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December 21, 2023

Wholesale of Substantial Amount Of Company Assets In Joint-Stock Companies


It should be first noted that the Turkish Code of Commerce no. 6102 (“TCC”) merely specifies the body authorized to decide on the wholesale of substantial amounts of company assets in a joint stock company and it lacks any clarification about what constitutes substantial amount of company assets and in what way their wholesale may be performed.

This Memorandum provides evaluations regarding the wholesale of substantial amount of company assets in a joint stock company, in light of TCC provisions, the case law of the Court of Cassation as well as the opinions in the doctrine.


Pursuant to sub-paragraph (f) of the second paragraph of Article 408 of TCC, the wholesale of a substantial amount of company assets are among the non-transferable duties and powers of the general assembly. The second paragraph of Article 538 of the TCC also included the same regulation in terms of the liquidation process. While Article 408 of TCC refers to the “Company assets”, Article 538 of TCC refers to the “Company actives”; in our opinion, these two provisions are not different from each other.

On the other hand, there is no provision in TCC which clarifies what “substantial amount” means, or what kind of assets constitutes company assets or in what way their wholesale may be conducted.

There are some opinions in the doctrine with respect to the concept of company asset. One of the opinions states that all receivables that cannot be collected, converted into money and which are not subject to money, as well as various items such as securities, real estate, and share certificates can be included in the concept of company assets. According to another view, assets that cannot be converted into cash for a certain period of time, in other words, whose value is constantly operating, can be included [1]. In our opinion, the shares of the company should not be included in the company assets and fixed assets that cannot be converted into cash for a certain period of time should be included. As a matter of fact, before the decision is taken in the general assembly, firstly, the necessity of the Board of Directors to identify the fixed assets to be sold and present them to the General Assembly is evaluated.

It is extremely difficult to determine what extent the company assets have reached a “substantial amount”. Although there is no explicit provision in TCC, it is prescribed that the sale of a substantial amount of company assets is subject to the approval of the general assembly. This way, there is an attempt to prevent a serious downsize in the scope of business or a circumstance in which the company will be unable to pursue its operations, due to poor management of the company by the shareholders. For determining what constitutes “substantial amount”, it is considered that in line with Article 4 of the TCC, a judge may determine this depending on the specific nature of the case, in line with the law and rules of equity.

It should be evaluated in which procedure and which transactions the wholesale sale stated in the TCC. Basically, a wholesale means the sale of assets or properties all at once. Because the purpose of the legislator is to sell assets at once. otherwise, in case assets are sold to the same person in more than one transaction in order to bypass this provision this will constitute a fraudulent act against the law.

We would like to lastly mention that it is not possible for a joint-stock company, which carries out any disposition over a substantial amount of assets, to be terminated without liquidation. However, if all assets of the company are sold in a wholesale transaction and this will render it impossible for the company to pursue its scope of business as per its articles of association, then the company may be deemed to have been terminated according to customary practices. In consequence of such transaction, as a rule, the company is not dissolved, is not subjected to liquidation, and is not deprived of its legal personality. Moreover, shareholders of the company which transfers its assets are not directly affected by such transaction nor do they gain a benefit or sustain a loss as a result thereof. As a matter of fact, not only do corporate shares which are the assets owned by the shareholders not constitute the subject matter of the transaction but also there is no change in total assets of the company and the value thereof because of the existence of a consideration; consequently, at least in theory, the value of the shares also remain the same. In this respect, it should be noted that the company will not enter into the liquidation process unless an application for liquidation is made by the board of directors.


As it is known, the power of the general assembly to adopt resolutions arises from the laws and the articles of association within the framework of the laws. Articles of association may not authorize the general assembly in a manner that would be against the structure of the joint stock company which constitutes the system that empowers the bodies of the company, or against the statutory division of functions among the bodies. Board of directors may not transfer to the general assembly such powers on matters that are reserved to it and cannot be delegated pursuant to the law nor may it make them subject to the general assembly’s approval. Likewise, general assembly may not obtain such powers that are vested in other bodies and that cannot be delegated. Board of directors may also not assume the powers of the general assembly. General assembly shall indicate its will and intention by adopting resolutions at its meetings that are held according to the procedure for calling a general assembly to meeting, as described in the law and articles of association.

In this respect, the second paragraph of Article 408 of TCC contains a mandatory provision and any transaction in breach of that provision shall be null and void pursuant to the sub-paragraph (d) of Article 391 of the Turkish Code of Commerce.

As for the meeting and resolution quorum, there is no special aggravated quorum provision in TCC. On the other hand, pursuant to the 12th paragraph of Article 22 of the Regulation on Terms and Procedures applicable to General Assembly Meetings in Joint-stock Companies as well as Representatives of Ministry of Customs and Trade who will Participate in these Meetings, which governs meeting and resolution quorum, it is prescribed as follows: “in a general assembly meeting, a resolution to sell a substantial amount of company assets in a wholesale transaction shall be adopted by means of favourable votes cast by the shareholders who represent at least seventy-five percent of the company capital. In case this quorum cannot be met in the first meeting, the same quorum shall be sought in the second meeting to be held”. In our opinion, Articles 421/3 and 421/4 of TCC and the provisions of the Regulation indicated above shall be applicable not only in case of liquidation but also in all sales of substantial amount of assets. Therefore, even in case of an adjourned general assembly meeting, 75% meeting and resolution quorum shall be sought.


A wholesale of substantial amount of company assets is governed and regulated by the subparagraph (f) of the second paragraph in Article 408 of TCC and the second paragraph of Article 538 of TCC. In this respect, the wholesale of a substantial amount of company assets is listed among the duties and powers of the general assembly that cannot be delegated. Our detailed evaluations on the subject are given above.

As there is no provision in TCC which clarifies what constitutes “substantial amount”, or what kind of assets constitutes company assets or in what way their wholesale may be performed, and since it is highly probable that cancellation and nullity lawsuits may be brought against such transactions and that such transactions may result in various problems in practice, it is considered that these matters are in need of regulation that will leave no room for any doubt.


[1] First opinion has been put forth by Prof. Hayri Domaniç and the second one by Prof. Ünal Tekinalp.

Please see. Domaniç, Hayri: Anonim Şirketler Hukuku ve Uygulaması, Türk Ticaret Kanunu Şerhi-II (Joint-stock Companies Law and Its Application. Turkish Code of Commerce Annotation -II), İstanbul, 1998, p.1480;

Please see. Tekinalp-Poroy-Çamoğlu, Ortaklıklar ve Kooperatif Hukuku (Law of Partnerships and Cooperatives), Istanbul 1997, p. 1595 6


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