Share Transfer Restraints in The Articles of Association Under Turkish Law

Abstract

In Turkish law, the articles of association is an agreement prepared in accordance with the principles and mandatory provisions regulating joint stock companies set forth in the Turkish Commercial Code (“TCC”) and signed by the founders to incorporate a joint stock company. Pursuant to the TCC, the internal organization, powers and duties of the branches and rights and responsibilities attached to the ownership of shares shall be stated in the articles of association. Provisions included in the articles of association in accordance with the principles and mandatory provisions of the TCC, called real provisions, bind not only the founders who signed the articles of association but also the existing and future shareholders as well as the company and its branches. However, the articles of association may also include provisions the regulation of which the TCC does not require. These provisions are not considered mandatory provisions of the articles of association; therefore, rights arising out of these provisions will not bind the company, its branches or the existing and future shareholders, therefore, they cannot be enforced by the instrumentalities set forth in the TCC even though such provisions are included in the articles of association. Such provisions only create contractual obligations and bind the parties who have consented to their terms under the Code of Obligations.