In the operation of limited liability companies, situations frequently arise that require the withdrawal or exclusion of a company member. These procedures are legally sensitive and require careful application of statutory provisions as well as protection of the interests of the company and its members. Our law firm provides professional legal assistance at all stages of these proceedings—from assessing the legal grounds to implementing decisions and registering changes with the court register.

For various reasons, a member of a limited liability company may wish to withdraw from the company, or the company may seek to exclude a member due to inappropriate conduct.

Withdrawal and exclusion are legal mechanisms expressly provided for by the Companies Act and the company’s Articles of Association.

Considering that a limited liability company is a capital company and that more than 90% of all registered companies in the court register fall within this form, the possibility of the termination of membership requires special attention.

Withdrawal constitutes a voluntary exit from the company, resulting in the termination of membership. Such withdrawal may be effected based on the Articles of Association or by filing a lawsuit with the competent court in accordance with the relevant provisions of the Companies Act and the Civil Procedure Act.

However, neither the member nor the company may exercise these rights without limitations, since the withdrawal or exclusion of a member affects the membership structure of the company, and the company is obliged to pay the member appropriate compensation for his or her share in the company.

Thus, while withdrawal constitutes a voluntary exit, exclusion represents an involuntary removal of a member. Apart from exclusion due to non-payment of the capital contribution, a member may be excluded for other reasons as well.

Membership arises from voluntary joining and likewise may cease by voluntary withdrawal, whereas exclusion for other reasons does not reflect the will of the member; instead, it results from conduct that prevents or significantly impedes the company in achieving its objectives.

Withdrawal represents a member’s voluntary exit from the company. In order for withdrawal to be possible, it must be expressly allowed under the Articles of Association, which, pursuant to Article 420(1) of the Companies Act (“Official Gazette” nos. …) must regulate the conditions, procedure, and consequences of withdrawal. This is a fundamental legal rule.

Regardless of the above provision, a member may file a lawsuit with the competent court requesting withdrawal if justified reasons exist, which are listed by way of example in Article 420(2) of the Companies Act.

Justified reasons particularly exist if the remaining members or any governing body of the company cause harm to the member or otherwise prevent the member from exercising his or her rights within the company. Whether a justified reason exists is assessed by the court based on the specific circumstances of each case.

The lawsuit must also state the amount of compensation for the business share and propose a reasonable deadline for its payment. If the court upholds the claim, it must determine the amount of compensation based on the market value of the claimant’s share and order the company to pay such amount within a reasonable period determined in the judgment. In determining the deadline, the court will consider the financial condition and business needs of the company, in accordance with Article 420(2) of the Companies Act.

Involuntary termination of membership occurs through exclusion. This also results in the withdrawal (redeeming) of the member’s business share. Exclusion is possible if provided for in the Articles of Association. In that case, the Articles must specify the conditions, procedure, and consequences of exclusion, as is also required for withdrawal (Article 420.1. of the Companies Act).

If exclusion is not provided for or is insufficiently regulated in the Articles of Association, it may still occur if an important reason exists. The company may then file a lawsuit requesting the court to exclude the member.

An important reason consists of conduct that prevents or significantly impedes the achievement of the company’s objectives, rendering the member’s continued presence intolerable. The lawsuit may also be filed by all other members.

The lawsuit must also specify the compensation amount and a reasonable deadline for its payment. In the judgment, the court orders the exclusion of the member under a suspensive condition and determines the market value of the share to be paid within a prescribed period, taking into account the company’s financial situation and business needs.

A member may not waive in advance the rights granted to him or her under Article 420(2) of the Companies Act, nor may the company waive its rights under Article 420(3), as expressly provided in Article (420.4).

By withdrawing or being excluded, the member’s membership rights cease. However, the withdrawing or excluded member is entitled to compensation equal to the market value of his or her business share at the time of withdrawal or exclusion (Article 421.2) of the Companies Act). Until the compensation is paid, the member retains his or her membership status (Article 421.3), which means that the member retains all related rights, including voting rights and the right to profit distribution.

Membership ends only when the compensation corresponding to the market value of the business share is paid. If the member contributed non-cash assets or rights, he or she is entitled to their return, but not earlier than three months after the withdrawal or exclusion.

The Articles of Association must list the conditions or reasons that allow a member to unilaterally withdraw from the company. The question arises whether these reasons must be listed exhaustively or whether it is sufficient to establish a general right to withdraw. The members are free to regulate their internal relations, provided such regulation is not contrary to the law or morality. Thus, the Articles may allow withdrawal without specifying particular reasons, unlike court-ordered withdrawal under Article 420(2), which requires justified reasons.

Since Article 420(1) requires that withdrawal conditions be set out in the Articles, it is advisable that they be clearly defined. If withdrawal is not provided for or is insufficiently regulated, the member may still bring a lawsuit for withdrawal. A lawsuit is also available even when withdrawal is provided for, but only for justified reasons.

Besides specifying the conditions, the Articles must also regulate the withdrawal procedure—that is, which actions must be taken and by whom. Withdrawal is a member’s personal right, and the initiative lies with the member, who must express an intention to withdraw.

Such intention must be communicated to the company’s management board, which legally represents the company (Article 426. of the Companies Act). The statement may be oral or written, although it is advisable to require a written statement—ideally sent by registered mail—to avoid disputes regarding its submission and timing. The statement should include a declaration of withdrawal and a request for payment of compensation, unless already determined by the Articles. For these reasons, the Articles should regulate the content and method of submitting withdrawal statements.

A withdrawing member is entitled to the market value of his or her business share at the time of withdrawal, not at the time of incorporation. This is consistent with current court practice. A member whose contribution consisted of assets or rights is entitled to their return after three months from withdrawal.

Article 420(2) stipulates that, when withdrawal is sought by lawsuit, the claim must state the compensation amount and a reasonable deadline for payment, and the court must determine the market value of the share. This could be interpreted to mean that the Articles of Association may specify a different amount than market value only where withdrawal occurs without court involvement; however, any clause inconsistent with mandatory rules would not be permissible.

Withdrawal results in the termination of all membership rights. Withdrawal is usually connected with a justified reason, but a member may also protect his or her interests by selling the business share, unless restricted.

The primary legal consequence is that membership terminates upon payment of compensation. Since the Companies Act contains no detailed regulation, the Articles must determine the fate of the business share of the withdrawing member. This typically means that the share becomes the property of the company if the capital contribution was fully paid, and that compensation is paid from funds exceeding the registered capital, pursuant to Article 418. The Articles may determine whether the share is allocated to existing members, a specific member, or redeemed (cancelled).

The Articles must also regulate the amount of compensation, the deadline, and the method of payment, in accordance with Article 420(3).

Where the Articles do not provide for exclusion, or provide for it inadequately, the company may bring a lawsuit to exclude a member under Article 420(3). The company may do so only if an important reason exists. Unlike withdrawal, which requires a justified reason, exclusion requires an important reason.

Article 420(3) defines an important reason as conduct that prevents or significantly impedes the achievement of the company’s objectives, making the member’s continued presence intolerable. This refers to conduct of such intensity that it obstructs the attainment of the company’s goals.

Minor difficulties or everyday disagreements that do not endanger corporate objectives do not constitute important reasons.

The central element is the intensity of the conduct and its effect on the company’s ability to meet its objectives, such as achieving profit or other goals defined by the Articles.

Examples include serious breaches of duty, abuse of trust, unlawful acts, or severe disruption of relations among members—but only when they prevent or significantly hinder the achievement of the company’s objectives. Whether such conditions exist must be assessed by the court in each individual case.