Commercial and Company Law

The contract is written before the dispute

Most commercial disputes arise from incomplete contracts signed while the relationship was going well. The minimum headings examined in a contract review:

• Definition of performance: what is to be delivered, of what quality, on what date
• Payment terms: maturity, default interest, security
• Penalty clause: its amount and which breach triggers it
• Termination and rescission: in which cases, with what notice period
• Dispute resolution: competent court or arbitration, governing law
• Confidentiality and non-compete: duration and geographic limit

Every heading left vague carries the risk of being interpreted in the other party's favour once a dispute arises.

Disputes between shareholders

The routes available in shareholder disputes are subject to different conditions:

Annulment of a general assembly resolution. An action for annulment is brought within the short period set by law against resolutions that violate the law, the articles of association or the principle of good faith. Attending the meeting and having a dissent recorded in the minutes is in most cases necessary to preserve the right to sue.

Withdrawal and exclusion from the company. In limited liability companies, withdrawal for just cause or the exclusion of a shareholder is assessed within the framework of the articles of association and the statutory conditions. The calculation of the exit payment due to the departing shareholder is the main point of contention in these files.

Dissolution for just cause. This arises where continuing the company has become intolerable; the court may order a more moderate solution instead of dissolution (such as the exclusion of the shareholder against payment of the real value of the shares).

Recovery of commercial receivables

The route to follow for commercial receivables depends on the document in hand:

• If there is a negotiable instrument (cheque, promissory note): enforcement through the attachment procedure specific to negotiable instruments.
• If there are invoices and a current account: enforcement without judgment; if the debtor objects, an action for annulment of objection.
• If there is a dishonoured cheque: the criminal aspect is assessed alongside the enforcement proceedings.

Under Article 5/A of the Turkish Commercial Code, pre-action mediation is required for monetary commercial claims for payment or damages and actions for annulment of objection, negative declaratory relief and restitution, subject to statutory exceptions.

Company formation and structuring

Choices made at the formation stage (company type, capital structure, signing authorities, shareholders' agreement) are decisions that are costly to change later. Particularly in two-shareholder companies, the deadlock risk of an equal shareholding and the mechanisms to resolve it should be written into the agreement from the outset.

This is general information; every commercial relationship is assessed on its own documents.