Share Transfer Restriction Options

1. Introduction

Transfer of shares to a third party may cause harm to the existing shareholders and create undesired consequences for them. For example, share transfer may result in the entry of an undesired third party into the entity as a shareholder. Therefore, shareholders may require strict measures to be taken for protecting the corporate structure of the entity, preventing the entry of undesired third party to the entity, preventing deadlock when reaching a decision, preventing the sale of company's shares to its competitors, protecting the rights of the minority shareholders, etc.

As per the general principle, shareholders are free to transfer their shares to third parties without any restriction. However, freedom of transferring shares can be restricted either by the provision of the Turkish Commercial Code No. 6102 (“TCC”) or the articles of association of the companies. According to Article 490 of the TCC, the shareholders holding registered shares can