Validity Of Share Transfer Restrictions Under Turkish Law

Introduction

Under Turkish law, in principle shareholders have sole debt against the company, which is payment of the capital amount that they undertake. Shareholders will not have any further debt (or obligation) once they fully pay their capital contribution¹. Therefore, shareholders cannot be subject to share transfer restrictions as they cannot have further obligation other than contribution to the capital amount they have subscribed to and, in principle, they must be free to transfer their shares to any person they choose.

Keeping this main principle in mind, companies would like to ensure their sustainability as well as the continuing success of their business and therefore prefer to restrict the transfer of shares to any third party who may not have the same interests/goals with the company. Companies seek alternative ways to circumvent this principle and restrict the transfer of shares to third parties by imposing limitations on shareholders through