information, bank movements, accounting records and contracts should be considered for preservation of evidence or for production by the court before they are lost. Data must not be obtained unlawfully.
How Is Preventive Minority Protection Built into Company Contracts?
Litigation routes matter after a dispute arises; however, the most effective protection is in most cases provided at the incorporation or investment stage.
Institutional Rights in the Articles of Association
- Representation of a particular group on the board of directors,
- Aggravated quorum for certain decisions,
- Share transfer and pre-emption arrangement,
- Information and reporting standards,
- Privileged shares and a special meeting mechanism,
- Profit distribution policy.
Complementary Protection in the Shareholders' Agreement
- Reserved matters and voting undertakings,
- Regular financial reporting,
- Approval of related-party transactions,
- Tag-along and drag-along rights,
- Deadlock and share buy-sell mechanisms,
- Confidentiality, competition and dispute resolution.
Provisions that must have institutional effect should be transferred into the articles of association; contractual sanctions and details should be completed in the shareholders' agreement.
Conclusion
The equal treatment principle does not abolish the majority principle; it ties the majority's power to the company's interest, the rule of good faith and shareholders' rights. Selective disclosure of information to shareholders in the same conditions, the transfer of hidden benefits to the controlling shareholder while no profit is distributed, the purposeless dilution of the minority through a capital increase, obstruction of participation in the general assembly, or the redirection of company resources to connected enterprises may call for legal protection.
The right route should be chosen according to the nature of the violation: annulment against a general assembly resolution, a declaration of nullity against a board of directors resolution, obtaining information, special audit, liability and, as a last resort, an action under Article 531 TCC have different conditions from one another. Minority protection should be pursued not through scattered complaints but by establishing the link between the decision, the date, the economic result and the evidence. The balance between the company's continuity and the effective protection of the minority is the basic criterion both in contract design and in litigation strategy.
Frequently Asked Questions
Does the equal treatment principle give all shareholders the same right in every situation?
No. Shareholders under equal conditions are treated equally. A privilege, a share class, a capital commitment or an objective company interest may justify different treatment.
What shareholding percentage is required for a minority right?
In non-public joint-stock companies, as a rule 10%, and in public companies 5%, is required. This percentage is not required for some individual rights; the articles of association may lower the minority percentage.
Can information be given only to the majority shareholder?
Selective information without justification cannot be given among shareholders under the same conditions. Information disclosed to one shareholder outside the general assembly must, on request, be given to the other with the same scope.
If the company does not distribute profit, is the decision automatically annulled?
No. A need for investment, debt or working capital may justify leaving the profit in the company. Conferring benefits on the majority by other means while no profit is distributed for a long time strengthens the violation.
Is a capital increase unlawful if it reduces the minority's share?
Not always. If there is a real financing need and the pre-emption right is effectively exercisable, the increase may be legitimate. If the aim is to dilute the minority and exclude it from management, annulment or other means of protection may come into play.
What is the time limit for an action against a general assembly resolution?
The annulment action must be filed within three months from the date of the resolution. The claimant's standing and the conditions of a negative vote and a dissenting note must be checked according to the specific case.
What happens if the board of directors violates the equal treatment principle?
Under Article 391 TCC, nullity of the resolution may be sought from the court. Provisional legal protection may additionally be required to stop the implementation of the resolution.
When is a special audit requested?
The shareholder should first exercise the right to obtain information or inspect and then request a special audit from the general assembly in order to clarify specific events. If it is refused, an application to the court may be made within the statutory percentage and periods.
Is majority pressure directly a ground for dissolution?
A single dispute is not always sufficient. The systematic nature of facts such as continual obstruction of information, non-distribution of profit, related-party benefits and exclusion of the minority may strengthen just cause under Article 531 TCC.
What should a minority shareholder do before filing an action?
They should verify the shareholding percentage and the articles of association; make their requests in writing; have their dissent recorded at the general assembly; preserve financial and electronic evidence; and determine the correct time limit and type of action for each violation.
Sources
Legislation and Official Sources
1. Turkish Commercial Code No. 6102, in particular Art. 357, 360, 391, 411-412, 418, 436-440, 445-446, 454, 478-479 and 531: Text of the law published by the Ministry of Trade
2. Turkish Civil Code No. 4721, Art. 2: Legislation Information System
3. Code of Civil Procedure No. 6100, in particular the provisions on provisional legal protection: Legislation Information System
Decisions of the Court of Cassation
4. Court of Cassation 11th Civil Chamber, E.2019/4620, K.2021/5396, T.29.06.2021: Text of the decision
5. Court of Cassation 11th Civil Chamber, E.2018/410, K.2019/5479, T.17.09.2019: Text of the decision
6. Court of Cassation 11th Civil Chamber, E.2018/4331, K.2020/2348, T.04.03.2020: Text of the decision
7. Court of Cassation 11th Civil Chamber, E.2018/2103, K.2019/4892, T.26.06.2019: Text of the decision
8. Court of Cassation 11th Civil Chamber, E.2025/4330, K.2026/369, T.21.01.2026: Text of the decision
9. Court of Cassation 11th Civil Chamber, E.2016/2361, K.2017/4719, T.26.09.2017: Text of the decision
10. Court of Cassation 11th Civil Chamber, E.2022/4496, K.2023/6513, T.08.11.2023: Text of the decision
Academic Sources
11. Academic study on the equality principle in joint-stock companies: DergiPark
12. Academic work on the protection of minority shareholders in joint-stock companies: İstanbul Hukuk Mecmuası
13. Gün Avukatlık Bürosu, “Anonim Şirketlerde Azınlık Pay Sahiplerinin Hakları” (Rights of Minority Shareholders in Joint-Stock Companies): Publication