A privileged share is a share in a joint-stock company to which the articles of association give an advantage in voting, dividend, liquidation share or another shareholder right. The right to representation on the board of directors is also protected separately by statute. However, the holder of a privilege does not have the power to block every resolution. Whether the right has actually been created, for which resolutions it may be exercised, and which procedure applies in the event of a violation must each be determined separately.
This guide addresses the creation and protection of privileges in joint-stock companies in Türkiye; the different voting regime in limited liability companies; the quorums of the general assembly and the special board; and the deadlines and avenues of action. For publicly held companies, the special provisions of the Capital Markets Law apply in addition. For a foreign investor or a minority partner, the key question is not the percentage of capital alone: Capital ratio, voting power, representation on the board and economic rights may all differ from one another.
On What Conditions Is a Privileged Share Created?
The Label "Group A Share" Does Not Create a Privilege by Itself
Under TTK Article 478, a privilege may be granted by the articles of association at incorporation or later by amending the articles. Naming shares Group A, B or C is only a classification. The subject matter of the privilege, its scope, the shares that benefit from it and the conditions for exercising it must be identifiable from the articles of association. Printing a share certificate in a different color, a share being registered or bearer, or a high price paid for it does not by itself create a privilege.
Likewise, granting a founder a particular dividend or management right in an investment agreement does not by itself create a privilege in the company-law sense. A shareholders’ agreement may create obligations between its parties; but provisions that are not carried over into the articles of association do not by themselves change the statutory duties and powers of the company’s organs. For this reason, the investment agreement and the registered articles of association must be reviewed together.
As a Rule, a Privilege Attaches to the Share
The basic structure under TTK Article 478 is that the advantage is granted to the share. On a legally valid transfer of the share, the privilege attached to it as a rule passes to the transferee. However, TTK Article 360 allows representation on the board to be granted to specific share groups, to shareholders forming a group defined by particular characteristics and qualities, and to a minority. Because of this special regulation, it should not be assumed that every representation right continues to the same extent merely through a share transfer; the definition of the group and the conditions for benefiting from the right must be checked.
The existence of a privilege does not justify eliminating the inalienable rights of other shareholders. The removal of the right to attend the general assembly, the minimum vote, the right to information or the right to bring an action in violation of the law is assessed separately under TTK Article 447. The principle of equal treatment of shareholders in the same position also continues to apply. It cannot be accepted that every advantage written into the articles of association is valid.
Four Checks for the Validity of a Privilege. First the right in the articles of association is checked, then the share or group that benefits, and then the scope and the statutory limits. The name of a share group does not by itself create an advantage.
What Majority Is Required to Create a Privilege Later?
Under TTK Article 421/3-b, an amendment to the articles of association creating privileged shares later requires the affirmative vote of the holders or representatives of shares constituting at least 75 percent of the company’s capital. The measure is neither the number of persons attending the meeting nor only the capital present. If this majority cannot be reached at the first meeting, the same quorum is required at the following meeting as well. Valid stricter provisions in the articles of association are also taken into account.
By contrast, changing or abolishing an existing privilege is not automatically the same transaction as creating a new privilege. The quorum applicable in the general assembly is determined according to the content of the change; if an existing privilege is violated, the protection of TTK Article 454 is examined separately. Reaching a sufficient majority in the general assembly does not by itself eliminate the protection of the special board.
Registered-share shareholders who vote against a resolution creating a privilege are not bound by restrictions on the transferability of their shares for six months from publication of the resolution in the Turkish Trade Registry Gazette (TTK Article 421/6). This does not mean that the company is obliged to buy the shares or to pay a price to remove the shareholder.
TTK Article 478/4 additionally limits the creation of privileges in favor of other shares in certain companies and affiliates more than half of whose capital belongs to the public legal entities, trade unions, associations, foundations, cooperatives and their umbrella organizations listed in the article. The exceptions in the provision for companies traded on the stock exchange, credit institutions and financial institutions must be taken into account.
A Voting Privilege May Provide Power Different from the Capital Ratio
A Share May Be Granted at Most Fifteen Votes
In a joint-stock company, a voting privilege is created by granting a different number of votes to shares of equal nominal value. According to TTK Article 479/2, at most fifteen votes may be granted to one share. This limit does not mean that the total vote a shareholder may cast with all of its shares is capped at fifteen.
For example, suppose that of one hundred shares, all of equal nominal value, twenty belong to Group A and eighty to Group B. If each A share has five votes and each B share has one vote, Group A casts 100 votes and Group B casts 80. Although Group A’s capital share is 20 percent, its weight within the total of 180 votes is approximately 55.56 percent. This calculation is meaningful for a resolution on which the privilege can be exercised. It does not remove capital-based quorums, disqualification from voting or special resolution requirements.
The Fifteen-Vote Limit Cannot Be Exceeded Without a Court Decision
Where institutionalization requires it or a justified reason is proven, the commercial court of first instance at the location of the company’s head office may grant an exception. A reasoned decision of the board of directors or the unanimous vote of the shareholders does not replace the court. The institutionalization project, the necessity and the effects on the company must be made concrete; a wish to preserve existing control is not sufficient by itself. A change in the project depends on a court decision; if the conditions cease to exist, the exception may be withdrawn.
In its decision of June 24, 2014, E.2014/3120, K.2014/11961, the 11th Civil Chamber of the Court of Cassation (Yargıtay 11. Hukuk Dairesi) dealt with a claim that limiting an existing high-voting privilege would cause problems for management and group companies; the dismissal rendered on the ground that justified reasons had not been proven was affirmed. The decision shows that exceeding the limit cannot be based solely on a contract or on concern about losing control; it cannot be generalized to mean that every request for an exception will be rejected.
A Privilege Cannot Be Exercised on Amendments to the Articles, Releases and Liability Resolutions
Under TTK Article 479/3, a voting privilege cannot be exercised on amendments to the articles of association, on releases (ibra) and on resolutions to bring a liability action. For this reason, including privileged votes in the outcome of transactions that amend the articles of association, such as a capital increase, may be erroneous.
The inability to exercise a privilege is different from a complete loss of the right to vote. For example, the fact that board members cannot use votes arising from their own shares when the board members are being released stems from TTK Article 436/2. In such a case, it is not enough merely to subtract the excess votes and allow ordinary voting. For each agenda item, both the prohibition on exercising the privilege and the person-specific disqualification from voting must be checked.
Capital Ratio and Voting Power Are Not the Same. If, of one hundred shares of equal nominal value, five votes are granted to each of twenty and one vote to each of eighty, 100 of the total 180 votes are in Group A. The result applies only to resolutions on which the privilege can be exercised; it does not remove capital quorums or disqualification from voting.
How Do Dividend and Board-Representation Privileges Work?
| Type of privilege | Right it may provide | Power it does not provide by itself |
|---|---|---|
| Voting privilege | Extra votes per share on permitted resolutions | Exercising the privileged vote on every resolution |
| Dividend privilege | Priority in distributable profit or participation at a higher rate | Guaranteed payment while the company is making a loss |
| Liquidation-share privilege | Priority or a different distribution in the liquidation balance | Collecting ahead of the company’s creditors |
| Pre-emptive right privilege | An advantage in acquiring new shares, as determined by the articles of association | Removing other shareholders’ statutory rights without limit |
| Board representation | Election from a particular group or binding nomination of candidates | Direct appointment of a member without a general assembly election |
Dividend Priority Is Not an Unconditional Guarantee of Return
The articles of association may provide that a share group receives a certain amount before the distributable profit or participates at a higher rate. It must be clearly written whether the calculation base is net profit for the period or the amount allocated for distribution, and whether there is renewed participation in the profit remaining after the priority amount. A vague priority sentence may lead to disputes in which the same amount is distributed twice or a group is excluded from the entire remainder.
The provisions on profit distribution and legal reserves in TTK Articles 507–509 and 519 remain protected. A privilege does not legitimize payment out of capital when there are no distributable resources, or disregard of mandatory reserves. In a liquidation privilege as well, the company’s debts and the order of liquidation in TTK Article 543 take priority. It cannot be assumed that the phrase "liquidation priority" used in an investment agreement covers the company’s ordinary profit for the period, the share sale price or payments to the company’s creditors.
When designing an advantage in pre-emptive rights, the justified reason, quorum and prohibition on unjustified benefit or loss in TTK Article 461 must be taken into account. A privilege clause should not be drafted as a general authority permitting the participation right of the other shareholders to be removed in every future capital increase without stating a reason.
Representation on the Board Is a Right Separate from a Majority of Votes
TTK Article 360 permits two basic methods: Members may be elected from a particular group or minority, or those groups may be granted the right to nominate candidates. Unless there is a justified reason, a candidate belonging to the group that made the nomination or was granted the right must be elected; the power of election lies with the general assembly. In publicly held joint-stock companies, representation provided in this way cannot exceed half of the number of board members; the provisions on independent members are reserved.
In its decision of March 10, 2025, E.2021/2119, K.2025/369, the 12th Civil Chamber of the Istanbul Regional Court of Appeal assessed under TTK Article 360 a small capital group’s nomination of candidates for three of the six seats on the board of directors. The right to nominate candidates for the board was not treated as the same as a privilege that increases the number of votes per share. The decision was rendered subject to appeal; it should not be presented as a decision confirmed to be final or as a rule that resolves all similar disputes.
A member elected through a representation right also performs the duty in the interest of the company. The member cannot act as a representative bound to carry out every instruction of the group that proposed the member; the duties of care and loyalty in TTK Article 369 continue to apply.
In Which Resolutions Does the Special Board of Privileged Shareholders Come into Play?
TTK Article 454 provides special board protection where amendments to the articles of association, the grant of authority to the board of directors to increase capital, and capital increase resolutions of the board of directors violate privileged rights. The resolution concerned cannot be implemented unless the required approval is obtained or it is deemed approved by law. This does not mean that the resolution is in every case automatically non-existent or null.
Complete abolition of a privilege is an obvious violation. However, rendering the right ineffective in practice while its text is preserved also matters. The loss, as a result of a capital increase, of the share threshold needed for representation on the board, giving a new share group a stronger priority, or a provision that makes it impossible to exercise the privilege are examined separately. Calculating the economic effect may be more illuminating than merely comparing the old and new sentences of the articles of association.
In its decision of December 13, 2022, E.2021/3726, K.2022/9001, the 11th Civil Chamber of the Court of Cassation (Yargıtay 11. Hukuk Dairesi) considered a capital increase that reduced the minority group’s total ratio below the representation threshold in the articles of association; the decision finding it appropriate to authorize the call of the special board was affirmed. While the name of the privilege remains in the articles, its usability may disappear. On the other hand, it cannot be concluded that there is an automatic violation in every capital increase.
The special board is not a second general assembly that approves all of the company’s activities. The TTK Article 454 route cannot be used for an ordinary sale, a management transaction or every resolution alleged to be unlawful. If the transaction falls outside the scope of this provision, the relevant avenues such as annulment of the general assembly resolution, nullity of the board of directors’ resolution or liability are considered.
In the registered capital system of publicly held companies, Capital Markets Law Article 18/4 does not require special board approval for the board of directors’ capital increase resolutions up to the registered capital ceiling. In companies that have privileged shares, however, general assembly resolutions on amendments to the articles of association within the scope of the same article are approved by the special board under the principles of TTK Article 454. A single approval rule should not be applied to the capital increases of non-public and publicly held companies.
How Are Deadlines, Quorums and Minutes Protected in the Special Board?
The One-Month Call Period and the Fifteen-Day Application Period Are Separate
Under TTK Article 454/2, the board of directors calls the special board to a meeting within one month at the latest from the announcement of the general assembly resolution. If no call is made, each privileged shareholder may, within fifteen days starting from the last day of the board of directors’ call period, request a call from the commercial court of first instance at the company’s head office. The shareholder should not skip these stages and regard itself as directly authorized.
There is a risk in practice as to when the period starts: Article 7/1-c of the General Assembly Regulation takes the date of the general assembly resolution as the basis for the call, whereas the text of the statute refers to the announcement date. The difference and the nature of the period are also debated in the doctrine. In the 2022 Court of Cassation decision above, the application was found to be within the period by considering the resolution and announcement dates together. For this reason, the dates of the general assembly, the announcement, the call and the notification should be recorded separately; one should not wait relying only on a later starting point. The concrete timeline should be built against both an early application and an objection that the period has expired.
The Meeting Quorum Is Calculated on the Capital of the Privileged Group
The wording of TTK Article 454/3 uses the expression "the majority of sixty percent of the capital representing the privileged shares" for the meeting; in Article 22/13 of the General Assembly Regulation the ratio is set as "at least sixty percent." In practice, 60 percent is taken as the meeting quorum and the majority of the shares represented at the meeting as the decision quorum. The number of shareholders and the capital of the group concerned relative to the company’s total capital should not be confused. The protection of groups whose different rights are violated is assessed separately.
If, at the general assembly, the holders or representatives of the relevant privileged shares have voted in favor of the amendment to the articles of association in accordance with the meeting and decision quorums in TTK Article 454/3, no separate special meeting is held. One person’s affirmative vote is not in every case the approval of the whole group.
If the special board cannot meet within the period despite a duly made call, the general assembly resolution is deemed approved. For this reason, not attending the meeting is not a safe method of blocking. Making no call at all and being unable to meet despite a valid call are not the same legal situation.
A Reasoned Rejection and Delivery Documents Are Mandatory
If it is concluded that the privilege has been violated, reasoned minutes are prepared. The minutes are delivered to the board of directors within ten days. A signed list of those who voted against the approval, constituting at least the quorum, and a common notification address for any action that may be filed are also provided. The minutes and information are registered and announced. Failure to comply with these statutory requirements may result in the special board resolution being deemed not to have been taken.
The attendance and signature of the Ministry representative are ensured within the framework of TTK Article 454/6 and Article 407/3 and the relevant regulation. To prove delivery, one should not rely solely on an oral in-house notice; a delivery record showing the date and content should be created. Instead of the sentence "Our rights have been violated," it should be explained which privilege has been affected, by which change and how.
Starting Points of the Deadlines in the Special Board. The four periods do not start from the same date. TTK 454/2 takes the announcement of the general assembly resolution as the basis for the call, while Regulation 7/1-c takes the date of the resolution. If no call is made, the shareholder’s court period is 15 days from the last day of the call period. The rejection minutes are delivered within 10 days. The board of directors’ period to bring an action is 1 month from the special board resolution.
Do the Same Privilege Rules Apply in Limited Liability Companies?
The fifteen-vote limit applicable to joint-stock companies does not apply directly to a limited liability company. According to TTK Article 618, votes are as a rule calculated by the nominal value of the capital shares; unless the company agreement provides a higher amount, every 25 Turkish liras gives one vote. The agreement may also provide one vote for each capital share irrespective of nominal value. In that case, the statutory requirement that the nominal value of the smallest share not be less than one tenth of the total nominal value of the other capital shares is checked separately.
The voting system by number of shares does not apply to the election of auditors, the election of a special auditor to examine the management or its divisions, and resolutions to bring a liability action (TTK Article 618/3). These exceptions are not the same as the list in Article 479/3 for joint-stock companies. Disqualification from voting on the release of managers is assessed separately under Article 619.
For capital shares with a voting privilege to be provided for, the two conditions in TTK Article 621/1-b are required together: At least two thirds of the votes represented and an absolute majority of the entire capital carrying the right to vote. Obtaining a majority of votes at the meeting alone is not enough. TTK Article 577 also allows arrangements such as a veto for specified or determinable partners or a casting vote in the event of a tie; these should not be confused with the provisions on joint-stock companies.
Since there is no express general reference on applying TTK Article 454 to limited liability companies, it cannot be said that the special board procedure of the joint-stock company is mandatory in exactly the same form in all limited liability companies. Ahmet Ata’s 2025 study argues that Article 454 should be applied by analogy to the extent that it suits the structure of the company. This view does not mean that the statute contains an express reference; the reasoning for analogy in the specific case must be built separately. In a limited liability company dispute, the right in the agreement, the consent and quorum required for the amendment, and the avenues of annulment and nullity under Article 622 should be examined first.
Which Action and Evidence Are Needed When the Right Is Violated?
Against a decision of the special board not to approve, the board of directors may, within one month from the date of the decision, bring an action before the commercial court of first instance at the company’s head office for annulment of the special board resolution and registration of the general assembly resolution, on the ground that the privileges have not been violated. Under TTK Article 454/8, the action is directed against those who voted against the approval. Starting the period from the notification of the minutes does not accord with the wording of the statute.
If annulment of the general assembly resolution is sought, the three-month period running from the date of the resolution under TTK Article 445 and the conditions for the right to sue in Article 446 are also taken into account. It is important for a shareholder who attended the meeting to have the negative vote and dissent entered in the minutes. Resorting to the special board route does not by itself suspend the annulment period against the general assembly resolution. Giving the request a different name in order to get around the annulment period, without a genuine ground of nullity or non-existence, achieves nothing.
Filing an action concerning a general assembly resolution does not automatically stop its execution. A stay of execution under TTK Article 449 or, depending on the nature of the request, interim protection under HMK Article 389 et seq. is considered. The existence of the privilege, prima facie proof, imminent harm and the effect of the measure on the company’s activities must be made concrete.
The main documents to be reviewed are the following:
• The current and previous articles of association, registration and announcement records; the resolution by which the privilege was first created.
• The share ledger, share transfer documents, and book-entry share records if any; the capital and vote calculation of each group.
• Calls to the general assembly and the special board, the agenda, the list of attendees, powers of attorney, minutes and dissent records.
• Calculations comparing the old and new capital structure, the order of dividend distribution or the threshold for representation on the board.
• The delivery record of the rejection minutes, the signature list, the common notification address and the Ministry representative’s records.
Claims that do not include a monetary claim, such as a call alone or annulment of a resolution, are not subject to mandatory mediation as a condition for bringing an action under TTK Article 5/A merely because they are commercial disputes. If a monetary claim or a claim for compensation is added, the current provision, the nature of the claim and the joinder of actions are assessed separately. Court fees, expert and notification costs and, where necessary, security and translation costs vary with the file; no fixed period or cost can be promised.
For a foreign partner, an investment agreement in a foreign language does not replace the articles of association registered in Türkiye. Signature and representation documents, a Turkish translation, an apostille or authentication where necessary, jurisdiction and competence tied to the company’s head office, and the applicable law are examined separately. The foreign element does not by itself extend the short company-law periods in the statute.
Avenue of Action by Problem. The avenue of action is chosen according to the dispute. Calling the special board and annulling the general assembly are different requests. The board of directors seeks annulment of a rejection decision. The conditions for interim protection are shown separately; the special board route does not by itself suspend the annulment period for the general assembly.
Conclusion
The value of a privileged share is determined less by the word "privilege" used in the contract than by which right it grants to whom, within what scope, and how it can be protected if violated. Capital and voting calculations, the conditions for representation on the board, the general assembly quorum and the special board procedure must be evaluated together. Creating a new privilege and abolishing an existing one; superiority in voting and nominating candidates; annulment of the general assembly and special board approval are separate legal issues. Correct document and deadline management prevents the right from remaining only on paper.
Related articles: Annulment of a Company General Meeting Resolution: Deadlines, Nullity and Stay of Execution; If the General Assembly Does Not Meet: Call and Court Application; Dividend Claim Against a Company: The Shareholder's Rights; Capital Increase and Pre-Emptive Rights in a Company; Company Conversion: From Limited to Joint-Stock Company; Capital Reduction in Companies and Protection of Creditors; A Company’s Acquisition of Its Own Shares.
Frequently Asked Questions
Can a Shareholder with a Ten Percent Stake Be Decisive in Managing the Company?
Yes, it can. A valid voting privilege or board-representation right may produce an effect different from the capital ratio. The result depends on the articles of association and the subject of the resolution; a low capital ratio does not mean control in every transaction.
Can a Privileged Shareholder Veto Every General Assembly Resolution?
No. The protection of TTK Article 454 concerns the resolutions specified in the article that violate the privilege. A voting privilege also cannot be exercised on the types of resolutions the statute prohibits. A veto right granted by agreement in a limited liability company is assessed separately.
Is the Privilege Lost When a Privileged Share Is Transferred?
A privilege attached to a share as a rule passes together with the share. If a right of representation on the board has been granted to a group of shareholders with specified characteristics, the group definition, the position of the transferee and the conditions in the articles of association must be examined separately.
Does Not Attending the Special Board Block the General Assembly Resolution?
It is not a safe method. If the special board fails to meet within the period despite a duly made call, the general assembly resolution may be deemed approved. The validity of the call and non-attendance at the meeting should be kept apart.
Can Articles of Association Providing More Than Fifteen Votes Be Applied?
A court decision is required for the exception in TTK Article 479/2. Acting on the basis of excess votes without such a decision creates legal risk. The validity of the provision and its effect on the resolution taken are examined separately.
When Does the Period Against the Special Board’s Rejection Decision Begin?
The one-month period in TTK Article 454/7 starts from the date of the special board’s decision. It should not be confused with the date of notification or of delivery of the minutes. The annulment action is directed against those who voted against the approval.
Can a Shareholder Who Opposes the Creation of a Privileged Share Withdraw?
A registered-share shareholder within the scope of TTK Article 421/6 may, on condition of having voted against, use the exception from the transfer restrictions for six months from the announcement. This provision is not by itself a right to withdraw from the company for a price; special rights in publicly held companies are assessed separately.
Sources
- Turkish Commercial Code No. 6102 — Ministry of Justice legislation record: Articles 5/A, 340, 357, 360, 369, 421, 434, 436, 445–449, 454, 460–461, 478–479, 507–509, 519, 543, 577, 618–619, 621–622.
- Turkish Commercial Code — Ministry of Trade PDF copy: full-text comparison of the relevant key articles; a copy containing amendments up to 2020, not used alone as the current consolidated text.
- Regulation on the Procedures and Principles of General Assembly Meetings of Joint-Stock Companies and on the Ministry Representatives to Attend These Meetings (Anonim Şirketlerin Genel Kurul Toplantılarının Usul ve Esasları ile Bu Toplantılarda Bulunacak Bakanlık Temsilcileri Hakkında Yönetmelik) — Union of Turkish Bar Associations legislation transfer: in particular Articles 7, 9, 22.
- Capital Markets Law No. 6362 — Ministry of Justice legislation record: Article 18.
- Code of Civil Procedure No. 6100 — Ministry of Justice legislation record: Article 389 et seq.
- 11th Civil Chamber of the Court of Cassation (Yargıtay 11. Hukuk Dairesi), 24.06.2014, E.2014/3120, K.2014/11961: request for an exception to the fifteen-vote limit.
- 11th Civil Chamber of the Court of Cassation (Yargıtay 11. Hukuk Dairesi), 13.12.2022, E.2021/3726, K.2022/9001: effect of a capital increase on the board-representation privilege and the call of the special board.
- 12th Civil Chamber of the Istanbul Regional Court of Appeal (İstanbul BAM 12. Hukuk Dairesi), 10.03.2025, E.2021/2119, K.2025/369: distinction between nomination of candidates and a voting privilege; the decision was rendered subject to appeal. Links to decisions may require a membership to access.
- Osman Karaköse, “Anonim Ortaklıklarda İmtiyazlı Pay Sahipleri Özel Kurulunun Toplantıya Çağrılması” (Calling the Special Board of Privileged Shareholders in Joint-Stock Companies), Journal of Commercial and Intellectual Property Law (Ticaret ve Fikri Mülkiyet Hukuku Dergisi), 2024, 10(2), 263–278: doctrinal debates on the starting point of the period and the call procedure.
- Ahmet Ata, “Düzenleme Eksikliği Bulunan Konularda Anonim ve Kollektif Şirketlere İlişkin Hükümlerin Limited Şirketlere Kıyasen Uygulanmasının İki Örnek Üzerinden İncelenmesi” (An Examination, through Two Examples, of the Application by Analogy to Limited Liability Companies of Provisions on Joint-Stock and General Partnerships Where There Are Regulatory Gaps), Periodicum Iuris, 2025, 3(1), 63–95: in particular pp. 76–81 and 89–90, the analogy view on protecting privileges.