There can be many issues about divorce in Turkey; divorce alimony issues in Turkey, illegal evidence in divorce cases, divorce cases due to mental illness in Turkey and many more. Divorce is a challenging process that becomes even more complex when it involves the division of assets, especially company shares. For foreigners living in Turkey or those who have been to Turkey, understanding the intricacies of dividing company shares during a divorce is crucial. This article explores the key considerations and common issues faced in such cases within the Turkish legal system.
Legal Framework for Asset Division in Turkey
Under the Turkish Civil Code, the grounds for divorce and the subsequent division of assets are clearly defined. When a marriage ends, all assets acquired during the marriage are subject to division, including company shares. The main legal basis for asset division is the regime of participation in acquired property, which applies unless the couple has opted for a different marital property regime.
Key Considerations for Dividing Company Shares
- Evaluation of the Company’s Value: The value of a company is determined based on various factors, including the state of the economy, the sector in which the company operates, the company’s size and growth rate, balance sheet values, technology, machinery, R&D activities, marketing and competition strength, customer portfolio, management team, and future projections such as sales, earnings, and cash flow.
- Date of Acquisition: It is essential to determine whether the company shares were acquired before or during the marriage. Shares acquired before the marriage are considered personal property and are not subject to division. However, any increase in value of these shares during the marriage may be considered marital property.
- Documentation and Records: Proper documentation and regular maintenance of company records are critical. The court will examine these documents to assess the legitimacy and value of the shares.
- Dividend Distribution: Whether the company distributes dividends is a significant factor. Dividends received during the marriage are considered marital property and are subject to division.
Steps in the Division Process
- Engage a Legal Expert: It is crucial to hire a lawyer experienced in family law and asset division, particularly with cases involving company shares. This is especially important for foreigners who may not be familiar with Turkish legal procedures.
- Obtain a Valuation: A professional valuation of the company shares is necessary to determine their worth. This valuation should take into account the company’s current financial status, future earning potential, and any other relevant factors.
- File a Petition: The petition for asset division should be filed in the family court. The petition must include detailed information about the company shares and their acquisition.
- Court Proceedings: The court will review the valuation and other evidence provided. Both parties will have the opportunity to present their case.
- Judgment: Based on the evidence, the court will decide on the division of the company shares. If the shares are considered marital property, their value will be divided between the spouses.
Challenges Faced by Foreigners
Language and Cultural Barriers
Foreigners may face difficulties due to language and cultural differences. Legal proceedings in Turkey are conducted in Turkish, which can be a barrier for non-Turkish speakers. Hiring a professional translator or a bilingual lawyer can help overcome this challenge.
Understanding Legal Nuances
The legal system in Turkey may differ significantly from other countries. Foreigners need to understand the specific legal criteria for asset division, including the treatment of company shares. This includes recognizing the distinction between personal and marital property and the implications of this distinction.
Practical Issues in Dividing Company Shares
Proving the Value of Shares
Determining the accurate value of company shares is a critical step. This process involves a thorough examination of the company’s financial records, market position, and future prospects. Inconsistent or conflicting valuations can complicate proceedings, so it is essential to obtain a reliable and comprehensive valuation from a reputable expert.
Impact on Company Operations
The division of shares can impact the operation of the company, particularly if one spouse is actively involved in managing the company. The court may consider the potential impact on the company’s operations when determining the division of shares.
Ensuring Fair Representation
Ensuring that both parties receive fair representation is crucial. The court may appoint a guardian ad litem to represent the interests of the spouse who is not actively involved in the company. This ensures that their rights are protected and that the division process is conducted fairly.
Common Issues Encountered in Practice
Timing of Share Acquisition
One of the main issues is whether the shares were acquired before or during the marriage. Shares acquired before the marriage are generally considered personal property, while those acquired during the marriage are subject to division. However, any increase in the value of personal property during the marriage may also be considered marital property.
Determining Marital Contributions
The court will consider the contributions of both spouses to the acquisition and increase in value of the company shares. This includes not only financial contributions but also non-financial contributions such as support and sacrifices made during the marriage.
Addressing Business Debts
The company’s debts and liabilities are also considered during the division process. The court will deduct these from the company’s value before determining the division of shares.
Conclusion
Dividing company shares during a divorce is a complex process that requires careful consideration of various factors. For foreigners in Turkey, understanding the legal framework and practical issues is crucial. Engaging experienced legal representation, obtaining a reliable valuation, and ensuring fair representation are key steps in managing the division of company shares effectively.
By being aware of the challenges and considerations involved, individuals can better prepare for the division process and ensure that their rights are protected. This approach helps ensure a fair and equitable outcome for both parties in the divorce proceedings.
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