Expulsion of a Shareholder in Two-Shareholder Limited Liability Companies Considering the Constitutional Court’s Recent Decision

Mechanism for the Expulsion of Shareholders in Limited Liability Companies

Under the system adopted by the TCC, the expulsion of a shareholder from a limited liability company may essentially occur either through a general assembly resolution adopted upon the existence of grounds explicitly stipulated in the articles of association, or through a court decision rendered upon the company’s request based on just cause.

Expulsion by court decision is regulated under Article 640/3 of the TCC. However, to initiate such proceedings, Article 616/1-h of the TCC requires the adoption of a general assembly resolution. Pursuant to Article 621/1-h of the TCC, such resolution must be adopted by at least two-thirds of the represented votes and by the absolute majority of the share capital carrying voting rights.

The purpose of these provisions is to prevent the arbitrary expulsion of minority shareholders by the majority and to subject shareholder expulsion, which leads to severe legal consequences, to strict procedural safeguards.

The Problem Arising in Two-Shareholder Limited Liability Companies

In practice, the procedural requirements introduced under Articles 616/1-h and 621/1-h of the TCC frequently render the shareholder expulsion mechanism entirely dysfunctional in two-shareholder limited liability companies. Indeed, these procedural requirements effectively lead to a de facto unanimity requirement for the adoption of the relevant general assembly resolution.

However, it is naturally expected that the shareholder whose expulsion is sought would not approve such a resolution. As a result, the general assembly resolution required for the company to apply to court cannot be adopted, the expulsion lawsuit cannot be filed on behalf of the company, and consequently, disputes may remain unresolved even where just cause exists.

This issue becomes particularly apparent where the relationship of trust between shareholders has completely broken down, where the company’s management becomes dysfunctional, or where one shareholder intentionally obstructs the company’s operations. In practice, this situation is commonly referred to as a “deadlock” and results in the paralysis of the company’s decision-making mechanisms.

Indeed, in practice, expulsion lawsuits have frequently been dismissed on procedural grounds due to the absence of the required general assembly resolution, forcing shareholders to resort to more severe remedies such as dissolution of the company or withdrawal from the company. Such situations may ultimately jeopardize the continuity of the company’s operations.

Application Before the Constitutional Court

In the case subject to the Decision, the relevant provisions of TCC came under scrutiny in a lawsuit filed by one shareholder of a two-shareholder limited liability company seeking the expulsion of the other shareholder.

The Bakırköy 1st Commercial Court of First Instance (“Court of First Instance”), hearing the dispute, determined that under the current provisions of the TCC, the necessary general assembly resolution could not be adopted and therefore the procedural precondition for filing the lawsuit had not been fulfilled. Subsequently, the Court of First Instance applied to the Constitutional Court, arguing that Articles 616/1-h and 621/1-h of the TCC were unconstitutional, particularly with respect to two-shareholder limited liability companies.

The application specifically emphasized the practical impossibility of adopting the required general assembly resolution, the inability to file a lawsuit even where just cause exists, the deadlock in the company’s operations, and the protection afforded by the system to a shareholder acting in bad faith. It was argued that Articles 616/1-h and 621/1-h of the TCC violated Articles 2, 10, 35, 36, and 74 of the Constitution.

Constitutional Court’s Assessment

The Constitutional Court conducted its assessment specifically with respect to two-shareholder limited liability companies and determined that the contested provisions primarily needed to be evaluated under Article 40 of the Constitution (right to an effective remedy) and Article 48 of the Constitution (freedom of enterprise).

In this regard, the Court first stated that the right granted under Article 640/3 of the TCC to request the expulsion of another shareholder from the court based on just cause constitutes a mechanism aimed at preventing the termination of the company’s legal existence and safeguarding the continuity of its commercial activities. Accordingly, the Court held that this mechanism falls within the scope of protection afforded by the freedom of enterprise under Article 48 of the Constitution.

The Constitutional Court further found that, in two-shareholder companies, the requirement to adopt a general assembly resolution effectively renders the filing of an expulsion lawsuit impossible even where just cause exists. Although the Court acknowledged that the purpose of the relevant provisions was to prevent the majority from arbitrarily expelling minority shareholders, it emphasized that, in two-shareholder companies, the mechanism produces precisely the opposite result.

The Court also noted that this structure in two-shareholder limited liability companies jeopardizes the continuity of the company’s operations and enables one shareholder to systematically block the other shareholder. According to the Court, the inability to resolve disputes despite the existence of just cause affects not only the individual interests of the shareholders but also the company’s economic existence and commercial activities.

Finding that such a structure, where dispute resolution is prevented and company operations become unsustainable even where just cause exists, is incompatible with the State’s positive obligations under Article 40 of the Constitution, the Constitutional Court concluded that Articles 616/1-h and 621/1-h of the TCC were unconstitutional insofar as they apply to two-shareholder limited liability companies and annulled these provisions for such companies by majority vote, with six dissenting votes.

Effects of the Decision in Practice

The Decision directly addresses a significant practical issue that has long been debated in relation to two-shareholder limited liability companies. Under the previous system, the practical inoperability of the expulsion mechanism frequently pushed shareholders toward more severe outcomes such as dissolution of the company.

Following the Constitutional Court’s annulment decision, the requirement for a general assembly resolution in relation to the expulsion of a shareholder in two-shareholder limited liability companies has effectively ceased to apply. Nevertheless, it remains unclear how courts will approach expulsion lawsuits filed without a general assembly resolution and what procedural framework will be adopted in practice. Accordingly, new case law on this matter is expected to emerge in the near future.

Alternative Solutions and Contractual Mechanisms

While the Decision addresses the deadlock problem in two-shareholder limited liability companies from a constitutional perspective, it also highlights the importance of contractual mechanisms for preventing such disputes.

In particular, predetermining exit mechanisms within shareholders’ agreements or similar arrangements may significantly facilitate the resolution of future disputes. In this context, mechanisms granting the parties reciprocal buy-out or sell-out rights under certain conditions stand out as practical solutions where the shareholder relationship becomes unsustainable.

Accordingly, especially in two-shareholder limited liability companies, it is important not only to carefully structure the articles of association but also to comprehensively draft shareholders’ agreements.

Conclusion

The Constitutional Court’s Decision dated 25.12.2025 constitutes a significant turning point regarding the practical operation of the shareholder expulsion mechanism in two-shareholder limited liability companies. The Decision assessed the structural problem arising from the current system from a constitutional perspective and made important findings concerning the State’s positive obligations under the freedom of enterprise (Article 48 of the Constitution) and the right to an effective remedy (Article 40 of the Constitution).

Following the Constitutional Court’s annulment of Articles 616/1-h and 621/1-h of the TCC insofar as they apply to two-shareholder limited liability companies, it is expected that the current practice regarding shareholder expulsion will be significantly affected and that new judicial approaches in this field will emerge.