- within Transport topic(s)
I. INTRODUCTION
A significant majority of enterprises operating within global economies are family businesses, and in many countries a substantial portion of the gross national product is generated by these entities. Türkiye is not an exception. According to data from the Family Business Association, approximately 95% of enterprises in the country qualify as family businesses. Therefore, the sustainability of these companies depends not only on economic factors but also on how the applicable legal framework is implemented.
Share transfers and succession-based transitions in family businesses constitute fundamental elements determining the continuity of the enterprise. Admission to partnership through inheritance can easily disrupt the delicate balance between familial relationships and the corporate structure, thereby giving rise to significant legal challenges. This study examines disputes arising from inheritance and share transfers within the framework of the Turkish Commercial Code No. 6102 ("TCC"), specifically focusing on joint stock companies and registered shares not listed on the stock exchange, and offers potential solutions to these issues.
II. Disputes Arising from Succession-Based Shareholding
1. The Right of Heirs to Become Shareholders
Pursuant to the principle of universal succession under Turkish Civil Code ("TCCiv"), as a rule, upon the death of the decedent, the shareholding in a joint stock company passes automatically to the heirs together with all associated rights and obligations, without the need for any further legal act. However, the situation differs with respect to the transfer of a decedent's shares in a joint stock company. As a rule, registered shares in joint stock companies are freely transferable. Nonetheless, the articles of association may include provisions that limit or make the transfer of such shares subject to approval. These restriction clauses may, however, become ineffective in certain circumstances. Specifically, there circumstances are inheritance, partition of inheritance, matrimonial property regimes between spouses, or compulsory execution. Therefore inheritance, in other words the death of a shareholder, is one of the situations in which restrictions stipulated in the articles of association lose their effectiveness pursuant to Article 493/4 of the Turkish Commercial Code ("TCC"). This matter will be elaborated in further detail below.
2. Inheritance Shares Remaining as Joint Ownership
A significant distinction exists between the transfer of partnership rights to heirs under inheritance law and their transfer under corporate law. Under inheritance law, partnership rights within the estate cannot pass to the heirs proportionally to their shares unless and until the inheritance is partitioned.1 This is because, pursuant to the relevant provisions, the heirs hold the estate under a regime of joint ownership, which unlike sole ownership or communion with fractional shares is not amenable to any factual or notional division.2 Conversely, under company law, partnership rights belonging to the deceased are deemed to pass automatically to the heirs in proportion to their inheritance shares. In this respect, heirs acquire direct ownership of the portion of the partnership interest corresponding to their respective inheritance shares.
The rights attached to a share are classified into property rights and management rights. In the context of joint stock companies, a distinction is drawn between the exercise of these rights by heirs. Pursuant to Article 494/2 of the Turkish Commercial Code ("TCC"), upon the death of a shareholder, the property rights attached to the share pass automatically to the heirs together with the ownership of the share. In contrast, the transfer of management rights to the heirs requires the approval of the company. Once such approval is granted, heirs become entitled to participate in the general assembly and exercise voting rights. As a result, they must be considered when calculating quorum requirements for resolutions to be adopted at the general assembly; otherwise, resolutions adopted without the necessary affirmative votes of the heirs would be deemed null and void. Additionally, heirs must be duly invited to all subsequent general assembly meetings.
As a consequence of the share remaining under joint ownership, when multiple heirs exist, the exercise of partnership rights requires the appointment of a representative (TCC Art. 432/1). In other words, so long as the inheritance community continues, heirs do not possess independent fractional shares nor an autonomous right to dispose of the share (TCCiv Arts. 640, 702/1).3 This means that until the estate is partitioned, heirs neither hold individually identified shares nor can act independently with respect to the rights attached to the share.4 Joint ownership ceases only when all inheritance interests are transferred either to one of the heirs or to a third party.
3. The Impact of Heirs' Admission to Partnership on the Continuity of the Company
The inclusion of heirs as shareholders in a family business presents both opportunities and significant risks. If the inheritance process is not properly managed, it may undermine the trust-based relationship among shareholders and disrupt internal decision-making mechanisms. Heirs belonging to different generations may hold divergent expectations regarding the operation of the business, which can lead to misalignments in the company's long-term strategic objectives.
Disagreements among heirs frequently result in managerial deadlocks. When decision-making mechanisms become dysfunctional, managerial authority becomes uncertain, and conflicts arise among shareholders, the operational efficiency of the company is adversely affected. In highly competitive sectors, such disruptions directly threaten the company's market share, financial stability, and growth capacity.5
In conclusion, the admission of heirs into the partnership -if not accompanied by clear rules, share transfer policies, and established corporate governance structures- may become a critical vulnerability that jeopardizes the continuity of the enterprise. For this reason, instruments such as a family constitution, shareholders' agreements, professional management models, and succession planning play a crucial role in ensuring the long-term sustainability of family businesses.
III. Preventing the Transfer of Shares to Non-Family Members
1. Share Transfer Restrictions and the Purchase Right
The reason underlying restrictions on the transfer of registered shares or registered share certificates is referred to as a "restriction clause". Such restrictions may be statutory or contractual. Statutory restrictions seek to secure the performance of capital contribution obligations, whereas contractual restrictions aim to prevent the entry of outsiders into the shareholder structure. Whether a share transfer may be restricted depends on whether the articles of association include a restriction clause. If the articles of association do not contain such a clause, the transfer of shares becomes effective directly upon transfer between the parties. The exception concerns registered shares whose issue price has not yet been fully paid. These may be transferred only with the approval of the company (Art. 491 TCC).6 Although the statute does not expressly determine which corporate body is competent to grant approval, Article 374 TCC indicates that the board of directors is competent; however, the articles of association may authorize the general assembly for such matters. Indeed, in family-owned companies, entrusting this authority to the general assembly is regarded as more appropriate in doctrine.7 Under Article 491/2 TCC, the company may refuse approval only if the transferee's financial ability is doubtful and the requested security has not been provided.8 The mere fact that the share price has not been fully paid does not, on its own, justify refusal of approval. If the transferee is financially capable and acts in good faith, the company must approve the transfer. A contrary interpretation would violate both the statute and the principle of good faith, as also emphasized in the legislative rationale of Article 491/1 TCC.
If the articles of association do contain a restriction clause, the TCC differentiates between publicly traded and non-publicly traded registered shares. For non-publicly traded registered shares, the company may refuse approval based on the restriction clause provided in the articles of association. Article 493/1 TCC stipulates that the company may refuse approval by invoking a "significant reason" specified in the articles. Article 493/2, which addresses the shareholder profile and provisions related to the company's business purpose or economic independence, is cited as an example of a significant reason. For instance, if the company's business operations require certain professional qualifications, preventing the transfer of shares to individuals lacking such qualifications would constitute a significant reason.9 To ensure predictability for shareholders regarding the characteristics of admissible transferees, such reasons must be clearly and concretely defined in the articles of association. Otherwise, the company's refusal would lack a legitimate basis under Article 491.10 In cases where the articles of association provide for approval of share transfers but do not specify significant reasons—or where the reasons provided do not apply to the specific case—the company may rely on an alternative mechanism known in scholarly writing as the "escape clause". This mechanism enables the company to prevent undesirable transferees from joining the shareholder structure, particularly when the company has failed to predetermine reasons suitable for its needs or when the transferee's becoming a shareholder would be detrimental considering current circumstances.
Under this clause, the company may refuse approval by offering to acquire the shares—either in its own name or on behalf of other shareholders or third parties—at their fair market value at the time of the application. This mechanism, too, is referred to as the escape clause in doctrine.11 It may be invoked only where the articles of association subject the transfer to company approval. To prevent circumvention of restriction clauses, the TCC allows the company to reject registration if the transferee has not declared whether they are acquiring the shares on their own behalf or for a third party. Pursuant to Article 494/2 TCC, where shares are acquired through inheritance, matrimonial property regimes, partition of inheritance, or compulsory execution, the company may refuse the transfer only by offering to purchase the shares at their fair market value, and not by an outright refusal of approval. If the company fails to refuse approval within three months, or if the refusal is unjustified, approval is deemed to have been granted (Art. 494/3 TCC).
All these provisions share a common principle: acquisition of shares through inheritance, matrimonial property regimes, partition of inheritance, or compulsory execution is exempt from transfer restrictions. Therefore, in non-publicly traded companies, the only mechanism for preventing the transfer of shares outside the family is the company's statutory purchase right. Even if the heir is technically a family member, they may still be "foreign" to the existing shareholder group in terms of corporate governance, which may cause undesirable consequences for the company and the other shareholders. Accordingly, in the context of inheritance, the law seeks to protect not only the rights of heirs under inheritance law but also the interests of the company and its shareholders.
The exercise of the company's purchase right is not dependent on the number of votes held by shareholders in the general assembly. For instance, if a member of a three-person board of directors who owns 80% of the company's shares passes away, the remaining two board members may still adopt a board resolution to exercise the company's purchase right and thereby refuse approval for 80% of the shares to pass to the heirs.
2. Internal Corporate Conflicts
The transfer of shares to non-family members is often perceived—particularly by majority shareholders within the family—as a threat to the preservation of corporate control. Consequently, the majority may adopt a stricter attitude toward external share transfers by exercising the powers granted under the articles of association. While such conduct may at times constitute a legitimate effort to safeguard ownership structure, in some instances it may transform into a tool of pressure that unnecessarily restricts the proprietary rights of minority shareholders. Situations of this nature strain internal corporate relations and may ultimately undermine the company's governance framework.
Conversely, minority shareholders who wish to transfer their shares to third parties may find themselves confronted with the majority's use of approval mechanisms as a means of obstruction. This practice constrains the economic freedoms of minority shareholders and complicates the disposal of shares at their fair value. Such imbalances can erode trust within the company and foster a chronic environment of conflict among shareholders.
3. Legal and Practical Consequences
The validity of a share transfer depends on the fulfillment of both formal and substantive requirements. If the approval mechanisms set out in the articles of association are not followed, or if the transfer is made to a prohibited transferee, the transaction may become invalid or unenforceable. In family companies in particular, such provisions help maintain control over share transfers; however, they may also render the legality of the transfer continuously open to dispute. For this reason, companies must formulate share transfer provisions in a clear, proportionate, and practically applicable manner.
According to Article 491/1 of the Turkish Commercial Code ("TCC"), although the ownership of shares passes to the heirs automatically upon inheritance without requiring company approval, Article 499/4 TCC stipulates that, in relations with the company, only the person registered in the share ledger is recognized as a shareholder. Thus, even though ownership of the shares and the rights arising therefrom transfer by operation of law upon death, the exercise of these rights vis-à-vis the company requires the heir to be registered in the share ledger. Registration is carried out upon the heir's application to the company. Although such an application does not constitute a request for approval, it is a procedural step required for the actual exercise of rightsHowever, this does not mean that the company is obliged to register the heir in the share ledger. If the company refuses to record the heir—even though registration is not subject to approval—the only legal remedy available to the heir is to file a lawsuit requesting registration. Although it is recognized that such an action may be brought, lengthy judicial proceedings, the heir's inability to participate in corporate decisions during this period, and the subsequent disputes that may arise if the heir challenges decisions adopted before registration, all demonstrate that this solution does not align well with the practical needs of commercial life.12
During litigation, the inability to exercise shareholder rights constitutes a significant interference with the heir's property rights. For example, if a majority shareholder holding 90% of the shares dies, it is highly likely that the remaining 10% shareholder(s) will convene the general assembly and become the sole decision-makers in the company's management and future direction. Even more problematic is the scenario in which a company has a single shareholder: if the sole shareholder dies, the board of directors may avoid registering the heir in the share ledger and thereby retain full control over the company throughout the litigation process. In such cases, the heirs of the deceased sole shareholder will have no influence over the company, will be unable to participate in any decision-making processes, and will be deprived of exercising shareholder rights before the competent corporate bodies until court proceedings are concluded.
IV. Conclusion
This study demonstrates that the processes of share transfer and succession-based admission to partnership in family businesses carry critical significance both within the systematic framework of the Turkish Commercial Code ("TCC") and in terms of the corporate sustainability of such enterprises. The distinction drawn by the TCC between publicly traded and non-publicly traded companies results in differing legal consequences, particularly regarding the transfer of registered shares, the company's authority to refuse transfers, and the heir's acquisition of shareholder status. Nevertheless, it is evident that certain statutory provisions do not provide sufficient clarity in practice; issues such as registration in the share ledger, valuation procedures, and delays in the heir's ability to exercise rights often lead to practical disruptions in the company's internal decision-making mechanisms. These challenges illustrate that the transfer of shares through inheritance is not merely a matter of private law but constitutes a structural issue affecting the corporate integrity and economic functioning of the enterprise.
Within this context, the findings indicate that statutory regulations alone are insufficient to provide the level of protection envisaged for family businesses; these provisions become functional only when complemented by internal governance mechanisms. The implementation of family constitutions, shareholders' agreements, predetermined succession and inheritance policies, and corporate governance principles as an integrated model serves both to clarify the rights of heirs transparently and to safeguard the company's shareholder structure against abrupt changes. Accordingly, the management of share transfers and inheritance in family businesses should be regarded not solely as a technical legal matter but as a multifaceted process requiring strategic corporate planning and governance design.
Absent such a holistic approach, the succession process amplifies the risk of internal conflict, while the protracted nature of judicial proceedings remains incompatible with the goal of organizational stability emphasized in economic and management sciences. Ultimately, ensuring intergenerational continuity in family businesses depends on reinforcing the legal framework provided by the TCC with robust internal regulations and corporate governance policies.
Footnotes
1. ÇELİK A., Limited Şirketlerde Payın Miras Yoluyla Geçişinin Miras Hukuku ve Şirketler Hukuku Açısından Sonuçları, Türkiye Adalet Akademisi Dergisi, Year 15, No. 59, July 2024, p.446.
2. SEROZAN R., ENGİN B. İ., Miras Hukuku, Seçkin Yayıncılık, 2022, 8th Edition, p. 87.
3. See, for the principle that heirs do not possess independent shares or autonomous rights of disposition over the assets and rights forming part of the estate as long as the inheritance community continues (i.e., until partition of the estate): Court of Cassation (1st Civil Chamber), Merits No. 2015/10804, Decision No. 2018/10817, 30 May 2018 (De Jure, 08.12.2025).
4. Court of Cassation 23th Civil Chamber, Merits No. 2015/4707 Decision No. 2015/4977 Date 26.06.2015.
5. KARAMAN ÇOŞGUN Ö., Anonim ve Limited Şirketlerde Pay Sahipliği Hakkının Miras Yoluyla İntikali, Özel Hukukun Güncel Sorunları ve Anayasa'nın Özel Hukuka Etkileri, On İki Levha Yayıncılık, October 2022, p. 462.
6. TEKİNALP Ü., Anonim Ortaklıkta Yeni Bağlam Sisteminin Esasları –Pay Defteri Hukuku İle-, İstanbul 2012, p. 26.
7. CENKCİ E., Borsaya Kote Edilmemiş Nama Yazılı Payların Devrinde Kaçış Klozuna Başvuru Hakkının Kötüye Kullanılması, İstanbul Üniversitesi Yayınevi, İstanbul Hukuk Mecmuası, 79 (2), p. 383.
8. YAĞMUR S., Anonim Şirketlerde Eşit İşlem İlkesi, On İki Levha Yayıncılık, January 2020, p. 91(Lexpera 23.11.2025).
9. CENKCİ E., Borsaya Kote Edilmemiş Nama Yazılı Payların Devrinde Kaçış Klozuna Başvuru Hakkının Kötüye Kullanılması, İstanbul Üniversitesi Yayınevi, İstanbul Hukuk Mecmuası, 79 (2), p. 384.
10. CENKCİ E., Borsaya Kote Edilmemiş Nama Yazılı Payların Devrinde Kaçış Klozuna Başvuru Hakkının Kötüye Kullanılması, İstanbul Üniversitesi Yayınevi, İstanbul Hukuk Mecmuası, 79 (2), p. 395.
11. YAĞMUR S., Anonim Şirketlerde Eşit İşlem İlkesi, On İki Levha Yayıncılık, January 2020, p. 93 (Lexpera 23.11.2025).
12. KARAMAN ÇOŞGUN Ö., Anonim ve Limited Şirketlerde Pay Sahipliği Hakkının Miras Yoluyla İntikali, Özel Hukukun Güncel Sorunları ve Anayasa'nın Özel Hukuka Etkileri, On İki Levha Yayıncılık, October 2022, p. 461.
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