Constitutionality Review

Contested Provisions

The contested provisions allow for bringing an action, in limited liability companies with two partners, for the exclusion of a partner from the company on the basis of a resolution of the general assembly adopted with the required quorum.

Grounds for the Request for Annulment

It was maintained in brief that the contested provisions are unconstitutional on the grounds that they preclude the possibility of excluding a partner from limited liability companies with two partners, and that the right to bring an action for exclusion, which may be exercised by a single partner in a general partnership (an unlimited company), is not granted to partners of limited liability companies, contrary to the principle of equality.

The Court’s Assessment

The freedom of enterprise enshrined in Article 48 of the Constitution imposes a positive obligation on the state to protect enterprises against any acts of partners. However, this obligation does not grant company partners the right to exclude another partner from the company without dissolving the company. The legislator enjoys a certain margin of appreciation in determining how a partner’s rights within companies may be terminated. Moreover, the mechanisms established under the positive obligation to protect partners against one another’s acts fall within the scope of Article 48 of the Constitution.

Under Article 640 § 3 of the Turkish Commercial Code no. 6102 (Law no. 6102), partners of limited liability companies are granted the right to request the competent court to exclude another partner on justified grounds, without dissolving the company. This provision is intended to ensure the continued operation of the limited liability company and the involvement of its partners in its operations. It is evident that the mechanism permitting the exclusion of a company partner for justified reasons serves as a remedy that both precludes the dissolution of the company and facilitates the continuation of its commercial operations more effectively. That is because achieving certain objectives within the company requires harmonious collaboration between company partners. In this regard, this mechanism both eliminates the factors disrupting such collaboration and ensures the company’s continued existence. Accordingly, the mechanism allowing a partner to request the exclusion of the other partner, established by the legislator so as to ensure the continued functioning of the company, must be regarded as falling under the freedom of enterprise.

The contested provisions make bringing such an exclusion request conditional upon a general assembly resolution adopted by at least two-thirds of the votes represented and by an absolute majority of the holders of the voting shares.

Given the conditions laid down in the provisions, it is evident that, in limited liability companies with two partners holding equal shares, a partner’s request to exclude the other partner on justified grounds cannot be effected by a general assembly resolution. In addition, the exclusion of a partner on justified grounds cannot take place if none of the partners holds an absolute majority of the company’s capital.

On the other hand, Article 636 § 3 of Law no. 6102 sets forth that in cases where a partner applies to the court for the dissolution of the company on justified grounds, the court may, instead of granting dissolution, order the payment of the real value of the claimant partner’s share and his exclusion, or decide on any other appropriate and acceptable solution. Therefore, a partner in a limited liability company can be excluded from the company only upon the request for the dissolution of the company. However, in that case, the court is directly vested with the discretion to order the exclusion of a partner, or to decide on another appropriate solution. It should be further noted that a partner’s request for the dissolution of the company does not directly result in the exclusion of the partner disrupting the company’s ongoing operations, but may, instead, lead to the exclusion of the claimant partner who seeks dissolution on justified grounds.

Accordingly, under the contested provisions, in limited liability companies with two partners, the other partner cannot request the exclusion of a partner who disrupts the company’s operations, either directly or through the general assembly. As a result, the exclusion mechanism, which is intended by the state as a means under its positive obligation to protect the freedom of enterprise, cannot be applied to these companies. Such a limitation is not compatible with the state’s obligation to provide an effective remedy for rights granted under its positive obligations.

Consequently, the contested provisions have been found unconstitutional and therefore annulled in so far as they apply to “limited liability companies with two partners”.