Privileged Shares in Turkish Listed Companies: Voting and Board Nomination Privileges, Their Limits and Their Abolition after Five Years of Losses under Capital Markets Law Art. 28 and Communiqué II-28.1

Many Turkish listed companies have share groups carrying privileges, most often the right to nominate a number of board members or extra votes per share. Such privileges allow controlling shareholders to direct the company with a minority of the capital. Turkish law limits them. A share may carry at most fifteen votes unless a court allows more. Voting privileges cannot be used in votes on amendments to the articles, the release of directors or the decision to bring liability actions. In a listed company, board representation privileges may not cover more than half of the board (Commercial Code Arts. 360 and 479). Where a listed company records net losses in its financial statements for five consecutive years, its voting and board representation privileges are abolished by decision of SPK. This does not apply where its activities make the losses reasonable and necessary, or to privileged shares held by public bodies (Capital Markets Law Art. 28(2); Communiqué II-28.1). Creating privileges, or changing their scope, is a significant transaction that gives dissenting shareholders an exit right (Communiqué II-23.3 Art. 4(1)(ç)). Holding privileged shares that nominate a majority of the board counts as control for mandatory tender offer purposes (Capital Markets Law Art. 26(2)). This guide explains these rules for foreign institutional investors. It reflects the legislation in force as at 26 October 2026.

Why privileged shares matter to minority investors

In many Turkish listed companies, the capital is divided into groups, typically called Group A and Group B. The publicly traded shares carry ordinary rights, and a group held by the founders or controlling shareholders carries privileges. The most common privilege is the right to nominate most or all of the board members elected by the general meeting. Voting privileges, giving several votes per share, are also found. For a foreign institutional investor holding traded shares, this means that its votes may have limited influence on the composition of the board, whatever the size of its holding.

In the context of the 2026 cases, privileges matter in three ways. They determine who controls the board of companies under scrutiny and therefore who is responsible for disclosures and transactions. They affect whether and when a change of control triggers a mandatory tender offer. And they can be abolished by law where a company has made losses for five consecutive years, which can change the balance of power in a troubled company. Understanding the privileges attached to a company’s share groups is part of basic due diligence for any minority position.

The legal framework

What a privilege is

Definition. Privileges may be granted to certain shares in the initial articles of association or by amending them (Commercial Code Art. 478(1)). A privilege is a superior right attached to a share in matters such as dividends, liquidation proceeds, pre-emption and voting, or a new shareholder right not provided for by law (Art. 478(2)). The articles must state the privileges granted to particular shares (Art. 339(2)(d)).

Board representation. The right to be represented on the board, granted under Art. 360, is also treated as a privilege (Arts. 360(2) and 478(3)).

Default rule. Without privileges, shareholders exercise their votes in proportion to the total nominal value of their shares. Every shareholder has at least one vote, and the articles may cap the number of votes of a holder of several shares (Art. 434(1)–(2)).

State-controlled companies. In companies more than half owned by the State, public bodies, unions, associations, foundations or cooperatives, privileges may be created only for the shares those bodies hold. This rule does not apply to companies whose shares are traded on the exchange, or to credit and financial institutions (Art. 478(4)). The position of State-controlled listed companies is explained in our guide to State-controlled listed companies in Turkey.

Voting privileges and their limits

Form and ceiling. A voting privilege is created by giving shares of equal nominal value different numbers of votes. One share may carry at most fifteen votes. This limit does not apply where institutionalisation requires it or a just cause is proven. In those cases the commercial court at the company’s seat must examine the institutionalisation project or the just cause and decide to grant the exception, and it may revoke the exception if the project fails or the cause ends (Commercial Code Art. 479(1)–(2)).

Votes where the privilege cannot be used. A voting privilege cannot be used in votes on (Art. 479(3)):

1. 1. amendments to the articles of association;
2. 2. the release of directors; and
3. 3. the decision to bring a liability action.

For minority investors seeking accountability after the 2026 events, the last two points are significant. Controlling shareholders cannot use extra votes to release directors or to block a general meeting decision to sue them. How release votes and liability claims work is explained in our guides to shareholder rights in Turkish listed companies and suing directors and auditors of Turkish listed companies.

The corporate governance principle. SPK’s corporate governance principles provide that voting privileges should be avoided. Where they exist, privileges that would prevent holders of publicly traded shares from being represented in management should be removed (Communiqué II-17.1 Annex, Principle 1.4.2). This principle is not among those that listed companies must apply (Art. 5(1)). It operates on a comply-or-explain basis, through the corporate governance compliance reporting described in our guide to corporate governance in Turkish listed companies.

Board nomination privileges

The rule. The articles may give certain share groups, shareholders forming a group defined by their characteristics, or the minority the right to be represented on the board. This may take the form of electing board members from among the group or of a right to nominate candidates. A candidate nominated by the privileged group must be elected by the general meeting unless there is just cause (Commercial Code Art. 360(1)).

The limit for listed companies. In publicly held companies, representation rights granted in this way may not exceed half the number of board members. The rules on independent board members are reserved (Art. 360(1)). In practice, a privileged group may nominate up to half of the board, with independent members chosen under the corporate governance rules. A group that controls the nomination of half the board, together with ordinary votes, can often secure a majority.

Disclosure of privileges

At the IPO. All privileges existing at the initial public offering of a company’s capital market instruments must be disclosed to the public in transparent and understandable detail (Capital Markets Law Art. 28(1)). The IPO documents are explained in our guide to public offerings in Turkey.

Before general meetings. At least three weeks before a general meeting, listed companies must publish on their website and on KAP the total number of shares and votes and, where there are privileged shares, the number of shares and votes in each privileged group and the nature of the privileges (Communiqué II-17.1 Annex, Principle 1.3.1(a)). This is one of the principles that listed companies must apply (Art. 5(1)).

On the website. The corporate governance principles call for detailed information on privileged shares on the company’s website (Principle 2.1.1). They also call for the shareholding structure, showing natural persons holding more than 5% and their privileges, to be published and updated at least every six months (Principle 2.1.2).

Abolition after five years of losses

The rule. Subject to the principles set by SPK, and except where the company’s activities make the losses reasonable and necessary, voting and board representation privileges are abolished by SPK decision in listed companies that record net losses in their financial statements for five consecutive years. The rule does not apply where the privileged shares belong to public bodies (Capital Markets Law Art. 28(2)). Communiqué II-28.1 sets out the procedure.

Which losses count. The losses are the net loss attributable to the parent company in consolidated financial statements, or the net loss in individual statements (Communiqué II-28.1 Art. 3(1)(a)). The determination is based on publicly disclosed audited financial statements. Consolidated statements are used where the company must prepare them, otherwise individual statements (Art. 5(1)–(2)). The five-year period starts with the first annual accounting period beginning after the year in which the company became publicly held (Art. 4(2)).

Qualified, adverse and disclaimed opinions. Where the auditor’s opinion is qualified and the effect of the qualification on the loss can be determined from the opinion, it is taken into account (Art. 5(3)). Where the opinion is adverse or the auditor disclaims an opinion, SPK makes no assessment for eight months while the statements are prepared again. If new statements without such an opinion are not prepared within that period, the original statements are treated as loss-making for the purposes of the Communiqué (Art. 5(4)–(5)). SPK may also take into account later restatements of financial statements (Art. 5(7)).

The exemption for reasonable and necessary losses. Within 20 business days of publishing the financial statements for the fifth loss-making year, the company must send SPK its explanations of any circumstances in which its activities made the losses reasonable and necessary. In assessing them, SPK takes into account adverse developments beyond management’s control affecting the economy, the sector or the company (Art. 6).

Effect of the decision. From the date of SPK’s decision, the privileges can no longer be used, and contrary provisions of the articles do not apply (Art. 7(1)). Within two months of notification, the company must apply to SPK to amend its articles, and the amendment must be put on the agenda of the next general meeting. If it does not, SPK has the item added to the agenda (Art. 7(2)–(3)). No benefit may be provided in return for the abolition (Art. 7(4)). SPK notifies MKK so that the shares are converted to non-privileged status as of the decision date, and notifies the Ministry of Trade so that abolished privileges are not used at general meetings (Art. 9). The board is responsible for compliance (Art. 11(1)).

Public bodies. Where privileged shares belong partly to public bodies and partly to others, only the privileges of the others are abolished (Art. 10(2)).

No mandatory offer. Acquiring control because a holder of more than half the votes gains control after the abolition does not trigger a mandatory tender offer (Art. 8).

Creating, changing and protecting privileges

A significant transaction. Introducing privileges, or changing the scope or subject of existing privileges, is a significant transaction under the Capital Markets Law (Art. 23(1); Communiqué II-23.3 Art. 4(1)(ç)). Shareholders who attend the general meeting, vote against and have their dissent recorded have an exit right at the price set by the Communiqué. Where specific persons benefit directly from the transaction, for example from the creation of a dividend privilege, they pay the exit price instead of the company (Communiqué II-23.3 Art. 11(7)). SPK may grant exemptions from the duty to offer the exit right where privileges are abolished free of charge or narrowed in scope or subject (Art. 16(1)(b)). The exit right is explained in our guide to mergers, asset sales and exit rights.

Special meeting of privileged shareholders. If a general meeting resolution amending the articles, or authorising or carrying out a capital increase, would harm the rights of privileged shareholders, it cannot be implemented unless approved at a special meeting of those shareholders (Commercial Code Art. 454(1)). The board must call the meeting within one month of the announcement of the general meeting resolution. The special meeting requires the presence of 60% of the capital represented by the privileged shares and decides by a majority of those represented (Art. 454(2)–(3)). If the meeting cannot be held despite being called, the resolution is deemed approved (Art. 454(5)). If the special meeting refuses approval, the board may sue within one month for its annulment and the registration of the general meeting resolution (Art. 454(7)).

Registered capital system. In companies under the registered capital system, general meeting resolutions amending the articles must be approved by the special meeting where privileged shares exist, but capital increases within the registered ceiling do not require it (Capital Markets Law Art. 18(4); Communiqué II-18.1 Art. 9(3)). The board may issue privileged shares or take decisions restricting the rights of privileged shareholders only if the articles expressly authorise it (Capital Markets Law Art. 18(5); Communiqué II-18.1 Art. 11(1)).

Mergers. In a merger, holders of privileged shares in the absorbed company receive equivalent rights or compensation determined with an expert opinion. Different privileges may be provided. Where the merger creates new privileges, or changes the scope or subject of existing ones, in the absorbing listed company, SPK’s rules on the exit right continue to apply (Communiqué II-23.2 Art. 11(3)).

Privileges in capital increases, reductions and dividends

Below-nominal issues. A listed company whose shares trade below nominal value may issue shares below nominal value. Where privileges exist, they must be abolished by amending the articles before SPK delivers the approved prospectus or issue document. Otherwise, the controlling shareholders or privileged shareholders must first make a tender offer to the other shareholders (Communiqué VII-128.1 Art. 18(4)).

Capital reductions to cover losses. The same rule applies where a company whose shares trade below nominal value reduces its capital to cover a balance sheet deficit and privileges exist (Art. 19(3)). For investors in loss-making companies, these provisions can bring about the removal of privileges or an exit opportunity. Capital increases more generally are explained in our guide to capital increases and dilution.

Dividends. In the dividend rules, a privileged share means a share with a dividend privilege (Communiqué II-19.1 Art. 3(1)(ç)). Dividends are distributed equally to all existing shares in proportion to their holdings, with rights under dividend privileges reserved (Art. 5(1)). Interim dividends are paid to privileged shares without regard to the privilege (Art. 9(4)). The dividend framework is explained in our guide to dividends in Turkish listed companies.

Control, tender offers and share sales

Control through privileges. Holding privileged shares that give the right to elect, or nominate at the general meeting, a majority of the board counts as acquiring management control. Holding more than half of the votes also counts. Cases where management control cannot be acquired because of the existence of privileged shares are outside the rule (Capital Markets Law Art. 26(2); Communiqué II-26.1 Art. 12(1)). Acquiring such privileged shares can therefore trigger a mandatory tender offer.

Involuntary control. No mandatory offer arises where a shareholder gains control as a result of events outside its will. Examples are amendments to privileges in the articles, the freezing of other shareholders’ voting rights, or capital reduction by cancellation of shares (Communiqué II-26.1 Art. 14(1)(g)). The same applies to control gained through the abolition of privileges under Communiqué II-28.1 (Art. 8).

Pricing. For share groups not traded on the exchange, the tender offer price takes account of differences in privileges between groups through a valuation report prepared under SPK’s rules (Communiqué II-26.1 Art. 15(1)(b)). Mandatory offers are explained in our guide to mandatory tender offers in Turkey.

Sales by privileged holders. A shareholder holding privileged shares that give the right to elect, or nominate at the general meeting, at least one board member must prepare a share sale information form before selling on the exchange shares exceeding 10% of the company’s capital in any twelve-month period. The form must be approved by SPK before the sale. The same applies to holders of more than 20% of the capital (Communiqué VII-128.1 Art. 27(1)). The threshold is calculated separately for each such shareholder, and persons acting together with them are taken into account (Art. 27(2) and (4)). For minority investors, the form is an early signal that a controlling or privileged shareholder intends to sell.

Challenging resolutions on privileges

Annulment. General meeting resolutions that breach the law or the articles of association, and in particular the principle of good faith, may be challenged by an annulment action before the commercial court at the company’s seat within three months of the resolution (Commercial Code Art. 445). A shareholder may sue if it attended the meeting, voted against and had its dissent recorded in the minutes. A shareholder may also sue, whether or not it attended or voted, if it claims that the meeting was not properly called, the agenda was not properly announced, unauthorised persons voted or it was wrongly prevented from attending or voting, and that these defects affected the resolution (Art. 446(1)). Where a resolution creates or extends privileges in a way that appears to serve only controlling shareholders, without a legitimate corporate interest, the good faith ground in Art. 445 is the one usually examined.

Nullity. Resolutions that restrict or remove shareholders’ rights to attend the general meeting, minimum voting rights, rights of action or other inalienable statutory rights, that restrict information and inspection rights beyond what the law allows, or that destroy the basic structure of the company or breach capital maintenance rules are null (Art. 447(1)). Nullity is not subject to the three-month period. How annulment and nullity actions proceed is explained in our guide to shareholder rights.

Points for foreign institutional investors

Read the articles. The privileges attached to each share group must appear in the articles of association (Commercial Code Art. 339(2)(d)), and listed companies disclose them before each general meeting (Communiqué II-17.1 Annex, Principle 1.3.1(a)). These are the starting points.

Track losses. For loss-making companies with privileged groups, follow whether SPK’s five-year test may be met and whether the company will claim that its losses were reasonable and necessary (Communiqué II-28.1 Arts. 4 and 6).

Use the votes where privileges do not apply. On amendments to the articles, the release of directors and the decision to sue them, voting privileges cannot be used (Commercial Code Art. 479(3)). Votes from abroad can be cast as explained in our guide to voting at Turkish general meetings from abroad.

Record dissent. Where privileges are created or changed, the exit right depends on attending, voting against and recording dissent (Communiqué II-23.3).

Frequently asked questions

What privileges can Turkish shares carry?

Superior rights in dividends, liquidation proceeds, pre-emption and voting, new rights not provided by law, and the right to be represented on the board (Commercial Code Arts. 360 and 478).

How many votes can one share have?

At most fifteen, unless a commercial court grants an exception for institutionalisation or another just cause (Art. 479(2)).

When can voting privileges not be used?

In votes on amendments to the articles, the release of directors and the decision to bring a liability action (Art. 479(3)).

How much of the board can a privileged group nominate in a listed company?

No more than half of the board members; independent member rules are reserved (Art. 360(1)).

Must the general meeting elect a privileged group’s nominee?

Yes, unless there is just cause (Art. 360(1)).

Can privileges be abolished by law?

Yes. Voting and board representation privileges are abolished by SPK decision in listed companies with five consecutive years of net losses, subject to exceptions (Capital Markets Law Art. 28(2); Communiqué II-28.1).

Are privileges of public bodies affected?

No. The rule does not apply to privileged shares held by public bodies (Capital Markets Law Art. 28(2); Communiqué II-28.1 Art. 10).

Can the company escape abolition?

Only if SPK accepts that its activities made the losses reasonable and necessary; it must explain this within 20 business days of publishing the fifth year’s statements (Communiqué II-28.1 Art. 6).

Do holders receive compensation when privileges are abolished?

No benefit may be provided in return for abolition under the Communiqué (Art. 7(4)).

Does creating a new privilege give minority shareholders an exit right?

Yes. Creating privileges or changing their scope is a significant transaction (Communiqué II-23.3 Art. 4(1)(ç)).

What is the special meeting of privileged shareholders?

A meeting that must approve general meeting resolutions harming privileged holders’ rights, with a 60% quorum (Commercial Code Art. 454).

Does acquiring board-nominating privileged shares trigger a tender offer?

Yes, where they give the right to elect or nominate a majority of the board (Capital Markets Law Art. 26(2)).

Are privileges disclosed?

At the IPO, before each general meeting and on the company website (Capital Markets Law Art. 28(1); Communiqué II-17.1 Principles 1.3.1(a), 2.1.1 and 2.1.2).

Can the board issue privileged shares?

Only if the articles expressly authorise it under the registered capital system (Capital Markets Law Art. 18(5)).

Do privileged holders need approval to sell shares on the exchange?

Holders of board-nominating privileges selling more than 10% of capital in twelve months must first have a share sale information form approved by SPK (Communiqué VII-128.1 Art. 27).

Related guides

• Turkey’s 2026 Fund and Market Manipulation Crisis: Legal Guide for Foreign Institutional Investors — the entry point to this series
• MSCI’s Turkey Index Freeze and the Legal Response
• Lease Certificates (Sukuk) in Turkey
• Inflation Accounting in Turkey: TMS 29 and the Tax Books
• Individual Application to Turkey’s Constitutional Court and the ECHR
• Corporate Governance in Turkish Listed Companies
• Shareholder Rights in Turkish Listed Companies
• Voting at Turkish General Meetings from Abroad
• Mandatory Tender Offers in Turkey
• Mergers, Asset Sales and Exit Rights in Turkish Listed Companies
• Capital Increases and Dilution in Turkish Listed Companies
• Dividends in Turkish Listed Companies
• Suing Directors and Auditors of Turkish Listed Companies
• State-Controlled Listed Companies in Turkey