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Expulsion of a Shareholder in Two-Shareholder Limited Companies After the Constitutional Court's Judgment of 17 March 2026

Authors
Uğurcan Tekinİnci ÖzçilsalBeyza ErdemirUğurcan Tekin · İnci Özçilsal · Beyza Erdemir
Published26 March 2026
Reading time11 min
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CategoryCorporate
Published26 March 2026
Authors
Uğurcan TekinPartner
İnci ÖzçilsalAttorney at Law
Beyza ErdemirAttorney at Law
Contents01The Institution of Expulsion in Limited Companies02The Problem in Practice: Deadlock in Two-Shareholder Companies03The Court's Assessment: Effective Remedy and the Functionality of the Norm04The Scope of the Annulment05The New Legal Position: Individual Application to the Court06The Dissenting Opinions07Conclusion
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SummaryÖzet

Limited companies, by virtue of structures widely preferred in Turkish commercial life and generally established with a small number of shareholders, are company types resting on a relationship of trust among the shareholders. In this respect, disputes arising where harmony between shareholders breaks down do not remain a conflict between the parties alone; they are reflected directly in the company's management and decision-making processes and produce consequences affecting the operation of the company itself.

Under the existing legal system, mechanisms of withdrawal and expulsion on the basis of 'just cause' are provided for situations in which the shareholding relationship has become unsustainable. The operation of these mechanisms is, however, largely made dependent on the will of the company and on a general assembly resolution. As a rule this approach serves the purpose of protecting the integrity of the company and the collective will; in certain company structures, however, it causes the system to become effectively inoperable.

Indeed, in practice — particularly in limited companies with two equal shareholders — where there is a conflict of will between the shareholders, the company's decision-making mechanism is seen to be entirely deadlocked because general assembly resolutions cannot be adopted. This leads to legal instruments such as expulsion being incapable of operation despite the existence of just cause, and frequently to recourse to more severe outcomes such as the dissolution of the company.

Against that background, by its judgment of 25 December 2025, Case No. E. 2025/128, K. 2025/273 — published in the Official Gazette of 17 March 2026, No. 33199 — the Constitutional Court subjected to constitutional review the existing provisions which cause the expulsion mechanism to be incapable of operation in two-shareholder limited companies, and concluded that those provisions are contrary to the Constitution in respect of that company structure.

01
The Institution of Expulsion in Limited Companies

The institution of expulsion in limited companies was provided by the legislature as an alternative solution enabling the continuation of the company in situations where the shareholding relationship has become unsustainable for just cause. This mechanism takes as its basis, on the one hand, the preservation of the shareholding bond, while on the other permitting that bond to be terminated under certain conditions.

The operation of the mechanism is, however, tied directly to the will of the company: in particular, application to the court for the purpose of expelling a shareholder is regulated among the non-transferable powers of the general assembly. Article 616(1)(h) of the Turkish Commercial Code No. 6102 expresses this expressly as: 'Making an application to the court for the expulsion of a shareholder from the company.'

In addition, for such a general assembly resolution to be adopted, Article 621(1)(h) prescribes an aggravated quorum: the resolution to apply to the court for expulsion for just cause may be adopted only where at least two-thirds of the votes represented and an absolute majority of the entire share capital carrying voting rights are present together.

Assessed systematically, this approach aims to protect the integrity of the company by leaving an operation with such severe consequences to the collective will of the company. Yet this structure may produce a result that renders the operation of the prescribed mechanism entirely impossible in situations where the will of the company cannot be formed. A system which appears balanced and coherent at the normative level may therefore, for certain company structures, move away from producing solutions and become the source of the problem itself.

The institution of expulsion is not an isolated mechanism: within the systematic structure of the Turkish Commercial Code it forms an integrated whole with the regime of dissolution and departure. Article 640 regulates expulsion, Articles 641 and 642 the departure share and payment regime, and Article 636 dissolution for just cause; assessed together, these mechanisms aim at rebalancing the shareholding structure rather than terminating the company.

02
The Problem in Practice: Deadlock in Two-Shareholder Companies

The area in which the existing regulation becomes most conspicuously dysfunctional is limited companies with two equal shareholders. In such structures, the adoption of the general assembly resolution required for the expulsion of one shareholder depends directly on the will of the other party. Where there is a dispute between the shareholders, and since it is certain that the shareholder facing the expulsion request will not vote in favour of their own removal, attaining the two-thirds vote ratio and capital majority required by the Law becomes effectively impossible, and the company's decision-making mechanism and internal functioning are entirely deadlocked.

“Having regard to the conditions prescribed in the rules, it is evident that in limited companies with two equal shareholders it is not possible for the general assembly to adopt a resolution for the expulsion of a shareholder.”

This finding demonstrates that the problem is not merely a technical question of majority; it results directly in the legal protection mechanism being rendered inoperative. The existence of just cause is accepted, yet the instrument enabling the exercise of that right disappears for structural reasons.

This produces significant consequences in practice. A more proportionate solution capable of ensuring the continuation of the company — expulsion — cannot be operated; instead, the dissolution of the company frequently comes onto the agenda. That leads to more severe and destructive consequences not only for the shareholders, but also for the company's commercial relationships and its connections with third parties.

Where two equal shareholders disagree, the statutory remedy becomes unavailable precisely when it is most needed.
A deadlocked two-shareholder company cannot pass the very resolution the remedy requires.
03
The Court's Assessment: Effective Remedy and the Functionality of the Norm

In assessing the regulation under examination, the Constitutional Court did not content itself with the existence of the norm; it took as its basis whether the norm was in fact applicable in concrete cases and whether it provided effective legal protection for individuals. In this respect the Court went beyond classical norm review, treating the regulation's capacity to produce results in practice as part of constitutional scrutiny.

The Court established clearly that in two-shareholder limited companies the existing system does not permit the expulsion of a shareholder despite just cause, and that this effectively removes the individual's access to a court. The reasoning of the judgment expresses this as follows:

“Not permitting an application to be made to the court by the company for the expulsion of a shareholder who prevents the company from continuing its activities, or whose conduct requires their expulsion, is irreconcilable with the State's obligation to provide an effective remedy mechanism.”

On the basis of this finding the Court held that the regulation violated the right to an effective remedy guaranteed by Article 40 of the Constitution. Under that provision everyone whose rights and freedoms have been violated must have the possibility of applying to the competent authorities, and that application must be not merely theoretical but actually accessible and capable of producing results.

The Court further assessed that the regulation was also irreconcilable with the freedom of enterprise guaranteed by Article 48 of the Constitution. Where the shareholding relationship has become unsustainable, the fact that the legal instruments enabling the company to continue its activities cannot in practice be used produces a result directly affecting the continuation of economic activity.

The Court also emphasised that the expulsion mechanism is not merely an instrument terminating the relationship between shareholders; it is a structure serving the protection of the company's legal existence and the continuity of its activities. In this respect the Court's approach clearly demonstrates that the recognition of a right at the normative level is not sufficient on its own: supporting that right with an effective, accessible and applicable remedy is a constitutional necessity. The Court also made clear that the State cannot content itself with refraining from interfering with individuals' rights; it bears a positive obligation to establish mechanisms ensuring the effective exercise of those rights.

04
The Scope of the Annulment

Rather than removing the regulation entirely, the Constitutional Court limited its annulment in a manner specific to a particular company structure, thereby adopting an approach consistent with the principle of proportionality and focused on its target. The Court established that the norm gives rise to a constitutional problem not for all limited companies, but only for two-shareholder limited companies, where it becomes dysfunctional in practice.

This is expressed clearly in the operative part of the judgment: 'It has been decided that the rules are contrary to the Constitution and are annulled in respect of two-shareholder limited companies.'

This approach shows that in norm review the Court preferred a limited annulment targeting the area in which the concrete problem arises, rather than a generalising intervention. The judgment thereby both preserves the general systematic structure of the norm and offers a functional solution directed at removing the structural blockage encountered in practice.

Assessed together, the operative part shows that the Court considered within the same scope not only Article 616(1)(h), regulating the general assembly's power to apply to the court, but also Article 621(1)(h), which subjects the adoption of that resolution to aggravated quorums. The annulment does not result in the provisions being abolished altogether; it produces the result that they may not be applied in respect of two-shareholder limited companies, narrowing the field of application of the norm within constitutional limits.

05
The New Legal Position: Individual Application to the Court

Following the judgment, a substantial change has occurred in the operation of the expulsion mechanism in two-shareholder limited companies. This is not merely a procedural difference; it directly affects the operating logic of the institution of expulsion.

In this framework, in a two-shareholder limited company one of the shareholders may now apply directly to the court seeking the expulsion of the other shareholder for just cause, without the need for a general assembly resolution to be adopted on behalf of the company. A mechanism previously operable only in dependence on the will of the company has thereby become, for a particular company type, a possibility capable of being made the subject of an individual application.

This development removes the deadlock arising in equal-shareholding structures and restores to operation the legal protection mechanism which had been disabled by the impossibility of adopting a general assembly resolution. In this respect the judgment renders actually usable a more proportionate solution — one rebalancing the shareholding structure — in place of more severe and final outcomes such as dissolution.

The judgment thus goes beyond resolving a problem specific to two-shareholder limited companies; by establishing that normative regulations in company law may be reviewed on the basis of functionality in the context of constitutional rights, it constitutes case law capable of serving as precedent for similar structural problems.

06
The Dissenting Opinions

The annulment was adopted not unanimously but by majority; as is apparent from the operative part, the determination of the scope of examination was unanimous, whereas the annulment itself was established by majority. This demonstrates a substantial divergence of opinion among the members of the Court as to the constitutional character and effects of the regulation, and renders the dissenting opinions appended to the judgment separately significant for legal assessment.

The dissenting opinions first emphasised the freedom of enterprise guaranteed by Article 48 of the Constitution and, within that scope, the legislature's broad discretion in the field of company law. It was stated that in regulating commercial life the State is obliged to establish a multi-layered balance taking account not only of the interests of the shareholders in dispute, but also of company creditors, employees and other actors in commercial life. It was accordingly argued that characterising deadlock in two-shareholder companies directly as a constitutional violation produces an effect narrowing and restricting the legislature's discretion in the field of company law.

The dissent also drew attention to the integrated structure of the provisions relating to limited companies. The legislature regulated the expulsion mechanism among the non-transferable powers of the general assembly under Article 616(1)(h), and subjected the adoption of that resolution to aggravated quorums under Article 621(1), thereby establishing a deliberate system. On this view, making an operation directly affecting the shareholding structure and producing severe consequences dependent on the will of the company is consistent with the fundamental principles of company law.

Another significant point emphasised in the dissenting opinions is the assessment that shareholders are not left entirely without legal protection even in cases of deadlock. Within this scope it was stated that, even where a general assembly resolution cannot be adopted, the shareholder's possibility of access to a court does not disappear, since under Article 636 of the Turkish Commercial Code every shareholder may seek the dissolution of the company for just cause. It was particularly emphasised that in such proceedings the court has the power to order, instead of the direct dissolution of the company, the payment of the true value of the claimant shareholder's shares and their expulsion from the company, or another solution appropriate to the concrete situation.

07
Conclusion

For practitioners the judgment has immediate practical consequences. In two-shareholder limited companies facing deadlock, the appropriate course is no longer to attempt a general assembly resolution that cannot be adopted, nor to proceed directly to a dissolution claim; it is to apply to the court for expulsion on just cause grounds. Shareholders' agreements in equal-shareholding structures should likewise be reviewed, since the availability of this remedy alters the negotiating position of both parties in a deadlock scenario.

Uğurcan TekinPartnerİnci ÖzçilsalAttorney at LawBeyza ErdemirAttorney at Law

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