One of the most common transactions in corporate law is the transfer of company shares. In particular, changes in the ownership structure of joint-stock and limited liability companies are possible through share transfer agreements. The transfer of shares is completed not only by the mutual declaration of intent of the parties, but also by the fulfillment of the official procedures stipulated by law. The Turkish Commercial Code (TCC) regulates share transfers in terms of both the transfer of shares and their registration in the commercial register.
As of 2025, the most important points to consider in share transfer agreements include whether the agreement is in writing, whether it is subject to notary approval, the type of company in which the share transfer is valid, and whether the registration procedures are carried out in accordance with the rules.
What is a Share Transfer Agreement?
A share transfer agreement is a legal document that regulates the transfer of shares owned by one of the company’s partners to another person. This agreement is critical in terms of changing the partnership structure and bringing new partners into the company.
- The contract is made between the party transferring the share (seller) and the party acquiring the share (buyer).
- The transfer is carried out by written agreement; in some types of companies, notarization is mandatory.
- Although the transfer of shares is valid upon the declaration of intent by the parties, it does not produce any effect against third parties unless it is registered in the commercial register.
A share transfer agreement is not limited to the transfer of shares; it can also regulate the future obligations of the parties. For example, issues such as representation rights in company management after the transfer, profit distribution, or the participation of new partners in the company may also be included in the agreement. Therefore, the agreement is a strategic document that shapes not only the transfer but also the internal balances of the company.
Transfer of Shares in Limited Liability Companies
Share transfers in limited liability companies are often a more sensitive process in family businesses or small-scale enterprises because they directly affect the partnership structure. In particular, the company agreement may contain provisions such as “shares cannot be transferred without the approval of the existing partners.”
- The transfer must be made in writing and notarized.
- The company agreement may contain specific restrictions regarding transfers.
- The approval of the general assembly is a prerequisite for the validity of the share transfer.
- The transfer cannot be asserted against third parties unless it is registered in the commercial register.
These regulations have been introduced to maintain trust among partners in limited liability companies.
Transfer of Shares in Corporations
The greater flexibility in transferring shares in corporations makes these companies attractive to investors. However, even in non-public corporations, it is possible to restrict transfers. For example, the transfer of shares can be prevented for a certain period by including specific provisions in the company’s articles of association.
- The transfer of registered shares is effected by endorsement and delivery.
- Entry in the share register is a prerequisite for the transfer to be effective against the company.
- Bearer shares become valid upon transfer of ownership.
- Transfer restrictions may be imposed in the articles of association.
The simplified transfer of shares in corporations aims to ensure faster circulation of capital.
Elements of a Share Transfer Agreement
The elements that must be included in a valid share transfer agreement are as follows:
- Identity information of the parties
- The amount and nominal value of the shares to be transferred
- Transfer fee and payment method
- The rights and obligations of the parties
- The provisions of the company’s articles of association
The absence of these elements may lead to disputes in the future.
Conditions for Transfer of Shares
Certain conditions must be met for the transfer of shares to be valid.
- Consideration of the limitations in the company’s articles of association
- Notary certification (especially for limited liability companies)
- Approval of the general meeting (in limited companies)
- Registration and publication in the commercial register
Failure to comply with these conditions may result in the transfer being deemed invalid.
Annotation Procedures and Registration in the Commercial Register
For share transfers to be enforceable against third parties, they must be registered in the commercial register. This stage is called the annotation process.
- The transfer agreement and necessary documents are submitted to the commercial registry.
- After the registration process is completed, the change is announced in the Turkish Trade Registry Gazette.
- The company’s share register must also be updated.
Annotation procedures not only formalize the company’s partnership structure, but also ensure the protection of third parties.
Tax Consequences of Share Transfers
The transfer of shares has not only legal but also tax consequences.
- Share transfers in limited liability companies are subject to stamp duty.
- Income derived from the transfer may be subject to income tax.
- In corporations, a notary public’s approval is required for the transfer of registered shares, which incurs additional costs.
Therefore, tax obligations must also be taken into account before transferring shares.
Things to Consider During Share Transfer
Although a share transfer may seem like a simple sale, it has serious consequences for the parties involved.
- The company agreement must be reviewed.
- The actual value of the share must be determined, and the transfer price must be agreed upon accordingly.
- The suitability of the buyer for the company is particularly important in limited companies.
- The parties’ debts and obligations must be clearly stated in the contract.
These steps will largely prevent legal disputes that may arise in the future.
Stock Transfers in Light of Supreme Court Decisions
In some decisions of the Supreme Court, share transfers made without complying with formal requirements are deemed invalid. For example, a limited company share transfer not executed before a notary public is not considered valid, even with the consent of the parties. This situation demonstrates that merely performing the transaction verbally or in writing is insufficient; compliance with the formal requirements prescribed by law is mandatory.
- Transfers made without regard to the limitations in the company agreement are invalid.
- Limited company share transfers without notary approval are invalid.
- Transfers of shares in a corporation that are not recorded in the share register cannot be asserted against the corporation.
These decisions serve as guidance for attorneys and companies in practice.
Digitalization and Share Transfers (2025)
With the rise of digitalization, share transfer processes have also begun to move to the electronic environment.
- Ability to prepare contracts with e-signature
- Electronic applications to the commercial registry
- Keeping digital ledgers
The widespread adoption of these processes by 2025 will provide significant advantages in terms of both speed and cost.
Legal Support and Professional Assistance
Share transfer agreements may appear to be ordinary documents, but they are critically important because they alter the structure of the company. Agreements that are incomplete or incorrectly drafted can lead to serious lawsuits in the future. Therefore, the safest approach is to have the process handled by professional attorneys.
Legal counsel provides significant convenience to the parties both in drafting the contract and in trade registry procedures. It also helps ensure the proper management of tax obligations and prevents potential penalties.
A share transfer agreement is an important legal transaction that directly affects the rights and obligations of company partners. Different rules apply to limited and joint-stock companies; in particular, limited companies require notary approval and a general assembly resolution. In joint-stock companies, share register entries and commercial registry annotations are of critical importance.
By 2025, the digitization of share transfer processes will make transactions faster, but legal and tax obligations must be carefully fulfilled. It is recommended that the contract be prepared with professional support to ensure a secure transfer for both the buyer and the seller.
