Transfer of Substantial Part of a Joint Stock Company’s Assets under Turkish Law

I. Introduction

Wholesale of substantial part of a joint stock company’s assets require shareholders’ approval under Turkish Commercial Code numbered 6102 dated 13 January 2011 (“TCC”) art. 408/2(f). From a comparative law perspective, jurisdictions that impose shareholder approval requirement for transfers of corporate assets span a range of legal systems, such as Germany[1], Delaware[2], Switzerland[3], South Africa[4] or Philippines[5]. Such requirements are typically designed to protect shareholders’ interests and to ensure major transactions do not jeopardize the company’s ability to pursue its business.

In cross-border or domestic transactions, whether structured as asset or share deals, where the transferring party is an entity whose main or substantial asset constitutes the subject of the transaction, necessity to obtain shareholders’ approval may arise. These requirements may add additional steps and affect the time management of the transaction. Understanding the legal framework governing asset transfers is also important for creating and maintaining stable partnership structures, both when negotiating shareholders’ agreements or later resolving disputes among partners.

This article explores how TCC approaches the transfer of a substantial part of a company’s assets, focusing on when shareholder approval is required based on the scope of “substantial part of assets”, the quorum requirements and the consequences of proceeding without such approval.

II. General Framework under TCC art. 408/2(f) and Scope of “Substantial Part” of Assets

A. General Framework

Art. 408/2(f) TCC classifies the “wholesale of substantial part of a company’s assets” in joint stock companies as one of the inalienable and non-delegable powers of the general assembly of shareholders.[6]

Although the previous Turkish Commercial Code No. 6762, which was in force between 1956 and 2012, did not contain any provisions in that regard, the Court of Cassation had developed a case law mandating a general assembly resolution in cases involving the transfer of substantial part of corporate assets. The Court reasoned that, while formal liquidation follows a prescribed legal process, sale of assets that are critical to the company’s operations might constitute a “de facto liquidation”, and since the formal liquidation process envisages a resolution by the general assembly of shareholders, the same must be required for sale of a substantial part of assets for an active company.[7]

Art. 408/2(f) of TCC was introduced in the draft code with the Court of Cassation’s case law in mind.[8] The provision refers to a “substantial part” of assets, but neither the doctrine nor the Court of Cassation’s decisions provide a consistent definition. This lack of clarity is largely because of the ambiguous wording of art. 408/2(f).

B. Doctrinal Views

Turkish law doctrine is mostly aligned on legislature’s explicit use of the term “substantial part” reflects an intention to extend the rule beyond the context of de facto liquidation. However, there is no consensus on how to determine what constitutes a “substantial part” of a company’s assets.

One view takes a quantitative approach, arguing that either the provision should have established a fixed threshold, or, even under the existing text, judges may rely on other related provisions while exercising their discretion under art. 4 of the Turkish Civil Code numbered 4721 dated 22 November 2001.[9]

• For example, Esra Hamamcıoğlu and Levent Biçer argue that setting a quantitative threshold serves both legal certainty and the protection of the company’s and third parties’ interests. Accordingly, they suggest that the legislator should have provided under TCC art. 408/2(f) that transfers exceeding 60% of a company’s assets require approval by the general assembly.[10]
• Ersin Çamoğlu suggests that the threshold used in Communiqué on Common Principles for Significant Transactions and the Exit Rights numbered II-23.1 for public companies, that is the 50% of either the total assets or the company value, can be used as a reference point by the judges.[11]

Another group believes qualitative elements should be taken into account. In that regard, Mehmet Helvacı argues that, in assessing whether a transaction involves a “substantial part”, the purpose of the sale must be considered. For instance, even the sale of the company’s sole factory may not qualify as substantial depending on the intended use of the proceeds and the rationale for such sale.[12]

C. Court of Cassation’s Case Law

The Court of Cassation has so far avoided setting comprehensive or guiding principles on this issue.

• In majority of its decisions, it follows case law established in the pre-TCC era, requiring shareholder approval based on the transfer’s effect on the company’s operations. That said, it applies varying criteria, such as assets that “are vitally important”[13] or a sale which would “render the company unable to carry out its main activities”.[14]
• In some other decisions, however, the court takes a more expansive approach, holding that an asset may constitute a “substantial part” even if it is not vital for the company’s operations. For example, in a decision dated 2023, the Court ruled that 1/3 share of a company’s property could be considered a substantial asset.[15]

III. Quorum Requirements

One of the controversial aspects of art. 408/2(f) of TCC concerns the quorum requirements for the general assembly resolution.

A. General Framework

Art. 418 of TCC sets the meeting quorum for general assembly meetings as at least 1/4 of the capital and the decision quorum as the simple majority of votes present. Since there are no explicit provisions requiring a higher threshold for resolutions under art. 408/2(f) of TCC, it may initially appear that the quorum rules of art. 418 would apply. However, art. 538(2) of TCC provides a qualified majority of at least 75% of the company’s outstanding capital for the adoption of general assembly resolutions regarding wholesale of company assets taken as part of the liquidation process.

Also, art. 22/12 of the Regulation on the Procedures and Principles of General Assembly Meetings of Joint Stock Companies and the Ministry Representatives to Attend These Meetings (“Regulation”) provides that any decision to sell substantial part of the company’s assets must be approved by shareholders representing at least seventy-five percent of the company’s outstanding capital.[16] Although criticized in the doctrine for its apparent violation of the hierarchy of norms[17], this requirement appears to have been influenced by the pre-TCC case law of the Court of Cassation, which, based on the concept of de facto liquidation, mandated a qualified majority under art. 443(2) of the former Commercial Code governing the wholesale disposal of assets during liquidation.[18]

B. Doctrinal Views

In the doctrine, there is no consensus regarding the quorum required for resolutions on the sale of a substantial part of a company’s assets under TCC art. 408/2(f).

• Some scholars consider the fact that TCC does not explicitly impose an enhanced quorum for such decisions. They emphasize that the qualified majority set forth in art. 538(2) of TCC must apply for liquidation process and therefore cannot be analogously applied to ordinary asset sales. Also, the provision in the Regulation requiring approval by shareholders representing at least seventy-five percent of the company’s capital is inconsistent with TCC and, accordingly, should not be applied.[19]
• On the other hand, majority of the doctrine opine that it would be appropriate to require the seventy-five percent quorum by analogous application of art. 538(2). This view is primarily grounded in the absence of any logical basis to distinguish the sale of a substantial part of assets between companies that are in liquidation or active, and that such an interpretation would effectively ensures adequate protection for shareholders.[20]

C. Court of Cassation’s Case Law

The case law of the Court of Cassation on the quorum requirement is inconsistent. Some decisions uphold the application of the qualified seventy-five percent quorum as per arts. 538 and 421, while others apply the ordinary quorum set out in art. 418 of TCC.

• For instance, in one of its decisions in 2019, the court confirmed the annulment of a general assembly resolution on the grounds that the enhanced 75% quorum was required. Here, the reasoning of the decision relies on both the arts. 538 and 421 of TCC and on the Regulation.[21]
• On the other hand, in a decision in 2021, the court ruled that the ordinary quorum under art. 418 applies to resolutions regarding the wholesale of substantial part of company assets. In its decision, the court noted that TCC does not contain any provision requiring a qualified majority for such resolutions. The Court emphasized that any intention by the legislator to require a qualified quorum should have been explicitly stated in the law. On the basis of this reasoning, the Court concluded that the enhanced seventy-five percent quorum in the Regulation cannot be applied to active companies, as doing so would violate the hierarchy of norms.[22]

IV. Legal Consequences of Non-Compliance

The impact of failing to obtain the general assembly’s approval on transactions with third parties is also an important aspect. A minority view in the Turkish law doctrine holds that the absence or annulment of the general assembly resolution should not automatically invalidate the transaction.[23] This view is primarily based on:

• The general principle that the general assembly is an internal corporate body under Turkish law (art. 371(4) of TCC), and therefore any exception to this rule should have been explicitly stated by law, and
• The necessity to protect legal security of third parties, which is an essential part of commercial life.

On the other hand, the prevailing view in the doctrine regards art. 408/2(f) of TCC as an exception to the general rule that internal breaches within a company do not affect transactions with third parties. Accordingly, if a general assembly resolution is non-existent, void or annulled, any sale of a substantial part of the company’s assets to third parties will also be void[24] and unenforceable.[25]

Court of Cassation is also in this opinion:

• In one of its decisions, the Court ruled that without a general assembly resolution, the board of directors and company officers lack the authority to execute the transaction; in other words, they do not have the legal capacity to act on behalf of the company, therefore any sale of substantial assets without the required general assembly approval is void.[26]
• In another decision, the Court went further, holding that a transaction regarding transfer of asset under the scope art. 408/2(f), if carried out by company managers without the required general assembly resolution, is non-existent (yok hükmünde).[27]

V. Conclusion

Many jurisdictions, including Turkish law, have rules governing the transfer of substantial part of a company’s assets. However, the application of art. 408/2(f) of TCC remains far from uniform. There is no doctrinal consensus on what constitutes a “substantial part” of a company’s assets requiring general assembly approval, and the Court of Cassation has neither established clear guiding principles for this determination nor developed a consistent case law to date. Regarding the required quorum, doctrinal opinion is similarly divided, and the Court of Cassation has ruled on conflicting decisions, sometimes applying the ordinary quorum given in art. 418, and other times requiring the qualified majority under art. 421(3) of TCC, taking into account the reference in art. 538(2).

One aspect of the issue that is consistently applied by the Court of Cassation is that any sale of a substantial part of assets without a proper general assembly resolution is invalid. While this protects shareholder rights, it has been criticized in the doctrine for undermining legal security for the third parties.

These uncertainties, both in defining the scope of “substantial part of assets” and in determining the applicable quorum, and the risk of invalidity arising from non-compliance compound the challenges for companies seeking to make major asset transfers and highlight the need for clearer legislative (or judicial) guidance.

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[1] Aktiengesetz dated 6 September 1965, Bundesgesetzblatt (Federal Gazette) I, p. 1089) art. 179(a)1 provides “[a] contract by which a stock corporation enters into obligation to transfer the entirety of the company’s assets […] requires a resolution to be adopted by the general meeting [… ]” . See also German Federal Supreme Court No. 83/122 known as Holzmüller decision for broader application of this rule under German Law.

[2] Delaware General Corporation Law, Del. Code Ann. tit. 8, § 271(a). Delaware Law is chosen as the example for the United States because of the state’s dominance in corporate establishment. As of 2024, Delaware is the state of incorporation of 66.7% of Fortune 500 companies and 81.4% of all United States initial public offerings. See Delaware Division of Corporations: 2024 Annual Report, p.1 https://corpfiles.delaware.gov/Annual-Reports/Division-of-Corporations-2024-Annual-Report.pdf, accessed 21 November 2025. See also Delaware Court of Chancery, Chancellor McCormick, No. 2021-0946-KSJM, decision dated 22 May 2023 for further application of this rule under Delaware Law.

[3] See Swiss Federal Supreme Court, 1^st Civil Chamber, No. 116 II 320 dated 24 April 1990.

[4] Companies Act 2008 (Act 71 of 2008), Section 112 titled “Proposals to dispose of all or greater part of assets or undertaking”.

[5] Nestor Gernando T. Siazon, Update on Swiss Corporate Asset Transfers, https://www.lexology.com/library/detail.aspx?g=32826a55-29b8-4f9e-aae7-561e2906ff49 accessed 23 November 2025.

[6] TCC art. 408/2: “[…] (2) Without prejudice to the non-delegable duties and powers stipulated in other provisions, the following duties and powers of the general assembly cannot be delegated: […] (f) wholesale of substantial part of the company’s assets […]”.

[7] See Turkish Court of Cassation, 11^th Civil Chamber Case No. 1999/8298 Decision No. 2000/19, dated 17.01.2000; Turkish Court of Cassation, 11^th Civil Chamber Case, Case No. 2005/1362 Decision No. 2006/1253, dated 13.2.2006; Turkish Court of Cassation, 11^th Civil Chamber, Case No. 2007/13482 Decision No. 2009/2957, dated 13.03.2009; Turkish Court of Cassation, 11^th Civil Chamber, Case No. 2009/8122 Decision No. 2009/11125 dated 28.10.2009.

[8] The Justice Commission Report on TCC: “Furthermore, a new paragraph (f) has been added to the second subsection of Article 408 of the Draft. The new provision expressly establishes, in line with Court of Cassation case law, that the sale of a substantial part of a company’s assets cannot be carried out by the board of directors, and that this is one of the non-delegable and exclusive powers of the general assembly”

[9] Turkish Civil Code numbered 4721 dated 22 November 2001, art. 4: “In matters where the law grants discretion or requires consideration of the circumstances or justified reasons, the judge shall decide in accordance with law and equity”.

[10] Esra Hamamcıoğlu and Levent Biçer, “Anonim Ortaklıklarda Genel Kurulun Devredilemez Yetkileri Kapsamında Önemli Miktarda Şirket Varlığının Toptan Satışı ve Uygulama Alanı (TTK m. 408/2-f)”, Kadir Has University Faculty of Law Journal, Vol. 1, No. 1, June 2013, (“Biçer-Hamamcıoğlu”) p. 41.

[11] Ersin Çamoğlu, “Anonim Ortaklık Genel Kurulunun Devredilemez Yetkileri Kapsamında Önemli Miktarda Şirket Varlığının Toptan Satışı”, Prof. Dr. Sabih Arkan’a Armağan, 2019, pp. 332-333. It should be noted that the Communiqué on Significant Transactions and the Exit Rights numbered II – 23.3, which entered into force upon its publication in the Official Gazette No. 31168 dated 27 June 2020, increased this threshold to 75%.

[12] Mehmet Helvacı “Anonim Ortaklık Genel Kurulunun Devredilemez Bir Yetkisi Olarak Önemli Miktarda Şirket Varlığının Toptan Satışı – Temel Sorunlar, Hükmün Yorumu ve Uygulanması Hakkında Düşünce ve Öneriler”, Türk Ticaret Kanunu Sempozyumu III, 2020 (“Helvacı”), p. 53.

[13] Turkish Court of Cassation, 11^th Civil Chamber Case, Case No. 2017/1837, Decision No. 2018/7055 dated 14 November 2018.

[14] Turkish Court of Cassation, 11^th Civil Chamber Case, Case No. 2020/8038, Decision No. 2022/4957 dated 16 June 2022; See also Turkish Court of Cassation, 11^th Civil Chamber Case, Case No. 2024/3621, Decision No. 2025/3752 dated 28 May 2025.

[15] Turkish Court of Cassation, 11^th Civil Chamber, Case No. 2022/2437, Decision No. 2023/6146 dated 25 October 2023.

[16] Regulation on the Procedures and Principles of General Assembly Meetings of Joint Stock Companies and the Ministry Representatives to Attend These Meetings published in the Official Gazette numbered 28481 dated 28 November 2012 art. 22/12.

[17] Abuzer Kendigelen, “Anonim Şirketlere İlişkin Hükümlerde Benimsenen Bazı Ağırlaştırılmış Nisaplar Bilinçli Bir Tercihin Ürünü Mü?” Banka ve Ticaret Hukuku Araştırma Enstitüsü 60^th Anniversary Commemorative Volume, 2015, p. 101, fn [11].

[18] See Turkish Court of Cassation, 11^th Civil Chamber, Case No. 1984/6072, Decision No. 1985/270 dated 30 January 1985; Turkish Court of Cassation, 11^th Civil Chamber, Case No. 1999/8298, Decision No. 2000/19 dated 17 January 2000.

[19] Abuzer Kendigelen, Yeni Türk Ticaret Kanunu: Değişiklikler, Yenilikler ve İlk Tespitler, 3^rd ed., On İki Levha Yayıncılık, 2016, p. 309; Helvacı pp. 60-62.

[20] Çamoğlu (Poroy/Tekinalp), Ortaklıklar Hukuku, Volume I, 16^th ed., 2025, p. 551; Tolga Ayoğlu “Önemli Miktarda Şirket Varlığının Satışında Genel Kurul Kararının Hukuki Niteliği”, Kadir Has University Faculty of Law Journal, Vol. 5, No. 1, June 2017 (“Ayoğlu”), p. 95; Hasan Pulaşlı, Şirketler Hukuku Şerhi, Vol. II, 5^th ed., 2024, p. 1057.

[21] Turkish Court of Cassation, 11^th Civil Chamber, Case No. 2017/3458, Decision No. 2019/558 dated 21 January 2019

[22] Turkish Court of Cassation, 11^th Civil Chamber, Case No. 2020/306, Decision No. 2021/6945 dated 08 December 2021.

[23] Ayoğlu, pp. 100-102; Alihan Aydın, “Anonim Ortaklık Yönetim Kurulunun Temsil Yetkisinin Sınırları ve Temsil Yetkisinin/Gücünün Kötüye Kullanılması Sorunu”, Banka ve Ticaret Hukuku Dergisi, Vol. 30, pp. 164-166.

[24] In the doctrine, if transfer to third parties is made without a general assembly resolution, it is considered provisionally void (askıda hükümsüz); if the general assembly subsequently adopts an approval resolution, the transaction becomes valid. However, if no resolution is ever adopted, the sale is deemed void. See Helvacı pp. 73-74; Feyzan Hayal Şehirali Çelik (Kırca, Manavgat), Anonim Şirketler Hukuku, Vol. 2/1, 1^st ed., 2024 (“Şehirali Çelik (Kırca/ Manavgat)”) p. 99.

[25] Şehirali Çelik (Kırca/ Manavgat), p. 97; Biçer-Hamamcıoğlu p. 47; Emin Çamurcu, Anonim Ortaklık Genel Kurul Kararlarının İptaline Bağlanan Hukuki Sonuçlar, Master’s thesis, Galatasaray University, 2020, p. 196; Helvacı pp. 71-75.

[26] Turkish Court of Cassation, 11^th Civil Chamber, Case No. 2016/3810, Decision No. 2017/3294 dated 01 June 2017.

[27] Turkish Court of Cassation, 11^th Civil Chamber, Case No. 2020/8038, Decision No. 2022/4957 dated 16 June 2022.