Ercüment Erdem Att. Ozgur Kocabasoglu

Wholesale of a Significant Amount of Company Asset

October 2019


The Turkish Commercial Code (“TCC”), numbered 6102, Article 408(2)(f) governs that “wholesale of a significant amount of company asset” falls under the exclusive and unassignable duties and powers of the general assembly of the shareholders. The mentioned Article created much controversy, both amongst the doctrine and in practice. Below, it is aimed to summarize the controversial issues in doctrine, under five sub-headings.

What is to understand from a Significant Amount, Company Asset and Wholesale

Significant Amount

There is no specification under the TCC regarding what is a significant amount or how it would be assessed. Supreme Court of Appeals, during the repealed Commercial Code (rTCC) numbered 6762, ruled that a resolution by the assembly of shareholders is required, instead of the authorized executive to represent, when it is the only asset that the company owns, or is of crucial importance, for the continuity of the company.[1] Although no specific criterion regarding the significant amount is suggested, it is stated in the doctrine that a transfer of movable and immovable properties, industrial properties, such as trademarks and patents among company’s assets, may preclude the company from continuing its performance.[2] It is disputed[3] whether the criteria under the “Communıqué on Common Principles Regarding Significant Transactions and the Retirement Right (II-23.1),” issued by the Capital Markets Board for significant transactions in open joint stock companies, can be applied. It may be also argued that the determination of the significant amount would be at the judge’s discretion, pursuant to the Turkish Civil Code, Article 4.[4]

Company Asset

While the TCC, Article 538(2), regarding the dissolution of companies, states that “general assembly resolution for the wholesale of a significant amount of activities” is required, the TCC Article 408(2)(f) mentions “company assets.” During the rTCC, it is particularly disputed how to interpret the wording of “active” under Article 443(2). The view for a narrow interpretation[5] included only movable, immovable, stable assets, and the rights and claims that cannot be immediately collected, while the view for a broader interpretation[6] was of the opinion that active corresponds the whole assets of a company either passive or active. This controversy appears to continue under the TCC.[7]


The certain meaning of wholesale that is used by the legislator is disputed. Particularly, it can be disputed whether the meaning is selling as a whole with a discounted price as opposed to selling the company assets one by one, or selling a significant asset at once. Supreme Court of Appeals, during the rTCC, ruled[8] that the sale of an immovable one by one by dividing into parcels requires an ordinary threshold, as opposed to aggravated threshold for sale of an immovable at one time. What is unanimously accepted in the doctrine is the sale of property one piece at a time (not in its entirety) to the same person, only for the purposes of evasion of law and avoiding the consent of the general assembly, is invalid.

It is disputed as to whether transactions, such as pledges, warranties, guarantees, donations, clearings, barters, loans, which can result in the transfer of a significant amount of a company’s property, are under the scope of the Article, although the wording of the Article only refers to the sale. Certain parts of the doctrine[9] are of the opinion that the Article 408 of TCC is an exception and should be interpreted narrowly so that only sale is under the scope. Another view in the doctrine[10] argues that when the aim of the Article is assessed, the Article should be applied to other transactions, which would result in the transfer of property of a significant amount of a company asset.

Threshold for the Resolution of the General Assembly

TCC Article 408(2)(f), while requiring an unassignable general assembly resolution for the wholesale of a significant amount of an asset, does not provide a specific threshold for this resolution. On the other hand, the abovementioned Article 538(2) of the TCC, regarding the significant amount of active sale during dissolution, requires the resolution to be accepted by an aggravated (75%) threshold, by referring to TCC Article 421, paragraphs 3 and 4. Although the TCC does not provide any explicit provision, Article 22(12) of the Regulation on Procedures and Principles of General Assembly Meetings of Joint Stock Companies and Participation of Ministry of Customs and Trade Representative in These Meetings states that the consent of 75% of shareholders is required for resolution on the wholesale of a significant amount of company asset, either in the first or second meeting. A view in the doctrine criticizes this legislation on the grounds that thresholds for a company in dissolution cannot be exemplified for TCC Article 408, and the mentioned Regulation is in contradiction with the hierarchy of norms. Another view[11] in advocates for the application of thresholds mentioned in Article 538(2) and 421(3), (4) by analogy, by arguing that applying different thresholds on the same issue (wholesale of a significant amount of company asset/active) depending on whether the company is in dissolution or not, would be inconsistent.

Scope and Content of the Resolution of the General Assembly

There are doubts on the scope and content of the general assembly resolution required by TCC Article 408(2)(f). Particularly, shall the general assembly merely give consent to a particular sale, or shall the general assembly authorize the board of directors by determining the terms of sale? In the case of an authorization or pre-authorization, could it be left to the board of directors to determine the buyer, price, terms of paying, security or the timing of the sale? In the doctrine[12], it is stated that a resolution may leave the discretion to the board of directors regarding the sale.

Remedy of the Breach of TCC Article 408(2)(f)

The Supreme Court of Appeals’ approach[13], since the rTCC, to sell a significant amount of company asset in the absence of a general assembly resolution is invalidity of the sales contract. It is of doctrinal opinion that ratification by the general assembly for the sale is possible; otherwise, the contract is invalid from the beginning.[14] It is argued that in the case of suspended invalidity, ratification would cause the contract to bind the company from the beginning,[15] and absence of consent or ratification causes a company not to be bound by the contract. It also states that upon a transaction to the contrary of the resolution, TCC Article 371(4) would apply[16], and the sale would be valid for the purposes of protecting the third party.

The invalidity approach of the Supreme Court of Appeals is criticized as it fails to protect the third party in good faith who is also the party of the contract, and fails to maintain legal security which commercial life requires. Also, the Supreme Court of Appeals’ approach is criticized since it interprets a provision regarding authority of company bodies on the internal processes of the company, in such a way that a third party in good faith is affected.[17]

Whether TCC Article 408(2)(f) Shall be Applied to LLC’s

There is no explicit provision regarding the requirement of resolution for sale of a significant amount of company asset under Article 616 of the TCC – where the unassignable powers of a shareholders’ general assembly are listed. Under Article 644 – where the references to joint stock company provisions are listed, there is no reference to Article 408(2)(f). On this issue, part of the doctrine argues that the omission of such reference is intentional; therefore, an application by analogy should be refrained from. Other scholars argue that the newly introduced unassignable power of the general assembly has its roots in the Supreme Court of Appeals’ rulings on limited liability companies; therefore, the omission is unintentional and the gap should be closed by applying TCC Article 408(2)(f) by analogy, and there is no justified reason precluding such application.[18]


Under TCC Article 408(2)(f) and 538(2), the “wholesale of a significant amount of company asset (active)” is governed. In the TCC, there is no specific provision regarding a significant amount, how it would be determined, the scope of company asset and the nature of the wholesale. Thresholds for subject matter resolution, application of the provision to the transactions that result in the transfer of property, and application of the provision to limited liability companies, are disputed issues. The transfer of a significant amount of company asset through the board of directors’ resolution, in the absence of a general assembly resolution, is deemed invalid in Supreme Court of Appeals’ rulings. However, such case law is criticized by the doctrine, and the notion of suspended invalidity is argued where it is possible for the general assembly to ratify the transaction.

[1] 11. CC of the Supreme Court of Appeals, E. 2005/1362 K. 2006/1253, 13.02.2006.

[2] Özdamar, Mehmet: “Anonim Ortaklığın Sahip Olduğu Malvarlığının Yönetim Kurulu Tarafından Topluca Devredilmesi”, Selçuk Üniversitesi Hukuk Fakültesi Dergisi, C. 14, S. 2, 2006, p. 104, (Access date: October 2019).

[3] Biçer, Levent; Hamamcıoğlu, Esra: “Anonim Ortaklıklarda Genel Kurulun Devredilemez Yetkileri Kapsamında Önemli Miktarda Şirket Varlığının Toptan Satışı ve Uygulama Alanı (TTK m. 408/2-f)”, Kadir Has Üniversitesi Hukuk Fakültesi Dergisi, C. 1, S. 1, 2013, p. 44.

[4] Ayoğlu, Tolga: “Önemli Miktarda Şirket Varlığının Satışında Genel Kurul Kararının Hukuki Niteliği”, Kadir Has Üniversitesi Hukuk Fakültesi Dergisi, C. 1, S. 1, 2013, pp. 93-104.

[5] Domaniç, Hayri: Anonim Şirketler Hukuku ve Uygulaması, TTK Şerhi II, İstanbul, 1988, p. 1480; Tekinalp (Poroy / Çamoğlu): Ortaklıklar ve Kooperatif Hukuku, İstanbul, 1997 N. 1595.

[6] Karahan, Sami: Anonim Şirketlerde Tasfiye, Konya, 1998, p. 200; Eriş, Gönen: Ticari İşletme ve Şirketler 2, Ankara, 2004, p. 2804.

[7] Biçer / Hamamcıoğlu, p. 40.

[8] 11. CC of the Supreme Court of Appeals, E. 6072 K. 270, 30.01.1985.

[9] Ayoğlu, f.n. 26; Demir, Aybüke; Eroğlu, Muzaffer: “Anonim Şirkette Organlar Arası İşbölümü ve Genel Kurulun Devredilemez Yetkileri”, Kadir Has Üniversitesi Hukuk Fakültesi Dergisi, C: 2, S: 2, 2014, p. 96.

[10] Biçer / Hamamcıoğlu, p. 48.

[11] Ayoğlu, p. 95; cf. Kendigelen, Abuzer: Türk Ticaret Kanunu, Değişiklikler, Yenilikler ve İlk Tespitler, 3. Bası, İstanbul 2016, p. 309.

[12] Dural, p. 234-237; Ayoğlu, p. 96.

[13] Ayoğlu, p. 99; 11. CC of the Supreme Court of Appeals, E. 2016/3810 K. 2017/3294, 01.06.2017.

[14] Biçer / Hamamcıoğlu, p. 47; Ayoğlu, p. 99. 11. CC of the Supreme Court of Appeals, E. 2012/6771 K. 2013/6820, 04.04.2013.

[15] Kırca (Şehirali Çelik / Manavgat), Anonim Şirketler Hukuku I, Ankara, 2013, p. 644-645; Biçer / Hamamcıoğlu, p. 47; Ayoğlu, p. 100.

[16] Dural, p. 237; Ayoğlu, p. 99.

[17] Ayoğlu, p. 100-102.

[18] Biçer / Hamamcıoğlu, p. 49; Dural, p. 227.