Partnership Exit Lawsuit in Limited Liability Companies
The legislator has not included any provision regarding exiting the partnership in joint-stock companies within the framework of the principle of capital protection.[1] In limited liability companies, the right to file a partnership exit lawsuit is regulated under Article 638 of the Turkish Commercial Code No. 6102. Accordingly;
- The company agreement may grant partners the right to exit the company and may condition the exercise of this right on certain requirements.
- Each partner may file a lawsuit to have their exit from the company approved if there are justifiable reasons.
- Upon request, the court may, during the course of the lawsuit, order that some or all of the plaintiff’s rights and obligations arising from the partnership be suspended, or take other measures to secure the position of the partner filing the lawsuit.
As can be seen, in a limited liability company, each partner may file a lawsuit to exit the partnership if there is a justifiable reason. Therefore, even if the company agreement does not explicitly provide for it, any partner may file a lawsuit to have their exit from the company approved if a justifiable reason exists.
[1] Tayfun Ercan, Zeliha Çimrin, Limited Şirketlerde Ortaklıktan Çıkma Ve Çıkarılma, Seçkin Yayıncılık, 2024, s.60.
Haklı Sebep
The Turkish Commercial Code No. 6102 does not provide a definition of justifiable cause. However, according to many definitions in the doctrine, it is stated that each partner must act in accordance with the rules of honesty. The rule of honesty is defined in Article 2 of the Turkish Civil Code No. 4721. Accordingly, “Everyone must comply with the rules of honesty when exercising their rights and fulfilling their obligations. The legal system does not protect the clear abuse of a right.”
Moreover, although justifiable causes for exiting a partnership in limited companies are not explicitly listed in the law, Article 245 of the Turkish Commercial Code regulates the concept of justifiable cause for collective companies. Accordingly:
“A justifiable cause occurs when the actual or personal reasons that led to the establishment of the company have ceased in a way that makes it impossible or difficult to achieve the company’s business purpose; in particular:
a) A partner betraying the company in the management of its affairs or in the preparation of its accounts,
b) A partner failing to fulfill their primary duties and obligations,
c) A partner misusing the company’s trade name or assets for personal gain,
d) A partner losing the ability and competence required to perform the company’s business due to a chronic illness or other reasons,
These are considered justifiable causes.
According to items (a), (b), and (c), a partner who has grounds for termination does not have the right to file a lawsuit.
In conclusion, although there is no specific definition of a justifiable cause, within the framework of Supreme Court practices and doctrinal opinions, the judge will assess whether a justifiable cause exists. If the company agreement contains a provision regarding a justifiable cause, the judge will take it into consideration.
Withdrawal from Partnership in Case of Transfer of Principal Capital Share
The transfer of the principal capital share is regulated under Article 595 of the Turkish Commercial Code (TCC). Even if the transfer of shares is prohibited, each partner may file a lawsuit to withdraw from the partnership based on justifiable reasons. Indeed, Article 595/5 of the TCC states: “If the company agreement prohibits the transfer or the general assembly refuses to approve it, the partner’s right to withdraw from the company for justifiable reasons remains reserved,” thereby preserving this right.
Competent and Authorized Court
In a lawsuit for withdrawal from a partnership, the competent court is the Commercial Court of First Instance. The authorized court is the court of the location where the company’s headquarters is situated.
Precedent Decisions
“…Within the scope of Article 638/2 of the Turkish Commercial Code No. 6102, each partner may request the court to allow them to exit the company based on justifiable reasons… While the plaintiff must be faultless or less at fault regarding the asserted justifiable reasons, the current evidence shows that this condition is not met. Furthermore, since it is sufficient for a suit seeking permission to exit the partnership to be filed solely against the company, directing the lawsuit at a partner who is not a party is incorrect; thus, the court’s decision to dismiss the case against the partner due to the lack of passive legal standing is also correct…” (Court of Cassation, 11th Civil Chamber, 2021/3860 E., 2022/7704 K., 02.11.2022)
“…For the partnership relationship to continue among partners, a trust-based relationship must be established. If such unity no longer exists between the parties, managing the partnership will not provide any benefit to the parties or the company. Considering that in limited companies, the personal element dominates the partnership structure… The plaintiff, being one of the founding partners, invested in a company that has never distributed profits since its establishment and continually requires capital. Despite lending money to the company over time, the plaintiff has not benefited from profits. Therefore, it is unreasonable to expect the plaintiff to retain trust in the controlling partners and the company. Consequently, all conditions justifying the plaintiff’s exit from the company are deemed met. Accordingly, the court correctly accepted the plaintiff partner’s request to exit the partnership, taking into account the existence of justifiable reasons under Article 638/2 of the Turkish Commercial Code No. 6102…” (Court of Cassation, 11th Civil Chamber, 2021/6313 E., 2022/4505 K., 06.06.2022)
“…The company established within the marriage cannot continue to exist due to the separation of the parties; however, according to the provisions of the Turkish Commercial Code (TTK), the default assumption is that the company should continue its existence, and considering that a company may be established by a single person and that the request concerns exiting the company, the court does not have the authority to unilaterally decide on the dissolution and liquidation of the company. In the present case, there is a justifiable reason for exiting the company…” (Court of Cassation, 11th Civil Chamber, 2016/2571 E., 2017/5023 K., 04.10.2017)
“…When evaluating the plaintiff’s request for permission to exit the company under Article 638/2 of the TTK, it should be noted that this article applies to limited liability companies and not to joint-stock companies. In joint-stock companies, a partner does not have the direct right to demand exit by asserting justifiable reasons. Under Article 531 of the TTK, if justifiable reasons exist, a partner in a joint-stock company has the right to request the dissolution and liquidation of the company. Therefore, the court may only rule on exit after it is first established that justifiable reasons exist for dissolution and liquidation…” (Court of Cassation, 11th Civil Chamber, 2016/527 E., 2017/3549 K., 08.06.2017)
Lawyer. Gökhan AKGÜL & Lawyer. Züleyha APAYDIN
ANTALYA COMMERCIAL LAWYER – ANTALYA BUSINESS LAW ATTORNEY
A shareholder exit lawsuit is a legal remedy used in cases of disputes among company partners, a breakdown of trust, or when partnership activities become unsustainable. This lawsuit allows a partner to withdraw from the partnership for justifiable reasons, protecting their rights while ensuring the company continues to operate smoothly. The process is subject to specific conditions set out in the Turkish Commercial Code and requires detailed legal expertise. A shareholder exit lawsuit attorney provides professional support to best defend the client’s rights, gather evidence, and manage the litigation process effectively. At our law firm in Antalya, our experienced and professional team ensures that your shareholder exit case proceeds efficiently and in full compliance with the law.
