Constitutional Court's New Ruling: A Solution to Deadlocks in Mechanisms for Removing Shareholders from Two - Shareholder Limited Liablity Companies 18 March 2026

Background of the Dispute and Relevant Legal Provisions
 

The objection brought before the Constitutional Court arose after one shareholder in a two-shareholder limited liability company requested the expulsion of the other shareholder from the company. Under the Turkish Commercial Code (TCC), the expulsion of a shareholder from a limited liability company may be carried out in two different ways:
 

i. Expulsion by General Assembly Resolution Based on Reasons Specified in the Articles of Association
 

Pursuant to TCC Art. 640/1, the grounds for expelling a shareholder from the company may be freely determined in the articles of association. Upon the occurrence of such grounds, the general meeting may decide to expel the relevant shareholder; the expelled shareholder may file an action for annulment within three months from the date of notification of the decision. However, TCC Art. 621/1-(h) classifies the decision to "expel a shareholder from the company for a reason specified in the articles of association" as a major decision and requires a heightened quorum for its adoption: at least two-thirds of the votes represented and an absolute majority of the total subscribed capital with voting rights.
 

ii. Expulsion Through Court Proceedings Based on a General Meeting Resolution in Cases Where Just Cause Exists
 

If the articles of association do not provide for a ground for expulsion, or if such grounds are provided but a valid reason outside of them arises, pursuant to Article 640/3 of the Turkish Commercial Code (TCC), the corporate entity may file a petition with the court requesting the expulsion of the relevant shareholder based on such valid reason. However, pursuant to Article 616/1-(h) of the Turkish Commercial Code, the decision to file a lawsuit is among the general meeting's non-delegable powers; Article 621/1-(h) of the Turkish Commercial Code, meanwhile, classifies this decision as a "major decision" and mandates the same enhanced quorum requirement.
 

The enhanced quorum required in both methods of expulsion carries the risk of structural deadlock in two-shareholder limited liability companies. In particular, the Supreme Court's jurisprudence-which, contrary to the literal wording of the statutory provision regarding the quorum, holds that "in a two-shareholder limited liability company, where both shareholders do not vote in the same direction, the required enhanced quorum for a general meeting decision to expel a shareholder for just cause-classified as a major decision-cannot be met"-has exacerbated this issue.
 

The Constitutional Court's Assessment
 

The Constitutional Court conducted its review within the framework of Article 40 (right to an effective remedy) and Article 48 (freedom of enterprise) of the Constitution. The Court emphasized that the mechanism for expelling a shareholder from the company for just cause is an important tool that prevents the termination of the company's legal existence and enables commercial activities to be carried out more effectively. The Court also determined that, under the contested rules, there is no practical means to terminate the relationship of a shareholder who obstructs the operation of a two-shareholder limited liability company. The dissolution lawsuit regulated by Article 636 of the Turkish Commercial Code (TCC)-which appears to be the only current alternative-fails to guarantee the desired outcome; for in such cases, the court may rule to expel the plaintiff shareholder personally rather than dissolve the company.
 

Conclusion and Assessment
 

Based on the aforementioned grounds, the Constitutional Court (AYM) ruled that the relevant provisions of the TCC are inconsistent with Articles 40 and 48 of the Constitution, solely with respect to two-shareholder limited liability companies and annulled them. The decision was adopted by a majority vote, despite the dissenting opinions of six members, including President Kadir Özkaya.
 

The annulment decision marks a significant development in case law regarding deadlock situations in two-shareholder limited liability companies. The consequences of the annulment decision for these corporate structures can be summarized as follows:
 

• In cases where justifiable grounds exist, the decision to file a lawsuit to remove a shareholder from the company has been removed from the general meeting's non-delegable powers in two-shareholder limited liability companies, and this decision may now be made by the board of managers.
   

• Even if no such authority has been delegated to the board of directors, the decision to file a lawsuit with the court in cases where just cause exists may be made by the general meeting in two-shareholder limited liability companies without requiring a qualified majority.
   

You can access the Decision here.