3.) Can Legal Action Be Brought Against a Removal Decision Adopted by the General Assembly?

If a removal decision is contrary to the law, the articles of association, or the principle of good faith, the removed shareholder may seek judicial remedies. Pursuant to Article 640/3 of the TCC, the shareholder may file an action for annulment of the removal decision within three months from the date on which the decision is notified to them through a notary public.

The type of action to be brought against a removal decision may vary depending on the nature of the specific transaction. An action for annulment of the general assembly resolution, an action for a determination of invalidity, a claim seeking a determination that shareholder status continues, or claims concerning the separation payment may arise separately.

What Is a Separation Payment?

A shareholder who withdraws from or is removed from a limited liability company may be entitled to receive an amount corresponding to the actual value of their share in the company. This amount is commonly referred to as a “separation payment” (ayrılma akçesi).

The company’s actual financial and economic condition should be taken into account when determining the separation payment. Calculating the payment solely based on the company’s nominal capital may lead to unrealistic results, particularly in companies with significant assets and commercial value.

There is no specific statutory provision governing whether the separation payment must be made in cash or in another form, or whether payment may be made in installments. These matters have generally been shaped by judicial decisions and legal doctrine.

Istanbul Anatolian 10th Commercial Court of First Instance, File No. 2018/1177, Decision No. 2022/448, dated 29 June 2022: The court stated, in substance, that Article 531 of the TCC does not specify whether the separation payment should be made in cash or in kind. Referring to Swiss law, the court noted that, where the parties reach an agreement during the proceedings, the court may determine the manner and timing of payment in accordance with that agreement; in the absence of such an agreement, the court may exercise its discretion. The court ultimately held that, absent an agreement between the parties regarding the method of payment, the separation payment should generally be ordered to be paid in cash and in a lump sum.

4.) Competent Court in Actions Concerning Withdrawal and Removal from a Limited Liability Company

Disputes concerning withdrawal from or removal from a limited liability company may be considered commercial disputes. In determining the competent court, the corporate-law nature of the dispute and the applicable statutory provisions must be taken into account.

The Commercial Court of First Instance (Asliye Ticaret Mahkemesi) is generally the competent court for such disputes. However, when determining jurisdiction and venue, factors such as the company’s registered office, the nature of the dispute, whether the claim concerns the annulment of a general assembly resolution or a monetary claim, and the relevant procedural provisions must also be examined.

Whether mandatory mediation must be pursued before filing a lawsuit must likewise be assessed according to the nature of the claim. Where the claim falls within the scope of mandatory mediation for commercial disputes—for example, where a separation payment is also claimed together with an action for withdrawal—it may not be possible to file the lawsuit before the mediation process has been completed.

5.) Legal Assistance in Limited Liability Company Withdrawal and Removal Procedures

Withdrawal from or removal from a limited liability company should not be regarded merely as an internal corporate decision. The process must be carried out in compliance with the articles of association, the Turkish Commercial Code, general assembly procedures, trade registry rules, and the shareholders’ financial rights.

Within this scope, Uzunpınar Tüfek Law Firm may provide legal assistance in the following matters:

• Review of the articles of association,
• Assessment of withdrawal and removal provisions,
• Preparation of general assembly agendas and resolutions,
• Drafting withdrawal notices,
• Ensuring that the removal process is carried out in accordance with the law,
• Legal assessment concerning the calculation of the separation payment,
• Objections to expert reports,
• Actions for annulment of general assembly resolutions,
• Actions for withdrawal from the company for just cause,
• Litigation and defenses against removal decisions,
• Preparation of share transfer agreements,
• Trade registry applications,
• Preparation of settlement and liquidation protocols between shareholders.

The legal consequences of each case may vary depending on the content of the articles of association, the shareholders’ ownership percentages, the company’s financial condition, the grounds for withdrawal or removal, and the procedure followed. Therefore, it is important that the relevant documents be reviewed comprehensively before taking action.

Frequently Asked Questions

1.) Can a shareholder of a limited liability company withdraw from the company whenever they wish?

Not in every case. A shareholder cannot simply withdraw unilaterally at any time. If the articles of association provide for a right of withdrawal, the contractual conditions must be complied with. Where there is just cause, the shareholder may request withdrawal from the court. The parties may also reach an agreement concerning the transfer of shares or another solution for terminating the shareholder relationship.

2.) Can a shareholder be removed if the articles of association do not contain a removal provision?

The absence of a specific removal provision in the articles of association does not necessarily mean that removal is impossible in every circumstance. In such cases, a shareholder may also be removed from the company by a court decision upon the company’s request.

3.) Can a shareholder who withdraws from the company receive their money?

A shareholder who withdraws or is removed may have a right to a separation payment corresponding to the actual value of their share. However, the amount and timing of payment may vary depending on the company’s financial condition, the articles of association, any agreement between the parties, and the court’s assessment.

4.) How is the separation payment calculated?

The company’s actual economic value should be taken into account when calculating the separation payment. Factors such as the company’s assets, liabilities, profitability, commercial reputation, customer base, ongoing contracts, and future income potential may be relevant. Where necessary, an expert examination may be conducted.

5.) Can a removed shareholder challenge the decision?

If the removed shareholder believes that the decision is contrary to the law, the articles of association, or the applicable procedure, they may seek judicial remedies. The content of the decision, the date of notification, and the applicable time limits must be separately examined in accordance with the type of action that may be brought.

6.) Are withdrawal from the company and share transfer the same thing?

No. In a share transfer, the shareholder transfers their share to another person. In withdrawal from the company, the shareholder relationship may terminate through different means, such as exercising a right of withdrawal, reaching an agreement, or obtaining a court decision. Not every share transfer automatically results in a legally valid withdrawal from the company.

7.) How long does an action for withdrawal from a limited liability company take?

The duration of the proceedings varies depending on the court’s workload, the scope of the company records, expert examinations, the number of parties, the nature of the evidence, and whether the decision is appealed or otherwise challenged through legal remedies. Therefore, it is not possible to provide a definite timeframe without examining the specific case.

Conclusion

The removal of shareholders from and withdrawal of shareholders from a limited liability company constitute technical processes that must be carried out within the framework of the articles of association and the Turkish Commercial Code. Withdrawal primarily depends on the shareholder’s own will, whereas removal is carried out against the shareholder’s will and produces more serious consequences. Therefore, in removal procedures, particular importance must be attached to the legal basis, the specific grounds, the general assembly procedure, the applicable decision-making quorum, the notification procedure, and the relevant litigation periods.

The inclusion of withdrawal or removal provisions in the articles of association may make the parties’ rights more predictable. However, such provisions must be clear, enforceable, and compliant with the applicable statutory regulations.

A shareholder who withdraws from or is removed from the company may have a right to a separation payment. When determining this amount, not only the company’s nominal capital but also its actual economic value should be taken into account. The company’s assets, liabilities, profitability, customer base, and commercial reputation may be relevant to the calculation of the separation payment.

When withdrawal from or removal from a company becomes an issue:

• The articles of association should be reviewed,
• Company records should be preserved,
• Decision-making and notification procedures should be duly followed,
• The separation payment should be assessed based on the actual value,
• Litigation and objection deadlines should not be missed,
• Trade registry procedures should be completed in a timely manner.

It is not possible to reach a definitive legal conclusion without examining the specific circumstances of the case and the content of the articles of association. Obtaining professional legal assistance concerning withdrawal from a limited liability company, removal of shareholders, and separation payments is important for preventing potential loss of rights in the future.

Uzunpınar Tüfek Law Firm provides legal consultancy and litigation services concerning withdrawal from limited liability companies, removal of shareholders, separation payments, annulment of general assembly resolutions, share transfers, and corporate law disputes.