An Analysis of “Dissolution of the Company for Just Causes Claim” and “Liability Claim” as Legal Remedies of Minority Shareholders in Turkey and the Way Forward with Recommendations from English Law

Abstract

This article aims to present appropriate and applicable recommendations from English law for improvements regarding two essential provisions in Turkey: “dissolution of the company for just causes claim (Article 531 of Turkish Commercial Code(TCC))” and “liability claim (Articles 553 and 555 of TCC)”. This paper will compare the two jurisdictions’ situations, taking into account the impact of similar remedies for minority shareholders, namely unfair prejudice petition, winding up on just and equitable grounds, and derivative action in the UK and dissolution of the company for just causes and liability claim in Turkey. The analyses related to Article 531 will be presented first. Although the right in Article 531 provides the minority shareholders with substantial protection in companies, the fact that this right may result in the dissolution of the company and contains some uncertainties that make it difficult to achieve its purpose in practice. This article will first look at the shareholding ratio requested in the application to Article 531 and the difficulties that arise from it. After examination of the ongoing uncertainties and challenges regarding Article 531 proceedings, this article will offer a potential reform of Article 531 based on English law to make this lawsuit more protective for both shareholders and the company. Secondly, the liability claim against directors regulated under Articles 553 and 555 will be introduced and compared with the derivative action under UK Companies Act 2006. This paper also offers suggestions for overcoming the obstacles associated with “liability claim” in Turkey.