Dissolution of a Joint-Stock Company for Just Cause: Minority Right, Purchase of Shares and the Court's Alternative Solutions

The Legal Nature of the Dissolution Action Under Article 531 TCC

A joint-stock company is a capital company in which shares can be freely transferred and in which the personal element is weaker than in a limited liability company. For this reason, the law has not granted shareholders a general and direct right of “withdrawal from the company.” Article 531 TCC exceptionally enables shareholders who reach a certain minority percentage to request dissolution of the company where there is just cause and, if the court finds it appropriate, to be removed from the company against payment of real value.

The Right Provides Protection Against Abuse of Majority Dominance

The Court of Cassation (Yargıtay) characterises dissolution of a joint-stock company for just cause as a legal remedy protecting the minority against the majority's exploitation of its dominant position in the company. However, the company's employees, creditors, customers, investors and economic environment also have an interest in the company's continuation. For this reason, keeping the company alive is the rule; dissolution is the exception.

The Dissolution Action Is Not a Direct Withdrawal Action

In a joint-stock company, a shareholder cannot bring a general action for withdrawal for just cause similar to Article 638 TCC for limited liability companies. A shareholder's request that “my shares be paid for and I leave the company” cannot be accepted on its own without the minority percentage and just cause conditions of Article 531 TCC being met.

The 11th Civil Chamber of the Court of Cassation (Yargıtay 11. Hukuk Dairesi) has expressly stated that a direct withdrawal request by a joint-stock company shareholder cannot be granted when the dissolution conditions are not met. Accordingly, the purchase of shares at real value is not an independent right of withdrawal; it is one of the solutions that the court may use as an alternative to dissolution in an action for dissolution for just cause.

Who Can Bring an Action for Dissolution for Just Cause?

Under Article 531 TCC, shareholders representing at least one tenth of the capital in closed joint-stock companies, and at least one twentieth in public joint-stock companies, may bring the action.

Several Shareholders May Combine Their Percentages

The minority percentage does not have to be met by a single shareholder. Several shareholders may act together and reach the statutory threshold. Maintaining shareholding and the required percentage during the proceedings is important for standing to sue and legal interest.

A One-Percent Shareholder Cannot Bring an Article 531 TCC Action

In its decision dated 09.05.2024, the 11th Civil Chamber of the Court of Cassation accepted that a claimant holding one percent of the shares did not hold the minority percentage in Article 531 TCC and had no right to request dissolution. A person whose shareholding percentage is insufficient should consider other routes, such as the right to obtain information, special audit, annulment of a general assembly resolution, a liability action or rights arising from a share transfer agreement.

Provisions in the Articles of Association Must Be Examined Separately

The articles of association may contain complementary provisions, in conformity with the law, on the exercise of minority rights. Nevertheless, as regards the scope and percentage of the right of action in Article 531 TCC, the mandatory nature of the statutory regulation and the effect of the articles of association must be examined on the concrete text; an unlimited right of dissolution not provided for by the law cannot be created on the basis of the articles of association.

What Is Just Cause?

Article 531 TCC has not defined just cause. The legislative rationale has left room for developments in doctrine and judicial practice. Just cause arises not from a single event or abstract dissatisfaction, but from the whole of the facts by which majority dominance leaves the minority unprotected, damages the company's interest and seriously makes it impossible to continue the shareholding relationship in accordance with the rule of good faith.

Decision E.2022/7419, K.2024/1381 of the 11th Civil Chamber of the Court of Cassation dated 22.02.2024 sets out the current approach in detail. In that decision, the general assembly's being called contrary to the law many times, continual violation of minority and individual rights, obstruction of the right to obtain information and inspect, the company's continual losses and a regular decrease in dividends were listed among the examples of just cause. The Chamber also included in its field of assessment the failure to hold a general assembly for a long time, the company's being left without organs, the use of company resources by controlling shareholders, the transfer of hidden gains to managers under the name of attendance fees while no profit is distributed to the minority, and systematic pressure by the company management.

Systematic Majority Pressure and Economic Exclusion

If the controlling shareholder or the management under its control continually neutralises the minority's management, information, voting, dividend and supervision rights, just cause may arise. Even if individual transactions appear legally valid, the transactions as a whole may be directed at excluding the minority from the company economically and in terms of management.

Discriminatory Management Decisions

Removal of a minority shareholder from a managerial post without just cause, the rights granted to particular share classes not being exercised in practice, payments being made only to persons connected with the majority, or the minority being excluded from company facilities are examined in terms of the equal treatment principle and the rule of good faith.

Continual, Not One-Off, Violation of Rights Matters

The unlawfulness of a single general assembly resolution can in most cases be remedied by an annulment action. For dissolution, the violation must be repeated or be part of a broader system of pressure. The rejection of each of the minority's applications, the repetition of the same transactions despite court decisions and the management's evasion of institutional supervision strengthen the just cause.

Obstruction of the Right to Obtain Information and Inspect

A shareholder's right to obtain information and inspect under Article 437 TCC is the basic instrument for evaluating the company's management and financial position. Failing to answer questions at the general assembly, not opening statutory documents to inspection, the board of directors' rejecting a request to inspect the books without reasons, or presenting incomplete or misleading information may constitute just cause.

The Right to Information Must First Be Exercised in a Concrete Way

The claimant must show what information and documents were requested, under which general assembly or written application, how the request was rejected and its effect on shareholding rights. If narrower routes such as an action for information or a special audit were never tried, the other side may argue that the dissolution request is premature and disproportionate.

Rejection Decisions and Minutes Have Evidentiary Value

General assembly minutes, notarial notices, board of directors replies, court decisions and records drawn up during inspections are important in proving systematic obstruction. An allegation of oral refusal should, where possible, be supported by written documents and objective records other than witnesses.

Non-Distribution of Profit for a Long Time and Transfer of Hidden Benefits

Non-distribution of profit for many years although the company makes a profit, while economic benefit is provided to the controlling shareholder or managers through remuneration, attendance fees, rent, consultancy fees, loans or related-party transactions, may constitute just cause.

In decision E.2019/4836, K.2021/4728 of the 11th Civil Chamber of the Court of Cassation, the company's failure to distribute profit for eleven years was assessed as an important fact. However, non-distribution of profit alone is not an automatic ground for dissolution.

The Need for Investment and Financing May Be a Defence

The company's growth investment, loan agreements, a debt repayment obligation, working capital or statutory reserves may justify leaving the profit in the company. The reality of this defence must be tested by comparing cash flow, investment decisions, related-party payments and managers' benefits.

Attendance Fees and Remuneration Must Be Compared with Market Conditions

A payment to a manager is not in itself unlawful. However, where no company profit is ever distributed to the minority, payments that lack economic justification, are unusual or cause loss to the company may point to a transfer of hidden gains.

Use of Company Resources in Favour of the Controlling Shareholder

Use of the company's immovable property, personnel, customer base, financing or commercial opportunities for the benefit of the controlling shareholder or its other companies may lead to a violation of the company's interest and of the equal treatment principle.

Related-Party Transactions Are Examined by Comparable Value

In purchases and sales of goods or services, rent, loans, guarantees, security and asset transfers, conformity with market conditions must be examined. The economic justification of the transaction for the company, the decision-making process, voting prohibition, disclosure and accounting records are assessed together.

Redirecting Company Opportunities to Another Company

If members of the board of directors or controlling shareholders divert business opportunities in the company's field of activity to a connected enterprise, company loss and minority pressure may arise together. Customer and offer records, invoices, employee transfers and bank movements may be used in proving this allegation.

Failure to Hold the General Assembly, Irregular Calls and Organ Problems

The general assembly's not meeting for a long time, financial statements not being approved, the expiry of the board of directors' term of office, or the company's decision-making organs being systematically left non-functional are important in the assessment of just cause.

Each Irregularity Is First Addressed Within Its Own Legal Route

If an irregularity in the call can be remedied by an action for annulment of the resolution or for nullity, dissolution remains a last resort. However, the continual repetition of the same violations, non-implementation of court decisions or leaving the company without organs for a long time may strengthen the dissolution request.

The Company's Continual Losses or Loss of Its Purpose

Continual losses, the actual cessation of the subject of activity and the company's inability to realise its economic purpose may constitute just cause. However, temporary loss or market contraction is not sufficient. Whether the company can be restructured, its assets, its contracts and its continuing business capacity are examined.

Collapse of the Relationship of Trust in Family Companies

In family companies, personal relationships may be intertwined with the management and ownership structure. Inheritance, divorce, generational change or intra-family conflict is taken into the assessment of just cause if it is reflected in general assembly, management, information and dividend rights.

A Family Dispute Alone Is Not Sufficient

Where the company can function with professional management, the shareholder's rights are protected and economic activity is not affected, personal hostility may not be sufficient for dissolution. The claimant must show how the family conflict has turned into an institutional violation of rights.

In Which Situations May Just Cause Be Insufficient?

The following situations may not on their own lead to the result of dissolution under Article 531 TCC unless combined with other systematic violations:

• A shareholder's investment expectation not being realised.
• A one-off general assembly resolution that is contrary to the law.
• The company's making a loss for a short period.
• Profit not being distributed for one or several periods because of an objective financing need.
• A shareholder's not attending the general assembly or not exercising their rights.
• An information request made in a vague, disproportionate manner or in a way that would endanger company secrets.
• Removal from a managerial post creating merely personal dissatisfaction.
• An attempt to impose on the company a price dispute arising from a share transfer agreement.

The court also assesses whether narrower instruments, such as annulment, nullity, liability, information, special audit and dividend actions, are effective.

How Is the Action Brought?

The Defendant Is the Company as a Legal Entity

The dissolution action is brought against the joint-stock company. If the personal liability of the controlling shareholder or of board members is also asserted separately, the party, the legal ground and the procedural conditions of these claims must be assessed separately.

The Competent and Authorised Court

Article 531 TCC makes the commercial court of first instance (asliye ticaret mahkemesi) at the place of the company's head office competent and authorised. This jurisdiction is of particular importance owing to the nature of the action arising from the company shareholding relationship. The current registered head office must be checked before the action is filed.

Mediation as a Condition of Action

Dissolution of the company is not a monetary claim or a claim for compensation. For this reason, a pure Article 531 TCC dissolution action is, as a rule, not subject to mediation as a condition of commercial actions. The court's being able to decide on a real-value payment instead of dissolution does not by itself turn the action into a monetary claim action from the outset.

However, if, in addition to the dissolution request, the claimant asserts a specific dividend, compensation or other monetary claim, the mediation status of each claim and the effect of joinder of claims must be examined separately.

The Burden of Proof Lies with the Minority Shareholder

The claimant proves the events constituting just cause and their continuity and gravity. The fact that the company's records are in the management's hands does not entirely remove the claimant's obligation to produce evidence. It must be explained which document is held by the company, why it matters and what fact it will prove.

Basic Groups of Evidence

1. The share ledger, share certificates and MKK (Central Securities Depository) records showing shareholding and the minority percentage.
2. The articles of association and all amendments.
3. General assembly calls, minutes, attendance lists and dissenting notes.
4. Requests for information, notarial notices and replies.
5. Board of directors resolutions and signature authority records.
6. Financial statements, bank accounts, tax records and independent audit reports.
7. Decisions on profit distribution and payments to managers.
8. Related-party contracts, transfer prices, security and guarantees.
9. Fair values of company assets and commercial activity records.
10. Previous annulment, information, special audit or liability actions and decisions.

Should Narrower Rights Be Used Before the Action Is Filed?

Article 531 TCC does not expressly provide a condition of action such as “no action may be filed before other routes are exhausted.” However, because dissolution is a last resort, the fact that narrower routes capable of remedying the concrete violation were never used may be influential in the proportionality assessment.

Annulment and Nullity Actions

Failure to file an action within the time limit against an unlawful general assembly resolution does not mean that the resolutions are definitively lawful; however, the consistency of the claimant's allegation of systematic pressure and whether they used the existing protective instruments are discussed.

Information and Special Audit

Where information is obstructed, Article 437 TCC and the special audit provisions should be operated. The failure of these routes, or the non-implementation of court decisions, makes the dissolution allegation stronger.

Liability Action

Abuse of company resources may give rise to the liability of board members. Compensation of the loss to the company may be a more direct solution that protects the company's economic integrity, instead of dissolution.

Interim Injunction and Provisional Protection

Although Article 531 TCC does not contain a special injunction sentence as in the provision on dissolution of a limited liability company, an interim injunction may be requested under Article 389 et seq. of the Code of Civil Procedure (HMK). The injunction must not be of a kind that anticipates the outcome of the action, unnecessarily halts company activity, or entirely replaces the management organs.

Targeted Asset Measures

If there is a danger of a particular immovable property being transferred to a company connected with the controlling shareholder, of an important security being given or of the company's assets being spirited away, a transaction-specific measure may be requested. Freezing all bank accounts could cause loss to the company by preventing payment of wages and taxes.

Management or Representation Trustee

If the company is left without organs, there is a conflict of representation, or the management seriously endangers the company's value, a trustee (kayyım) may be requested. A representation trustee and a management trustee must be distinguished; the duty, term and powers must be clearly delimited.

Preservation of Evidence and Records

If there is a danger of electronic records being deleted, commercial books being altered or important contracts being lost, evidence-preservation and custody measures may be requested. Instead of a shareholder gaining unauthorised access to company systems, inspection should be carried out under court supervision.

Which Solutions May the Court Apply Instead of Dissolution?

Article 531 TCC offers the court two main alternatives: payment of the real value of the claimant shareholders' shares closest to the date of the decision and their removal from the company, or another appropriate and acceptable solution suited to the situation.

Removal of the Claimants from the Company by Payment of the Real Value of the Shares

This solution frees the minority from the shareholding for just cause while preserving the company's economic existence. The court must assess by whom, by what legal instrument and from what source the shares will be bought, in terms of protection of capital, the limitations on the company's acquisition of its own shares and feasibility.

The Company's Acquisition of Its Own Shares Is Not Unlimited

Article 379 TCC et seq. limits the company's acquisition of its own shares in terms of capital percentage, authorisation and available equity. In deciding on a real-value payment under Article 531 TCC, the effect of these rules cannot be disregarded.

Purchase by Other Shareholders Requires Consent and Financing

Other shareholders may agree to buy the claimant minority's shares. However, the court's imposing an unlimited payment obligation on third parties who have not expressed their will, or devising a solution whose financing is uncertain, creates implementation problems. The parties' offers, security and payment plans should be submitted to the file.

Other Appropriate and Acceptable Solutions

The law has not listed the other solutions. In doctrine and practice, options such as remedying particular management problems, convening the general assembly, special audit, representation of share classes, stopping an unlawful transfer of benefits, or an applicable share transfer plan are discussed.

The Court's Authority Is Not an Authority to Replace the Company's Organs Indefinitely

The court cannot freely exercise the business discretion of the general assembly or the board of directors. The alternative solution must comply with the law, the articles of association, the binding nature of the claim and the right to be heard; it must be enforceable and capable of genuinely removing the source of the dispute.

The Decision Must Not Be a Surprise Without Taking the Parties' Defence

If the court is considering a solution other than dissolution, it must give the parties an opportunity to be informed about and to submit evidence on the legal and financial consequences of the solution. A decision given without discussion of valuation, financing and the share transfer mechanism may give rise to a new dispute.

How Is the Real Value of the Shares Calculated?

Article 531 TCC provides for payment of the real value of the shares at the date closest to the date of the decision. This value is not identical to nominal value, book value or a past sale price.

Valuation Date

In files in which the proceedings are long, the financial statement at the date of filing the action may not reflect current value. The valuation must be made with data closest to the date of the decision; ordinary and extraordinary transactions that occurred later must be explained separately.

The Going Concern Basis

If the company continues its activity and generates income, the valuation should not be reduced to liquidation value alone. Discounted cash flow, market multiples, net asset value or other methods appropriate to the sector may be assessed together. The assumptions of the method used must be clear.

Tangible and Intangible Assets

Besides immovable property, machinery, stock, participations and financial assets, trademarks, licences, customer relationships, technology, the contract portfolio and business value are examined. To protect trade secrets, the scope of the expert examination and access to documents may be regulated by the court.

Debts and Contingent Risks

Tax and social security (SGK) risks, litigation and arbitration, guarantees, warranty obligations, environmental liabilities and related-party debts affect share value. Possible risks must not be turned into a means of reducing value without proof.

A Minority Discount Should Not Be Applied Automatically

The purpose of Article 531 TCC is to protect the minority under pressure for just cause. An automatic discount because of the shares' minority character or lack of liquidity may allow the majority to benefit from its own abuse. The valuation method must be reasoned within the framework of the specific company, the share rights and the law's protective purpose.

How Should the Litigation Strategy Be Framed?

Just Cause Should Be Presented as a Sequence of Events

The petition should not be merely a list of complaints. For each event, the date, decision, request, refusal, economic result and evidence should be shown. How individual transactions have turned into systematic majority pressure should be explained.

The Alternative Solution Request Should Be Framed Clearly

The claimant should set out, in the alternative or as explicit alternatives, first dissolution; if dissolution is not considered appropriate, payment of the real value of the shares and removal from the company; and other appropriate solutions. The valuation request, the start of interest, security and enforcement of the decision should also be thought through.

Access to Data for Valuation Must Be Ensured

The company's books, bank, contract and asset records should be obtained at an early stage, and the date of the financial statement should be updated. Related-party transactions and extraordinary dispositions made during the proceedings should be shown separately in the expert report.

The Other Side's Strongest Defences Should Be Anticipated

The defendant company often raises the following defences:

• The claimant does not hold the required minority percentage.
• The violations are isolated and remediable.
• The information request is irregular or endangers company secrets.
• The decision not to distribute profit results from economic necessity.
• The claimant did not attend general assemblies and did not exercise their rights.
• Related-party transactions comply with market conditions.
• Dissolution would have disproportionate consequences for the company, employees and creditors.
• The claimant's share value allegation is unrealistic.

The case file should discuss these defences in advance with documents.

Document and Evidence Checklist

1. Current records showing shareholding and the minority percentage.
2. The articles of association, share classes and privilege provisions.
3. General assembly minutes and calls for the last five to ten years.
4. Applications for information, special audit and calling the general assembly.
5. Profit distribution decisions and payments to managers.
6. Financial statements, independent audit reports, bank and tax records.
7. Related-party contracts, loans, security and asset transfers.
8. Board of directors resolutions and the use of company opportunities.
9. Previous annulment, liability and information actions.
10. Fair value and business value data of company assets.
11. Extraordinary transactions reducing value during the proceedings.
12. Alternative share purchase offers, financing and security documents.

Conclusion

Dissolution of a joint-stock company for just cause is not an institution that offers a minority shareholder a general ease of exit; it is an institution that provides last-resort protection against the majority's systematic abuse and the company's serious malfunction. The claimant must hold the statutory minority percentage, show just cause through a concrete sequence of events and evidence, and explain why narrower legal routes have proved inadequate.

Even where the court finds just cause, dissolution of the company is not mandatory. Having regard to the company's economic existence, employees and creditors, payment of the real value of the claimants' shares closest to the date of the decision or another applicable solution is considered first. The valuation cannot be limited to nominal or past balance sheet value; the going concern, tangible and intangible assets, debts, related-party transactions and the law's purpose of protecting the minority must be considered together. A successful litigation strategy separates the dissolution request from individual complaints; it sets up systematic pressure, evidence, the valuation method and an enforceable alternative solution in the same file.

Frequently Asked Questions

Can every shareholder of a joint-stock company bring an action for dissolution for just cause?

No. In non-public joint-stock companies, shareholders representing at least ten percent of the capital, and in public companies at least five percent, may bring the action.

Can several minority shareholders bring the action together?

Yes. If their shareholding percentages together reach the statutory threshold, they may act together. The shareholding and the percentage must be maintained throughout the proceedings.

Can a joint-stock company shareholder directly bring an action for “withdrawal from the company”?

As a rule, no. In joint-stock companies there is no general right of withdrawal for just cause as there is in limited liability companies. Exit by payment of real value is the court's alternative solution in an Article 531 TCC dissolution action if there is just cause.

Is non-distribution of profit on its own a ground for dissolution?

Not always. Non-distribution of profit for a long time without a justified economic reason, assessed together with the transfer of benefits to the majority by other means, may constitute just cause.

Can obstruction of the right to obtain information be a ground for dissolution?

Yes. Continual and systematic obstruction may constitute just cause. The claimant must document what information they requested, how the request was rejected and why narrower application routes proved inadequate.

If the court finds just cause, will it necessarily dissolve the company?

No. The company's continuation is the basic principle. The court may decide to remove the claimants by payment of the real value of the shares or on another solution suited to the situation.

As of what date is the real value of the shares calculated?

Article 531 TCC takes as its basis the real value at the date closest to the date of the decision. Current financial statements and fair values should be used.

By whom are the company's shares purchased?

Depending on the legal and financial structure of the solution, the company, other shareholders or a suitable third party may come into question. The limitations on the company's acquisition of its own shares, available equity and the consent of the parties must be taken into account.

Is a minority discount applied?

It should not be applied automatically. A reasoned valuation should be made having regard to the protective purpose of Article 531 TCC, the rights attached to the share and the specific characteristics of the company.

Is mediation mandatory before the action is filed?

A pure dissolution request is not a monetary claim and, as a rule, is not subject to mandatory mediation. Where dividend, compensation or other monetary claims are also asserted, a separate assessment is needed.

Can a trustee be appointed to the company during the proceedings?

If a concrete and serious danger to management or assets is proved prima facie, the court may grant provisional protection. Appointment of a trustee is not automatic and must be framed proportionately in terms of duty and authority.

Sources

Legislation and Official Sources

1 — Turkish Commercial Code No. 6102, in particular Art. 379 et seq., Art. 437-438 and Art. 531: Official legislation text

2 — Code of Civil Procedure No. 6100, in particular Art. 14 and Art. 389 et seq.: Official legislation text

Decisions of the Court of Cassation

3 — Court of Cassation 11th Civil Chamber, E.2022/7419, K.2024/1381, T.22.02.2024: Text of the decision

4 — Court of Cassation 11th Civil Chamber, E.2019/4836, K.2021/4728, T.03.06.2021: Text of the decision

5 — Court of Cassation 11th Civil Chamber, E.2023/2457, K.2024/4876, T.10.06.2024: Text of the decision

6 — Court of Cassation 11th Civil Chamber, E.2022/6812, K.2024/3771, T.09.05.2024: Text of the decision

7 — Court of Cassation 11th Civil Chamber, E.2014/3669, K.2014/10238, T.02.06.2014: Text of the decision

8 — Court of Cassation 11th Civil Chamber, E.2016/2552, K.2017/5272, T.11.10.2017: Text of the decision

9 — Court of Cassation 11th Civil Chamber, E.2025/7102, K.2026/1698, T.25.03.2026: Text of the decision

10 — Court of Cassation 11th Civil Chamber, E.2024/5951, K.2025/4282, T.18.06.2025: Text of the decision

Academic Sources

11 — Ertan, Füsun Nomer, academic study on dissolution of a joint-stock company for just cause: Academic work

12 — Sümer, Ayşe, “Anonim Ortaklıkların Haklı Nedenle Feshi” (Dissolution of Joint-Stock Companies for Just Cause), academic work: Academic work