A company merger or demerger does not allow a shareholder's shares and membership rights to be extinguished without consideration. Before the transaction, the shareholder may inspect the documents and question what value and rights will be given in exchange for the shares; if the conditions are met, the shareholder may bring an equalization action or an annulment action after the transaction. The merger agreement may also provide for an exit payment (ayrılma akçesi). However, the conditions for these remedies are not the same: an inadequate consideration, an unlawful resolution and a wish to leave the company must each be assessed separately.
Two time limits in particular must be kept apart. In an ordinary merger there is an inspection period of thirty days before the general assembly resolution; in a demerger the inspection regime starts two months before the general assembly resolution. The two-month time limits for bringing an action under TTK Articles 191 and 192, by contrast, are as a rule tied to the announcement of the resolution in the Turkish Trade Registry Gazette. The start of the inspection period does not mean that the time limit for bringing an action has also started. TTK Articles 149, 171, 191–192.
How do a merger and a demerger change the shareholder's legal position?
A merger is different from a share purchase
In a merger, one company may take over another, or companies may merge into a newly established company. The transferring company ceases to exist without liquidation; its assets and liabilities pass to the acquiring company upon registration. As a rule, the shareholders acquire shares in the acquiring or newly established company. By contrast, an investor's purchase of all the shares of a company does not in itself constitute a merger; the company whose shares are purchased keeps its legal personality.
Joint-stock and limited companies may merge with one another and with cooperatives. Where a capital company merges with a general partnership or an ordinary limited partnership, the capital company must be on the acquiring side. The participation of a company in liquidation in a merger depends on the condition that distribution has not begun and that it takes the position of the transferring company. In the case of loss of capital or over-indebtedness, the condition of sufficient free equity under TTK Article 139 is additionally required. The approval of the shareholders does not by itself remove these conditions. TTK Articles 136–139, 153.
Full demerger, partial demerger and to whom the shares are issued
In a full demerger, the entire assets of the company are divided into parts and pass to the acquiring companies, and the demerging company ceases to exist. In a partial demerger, certain parts of the assets are transferred and the demerging company continues to exist. The acquiring company may issue shares to the shareholders, or it may issue them to the demerging company itself, creating a subsidiary structure. For this reason, it cannot be said that a shareholder will directly become a shareholder of the new company in every partial demerger.
Under TTK Article 160, capital companies and cooperatives may be demerged into capital companies and cooperatives. The division of the assets of an ordinary partnership among the partners is not a company demerger under this regime. For a transfer to existing companies, a demerger agreement is prepared; for a transfer to newly established companies, a demerger plan is prepared. In particular, it must be clearly shown which real property, receivable, debt and intellectual property right passes to which company. TTK Articles 159–168, 179.
How are the share ratio and economic value protected?
Holding the same percentage and preserving the same value are not the same thing
After a merger, a shareholder's percentage may decrease; what matters is that a value corresponding to the existing shareholding and rights is preserved. The calculation does not compare only the nominal capital of the companies. Asset values, debts, the distribution of voting rights and other significant factors are assessed together. There are also special protections for non-voting shares, privileges and usufruct certificates (intifa senetleri). TTK Article 140.
In a simplified example, if two companies with shares of the same type have real values of TL 30 million and TL 70 million, then, assuming that debts and valuation conditions do not otherwise change, the shareholders of the first company receiving 30 percent of the shares in the combined structure may ensure economic continuity. A person who held 20 percent of the first company receiving 6 percent in the new structure does not, on its own, show a loss of rights. On the other hand, a significant trademark, affiliate or hidden debt that was left out of the valuation may change a ratio that appears correct on its face. This example is not a substitute for a valuation report.
In a demerger as well, shares and rights are protected. In a demerger in which the ratios are preserved, shareholders receive shares in the participating companies in accordance with their former ratios. In a demerger in which the ratios are not preserved, in other words an asymmetric demerger, different shareholders may be allocated different ratios in different companies. This flexibility does not mean that a shareholder can be excluded from all of the structures without consideration. TTK Article 161.
Three separate monetary consideration mechanisms must not be confused
The contractual equalization under TTK Article 140/2 may be used in setting the exchange ratio; it cannot exceed one tenth of the real value of the shares allocated. The exit payment under TTK Article 141 is the consideration offered in a merger instead of, or as an alternative to, membership. The equalization payment (denkleştirme akçesi) under TTK Article 191 is the court's balancing of unprotected shares and rights, or of an inadequately determined exit consideration. The one-tenth upper limit does not apply in this last action.
Accordingly, a shareholder whose share value has been understated by more than 10 percent is not required to give up the remaining loss merely because of that ratio. On the other hand, not every valuation difference automatically gives rise to a claim; it must be shown which assumption or which asset was wrongly assessed. TTK Articles 140–141, 191.
Which documents can be inspected before the general assembly?
Thirty days in a merger, two months in a demerger
The companies participating in a merger make the merger agreement, the merger report, the year-end financial statements and annual reports of the last three years and, where necessary, interim balance sheets available for inspection during the thirty-day period before the general assembly resolution. The inspection takes place at the company's head office and branches; the internet and announcement obligations prescribed by law must also be fulfilled. Where the documents are kept available is announced, at least three business days before they are filed, through the relevant announcements. Copies may be requested free of charge. This right does not belong only to the majority shareholder.
In a demerger, the agreement or plan, the demerger report, the financial statements and annual reports of the last three years and, if there is one, the interim balance sheet are made available for inspection by the shareholders two months before the general assembly resolution. No fee may be charged for copies of the documents. When examining the demerger plan, one should look not only at the new share ratio but also at which activity, source of income and debt is left in which company. TTK Articles 149, 171.
The date of the request for documents, the version of the documents provided and any attachments left out should be recorded in writing. Rather than merely telling the management “I want information,” specifying the valuation report, the exchange calculation, the interim balance sheet and the inventory makes it easier to show, in a dispute, which means of inspection was obstructed. While trade secrets and the protection of personal data must be taken into account, the statutory right of inspection must not be rendered ineffective.
Waiver of inspection and the exceptions for simplified mergers
In small and medium-sized companies, the preparation of a report or the right of inspection may be waived with the approval of all shareholders. The fact that the company is a family company, has few shareholders or that the majority has consented is not sufficient on its own. Separate statutory conditions for the report and for inspection, and the scope of the waiver, must be determined.
A simplified merger, on the other hand, is subject to a different regime. If the conditions of holding all of the shares carrying voting rights under TTK Article 155/1 are met, the report and inspection obligations may fall away; the agreement need not be submitted to the general assembly. Under the Article 155/2 regime, which is based on a shareholding of at least 90 percent, the minority must be offered the option of a cash consideration corresponding to the real value, and no new personal obligations may arise. In this second case, the right of inspection does not disappear entirely; it must be provided thirty days before the registration application. TTK Articles 147/4, 149/5, 155–156, 169/4, 171/2.
By what majority are a merger and a demerger approved?
In a joint-stock company, the general rule is the approval of three quarters of the votes present at the meeting, provided that the majority of the basic or issued capital is represented. In a limited company, the votes of three quarters of all the shareholders are required, provided that they hold shares representing at least three quarters of the capital. The special provisions for joint-stock companies whose shares are traded on the stock exchange, different company types, new personal obligations and the articles of association must also be examined. TTK Articles 151, 421/5.
TTK Article 151/5 provides for a special majority for a merger agreement containing an exit payment. If the transferring company is a capital company, 90 percent of the voting rights existing in the company are taken as the basis; if it is a partnership of persons, 90 percent of the partners holding voting rights. In a capital company, 90 percent of those attending the meeting is not the same as 90 percent of the total voting rights in the company. Although the application of this majority to an optional exit payment has been debated in the doctrine, it should not be overlooked that the text of the provision makes no distinction.
In a demerger, TTK Article 173/2 refers to certain paragraphs of Article 151. In a demerger in which the ratios are not preserved, the approval of at least 90 percent of the shareholders holding voting rights in the transferring company is required. The measure here is the number of shareholders; holding 90 percent of the capital or of the votes at the meeting cannot, on its own, be considered sufficient. For example, in a structure with ten shareholders holding voting rights, two shareholders carrying 95 percent of the total capital do not satisfy this special condition, which requires the approval of nine shareholders. TTK Article 173.
Is it possible to leave or be removed from the company through an exit payment?
The distinction between an optional right and compulsory exit
The merger agreement may give the shareholder a choice between acquiring shares in the acquiring company and receiving an exit payment corresponding to the real value of those shares. It may also be agreed that shareholders determined by providing only for an exit payment do not become shareholders in the new structure. The content of the agreement, the special approval majority, equal treatment and real-value protections apply together.
In a company that is not publicly held, opposing a merger does not, on its own, give every shareholder a right to leave at a price of their choosing. On the other hand, in the face of a properly adopted compulsory exit provision, the mere wish to remain a shareholder does not automatically prevent the transaction. Nevertheless, an inadequate consideration may be the subject of an equalization action, and an unlawful resolution, if the conditions are met, of an annulment action. The conclusion that “no action can be brought at all” is not correct. TTK Articles 141, 151/5, 191–192.
The current Court of Cassation approach regarding the shareholder of the acquiring company
In its decision of February 17, 2025, E. 2023/6190, K. 2025/960, the 11th Civil Chamber of the Court of Cassation (Yargıtay 11. Hukuk Dairesi) discussed the payment of an exit payment to the shareholders of the acquiring company and the inadequacy of the consideration. The lower courts had dismissed the case, considering the exit payment possible only for the shareholders of the transferring company. The Court of Cassation, assessing TTK Article 141 together with Article 191, held that the shareholders of the acquiring company are also protected, stated that the merits of the dispute over the consideration must be examined, and reversed the decision.
This decision shows that a person cannot be left outside protection on the ground that he or she is a shareholder of the acquiring company. It does not lead to the conclusion of an unconditional right of exit in every merger, or of the validity of every removal resolution. The agreement, the majority, equal treatment and the nature of the claim are examined separately. The decision is not, on its own, a decision unifying case law. Court of Cassation 11th Civil Chamber, February 17, 2025.
In a demerger, however, Article 161 refers to Article 140 as regards the protection of shares; the exit mechanism of Article 141 for mergers cannot be carried over to a demerger automatically. Giving a shareholder shares in a different company through an asymmetric demerger and forcibly removing a shareholder from all companies in return for cash are different transactions. Whether the specific demerger plan violates this distinction must be assessed separately.
What does an equalization action achieve?
TTK Article 191 allows every shareholder whose shares or rights are not adequately protected, or whose exit consideration is not appropriately determined, to request an appropriate equalization payment. The requirement to vote against at the general assembly and to have the dissent recorded in the minutes belongs to the annulment action under Article 192; this requirement cannot be carried over automatically to Article 191.
The action is brought within two months from the announcement of the resolution in the Turkish Trade Registry Gazette. The period is a preclusive period. The registration date, the announcement date and the date of actual knowledge may not be the same. Merely sending a warning notice or talking with the company should not be regarded as an act that preserves the time limit for bringing an action. TTK Article 191.
The court's decision also has effect with respect to other shareholders in the same legal position as the claimant. Where there are different share classes, privileges, payment conditions or valuation bases, being in the same position is investigated separately. This provision cannot be read as meaning that all shareholders will collect the same amount without taking any action. The scope of the judgment, the person entitled and the amount to be collected must be determined.
An equalization action does not affect the validity of the merger or demerger. The aim is to establish a monetary balance. Litigation costs, as a rule, are borne by the acquiring company; however, if special circumstances justify it, the court may impose them in part or in full on the claimant. Therefore, one cannot speak of an unconditional cost exemption independent of the outcome of the case.
How is the annulment of a merger or demerger resolution requested?
If there is a violation of the provisions of TTK Articles 134–190, shareholders who did not vote in favor of the resolution and had this recorded in the minutes may bring an annulment action under Article 192. The failure to make the inspection documents available, an incorrect majority, an unlawful allocation of shares or failure to follow the required procedure may be assessed within this framework. As a rule, the action is brought within two months from the date of announcement; where no announcement is required, the law ties the start to registration. This route is also provided against restructuring resolutions adopted by the management body.
The position of a shareholder who did not attend the meeting, who was improperly summoned or who was wrongfully refused admission to the meeting must be examined separately, in terms of the relationship between the general assembly annulment provisions and the special provision. It would not be correct to say that there is in every case a requirement to attend the meeting, or that everyone can benefit directly from Article 192. The summons and attendance records are therefore decisive.
The court grants a period for a remediable deficiency to be completed. If the deficiency cannot be remedied or is not remedied within the period given, the resolution is annulled and the necessary measures are taken. The annulment of a registered merger is not merely the deletion of a line in the registry; the measures to be applied because of the companies that have ceased to exist, the assets transferred and the transactions of third parties are also determined. TTK Article 192.
It should not be assumed that the three-month period of the general annulment regime for general assembly resolutions can safely be used here. The claim should be framed on the basis of the special two-month period. If a claim of non-existence or nullity is asserted, the real legal ground of that claim must be shown; a missed annulment period cannot be overcome merely by changing the name of the action. For the distinctions concerning the relationship between general and special annulment actions, see Narbay–Kesici, 2015, pp. 141–143.
| Problem or objective | Main route | Time limit or critical condition | Expected legal effect |
|---|---|---|---|
| Inadequacy of the share consideration or the exit payment | TTK Article 191 equalization | Two months from the announcement of the resolution in the TTSG | A monetary balance is established; the transaction remains valid |
| Resolution contrary to the restructuring provisions | TTK Article 192 annulment | As a rule, two months from the announcement; condition of not voting in favor and having it recorded in the minutes | Remedying of the deficiency; if not possible, annulment and the necessary measures |
| Separate loss arising from a faulty transaction | TTK Article 193 liability | Loss, fault and causation; the applicable limitation period is calculated separately | Compensation of the right holder's loss |
| Receiving consideration instead of membership in a merger | TTK Article 141 exit payment | Provision in the agreement and the required approval majority | Consideration corresponding to the real value in return for the termination of membership |
Which evidence strengthens an objection to the valuation?
A company's book value is not always the same as the real value of the business. Affiliates, real property, trademarks and technology, income-generating capacity, debts and contingent liabilities may affect the valuation. However, it is also not mandatory to apply the same method to every company. The method of assessment for an asset-heavy company and for a company based on operating income must be reasoned. Bozgeyik–Işın, 2024, pp. 351–352.
In its decision of July 3, 2025, E. 2022/816, K. 2025/1092, the 12th Civil Chamber of the Istanbul Regional Court of Appeal (İstanbul BAM 12. Hukuk Dairesi) took the value at the time of the merger as the basis in a dispute concerning the merger payment, and did not accept the direct use of a higher real property value that arose during the proceedings. The decision distinguishes the exit payment calculated on account of leaving a limited company from the review of the consideration determined at the time of the merger. This assessment, which depends on the specific assets and evidence, does not mean that a single method is to be applied to all companies. Istanbul Regional Court of Appeal 12th Civil Chamber, July 3, 2025.
In the objection, it must be made concrete which asset was understated, which debt was wrongly recorded, which date was chosen and how the exchange ratio was affected by this. The merger or demerger report, the account attachments, the interim balance sheet, the land registry and affiliate records, expert reports, board minutes and announcements are the basic documents. Where more than six months lie between the balance sheet date and the date of the agreement or plan, or where there has been a significant change in assets, the interim balance sheet obligation is checked separately. TTK Articles 144, 150, 165, 172.
What should be considered regarding the court, mediation, injunction and liability?
In an action under TTK Article 191, the commercial court of first instance at the location of the head office of one of the companies participating in the transaction has statutory jurisdiction. In a merger, the claim is generally directed against the acquiring or newly established company. In a demerger, all claims should not be directed against the same defendant without establishing which company took over which assets and obligations. In an annulment action, the holder of the resolution and, if any, its successor are determined; the special jurisdiction rule in Article 191 does not apply automatically to all types of action. In these disputes arising from shareholding, the simplified procedure under TTK Article 1521 is also taken into account.
For a commercial receivable or compensation claim concerning the payment of a sum of money, pre-litigation mediation applies under TTK Article 5/A. A pure annulment request is not the same as this monetary action. The distinction between an action seeking only the determination of the equalization payment and an action containing a claim for collection is important in the mediation assessment. A single answer should not be given for all restructuring actions based merely on the heading of the petition. The effect of the time spent in the applicable mediation process on the statute of limitations and the preclusive period is calculated within the framework of HUAK Article 18/A/15; this effect is not presumed in advance for a separate annulment request. TTK Article 5/A; HUAK.
Bringing an action does not automatically stop the transaction. If there is a possibility of serious harm due to delay, a concrete and proportionate interim injunction may be requested under HMK Article 389 et seq. The petition sets out the right to be protected, the imminent danger and the evidence; the injunction should not be turned into a tool that needlessly halts all of the company's activity. The court's assessment of the security and the scope of the injunction is made separately. HMK Articles 389–392.
Where loss has arisen separately through the fault of persons involved in the transaction, liability under TTK Article 193 comes into play. It must be borne in mind that the inadequacy of the share consideration is not the same as the loss suffered by the company, and that the company's loss does not turn into a shareholder's personal claim. The liability provisions reserved by Article 193, the statute of limitations and the routes under Article 202 on the abuse of dominance may also apply separately. Showing more than one legal route for the same loss does not create a right to double recovery.
Do a publicly held company and creditor status change the result?
If at least one of the parties is a publicly held company, SPKn Articles 23–24 and Communiqués II-23.2 and II-23.3 are assessed separately. The announcement text, the opinion of the expert institution, public disclosure and the conditions of the right of exit are part of this regime. The right of exit exercised under the Capital Markets Board (SPK) by selling shares to the company is not identical to the contractual exit payment under TTK Article 141. Because of exemptions and cases in which the right of exit does not arise, an automatic right cannot be inferred for every merger. SPK, Merger and Demerger Communiqué; Communiqué on Significant Transactions and the Right of Exit.
If the shareholder is also a creditor of the company, the two capacities are protected separately. In a merger, the period for creditors to request security is three months from the date legal effect is acquired. In a demerger, the three-month security period in Article 175 is calculated from the publication of the announcements under Article 174; creditor security is part of the protective process before general assembly approval. The lifting of the security obligation by proof that the demerger does not endanger the claim should not be carried over verbatim to the current text of Article 157 on mergers. In a demerger, recourse in the second instance to the other companies is also subject to the additional conditions of Article 176. TTK Articles 157, 173–176.
Conclusion
In a merger or demerger, the shareholder's first task is to identify correctly the type of transaction and their own claim. The right to remain a shareholder, the consideration at real value, the challenge to the resolution and creditor security rest on different legal bases. When the agreement or plan, the valuation attachments, the minutes and the announcement dates are examined together, it becomes clear which route can be used. Preserving the special two-month periods is as important as keeping records of the inspection and voting stages.
Related articles: Annulment of a Company General Meeting Resolution: Deadlines, Nullity and Stay of Execution; Right to Information and Inspection in Limited and Joint-Stock Companies; Loss of Capital and Over-Indebtedness: TTK 376 Measures; Loss Caused by a Controlling Company to a Subsidiary and Equalization; Change of Company Type: Conversion from a Limited Company to a Joint-Stock Company.
Frequently Asked Questions
Does my vote against the merger stop the transaction?
Not by itself. If the required majority is achieved, the transaction may proceed. Having it recorded in the minutes that you did not vote in favor is important for the annulment action. The conditions of a request for equalization are examined separately.
Are the exit payment and the equalization payment the same?
No. The exit payment is the consideration given in a merger instead of membership. The equalization under TTK Article 191, on the other hand, provides for the completion, through the court, of the value of unprotected shares or of an inadequate exit consideration.
Is there a 10 percent limit in an equalization action?
The limit on contractual equalization in TTK Article 140/2 does not apply to an action under Article 191. The court examines the claim on the basis of the real value and the concrete loss of rights.
Can the company refuse to show the documents because it is small?
SME status alone is not sufficient. The approval of all shareholders and the conditions of the relevant provision are required for waiving the report or the inspection. The conditions of a simplified merger are assessed separately.
Does the two-month time limit start on the day the company notifies me?
For TTK Articles 191 and 192, the basic starting point is the TTSG announcement. In cases where no announcement is required, Article 192 takes registration as the basis. The dates of personal notification, announcement and registration should be recorded separately.
Can the majority leave me outside all of the companies in a demerger?
An asymmetric demerger allows a different distribution of shares; however, the protection of shares and rights is mandatory. The compulsory exit payment mechanism of a merger cannot automatically be applied to a demerger.
Does bringing an action stop registration or the company's activity?
It does not stop them automatically. If there is a need for protection, an interim injunction should be requested by showing its concrete conditions. An action under TTK Article 191 is not aimed at eliminating the validity of the transaction.
Can a shareholder of the acquiring company also request equalization?
A shareholder of the acquiring company who asserts that his or her rights have not been adequately protected may also benefit from the protection of TTK Article 191. The decision of the 11th Civil Chamber of the Court of Cassation dated February 17, 2025 is important in this respect; the claim is examined according to the specific merger arrangement.
Sources
- Turkish Commercial Code No. 6102 (Türk Ticaret Kanunu), in particular Articles 5/A, 134–179, 191–193 and 1521. Ministry of Justice (Adalet Bakanlığı) current legislation text.
- Code of Civil Procedure No. 6100 (Hukuk Muhakemeleri Kanunu), in particular Articles 389–392. Ministry of Justice (Adalet Bakanlığı).
- Law No. 6325 on Mediation in Civil Disputes (Hukuk Uyuşmazlıklarında Arabuluculuk Kanunu), in particular Article 18/A. Ministry of Justice (Adalet Bakanlığı).
- Capital Markets Board (SPK), Merger and Demerger Communiqué (II-23.2), Official Gazette dated 28.12.2013 and numbered 28865; Board text with amendments incorporated. Communiqué. Merger and demerger application processes.
- Capital Markets Law No. 6362, Articles 23–24. Ministry of Justice (Adalet Bakanlığı). SPK, Communiqué on Significant Transactions and the Right of Exit (II-23.3), Official Gazette dated 27.06.2020 and numbered 31168. Board text.
- Court of Cassation 11th Civil Chamber (Yargıtay 11. Hukuk Dairesi), 17.02.2025, E. 2023/6190, K. 2025/960. Full text, De Jure case law database; a login may be required for access.
- Istanbul Regional Court of Appeal 12th Civil Chamber (İstanbul Bölge Adliye Mahkemesi 12. Hukuk Dairesi), 03.07.2025, E. 2022/816, K. 2025/1092. Full text, De Jure case law database; a login may be required for access.
- Şafak Narbay and Buğra Kesici, “A Comparative Study of the Annulment Action Provided Against a Structural Change Resolution in Commercial Companies” (Ticaret Ortaklıklarında Yapısal Değişiklik Kararına Karşı Öngörülen İptal Davası Üzerine Karşılaştırmalı Bir İnceleme), Journal of Commercial and Intellectual Property Law (Ticaret ve Fikri Mülkiyet Hukuku Dergisi), 2015/1, pp. 107–160; in particular pp. 141–143, 149–150. Article.
- Hayri Bozgeyik and Şule Işın, “The Exit Payment in Joint-Stock Company Mergers” (Anonim Şirket Birleşmelerinde Ayrılma Akçesi), Kırıkkale Law Journal (Kırıkkale Hukuk Mecmuası), 2024, 4(1), pp. 343–359; in particular pp. 351–352. DOI: 10.59909/khm.1442124. Article.