Starting a Startup Is Not the Same as Forming a Company: Building an Investable Structure from Idea to Exit

Summary

A startup having been formed does not mean it is ready to receive investment or to be sold. Investability depends on the founders’ shares being legally defined, on the intellectual property rights in the product actually belonging to the company or being licensed to it in a usable way, on the investor’s entry being governed by enforceable documents, and on commercial risks being capable of review. In Türkiye there are important distinctions among joint-stock and limited liability companies with respect to share transfers, capital increases and investment funds. Delivery of software is not the same transaction as delivery of the source code or transfer of the economic rights. From formation through the investment round to exit, the essential aim is not merely a working product but economic value that is legally manageable and, when necessary, transferable.

The Difference Between a Startup and a Classic Company: What Does the Investor Buy?

A commercial company may be formed to sell goods or services, to earn regular income, or to carry out a particular activity. A startup, by contrast, usually aims to make a business model that is still being validated repeatable and scalable. Legally, there is no separate, general Turkish commercial company type for startups. A joint-stock or limited liability company provides the legal-entity basis for the venture’s activities; what makes a business a startup is not the registry entry alone but the business’s growth and investment structure.

For example, the existence of a working application does not mean that the founder who developed it, a freelance developer or a former employer cannot assert a claim. Likewise, use of the product on the market does not mean that customer data can be freely transferred to another company. For these reasons, an investor researches not only the growth chart or business plan but the legal link between the company and its economic value.

The questions to be answered at the start are concrete: Are the founders’ share ratios and payments on record? Who holds the management powers? Who owns the rights in the software code? Are the design and trademark rights secured? Can the customer contracts continue to generate revenue? Are data protection processes documented? Will all of this pass to a buyer in a transfer of the company? If one of these is missing, the company continues to exist, but the terms of the investment agreement, the valuation or the possibility of an exit may change.

Choosing the Company Type at Formation: A Joint-Stock Company Is Not Always Required

How joint-stock and limited liability companies differ for investment purposes

For ventures aiming at growth and multi-stage investment in Türkiye, a joint-stock company is often a suitable structure. The reason is not only investor habit: instruments governed by Articles 490 et seq. of the Turkish Commercial Code (TTK), such as the transfer of registered shares, share groups that may be provided for in the articles of association, privileges within the statutory conditions, capital increases and conditional capital increases, can facilitate certain transactions. It should nevertheless be remembered that, where the price of registered shares has not been fully paid or a valid binding provision exists, the freedom to transfer may be limited. [1]

In a limited liability company, under TTK Article 595, the transfer of a share in the base capital and the transaction obligating the transfer must be made in writing; the parties’ signatures are notarized. Unless the company contract provides otherwise, the approval of the general assembly is also required. In a venture with few founders, an uncertain investment timeline and a limited business model, a limited liability company may still be appropriate. Therefore, the fact that a joint-stock company is often advantageous for investment does not mean that a limited liability company legally cannot receive investment. [1]

2026 capital amounts and the compliance issue of existing companies

According to the current announcement of the Ministry of Trade (Ticaret Bakanlığı), the minimum base capital of a joint-stock company is 250,000 Turkish lira (TL), the minimum initial capital of joint-stock companies that are not publicly held and choose the registered capital system is TL 500,000, and the minimum capital of a limited liability company is TL 50,000. The Ministry further states that, under Provisional Article 15, older companies whose capital falls below the minimum amount must comply by December 31, 2026. When assessing a capital shortfall, the date of formation, the paid-in or committed capital and the transitional provisions in force should be examined. [2]

More important than the choice of company type is determining correctly the scope of activity, the representation and management arrangement, the share groups and future financing transactions. It is not right to add to the articles of association, unconditionally, every right an investor may be likely to request in the future; mandatory provisions, the balance of corporate governance and, where necessary, the possibility of amending the articles are assessed together.

The Founders’ Agreement: The Exit Scenario Matters More Than the Share Ratio

Although it is natural for founders to trust each other at the idea stage, personal trust alone does not resolve duties, shares and departure relationships. A founders’ agreement should spell out capital or in-kind contributions, time and effort commitments, technical development responsibility, authority to represent, decision majorities, expenses and remuneration, access to information, confidentiality, vesting of intellectual property rights in the company, and dispute resolution.

Vesting, cliff and the shares of a departing founder

Vesting is the making of a founder’s acquisition or retention of a share conditional on certain service, time or performance requirements. A cliff is the threshold that must pass before the first entitlement is earned. Good leaver and bad leaver provisions are used to regulate under what conditions a share transfer or its price operates depending on the reason for the founder’s departure. These are not uniform, automatically applicable statutory patterns in Turkish law.

Particularly where a share already held by a founder is to be repurchased by the company or by the other shareholders upon a certain event, the TTK rules on share transfers, on a company’s acquisition of its own shares and on the protection of capital must be considered together with the applicable contractual provisions. A sentence such as “unvested shares automatically revert to company” in an English-language investment agreement alone does not bring about an automatic registry or share transfer in a Turkish company. Whether a share certificate has been issued, the obligation-creating undertaking and the act of disposition, and, where necessary, previously granted authorizations should be regulated separately.

Deadlock, competition and confidentiality

If the founders continually disagree on management or product strategy, a deadlock may arise. A designated negotiation stage, expert evaluation, mediation, a share buy/sell option or an agreed exit method should be designed before the dispute grows. However, arrangements that remove the statutory powers of the company’s bodies or circumvent mandatory provisions cannot be regarded as valid in every case. For non-competition covenants binding employees, the limits of TBK Articles 444–445 as to subject matter, place, duration, customer circle and the employee’s economic future are also taken into account separately. [1]

The Articles of Association and the Shareholders’ Agreement Do Not Provide the Same Protections

The articles of association are the document that determines the company’s bodies, its capital and the structural arrangements that the law permits, and that has consequences with respect to the registry and third parties. A shareholders’ agreement, on the other hand, governs the obligation-creating undertakings among the signatories, such as information sharing, new investment, exit, non-competition, pre-emption and co-sale. The two documents must be consistent with each other; a shareholders’ agreement does not, by itself, change the powers of the company’s bodies or the statutory formal requirements as against third parties.

TTK Article 360 offers separate normative frameworks for the right to representation on the board of directors; Articles 478 et seq. for privileged shares; and Articles 492–493 for the transfer of registered shares not listed on the stock exchange. These provisions raise the question of which parts of the investor approvals, board seats or veto mechanisms defined in the contract can be written into the articles of association. [1]

Tag-along (the right to join a sale) aims to allow the minority to participate in a given sale on the same terms; drag-along (compelling participation in a sale) aims to have the other shareholders also take part in the sale once its conditions are met. Their enforceability depends not only on what they are called but on the price and buyer terms, the notice procedure, the transfer documents, the representation and authority arrangement, and the possibility of specific performance. A buyer’s request for a transfer of one hundred percent of the shares does not mean that every contract contains an unlimited drag-along right.

Cap Table and Dilution: Who Retains Control After Investment?

A cap table (a table of ownership and share distribution) should make clear not only the current share percentages but also the share classes, nominal values, commitments and payments, options, conversion rights and planned new share issuances. Looking only at the economic share percentage without taking privileges and voting differences into account can misrepresent the position of control.

Money entering the company through a new share issuance is not the same as an existing shareholder selling his or her shares to another investor. In the former, as a rule, the investment amount is transferred to the company; in the latter, the transfer price is paid to the selling shareholder. In capital increases, pre-emption rights, possible restrictions on them, and the distinction between issuance at nominal value and issuance at a premium are examined separately. A capital increase gives the investor an economic share while it may reduce the existing founders’ percentage; this is called dilution.

The pre-money/post-money valuation formula alone does not explain all the rights in an investment agreement. Whether the option pool is created before or after the investment, the liquidation preference and conversion rights in later rounds can change the economic value that the founder will receive. For this reason, an investment offer should be read on the basis of a fully diluted share table and several exit scenarios, rather than a one-page percentage calculation.

The Startup’s Intellectual Property: Abstract Idea, Software and Trade Secret Distinguished

The fact that a business idea has been voiced on the market for the first time does not, as a rule, provide an unlimited exclusive right over every form that expresses the idea. Protectable elements may consist of source code that qualifies as a work, an original interface and design, a distinctive trademark, a technical invention that is patentable under certain conditions, trade secrets, know-how secured by contract, and the related rights in a database. The creation, scope and transfer of these rights differ from one another.

Under Articles 2 and 1/B of Law No. 5846 on Intellectual and Artistic Works (FSEK), computer programs that meet the conditions for a work can be protected; however, it cannot be assumed that the abstract principle on which the software is based and its concrete form of expression are protected to the same extent. The originality of the code, the use of a third party’s pre-existing code and the identification of the persons who created the work require examination. Nor does a patent right arise automatically simply because a product “uses artificial intelligence” or “has an algorithm”; the relevant technical solution and the conditions for patentability are assessed separately. [3]

A trademark, a domain name and a trade name are not a single right. The fact that a domain name is registered in a founder’s name does not automatically secure the company’s right in the trademark or the transfer of the domain name. Pre-formation trademark applications, any designs, API keys and social media accounts should be brought into the company’s name through the right contracts and account management.

Payment for Software Does Not Mean the Source Code and Economic Rights Have Been Transferred

Reading FSEK Articles 18 and 52 together

FSEK Article 18 regulates the author’s authority to exercise economic rights; for works produced by employees in the course of their jobs, the authority of use granted to the employer unless otherwise agreed is significant. However, an employee, a company shareholder, an independent contractor and an outside agency are not in the same legal position. Moreover, FSEK Article 52 requires that contracts and dispositions concerning economic rights be in writing and that the rights concerned be specified separately. A general statement such as “all intellectual property rights belong to the company” may not be accepted as sufficient, by itself, for a particular transfer. [3]

The contract needs to regulate separately the concrete scope of economic rights such as adaptation, reproduction, distribution and communication to the public; the term, territory, exclusivity, sublicensing and conditions of transfer to third parties; and the code to be delivered, installation instructions, database schemas, administrator accounts, dependencies and the maintenance obligation. It is not mandatory in every case to transfer every right without limit; a valid license suited to the product’s business model can also allow the economic value to be exploited. The real aim is to be able to show the investor clearly which rights belong to the company, which are licensed and which depend on third-party permission.

Directly relevant 2026 and 2025 court decisions

In its decision of February 26, 2026, E. 2023/858, K. 2026/267, the 14th Civil Chamber of the İzmir Regional Court of Appeals (İzmir Bölge Adliye Mahkemesi) treated as decisive that the transfer of source code had not been regulated in the parties’ software development contract; it held that the right to use the application does not mean a transfer of the source code and found the dismissal proper on the ground that, in the specific case, the conditions that would justify a claim for refund of the price were not present. The decision does not lay down an absolute rule that code will never be delivered under other contracts. [4]

The decision of the 11th Civil Chamber of the İzmir Regional Court of Appeals of February 17, 2025, E. 2024/1379, K. 2025/266 examined a dispute concerning the contract on the economic rights in a program developed for a university, the comparison of software components, and FSEK Article 52. The court partially granted pecuniary compensation for infringement of economic rights in the module concerned, basing the scope and amount on the specific software components. That delivery of code under the contract and transfer of economic rights must be assessed separately is also evident in the parties’ claims and the reasoning in this file. [5]

Read together, these two files make the real risk for an investor visible: even if the product has been delivered to the customer in working form, who holds the right to intervene in the product’s source code, to adapt, reproduce and license it, and to transfer it at exit must be proved by separate documents.

Separating the shared software framework from the customer-specific module

Software companies may develop separate modules for customers using the same technical infrastructure (a framework: a shared software framework used across more than one product). In such a case, a contract that merely says “all rights in the software belong to the customer” may create uncertainty with respect to the existing framework software and third-party licenses. The prior existence of the framework software, the function of the customer-specific modules developed, the delivery of the source code for them, permission to adapt and reuse, commercial licensing and the right to maintenance should be regulated separately. Otherwise, because of a commitment made to one customer, the company may be unable to offer the same infrastructure to its other customers, or may face an exclusivity claim at exit. The February 17, 2025 decision of the İzmir Regional Court of Appeals also shows the importance, in a multi-component software structure, of determining separately the scope of the contract and the module that is the subject of the alleged infringement. [5]

The financial dimension of the risk of economic-rights infringement under FSEK Article 68

FSEK Article 68 may, in specific circumstances, allow the rights holder, in cases of unauthorized use or other infringements of economic rights, to claim up to three times the fee that could have been demanded had a contract been made, or the amount determined under the criteria the law provides. However, this provision does not mean automatic triple damages in every software dispute or a direct penalty in every customer relationship. First, ownership of the work and of the economic rights, the specific infringement, the scope of the module concerned and the fee that forms the basis of the calculation must be determined. In the decision of the 11th Civil Chamber of the İzmir Regional Court of Appeals of February 17, 2025, it is significant in this respect that the calculation of the fee for the pecuniary infringement of rights was based on the disputed software component. [3, 5]

Employees, Freelancers and Service Inventions: The Person Who Acquires the Right Must Be Distinguished From the Company

The economic-rights regime for a work created by an employee within the job description is not the same as for a product ordered from outside. The employer-favoring authority of use under FSEK Article 18/2 and the rights an independent developer transfers by contract rest on different bases. Because the end of the employment relationship may increase claims to rights and the need for evidence, employment contracts, job descriptions, project management records and rights-transfer documents should be kept together. [3]

In contracts with freelancers, agencies, software studios, designers or consultants, the core deliverables and rights should be clear. The possibility that the natural person who did the work is the author, and the authority on which a contracting legal entity transfers rights, are also separately questioned. Code developed before the company was formed may belong to the founder personally; forming the company does not by itself carry these rights to the legal entity. Where necessary, appropriate written transfer, license and delivery steps should be completed after formation.

For patentable inventions, the provisions on employee inventions of the Industrial Property Law No. 6769, together with the notification and the employer’s claim process, are assessed separately. The exercise of economic rights in a software work is not the same as the process of obtaining a patent for an employee invention. The employee’s invention and the conditions for claiming rights should be established with concrete data; the employer’s right to claim and the employee’s right to reasonable remuneration must not be ignored. [6]

Being Able to Use the Product Is One Thing; Being Able to Run It Independently Is Another

A startup’s software may run on a third-party cloud infrastructure. That the application’s web address opens or that one can log in with a user account does not show that the source code repositories, the infrastructure account, production data, security keys and authority to make technical changes have passed to the company. Dependence on the first developer’s personal cloud account, in particular, is a business continuity risk in the exit process.

For this reason, the commercial and legal inventory of the software should track the following elements separately:

• The source code repository, version history, third-party components and the licenses relating to them.
• The actual owner and authorized person of the domain name, trademark, app store, server, cloud services, payment infrastructure and administrator accounts.
• The database, backup/restore operations, transfer and deletion authorities, and the limits of access to user data.
• The technical documents needed for deployment, building, running, updating, independent bug fixing and modifying the source code.
• A continuity plan that allows the service to continue if the maintenance contract ends or the lead developer leaves.

These are not a single package that must be transferred in the same way in every contract; but if rights and de facto control are unclear, the sale valuation also becomes unclear. In the investor’s due diligence, not only whether the software legally belongs to the company but also whether the company can operate the product independently of the developer should be examined.

Trademarks, Patents, Open Source and the Use of Artificial Intelligence Are Separate Risk Headings

The consistency of the trademark application with the product’s domain name and its name in app stores should be checked. A need for rebranding because of a third party’s registered trademark can create serious costs, especially after growth. Where a patent application is planned for technical solutions, early public disclosure and confidentiality processes should be managed together.

Using open-source software is not prohibited; however, the license’s conditions on offering source code, notice, attribution or distribution of derivative works must be assessed project by project. “It can be used for free” does not mean “every commercial use and redistribution is permitted.” An open-source inventory, a list of software components and dependency updates can speed up pre-investment review.

For code written with generative artificial intelligence tools, the risk relating to third-party copyright, the possibility of uploading personal data or trade secrets, the provider’s terms of use and the security of the code are different questions. It cannot be assumed that every output produced because code was generated with artificial intelligence carries copyright protection by itself. Where the product is used in regulated sectors, model security, data processing and sector-specific obligations are also taken into account.

Law at the MVP Stage: If There Is No Revenue Yet, Are There Also No Obligations?

A minimum viable product (MVP) aims to test assumptions in the market at low cost. However, the fact that the product is still in testing does not postpone contractual or data protection obligations. The promises made to beta users, whether a fee is charged, whether the user is a consumer or a business, and the nature of the data processed should be assessed separately.

If user data is processed, the general principles of Article 4 of KVKK and the processing conditions in Article 5 are taken into account. Explicit consent is not the single and mandatory legal basis for every personal data processing activity. The existence of a legal ground does not remove the obligation to inform. Terms of use, the privacy notice, cookie processes, retention and destruction, role-based access and data breach response should be built together with the product design.

Particularly when a foreign cloud or artificial intelligence service is used, the regime of KVKK Article 9, in force since June 1, 2024, is examined. An adequacy decision, appropriate safeguards and exceptional transfer situations are not the same thing. If a valid standard contract is used, the obligation to notify the Authority within five business days of completion of the signatures arises. Without examining the provider’s contract and the actual data flow, no single legal conclusion on the transfer can be drawn from the statement “the server is abroad” alone. [7]

Which Documents Are Sought in an Investor’s Due Diligence Review?

Due diligence (a legal, financial and operational review) examines a company’s present rights and liabilities before its forward-looking promises. If an investor learns that elements believed to belong to the company in fact depend on other persons’ permission to use, the investor may renegotiate the price, the scope of the transaction and the protection terms. The review is not an abstract test measuring the founders’ good faith but a documented risk investigation.

In using a data room, disclosure of customer contracts, personnel information, trade secrets and personal data to a third party is also subject to a lawfulness review. A confidentiality agreement does not, by itself, constitute an unlimited legal basis for data transfer or personal data processing. In particular, the principle of staged access to customer names, personal profiles, health/financial records and sensitive source code should be considered.

The Investment Process: Term Sheet, Share Issuance and Shareholders’ Agreement

In investment negotiations, a term sheet (a document of preliminary conditions or key commercial terms) may frame the valuation, the investment amount, the share ratio, priority rights, management and closing conditions. Which provisions of the text are binding must be stated clearly: exclusivity, confidentiality and expense provisions and an undertaking concerning a future share transfer may not have the same legal effect. For the final transaction, the investment agreement, the capital increase resolutions, the share subscriptions and the shareholders’ agreement are structured together.

The principal contractual mechanisms an investor may request are the following:

• Liquidation preference (priority in liquidation or sale proceeds): Aims to give the investor priority in the distribution of a certain exit price. It does not, in every event, remove the statutory order of liquidation or creditors’ rights.
• Anti-dilution (protection against a fall in valuation): May give the investor the adjustment agreed in the contract in later rounds at a lower valuation. The formula and the capital protection rules are important.
• Reserved matters/veto (decisions requiring special approval): Sets up a contractual approval system for the company’s significant transactions; not every veto right is automatically valid against the company’s bodies.
• Tag-along/drag-along: Aimed at joining a sale or, once the conditions are met, carrying out a sale process together; notice, price, share certificate and representation conditions should be clear.
• Representations, warranties and indemnification: Creates a documented allocation of responsibility on existing share ownership, compliance with legislation, taxes and intellectual property. The cap, period, exceptions, indemnification procedure and disclosure schedule are important elements.

Just as risky as rejecting investor rights entirely in the name of protecting the founder’s control is accepting unlimited vetoes and heavy indemnification obligations that would lock up later growth rounds. The scope of the rights should be discussed in proportion to the investment amount and the stage of the company.

SAFE, Convertible Debt and Conditional Capital Increase Do Not Substitute for One Another

SAFE (a simplified agreement for future equity) and the convertible note (a debt instrument that can convert into shares), used in foreign law, are not statutory company models that can be copied directly onto a Turkish company. In Türkiye, the characterization of the transaction is determined by the legal ground for the payment, whether it is a debt, the conversion and interest terms, the resolutions of the competent company bodies, capital increase procedures, foreign currency/financing regulations and the investor’s status. The English name of a contract does not override the mandatory formal and capital rules of Turkish law.

The conditional capital increase in TTK Article 463 rests on granting, within the framework of the articles of association, a right of exchange or purchase to those who are creditors of the company or of group companies by reason of newly issued bonds or similar debt instruments, or to employees. TTK Article 464 contains a limit on the nominal value of the conditional increase. These provisions do not lead to the conclusion that every investment payment can automatically convert into new shares. The fit of the capital increase method with the specific financing instrument must be examined separately. [1]

The Capital Markets Board (SPK) regulations should not be equated with general startup investment agreements. For venture capital investment funds, Communiqué No. III-52.4, and for share- or debt-based crowdfunding, Communiqué No. III-35/A.2, are separate frameworks. Special conditions tied to the type of fund and to the legislation do not automatically bring every private angel investment under the same regime. [8, 9]

ESOP and Employee Share Options: Vesting, Tax and the Employment Relationship

An Employee Stock Ownership/Option Plan (an employee share or share-option plan) aims to give talented employees the chance to participate in the increase in company value. However, an employee’s becoming entitled to a share, actually acquiring it, paying the option price and being able to sell the share are separate events. Payment of a cash bonus to an employee and a share transfer are likewise not of the same legal nature.

For this reason, the plan should regulate the vesting date, the departure and dismissal scenario, the option period, the nominal value of the share, transfer restrictions, tax and social security effects, and the fate of the rights if the employment relationship ends. In its decision of November 29, 2022, E. 2022/7885, K. 2022/15517, the 9th Civil Chamber of the Court of Cassation (Yargıtay) discussed share options in the employee’s favor and rights after the end of the employment relationship. The decision should not be read as a general and automatic ruling of validity applicable to every ESOP system. [10]

Compliance at the Growth Stage: Competition, KVKK, Employment and Sector Permits

As the number of users and revenue grows, so does the scale of contracts. Employees’ employment contracts, non-competition and confidentiality; renewal of customer contracts; service levels and limitations of liability; the platform’s content and consumer obligations; use of trademarks in other countries; and data protection and cybersecurity should be addressed in the same growth plan.

For products operating in banking, payment institutions, financial technology, health, e-commerce, high-risk uses based on artificial intelligence or another regulated sector, the general formation of a company does not replace the specific permit for the activity concerned. In international scaling, foreign consumer and data protection rules, commercial representation, and tax and sanctions compliance are examined separately. It cannot be asserted that all of these impose the same burden at every stage of the company: the obligation that applies is determined by the activity and the data flow.

Technology development zone, R&D or entrepreneurship supports are likewise not automatic titles that give rise to rights. Law No. 4691 and the relevant incentive conditions should be examined within the framework of period, type of activity, personnel and reporting rules. For example, the TÜBİTAK 1812 BiGG Investment Program, in its 2026 call document, is a special support model under which the fund is expected to invest in return for a certain share; the conditions of this model do not automatically apply to other investment agreements or to all entrepreneurs. [11]

What Transaction Is Carried Out at Exit: A Share Sale or an Asset Transfer?

Exit may refer to different transactions, such as the founders or investors transferring their shares, or the company’s business, for a given economic consideration. In a share sale, the rights and obligations belonging to the company, as a rule, remain within the legal entity while the shareholders change. In a transfer of a business or of assets, the transfer of software rights, trademarks, contracts, employee relationships and certain debts may require separate legal transactions and counterparty approvals. The sentence “the whole company is being sold” is not enough to determine the nature of the transaction.

Before exit, in particular, change of control, assignment of contracts, exclusive licenses, third-party software, third-party approvals, processing of personal data by the new buyer, foreign investment/competition legislation and the conditions for clawback of financing incentives should be assessed. Co-sale rights in the shareholders’ agreement, the investor’s priority return claim, the founder’s post-sale work or non-competition obligation and the escrow arrangement can matter as much as the price.

When the sale price will be paid, the conditions precedent to closing, the representations and warranties, the monetary cap on liability, security or retained amounts, any earn-out (additional consideration contingent on performance) and dispute resolution should be made concrete in the sale agreement. In the legal and financial review, a source code transfer left incomplete years ago or an invalid share subscription may turn into a condition for correction before the sale closes.

Do the Risks End When a Foreign Investor and an Overseas Holding Structure Are Set Up?

The participation of foreign investors in Turkish companies, the structuring of an international holding or the formation of an intellectual property company abroad is sometimes preferred for commercial reasons. However, by saying “we set up a company in Delaware/Estonia,” one does not automatically escape the obligations of activity, management, employment, tax and data protection in Türkiye. For each model, de facto management, workplace/permanent representation, transfer pricing, double taxation treaties and the legal and financial effects of transferring intellectual property rights are assessed separately.

In international share or asset transfers, the law governing the right to be transferred, the choice of applicable law and competent authority, local registry/registration requirements, trade sanctions and the cross-border transfer of customer contracts may become important. Pricing an investment in a Turkish company in foreign currency, and the compliance of the payment and financing transaction with foreign exchange legislation, are separate questions. It is not legally safe to give all the answers in advance by looking at the country of incorporation.

Evidence and Protective Measures in a Legal Dispute

Once a shareholder or investment dispute arises, one should not rely only on email correspondence and the company contract. Share certificates and transfer documents, the share ledger, capital increase resolutions, general assembly minutes, bank transactions, collection records, investor offers, stock option documents, source code repository activity, version history and software technical delivery records should be examined together.

Depending on the type of dispute, preservation of evidence by the court, an interim injunction, prevention of unfair competition or of infringement of intellectual property rights, and a claim for performance or compensation may come into play. However, no categorical conclusion on jurisdiction can be drawn that every share dispute is heard in the commercial court and every software dispute in the intellectual and industrial property rights court; the contract on which the claim rests and the nature of the protected right matter. Mediation as a condition for suit, jurisdiction, venue and the statute of limitations are likewise determined specifically for the dispute.

The preservation of the original state and change history of digital documents, the way access/log records are taken, the protection of trade secrets and the avoidance of unnecessary transfer of personal data to third parties affect legal compliance as well as evidentiary value. It should not be assumed that the confidentiality obligation in the process of giving documents to an investor has ended.

Legal Checklist From Formation to Exit

The checklist below shows the main thresholds on which a decision must be made. That it has been prepared does not, by itself, mean that the relevant contract has been signed or that registration has been completed.

The most critical test is documenting, before the sale, whether the legal rights in the assets the company claims, the de facto management authority and protection enforceable against third parties each exist separately. Being registered in the trade registry alone does not prove that all the economic assets within the company are undisputed and transferable.

Conclusion: Legal Structure Is the Auditable Part of Company Value

A startup’s legal success cannot be reduced to a single formation transaction. A company whose founder shares and management relationship are unclear, whose software and trademark rights are incomplete, whose investor rights are unenforceable, and whose customer and data arrangements are unfit for transfer may be growing, but it may face costly corrections and disputes at the investment and exit stages.

For this reason, the right path is not to develop the product first and then try to resolve all legal relationships on the day of the sale; it is to build, from formation onward, an auditable legal order that links the share structure, intellectual property rights, operational control, contracts, data compliance and the exit scenario. Without evaluating in the same review the documents on ownership and transfer of rights, current registry records, investment agreements and third-party rights, one should not conclude that the company is ready for sale solely from the investment amount or the growth rate.

Related articles: Legal Due Diligence Guide: Investment, Company Review, Contracts and 10 Critical Risks covers the investor’s review process and document list in detail; Startup Law Guide: Company Formation, Ownership, Investment and Intellectual Property Rights and Shareholders’ Agreement: Voting Arrangements, Co-Sale, Exit and Breach of Contract cover the formation, ownership and exit provisions; and Capital Increase and Pre-Emption Rights in a Company: Dilution of Share Ratios and Protection of the Shareholder completes the topic of dilution.

Frequently Asked Questions

Is it mandatory to form a joint-stock company for a startup?

No. In Turkish law there is no general mandatory joint-stock company type specific to startups. However, a joint-stock company may be suitable for investor entry, share groups, share transfers and the special conditions of some investment funds. One can also start with a limited liability company; the conditions of the envisaged financing model should be checked.

Does code written before the company is formed pass automatically to the company that is formed?

No. Who produced the code, and through what employment relationship or contract, must be determined; the transfer of economic rights, or the necessary license, must be documented separately under the relevant provisions of FSEK. Forming a company does not automatically transfer all rights that arose earlier.

Is buying software the same as owning the source code?

Not always. Delivery of the source code, permission of use and transfer of economic rights are different transactions. The contract, the nature of the software, the delivery condition and the relevant rights should be examined. The February 26, 2026 decision of the İzmir Regional Court of Appeals gave weight to the absence of a code transfer condition in the specific case. [4]

If a founder leaves, do the shares automatically return to the company?

No. Vesting and departure provisions should be set up in harmony with the applicable transfer rules of Turkish company law, the rules on a company’s acquisition of its own shares, and the performance of the contract. A promise of automatic reversion in the contract does not, by itself, produce the result of a share transfer in every case.

What is the difference between a share transfer and a capital increase for investment purposes?

In a share transfer, the price, as a rule, goes to the person selling the share. In a capital increase, the investor can bring the funds into the company by subscribing to the newly issued shares. Because transaction tax, registry and share ownership consequences differ, they should be distinguished clearly in the investment terms.

Can a SAFE agreement be used directly in a Turkish joint-stock company?

A foreign sample text does not directly replace the mandatory provisions of Turkish law. The legal nature of the payment, the conversion condition and the capital increase methods to be applied should be structured separately; not every contract called a SAFE automatically creates shares.

Can a venture capital investment fund invest in a limited liability company?

The SPK’s guide on venture capital investment funds (GSYF) accepts the possibility of investing in a limited liability company, but it also states the condition that a venture that is a limited liability company on the investment date must convert into a joint-stock company within one year following the first investment. This is a special condition of the fund regime concerned. [8]

Is a KVKK privacy notice required for beta users?

If there is a personal data processing activity, the legal processing conditions, the obligation to inform and data security obligations are assessed at the beta stage as well. Explicit consent is not the single basis required for every processing; the legal ground should be determined according to the activity and the type of data.

Why does an investor review open-source licenses before exit?

The license terms of third-party code used in the product may give rise to redistribution, source code disclosure or attribution obligations. Whether the selling company has complied with these terms can affect the product’s ability to be transferred and used commercially.

Can an exit be carried out if the intellectual property rights are clean but the customer contracts cannot be transferred?

The result differs according to whether the transaction is a share sale or an asset transfer, and according to the change of control, assignment and termination provisions in the contracts. The conditions may be rearranged with the buyer; however, it should not be assumed that all revenue contracts will pass automatically.

Sources and legal bases

1. Law No. 6102, Turkish Commercial Code, in particular Articles 360, 463–465, 478–479, 490–493 and 595. Ministry of Justice UYAP Legislation.
2. Ministry of Trade of the Republic of Türkiye, Companies – Frequently Asked Questions, minimum capital amounts and the December 31, 2026 transition date. Official statement.
3. Law No. 5846 on Intellectual and Artistic Works, Articles 1/B, 2, 18, 21–25, 48, 52 and 68; on the application of FSEK Articles 18 and 52, UYAP high court decision text.
4. İzmir Regional Court of Appeals, 14th Civil Chamber, E. 2023/858, K. 2026/267, February 26, 2026, delivery of software source code and contractual rights. Full decision – De Jure.
5. İzmir Regional Court of Appeals, 11th Civil Chamber, E. 2024/1379, K. 2025/266, February 17, 2025, software economic rights and FSEK Article 52. Full decision – De Jure.
6. Industrial Property Law No. 6769, Articles 113–116, employee inventions and employer rights. Official text of the law, Grand National Assembly of Türkiye (TBMM).
7. Personal Data Protection Authority (Kişisel Verileri Koruma Kurumu), official statements on Transfers Abroad and the Standard Contract Notification Module. KVKK Article 9 guide; five-business-day notification obligation.
8. Capital Markets Board (Sermaye Piyasası Kurulu), Venture Capital Investment Funds – Promotion Guide, scope of Communiqué No. III-52.4. SPK official source.
9. Capital Markets Board, announcement of May 31, 2025 on the Crowdfunding Information Form, Communiqué No. III-35/A.2. SPK official announcement.
10. Court of Cassation (Yargıtay) 9th Civil Chamber, E. 2022/7885, K. 2022/15517, November 29, 2022; employee stock option dispute. Full decision – De Jure.
11. TÜBİTAK, 1812 – Investment-Based Entrepreneurship Support Program; 2026-2 call information. Official program.