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Inability to Exit Limited Company Partnerships: Lawsuits


ccording to Article 638 of the Turkish Commercial Code No. 6102, partners can be granted the right to exit from a company through the company’s articles of association. Furthermore, specific conditions for exiting a limited company partnership can be stipulated in the articles of association. In such cases, a partner wishing to exit the partnership can do so by providing notice to the company or by fulfilling the conditions outlined in the articles of association. However, if there are no provisions in the articles of association regarding exiting the partnership, a partner who wishes to exit a limited company may face a lengthy and challenging legal process.

In practice, when a partner seeks to exit a limited company but the general assembly does not convene despite their call for a meeting, or if it does convene but refuses the partner’s request to exit, the partner must file a lawsuit to exit the partnership based on justifiable reasons, as per Article 638/2 of the Turkish Commercial Code. In such cases, based on established precedents in Turkish jurisprudence, if justifiable reasons are found to exist, the court grants the exiting partner the right to exit the partnership and orders the payment of the exit share by the company.

Considering the current judicial process in Turkey, where even minor procedural mistakes or delays in court hearings can lead to adjournments of several months, and the extended periods required for expert reports and lengthy legal proceedings, such lawsuits can take several years to conclude. During this extended period, the partner seeking to exit the limited company remains jointly and severally liable for all of the company’s debts. Additionally, the exiting partner can continue to exercise their partnership rights throughout the proceedings, which, when combined with the possibility of either party acting in bad faith, can lead to intractable damages.

To prevent both parties from suffering losses in these protracted “inability to exit” lawsuits, it may be necessary to introduce a legal provision that considers the exiting partner as having exited the partnership as of the date of filing the lawsuit. During the litigation process, the partner’s rights and obligations related to the company should be suspended, preventing them from participating in company decisions or claiming company rights. Such a legal framework would help deter bad faith actions and protect both parties from irreparable damages.

Please note that this translation is provided for informational purposes, and legal matters can be complex. For specific legal advice or assistance in Turkish law, it’s advisable to consult with a qualified legal professional in Turkey.

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