Just-Cause Dissolution of a Turkish Limited Company: TCC Article 636(3), Shareholder Deadlock and Alternative Remedies

1. Article 636(3) is a company-level remedy

Article 636 contains dissolution causes for limited companies. Paragraph three gives every shareholder a right to request dissolution from the court where just cause exists. The remedy therefore targets the continued legal existence of the company, not simply the claimant’s membership.

This is a major distinction from Article 638. A shareholder who personally wants to leave can seek judicial exit, whereas Article 636(3) asks the court to intervene in the company relationship as a whole.

Because dissolution affects employees, creditors, customers and other shareholders, courts examine proportionality carefully.

2. Every shareholder can bring the just-cause dissolution action

Article 636(3) does not impose the 10% or 5% minority threshold used for Article 531 AŞ dissolution. A shareholder of a limited company can bring the action if the person has standing as a shareholder and can prove just cause.

The claimant’s percentage can still matter factually. A 1% shareholder may have less ability to show structural deadlock than a 50% shareholder, but the statute does not remove standing merely because the holding is small.

Share ownership should be established through the share ledger, trade registry where relevant, transfer documents and capital records.

3. Just cause is assessed from the entire corporate relationship

Just cause is not defined through one exhaustive list. The court examines whether serious circumstances make continuation of the company relationship objectively unreasonable or fundamentally dysfunctional.

The analysis considers duration, recurrence, fault, financial consequences, ability to use less severe remedies and the legitimate expectations created by the articles and shareholder arrangements.

One isolated argument is rarely equivalent to a sustained structural breakdown.

4. Permanent deadlock can create just cause

In a 50/50 company, disagreement can block manager appointments, budgets, financing, distributions or essential contracts. A temporary disagreement is part of corporate life; a persistent inability to make indispensable decisions can threaten the company’s existence.

The claimant should document failed meetings, tied votes, rejected financing, inability to sign legally necessary acts and resulting commercial harm.

Shareholders’ agreements should be checked for escalation, mediation, Russian roulette, Texas shoot-out, put/call or other deadlock mechanisms before asking the court to dissolve the company.

5. Systematic majority oppression can support a dissolution claim

Majority shareholders can control managers, accounts and voting. Lawful majority control is not wrongdoing. The problem arises when control is used persistently to exclude a minority from legitimate rights or transfer value away from the company.

Examples can include withholding all information, discriminatory treatment without legitimate basis, related-party transactions designed to extract profit, deliberate dilution, or repeated refusal to distribute profit while benefits are channelled to controllers.

The petition should connect each act to the breakdown of the corporate relationship.

6. Persistent information exclusion can become part of just cause

Limited-company shareholders have information and inspection rights under Article 614. A shareholder cannot demand every private management document without limits, but the company cannot systematically prevent the owner from understanding the business.

Written requests, manager responses and any court proceedings on information rights can demonstrate whether the exclusion is serious and continuing.

Where an Article 614 remedy can solve the dispute, the court can consider whether dissolution is premature.

7. Diversion of company assets can justify strong intervention

If managers or controlling shareholders move customers, contracts, cash or assets to another controlled business without proper consideration, the company can be weakened deliberately.

Such facts can support manager-liability, restitution, unfair competition or criminal claims depending on circumstances, as well as the broader just-cause analysis.

Bank records, related-party agreements and accounting ledgers are central evidence.

8. Management breakdown can affect the company’s ability to function

A limited company must have functioning management and representation. If managers refuse to cooperate, representation cannot be exercised or compulsory corporate acts cannot be completed, the company can face serious legal and commercial paralysis.

The court should consider whether manager removal or appointment can solve the problem before dissolution.

Article 630 gives shareholders judicial remedies concerning managers and should be assessed together with Article 636.

9. Loss of trust matters when it has objective corporate consequences

Closed companies often depend on personal trust, especially family businesses and joint ventures. But subjective dislike alone is not just cause.

Loss of trust becomes legally relevant when based on concrete events—dishonesty, concealment, diversion, repeated breach or deliberate obstruction—that make cooperation objectively unreasonable.

The claimant should prove the events, not merely state that trust disappeared.

10. Losing a vote or earning less profit is not automatically just cause

Shareholders accept that majority voting can produce decisions they dislike. Market conditions can also reduce profit or company value without misconduct.

Article 636(3) should not become an appeal against ordinary business judgment.

A strong case shows structural abuse or paralysis rather than commercial disappointment.

11. The court can consider a solution less destructive than dissolution

Turkish company law favours preserving viable businesses when an alternative can fairly resolve the conflict. The court can therefore fashion another appropriate solution instead of dissolving the company.

Possible solutions can include a shareholder exit or other arrangement consistent with the statutory powers and facts.

The parties should present workable alternatives rather than demand liquidation reflexively.

12. Article 638 exit can be more targeted

If the claimant’s real goal is to leave and receive the value of the participation, Article 638 may be more proportionate than dissolving the entire company.

Conversely, if company operations themselves are fundamentally unlawful or impossible, individual exit may not solve the broader problem.

The choice of remedy should follow the objective sought.

13. Interim relief can preserve assets and governance during the case

Dissolution litigation can increase conflict. A controlling side may attempt unusual transfers, distributions or register changes while the action is pending.

Where Civil Procedure Law conditions are met, the claimant can request measures tailored to preserving assets or preventing irreversible corporate acts.

Proportionality is essential; ordinary business should not be paralysed unnecessarily.

14. An alternative buyout can make valuation decisive

If the court chooses a shareholder-separation solution, real-value analysis becomes central. The company’s balance sheet, cash flow, market position, hidden reserves and related-party balances can affect value.

Valuation should reflect an economically defensible date and method consistent with the court’s remedy.

Both parties should preserve accounting evidence early.

15. Corporate records should tell a chronological story

Minutes, notices, shareholder requests, accounting records, bank transfers, manager decisions, customer correspondence and expert reports can establish the breakdown.

The strongest file identifies the problem, attempts to resolve it, the opposing response and the continuing consequence.

General accusations should be replaced with documents and dates.

16. The commercial court at the relevant company seat is central

The case is a commercial company-law dispute. Jurisdiction, venue and mandatory mediation questions should be checked for the precise relief and current procedural rules before filing.

The company is the primary defendant. Representation conflicts may require special procedural measures where managers are aligned with the claimant or opposing shareholder.

Service and authority documents must be prepared correctly for foreign parties.

17. Foreign shareholders can coordinate the case from abroad

A shareholder living abroad can appoint Turkish counsel through a properly authenticated power of attorney for delegable litigation steps.

Foreign shareholder agreements and corporate documents can require apostille/legalisation and certified Turkish translation.

Bakırcı & Keskin Hukuk Bürosu has physical offices in Istanbul and Mersin. Commercial litigation throughout Türkiye can be coordinated from these offices subject to competent court and procedural rules.

Conclusion

TCC Article 636(3) is the limited-company remedy for serious corporate breakdown where company-level judicial intervention is necessary. The claimant should prove genuine just cause, compare less destructive remedies, preserve corporate evidence and define the desired practical outcome before seeking dissolution. For foreign shareholders, document formalities and representation should be planned before the corporate conflict reaches an irreversible stage.