Transfer of capital shares in limited liability companies and consequences

The transfer of the capital shares of limited liability companies, which have an important place in commercial life, is regulated under Articles 595 and following of the Turkish Commercial Code No. 6102. Unless otherwise agreed in the limited liability company agreement, it is possible to transfer the capital share to limited liability company shareholders or third parties. For the transfer of the capital share, a written transfer agreement must be executed between the transferor and the transferee, and the signatures in this agreement must be approved by a notary public. The transfer agreement has two stages: commitment and disposition; however, in practice, commitment and disposition are realized together. In order for the transfer to be completed, the company must be notified of the transfer agreement whose signatures have been notarized and the transfer must be approved by the general assembly of the limited liability company. If no decision is taken by the general assembly within three months following the notification of the transfer to the company, the approval shall be deemed to have been given. In the event that the approval is given by the general assembly or no decision is taken by the general assembly within three months, the transfer shall be deemed to be completed. It is possible to remove the obligation to obtain the approval of the general assembly for the transfer by the company agreement. The general assembly may reject the transfer without giving any reason. In this case, the shareholder who wishes to transfer his/her share has the right to leave the company for just cause. Following the approval of the transfer, the company manager shall record the transfer in the share ledger and apply to the trade registry for registration. Failure to comply with the regulations in the Turkish Commercial Code and the relevant legislation in transfer transactions may cause damage to the parties to the transfer transaction or to third parties who are not parties to the transaction.