Shareholders' Agreement Essentials for a Turkish Joint Venture with Foreign Partners

A shareholders' agreement is the private contract that sets the real rules of a joint venture: who controls it, how big decisions are made, when a partner can sell, and what happens if the partners fall out. In Türkiye (Turkey) the company itself is governed by the Turkish Commercial Code No. 6102 and its own articles of association, but those documents are public and, on their own, they rarely capture the deal two partners actually struck. The shareholders' agreement fills that gap. It is a contract under the Turkish Code of Obligations No. 6098, signed by the shareholders, that adds veto rights, board seats, transfer restrictions, deadlock mechanics and an exit plan. The catch every foreign partner should understand up front is that this agreement binds only the people who sign it — not the company and not new shareholders — so the parts that need to bite on the company have to be mirrored in the articles. This guide explains what the agreement should cover, how it interacts with the articles of association, and how to protect a foreign partner who is putting money into a Turkish JV.

What is a shareholders' agreement, and do you need one in Türkiye?

A shareholders' agreement (in Turkish, pay sahipleri sözleşmesi or hissedarlar sözleşmesi) is a private contract between some or all of a company's shareholders about how they will run and eventually leave the company. It is not part of the company's official constitution. It sits alongside the articles of association (esas sözleşme for a joint-stock company, şirket sözleşmesi for a limited liability company), which are the public, registered rules of the company itself.

Do you need one? For a single-owner company, no. For a joint venture with two or more partners — especially a foreign partner and a local partner, or two investors with different amounts of money and control at stake — it is the single most important document you will sign. The articles alone will not say who nominates the board, which decisions need both partners' consent, whether you can block the other side from selling to a competitor, or how you get your money out if the relationship ends. The shareholders' agreement is where all of that lives.

That distinction drives everything below. A well-built JV uses both documents together: the agreement records the commercial deal, and the parts that must be enforceable against the company are also written into the articles. If you are still choosing your structure, our guide to setting up a company in Türkiye and our company formation team cover that first decision.

Shareholders' agreement vs the articles of association: which one wins?

This is the question foreign partners most often get wrong, and it matters because the two documents do different jobs. The articles of association are public, registered with the trade registry, and bind the company and every shareholder — including someone who buys in later. The shareholders' agreement is private, flexible, and binds only the people who signed it. If a clause in the agreement contradicts the mandatory rules of the Commercial Code, the Code prevails; if a purely private promise between two partners is broken, the remedy is a contractual one (damages, or a penalty), not automatic corporate effect.

What should the agreement actually cover?

A joint-venture shareholders' agreement is only as good as the situations it anticipates. The right time to agree how you will handle a dispute, a sale or a deadlock is now, while everyone is friendly. The core building blocks are these:

Two of these deserve special attention for a foreign partner: the reserved-matters list and the exit mechanics. They are what stop a local majority partner from running the company in ways you never signed up for, and what let you get your capital back if the venture stalls. For JVs built around new investment rounds, our note on convertible investments in Türkiye covers how funding instruments interact with these terms.

How do you protect a minority foreign partner?

Owning less than half of a Turkish company does not have to mean having no control. A carefully drafted agreement gives a minority foreign partner real influence through a handful of well-established tools:

• Reserved matters (veto rights). A defined list of major decisions — changing the articles, issuing new shares, taking on significant debt, selling the business, changing the field of activity, related-party deals — that cannot pass without the minority's consent or a specified supermajority. This is the heart of minority protection.
• A board seat and information rights. The right to nominate at least one director, plus a contractual right to regular financial information, keeps you inside the room rather than reading about decisions after the fact.
• Anti-dilution and pre-emption. A right to participate in any new share issue on the same terms protects your percentage from being watered down by a friendly-priced round you were not invited to join.
• Tag-along rights. If the majority sells its stake, you can require the buyer to take yours too, on the same terms, so you are never left as a minority alongside a new and unknown controller.

Getting this architecture right — deciding which protections live in the contract and which must be built into the company's constitution — is core corporate work. Our corporate and M&A team structures these packages for foreign investors, and our US Desk handles US-headquartered partners end to end.

Share transfers, lock-up and deadlock: getting in and out cleanly

Entry is easy; exit is where JVs get expensive. A good agreement plans the whole life-cycle — how shares can move, and what happens when the partners simply cannot agree.

Transfer restrictions keep the ownership stable. A typical package includes a lock-up (no sales for an initial period), a right of first refusal (a partner who wants to sell must offer to the other first), and pre-emption on new shares. How these operate depends on your company type, and the difference is real:

• In a joint-stock company (anonim şirket), registered shares are, as a rule, more freely transferable, though the Commercial Code lets the articles impose certain approval-based restrictions.
• In a limited liability company (limited şirket), a share transfer is more formal — typically a notarised transfer agreement and, by default, general-assembly approval — which makes ownership stickier but transfers slower.

That trade-off is one reason the company-type choice matters so much at the outset; our comparison of company forms in Türkiye unpacks it.

Deadlock is the scenario 50/50 partners most fear: a decision that both must approve, and neither will move. Rather than leave the company paralysed or heading to court, the agreement should pre-agree an exit — an escalation to the partners' senior management, a mediated buy-out, or a buy-sell mechanism where one partner names a price and the other chooses to buy or sell at it. Deciding the deadlock rule in advance is far cheaper than fighting one out later.

Which law governs the agreement, and how are disputes resolved?

Because a Turkish JV usually has a foreign element — a foreign shareholder, foreign funding — the parties often ask whether they can put the shareholders' agreement under English or another familiar law. As a contract, the agreement generally can carry a foreign governing-law clause: Turkish private international law (the Act on Private International and Procedural Law No. 5718) recognises the parties' freedom to choose the law of a contract with a foreign element. But there is a hard limit worth understanding.

For the forum, many foreign partners prefer arbitration over the local courts — it is private, neutral and produces an award that is easier to enforce across borders under the 1958 New York Convention. The Istanbul Arbitration Centre (ISTAC) is a common seat for Türkiye-connected disputes. Whether arbitration or a Turkish court is right for you is a genuine strategic choice; we compare them in arbitration versus Turkish court litigation, and the mechanics of a clean governing-law-and-jurisdiction clause are covered in our note on governing law and jurisdiction in Turkish contracts.

One realistic note on remedies: if a partner breaches the agreement, a key contractual remedy is damages, often reinforced by an agreed penalty clause (cezai şart) that fixes a sum payable on breach and saves you from proving loss. In practice it can be difficult to compel a party to carry out certain personal obligations — such as voting its shares a particular way — which is exactly why the key protections should also be locked into the articles, where breach can make a company act unregistrable rather than merely compensable.

How a lawyer turns a JV handshake into an enforceable deal

The value of a shareholders' agreement is not in reciting standard clauses; it is in matching each protection to the right instrument so it actually works under Turkish law. A Türkiye-qualified lawyer helps a foreign partner in three concrete ways. First, by splitting the deal correctly between the private agreement and the registered articles, so vetoes and transfer restrictions bite on the company and not just on your co-shareholder. Second, by choosing the right vehicle — joint-stock or limited liability company — for the transfer, governance and exit outcomes you want. Third, by building the exit in advance: tag, drag, put and call options, and a deadlock mechanism, so the day you want or need to leave is already mapped.

Before signing, it is also worth running due diligence on a local partner or target and pressure-testing the commercial contracts that sit underneath the JV. Our corporate and M&A practice drafts and negotiates joint-venture and shareholders' agreements for foreign investors, and our US Desk coordinates the whole structure for US-based partners. The goal is simple: a JV where the rules are clear on day one, and the exit is clear long before you need it.

Frequently asked questions