Withdrawal and Removal of a Limited Liability Company Shareholder: Just Cause, Action and Exit Payment

How Do the Routes of Leaving a Limited Liability Company Differ from One Another?

The first thing a shareholder who wishes to leave a limited liability company should do is to determine which legal institution the specific case fits. Although share transfer, withdrawal and removal may appear to produce the same result, their constitutive acts, parties, proof and financial consequences differ. Choosing the wrong legal route may lead to dismissal of the action for lack of standing or for want of a condition of action, to an incomplete calculation of the exit payment, or to the shareholder's capacity as shareholder unexpectedly continuing.

Share Transfer and Withdrawal from the Shareholding Are Not the Same

In a share transfer, the shareholder's share passes to another person. The economic value of the share is, as a rule, paid by the transferee at the price in the share transfer agreement. In withdrawal, on the other hand, a voluntary transfer of the share to a third party is not required; the shareholding relationship ends by the withdrawal mechanism in the articles of association or by court judgment, and the exit payment comes into play within the framework of Articles 641-642 TCC.

A share transfer is often a faster method based on the parties' wills. However, where no transferee can be found, the other shareholders do not approve the transfer, the real value of the share is disputed or the shareholding relationship has become intolerable, a withdrawal action may be more functional. When preparing a share transfer agreement, ancillary matters such as waiver of the withdrawal action, release (ibra), non-competition, current account and dividends must be regulated separately.

The Right of Withdrawal Under the Articles of Association

Article 638/1 TCC accepts that the articles of association may grant shareholders a right of withdrawal and may make the exercise of this right subject to certain conditions. These grounds may be the expiry of a certain period, the disappearance of the condition for working together with other shareholders, a change in the ownership structure, the end of a particular activity or other events expressly defined in the contract.

In withdrawal under the articles of association, the following questions must be answered together:

• Is the ground for withdrawal clear, measurable and has it occurred?
• To whom, in what form and within what period must the notice of withdrawal be given?
• Is a general assembly or board of managers resolution required?
• Will the notice take effect upon notification, from the date of the resolution, or on another date?
• Is there a special method in the contract for calculating the exit payment, and does this method contravene mandatory rules?

The existence of a withdrawal provision in the articles of association does not remove the action for withdrawal for just cause. Even if the contractual mechanism cannot be operated or the specific case does not fully fit the ground in the contract, withdrawal may be requested from the court if there is just cause within the scope of Article 638/2 TCC.

The Action for Withdrawal for Just Cause

Under Article 638/2 TCC, every shareholder may bring an action for a decision that they withdraw from the company where just causes exist. Just cause is not listed in the law as a closed list. For this reason, the assessment is made according to the type of company, the number of shareholders, the parties' duties, the articles of association, the gravity and continuity of the violation, and whether the shareholding relationship can reasonably be continued.

Withdrawal for just cause is not a transaction completed by the shareholder's unilateral declaration. A court judgment is required. The claimant must explain with concrete evidence both the facts that justify the withdrawal and that these facts have made the shareholding relationship unsustainable for them.

Contractual Removal and Removal by Court Judgment

The articles of association may provide the grounds on which a shareholder may be removed from the company by general assembly resolution. In this case, the removal resolution is notified to the shareholder through a notary. The shareholder may bring an action for annulment of the resolution within three months of the notification. In the application of this route, whether the ground stated in the contract has actually occurred, the decision quorum, the right to vote, the agenda, the opportunity to defend and proportionality are reviewed.

Differently from this, the company may apply to the court for the removal of a shareholder where just causes exist. The claimant in this action is the company as a legal entity. As a rule, a shareholder cannot directly request in their own name the removal of another shareholder; for an action to be brought in the company's name, the competent organ and the representation arrangement must be separately examined.

How Is Just Cause Determined?

In assessing just cause, the whole of the events matters more than a single event. A dispute arising at a single shareholders' meeting, profit not being distributed in a single year or a one-off delay in information may not be sufficient on its own for withdrawal. By contrast, if the same conduct becomes systematic, the shareholder is in practice unable to exercise their shareholding rights, and trust within the company is irreparably destroyed, just cause may arise.

The 11th Civil Chamber of the Court of Cassation (Yargıtay 11. Hukuk Dairesi) emphasises that just cause must be assessed separately in each specific case. For this reason, whether the continuation of the shareholding can be expected of a reasonable shareholder is examined on the basis of the source, duration, repetition and remediability of the violation.

Continual Obstruction of the Right to Obtain Information and Inspect

Continual obstruction of the shareholder's obtaining information about the company's financial position, contracts, bank movements and management decisions, in particular failure to answer written requests, concealment of books and records or the presentation of misleading information, holds an important place in the assessment of just cause.

It Must First Be Shown That the Right Was Exercised in Due Form

The claimant shareholder must make the information request specific in terms of subject, period and document, deliver the request in writing to the company and document the refusal or lack of reply. Saying in the abstract that “I was not given information” is in most cases not sufficient.

Refusal Based on the Trade Secret Defence Is Not Always Justified

The company may limit the request if there is a concrete danger that the information will be used in competing activity. However, the ground of company secrecy cannot be turned into a general means of refusal that eliminates all of the shareholder's supervisory rights. The court assesses the scope of the request together with the company's interest deserving protection.

Systematic Non-Distribution of Profit and Economic Exclusion

The company's not distributing profit for a long time although it makes a profit, and depriving the other shareholder of economic return while transferring benefits to some shareholders through remuneration, attendance fees, loans, advances or related-party transactions, may strengthen the just cause allegation.

Not Every Decision Not to Distribute Profit Is Automatically Just Cause

Objective reasons such as an investment need, indebtedness, cash flow or statutory reserves may justify leaving the profit in the company. For this reason, not merely the fact that “the dividend was not paid” but the company's real profitability, general assembly resolutions, other payments made to shareholders and the conformity of the decision not to distribute with the rule of good faith must be examined together.

Use of Company Assets for Personal Benefit

Personal payments made from the company account, transfer of company assets to a shareholder or relatives contrary to market conditions, unrecorded sales, redirecting company customers to connected enterprises and holding company income in other accounts may create strong just cause allegations in a withdrawal action.

The Allegation Must Be Substantiated with Financial and Technical Records

Bank records, invoices, current accounts, related-party contracts, inventory, stock movements, tax records and e-mail correspondence must be examined together. A mere decrease in the company's turnover does not of itself prove abuse; to whom, at what price and in what company interest the transaction was made must be shown.

Serious and Continuing Loss of Trust Among Shareholders

The personal element of a limited liability company is more pronounced than that of a joint-stock company. In a structure built on family ties, joint work or joint management, serious and continuing conflicts may make the continuation of the shareholding intolerable. However, the concrete effect of personal hostility on the company's activity must be shown.

The Claimant's Own Fault May Be Raised as a Counter-Defence

The shareholder seeking withdrawal obstructing the company's affairs, failing to pay the capital debt, violating the non-competition prohibition, failing to hand over records or personally aggravating the conflict is a strong defence for the other side. Although the claimant's fault does not in every case remove the just cause, it may affect the court's overall assessment, set-off claims relating to the exit payment and litigation costs.

How Is an Action for Withdrawal for Just Cause Brought?

Against Whom Is the Action Brought?

In an action for withdrawal from the shareholding, the principal defendant is the company as a legal entity. The debtor of the exit payment is, as a rule, also the company. Naming the other shareholders personally as defendants, unless a separate personal debt or liability of theirs is asserted, may give rise to an objection of lack of passive standing.

However, if there is a conflict of interest in the company's representation, who will represent the company in the action must be resolved separately. If the company manager is at the same time the other side of the dispute, a representation trustee or an appropriate representation mechanism may come into play.

The Competent and Authorised Court

The action is a commercial action and is heard by the commercial court of first instance (asliye ticaret mahkemesi). Under Article 14/2 of the Code of Civil Procedure (HMK), in actions arising from the shareholding or membership relations of private-law legal entities, the court at the place where the legal entity's head office is located has exclusive jurisdiction. If the company's actual head-office address differs from the head-office entry in the trade registry, the registry entry and the specific case must be assessed together.

Shareholder Capacity Continues During the Proceedings

Until the withdrawal decision is given, the claimant shareholder as a rule retains the capacity of shareholder. The Court of Cassation accepts that the withdrawal action is tied to the capacity of shareholder and that this right of action cannot be transferred, but that the claim for an exit payment to be awarded may be transferred. For this reason, transferring the share to a third party while the proceedings are pending creates a serious risk with regard to standing to sue and legal interest.

Requests for Provisional Legal Protection

Article 638/2 TCC gives the court the power, for the duration of the action, to freeze some or all of the claimant's rights and obligations arising from the shareholding or to take other measures that secure the claimant's position.

Freezing of Rights Is Not Automatic

An injunction requires concrete danger, prima facie proof and proportionality. How the claimant's right to vote, right to obtain information, obligation of additional payment or non-competition prohibition will be temporarily handled is assessed separately in each case. Freezing all shareholding rights without giving any reason may lead to a loss of rights instead of protecting the claimant.

A Targeted Injunction Should Be Requested to Protect Company Assets

Targeted measures, such as preventing the transfer of particular immovable property, making particular bank accounts subject to dual signature, preserving company records, conducting an independent financial examination or resolving the representation problem, may be more proportionate than general prohibitions that halt all of the company's activity. A clear connection must be established between the injunction requested and the right it is sought to protect.

Current Divergence in Case Law on Mediation as a Condition of Action

A withdrawal decision is a claim of status that cannot be measured in money; the exit payment, however, is a monetary claim. Asserting these two claims together has given rise to debate regarding mediation as a condition of action.

In its decision dated 17.03.2022, the 11th Civil Chamber of the Court of Cassation accepted that the withdrawal and withdrawal-share claims form a connected whole and that the action should be heard without being subject to mandatory mediation. By contrast, the same Chamber's decision dated 02.10.2024 upheld a decision dismissing an action for withdrawal and exit payment filed without applying to mediation for want of a condition of action. The decision dated 21.04.2026 also expressly states that the same type of action is subject to mediation.

The Safe Practice Is to Apply to Mediation Before the Action

Taking into account the current 2024 and 2026 decisions, if an exit payment claim is also to be asserted, applying to mediation in commercial disputes before filing the action is the safe route that reduces the risk of dismissal on procedural grounds. The subject of the application should cover withdrawal from the shareholding, the exit payment and connected claims in a way that leaves no doubt. The mediation status of a pure status claim and of a subsequently filed claim-only action is not the same.

How Is the Right to Join the Withdrawal Exercised?

Article 639 TCC gives the other shareholders, where a shareholder exercises the right of withdrawal in the articles of association or brings an action for withdrawal for just cause, the possibility of joining the withdrawal within one month if the conditions are met in respect of them.

The One-Month Period Starts to Run with the Company's Notification

The company must notify the other shareholders without delay of the intention to withdraw or of the action filed. The shareholder wishing to join applies to the managers, or to the court in the pending action, within one month of this notification. Since the period may cause a loss of rights, the date and content of the notification must be documented.

The Equal Treatment Principle Also Applies to the Exit Payment

All withdrawing shareholders are subject to equal treatment in proportion to their shares of the capital. Using the company's resources to pay only the shareholder who applied first may in practice devalue the exit payment of the other joining shareholders. The court must assess the company's ability to pay together with the rights of more than one departing shareholder.

How Is a Limited Liability Company Shareholder Removed?

A Ground for Removal Provided for in the Articles of Association

The articles of association may provide that a shareholder may be removed by general assembly resolution when events such as non-payment of the capital debt, a serious violation of the non-competition prohibition, loss of a particular professional qualification or other objective grounds occur. The ground must be clear and foreseeable; it must not give the company organs an unlimited and arbitrary power of removal.

In adopting a removal resolution, the agenda, call to the meeting, right to vote, decision quorum, minutes, reasons and notification procedure are examined. The resolution is notified to the shareholder through a notary, and the shareholder may bring an annulment action within three months. Since this period is preclusive (hak düşürücü süre), the date of the notification is critical.

The Company Brings the Action for Removal for Just Cause

Under Article 640/3 TCC, the company may, on its own request, ask for the removal of a shareholder by court judgment on the basis of just cause. The company's will to sue must be formed by the competent organ, and the company must be properly represented. A shareholder's requesting the removal of another shareholder directly in their own name will, as a rule, meet with a lack of active standing.

The Effect of the Constitutional Court Decision in Two-Shareholder Limited Liability Companies

By its decision E.2025/128, K.2025/273 dated 25.12.2025, the Constitutional Court (Anayasa Mahkemesi, AYM) annulled the rules on general assembly authority and decision quorum that in practice made it impossible to bring an action for removal for just cause in two-shareholder limited liability companies. The decision was published in the Official Gazette dated 17.03.2026.

The Decision Removed the Barrier to Access but Did Not Rewrite the Entire Procedure

The annulment decision removed the structural barrier to effective access to the mechanism of removal for just cause by one shareholder against the other in a two-shareholder company. However, the decision did not newly regulate all the details of who will exercise the right of action and under what representation arrangement. Until a new statutory regulation is made or practice stabilises, courts must develop an interpretation that considers together the right to an effective remedy, the company's legal entity and the right of defence.

How Is the Exit Payment Calculated?

Under Article 641 TCC, when a shareholder leaves the company, they have the right to claim an exit payment corresponding to the real value of their share of the capital. Real value is not merely the equity shown in the commercial books or the nominal price of the share.

The Valuation Date Is the Date Closest to the Date of the Decision

The 11th Civil Chamber of the Court of Cassation accepts that the exit payment must be determined by establishing the real value of the company's assets at the date closest to the date of the decision. In long-running proceedings, being satisfied with the balance sheet at the date of the action may disregard value the company later gained or lost.

Balance Sheet Value Alone Is Not Sufficient

Tangible Assets Are Examined at Fair Value

Immovable property, vehicles, machinery and stock may have a market value different from book value. The valuation should, where necessary, be made by a panel of experts bringing together real estate, machinery, financial advisory and sector expertise.

Intangible Values Must Also Be Taken into Account

Trademark, customer base, licence, distribution network, contract portfolio, technology, domain name and the business's continuing profitability capacity may affect real value. On the other hand, optimistic forecasts relating to the future alone should not artificially inflate the share value.

Debts, Tax Risks and Contingent Liabilities Are Deducted

Real value cannot be determined without examining the company's bank debts, tax and social security (SGK) risks, pending actions, guarantees and sureties, and shareholder current accounts. The reality of related-party debts and their conformity with market conditions must also be reviewed.

Dividends and the Shareholder Current Account Are Distinct from the Exit Payment

The exit payment is the counterpart of the real value of the share. The shareholder's previously accrued dividend claim whose distribution has been resolved, a loan made to the company, an expense claim or a wage claim may rest on separate legal grounds. To prevent the same item being collected twice, the effect of these claims on share value and their independent nature must be explained in the expert's calculation.

When Does the Exit Payment Fall Due?

Under Article 642 TCC, the exit payment falls due if the company has available equity, if the departing shareholder's shares are transferable, or if the capital has been reduced in accordance with the relevant provisions. This arrangement strikes a balance between the shareholder's real value right and the protection of the company's capital and creditors.

The Part That Has Not Fallen Due Does Not Disappear on Its Own

The part of the exit payment that has not fallen due continues as a claim ranking after all the company's other creditors. The amount of available equity is determined in the annual report, and the part that has fallen due is paid. The company's lack of ability to pay does not reduce the real value of the exit payment to zero; it affects the time of payment and the order of collection.

Document and Evidence Checklist for the Action

At least the following records should be collected before the action is filed:

1. Current trade registry records and all amendments to the articles of association.
2. The share ledger, the list of shareholders and the capital payment records.
3. General assembly and board of managers resolutions and meeting calls.
4. Requests to obtain information and inspect, notarial notices and replies.
5. Balance sheets, income statements, trial balances, bank and tax records for the last five years.
6. Related-party transactions, shareholder current accounts and payments made to shareholders.
7. Dividend distribution decisions or reasons for non-distribution.
8. Records of transfer, pledge, guarantee and security of company assets.
9. Correspondence among shareholders and documents showing the effect of the dispute on the company.
10. Data on immovable property, machinery, trademark and customer portfolio for the exit payment calculation.

Evidence must be obtained lawfully and the originals preserved. Unauthorised access to company e-mail or information systems may drag even a correct allegation into a debate about unlawfully obtained evidence.

Implementation Roadmap

1. The withdrawal and removal provisions in the articles of association are identified.
2. The options of share transfer, contractual withdrawal, withdrawal for just cause and dissolution are compared.
3. The events constituting the just cause are placed in order of date and document.
4. It is examined whether narrower routes such as information, general assembly, dividend or liability are sufficient.
5. If an exit payment is to be claimed, the mediation application is completed having regard to the current case-law risk.
6. The action is directed against the company in the commercial court of first instance at the company's head office.
7. Proportionate measures to protect company assets and the shareholder's status are separately reasoned.
8. The valuation is made with data close to the date of the decision and covering the company's entire asset-debt structure.
9. After the judgment, the share ledger, trade registry, tax, payment and security transactions are completed.

Conclusion

A limited liability company shareholder's leaving the shareholding does not take place merely by “giving up the share.” Share transfer, contractual withdrawal, withdrawal for just cause, joining the withdrawal and removal mechanisms are subject to different procedures. The most important strategic distinction is which legal route the shareholder selects and how that route secures the economic result.

A just cause allegation must rest not on an abstract shareholder dispute but on concrete events, such as obstruction of the right to information, economic exclusion, mismanagement, use of company assets for personal benefit or other facts that make the shareholding unsustainable. The exit payment must be calculated not on the nominal price of the share but on the real value closest to the date of the decision; due date and value must not be confused. In particular, one should not proceed without establishing a pre-action procedural plan that takes into account the mediation approach in the current decisions of the Court of Cassation.

Frequently Asked Questions

Can a limited liability company shareholder withdraw from the company by a unilateral petition?

As a rule, no. If the articles of association contain a right of withdrawal that can be exercised by notice, that mechanism may be applied. For withdrawal based on just cause, a court judgment is required.

Can I withdraw from the company without transferring my share?

Yes. Withdrawal for just cause or withdrawal under the articles of association is different from a voluntary transfer of the share to a third party. However, the exit payment and the fate of the share within the company are resolved separately.

Can the other shareholder remove me from the company alone?

As a rule, a shareholder cannot directly remove another shareholder by an action filed in their own name. For contractual removal, a resolution of the competent company organ is required; for judicial removal for just cause, the company must bring the action. In two-shareholder companies, the effect of the Constitutional Court's decision no. 2025/273 must be assessed separately.

Against whom is the withdrawal action brought?

The action is brought principally against the company. The debtor of the exit payment is also, as a rule, the company. Personal claims directed at the other shareholders must have a separate legal basis.

Can I exercise my right to vote while the withdrawal action is pending?

Unless the court gives a contrary injunction, shareholder capacity and the rights attached to it continue. Within the scope of Article 638/2 TCC, the court may temporarily freeze certain rights and obligations or take other protective measures.

Is the exit payment calculated according to the equity in the company balance sheet?

Balance sheet value alone is not sufficient. The company's immovable property, machinery, stock, trademark and customer base, ongoing work, debts and risks are examined at real value. The valuation is made according to the date closest to the date of the decision.

If the company has no money, is the exit payment lost?

No. Ability to pay affects when the claim falls due, not its value. The conditions of available equity, transferability of shares and capital reduction in Article 642 TCC are examined; the part that has not fallen due continues as a subordinate claim.

Is mediation mandatory before an action for withdrawal and exit payment?

There are differing decisions in the case law. While the 2022 decision does not require mandatory mediation, the 2024 and 2026 decisions do. As regards the current procedural risk, if an exit payment is also to be claimed, applying to mediation before the action is the safe approach.

Can I transfer my share to another person after filing a withdrawal action?

The right of action is tied to the capacity of shareholder. Transfer of the share during the proceedings may affect standing to sue and legal interest. If a transfer is planned, the litigation strategy and the transfer agreement must be assessed together.

If the court decides that I do not withdraw from the company, can it order dissolution of the company?

Depending on the prayer for relief and the specific case, dissolution may be asserted in the alternative. However, withdrawal and dissolution are subject to different conditions. The court decides within the framework of the parties' claims and the provisions of Articles 636-638 TCC.

Sources

Legislation and Official Sources

1 — Turkish Commercial Code No. 6102, in particular Art. 595, 616, 621 and 638-642, Legislation Information System: Official legislation text

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

3 — Constitutional Court, E.2025/128, K.2025/273, 25.12.2025, removal from the shareholding in two-shareholder limited liability companies: Official text of the decision

Decisions of the Court of Cassation

4 — Court of Cassation 11th Civil Chamber, E.2016/2571, K.2017/5023, T.04.10.2017: Text of the decision

5 — Court of Cassation 11th Civil Chamber, E.2021/5009, K.2023/721, T.08.02.2023: Text of the decision

6 — Court of Cassation 11th Civil Chamber, E.2023/753, K.2024/3848, T.13.05.2024: Text of the decision

7 — Court of Cassation 11th Civil Chamber, E.2012/8380, K.2013/8291, T.25.04.2013: Text of the decision

8 — Court of Cassation 11th Civil Chamber, E.2020/7524, K.2022/2040, T.17.03.2022: Text of the decision

9 — Court of Cassation 11th Civil Chamber, E.2023/5578, K.2024/7035, T.02.10.2024: Text of the decision

10 — Court of Cassation 11th Civil Chamber, E.2025/5483, K.2026/2281, T.21.04.2026: Text of the decision

Academic Sources

11 — Cenkci, Esra, “Çıkan ya da Çıkarılan Limited Ortağına Ayrılma Akçesinin Ödenmesi” (Payment of the Exit Payment to a Withdrawing or Removed Limited Liability Company Shareholder), Ankara Hacı Bayram Veli University Faculty of Law Journal: Academic work

12 — Tatlı, Burçak, “Limited Şirketlerde Çıkma, Çıkarılma ve Ayrılma Akçesi” (Withdrawal, Removal and Exit Payment in Limited Liability Companies), Ankara Hacı Bayram Veli University Faculty of Law Journal: Academic work