Corporate Groups According to Turkish Law

11 March 2025

1. Introduction

During the period of the former Turkish Commercial Code numbered 6762, there was no specific regulation regarding corporate groups. However, with the enactment of the Turkish Commercial Code numbered 6102 (“TCC”), regulations concerning corporate groups were introduced between Articles 195 and 210 of the TCC, thereby incorporating the concepts of “controlling/subsidiary companies” into the Turkish legal system.

Article 195/4 of the TCC defines a corporate group as follows:

“Companies that are directly or indirectly affiliated with a controlling company, together with it, constitute a corporate group.”

Based on this definition, a corporate group can be described as a structure consisting of a company or enterprise and the commercial companies directly or indirectly affiliated with it through certain control mechanisms.

For the existence of a corporate group, at least three commercial companies must be present[1]. Although this requirement is not explicitly stated in the TCC, it is inferred when evaluated together with the Turkish Trade Registry Regulation (“TRR”). Pursuant to Article 195/5 of the TCC, the existence of a corporate group requires a controlling company and more than one subsidiary. In this context, controlling companies are positioned as “parent companies”, while subsidiary companies are referred to as “subsidiaries”. Article 105 of the TRR is regulated as follows:

“Within the meaning of the fourth paragraph of Article 195 of the Law, a corporate group consists of a commercial company and at least two commercial companies directly or indirectly affiliated with it.”

Therefore, according to this regulation, for a corporate group to exist, a controlling company and at least two subsidiary companies must be present[2].

In practice, the concepts of holding companies and corporate groups are frequently confused. Holding companies are joint-stock companies whose primary business activity is to invest in other companies. While holding companies serve as an umbrella for the companies they control, a corporate group is rather the title given to a legal form of association[3]. Additionally, while a holding company can exist as a single entity, multiple companies are necessary to constitute a corporate group.

Moreover, the shareholding ratio in other companies is not a crucial criterion for holding companies, whereas, for corporate groups, the participation ratio must be at a level that ensures control.

Articles 198 and the following provisions of the TCC impose various rights and obligations on companies operating within a corporate group. One of these obligations is the notification, registration, and announcement obligation regulated under Article 198 of the TCC.

2. Concepts of a “Controlling Company” and a “Subsidiary Company”

Pursuant to Article 195 of the TCC, a corporate group consists of a controlling company and at least two subsidiary companies. Therefore, it is necessary to determine which company is the controlling company and which ones are subsidiaries.

1.1. Controlling Company

A controlling company is a company that exercises control over a subsidiary through the methods specified in Article 195 of the TCC.

Paragraph 5 of Article 195 of the Law states that the headquarters or domicile of the controlling company may be located either in Turkey or abroad. This provision is broadly formulated to prevent circumvention of corporate group regulations[4].

Accordingly, any company, business, or enterprise mentioned in the TCC or other relevant legislation shall be considered a controlling company, regardless of whether it is located in Turkey or abroad.

1.2. Subsidiary Company

A subsidiary company is defined as a company over which control is exercised through the control mechanisms listed in Article 195 of the TCC.

Unlike the definition of a controlling company, the scope of a subsidiary company has not been expanded in the legal provision. Therefore, it can be concluded that subsidiary companies are limited only to commercial companies.

Although subsidiary companies possess independent legal personalities, they are economically dependent on the controlling company[5].

If you would like to know more on this matter or require legal assistance, please contact Berker Berker Law Firm via info@berkerberker.com or any other contact information listed on our website.

FOOTNOTES

[1] For the opposing view, see Hasan Pulaşlı, Commentary on Corporate Law, Vol. 1, Adalet Publishing, Ankara, 2014, p. 302; Gül Okutan Nilsson, Corporate Group Law According to the Draft Turkish Commercial Code, On İki Levha Publishing, Istanbul, 2009, p. 68.

[2] Ünal Tekinalp, New Law on Capital Companies, Vedat Publishing, Istanbul, 2020, pp. 633-634.

[3] Hasan Pulaşlı, Corporate Law, p. 300.

[4] Fazıl Aydın, Joint-Stock Companies, Limited Companies, and Corporate Groups in the New Turkish Commercial Code, Bilge Publishing, Ankara, 2019, p. 214.

[5] Burcu İrge Erdoğan, Applicable Law and Competent Court in Liability Lawsuits Between the Controlling Company and Subsidiary in International Corporate Groups, International Trade and Arbitration Law Journal, Vol. 8, 2019, p. 122.