I. INTRODUCTION
Joint stock companies constitute a corporate form in which ownership and management functions are structurally separated, and this characteristic represents one of the fundamental discussion areas of company law. In such companies, the shareholders who provide capital and the board of directors who manage the company may consist of different persons. This separation of ownership and control inherently entails the risk that management may act contrary to the interests of shareholders. In order to mitigate the adverse consequences arising from conflicts of interest between management and shareholders, the TCC grants shareholders various control mechanisms, including the right to obtain information and inspection, supervision by the general assembly, independent audit, and special audit. Among these mechanisms, special audit is of an exceptional nature and functions as a supplementary legal protection tool to be used where ordinary audit mechanisms prove inadequate. In this context, the appointment of a special auditor emerges as an institution that concerns not only individual interests, but also the corporate structure of the company, the relationship of trust among shareholders, and the stability of capital markets.
II. Legal Nature and Purpose of Special Audit
The right to request the appointment of a special auditor in joint stock companies is considered in doctrine as an inalienable and non-waivable individual shareholder right.1 The institution of requesting a special audit is regarded as a natural extension and reinforced form of the shareholder’s right to obtain information and inspection as stipulated under Article 437 of the TCC. In order to prevent arbitrary or abusive use of this mechanism, the legislator has designed special audit as a measure of ultima ratio. Accordingly, as a prerequisite for requesting a special audit, the shareholder must have previously exercised the right to obtain information or inspection regarding the same matter and must have failed to obtain satisfactory information through these means.
The primary purpose of special audit is to enable shareholders to exercise other shareholder rights—such as voting rights, actions for annulment of general assembly resolutions, or liability actions against members of the board of directors—in an informed and effective manner. In this respect, special audit goes beyond being a mere information-gathering tool; it also serves to ease the burden of proof for shareholders by constituting a strong discretionary evidence that may be freely assessed by the judge in potential lawsuits against founders, board members, or auditors. Furthermore, the institution exerts a deterrent effect on management bodies, thereby strengthening corporate transparency and accountability.
Given that the right to request a special audit is protective in nature and aims to ensure the effective safeguarding of shareholders’ right to information, allegations of abuse of this right must be interpreted narrowly and exceptionally. The mere fact that the request disturbs company management or subjects board actions to scrutiny cannot, in itself, constitute abuse of right. However, if the shareholder resorts to this mechanism for purposes such as obtaining personal external benefits, obstructing corporate decision-making, or gaining tactical advantage, such conduct may qualify as an abuse of right.
To clarify the legal nature of special audit, it is necessary to distinguish it from independent audit. Independent audit is a statutory obligation for companies exceeding certain thresholds and constitutes a continuous and general audit aimed at providing assurance to external stakeholders (such as investors and creditors) by objectively reviewing the company’s financial statements in accordance with national and international accounting standards. Its scope is limited to financial statements and the board of directors’ annual activity report pursuant to Article 397 of the TCC. Special audit, on the other hand, is an optional inspection mechanism aimed at clarifying specific and concrete events, as an extension of shareholders’ right to information under Article 438 of the TCC. Unlike independent audit, it does not review the company’s overall financial status, but rather focuses on particular matters suspected by shareholders (e.g., certain expenditures of board members or details of a merger agreement). Therefore, special audit does not duplicate independent audit, but functions as a complementary mechanism intended to illuminate point-specific and suspicion-based issues falling outside the scope of independent audit.2
III. Conditions and Procedure for Requesting a Special Audit
Pursuant to Article 438 of the TCC, the special audit process generally begins at the general assembly. Each shareholder has the right to request that a specific matter be clarified through a special audit, even if such request is not included on the agenda.
For a special audit request—constituting an exception to the principle of agenda-dependence—to be deemed valid, two fundamental conditions stipulated by the TCC must be fulfilled cumulatively. First, the request must be based on specific and concrete events rather than general, vague, or abstract allegations. Second, the audit must be objectively necessary for the requesting shareholder to exercise shareholder rights (such as voting rights or initiating a liability action).
If the general assembly accepts a request meeting these conditions, the company or any shareholder may apply to the commercial court of first instance at the company’s registered seat within thirty days from the date of the resolution for the appointment of a special auditor.
IV. Rejection by the General Assembly and the Judicial Stage
Under the TCC, the right to request a special audit is primarily designed as a right to be exercised through the general assembly. However, in practice, such requests are often rejected by majority shareholders. Consequently, although normatively envisaged as an individual right, the right to request a special audit functionally acquires the character of a minority protection mechanism.
Pursuant to Article 439/1 of the TCC, shareholders representing at least 10% of the share capital (5% in publicly held joint stock companies), or whose shares have a total nominal value of at least TRY 1,000,000, may apply to the commercial court of first instance within three months following the general assembly’s rejection.
When examining the request, the court requires that shareholders present their allegations in a non-abstract manner and demonstrate, through convincing evidence, that the company or shareholders have suffered damage or face a risk of damage due to unlawful or articles-of-association-breaching actions of corporate bodies. According to the explicit provision of Article 440/2 of the TCC, the court’s decision rendered upon this examination is final and not subject to appeal.
V. Scope of the Audit, the Auditor, and the Legal Nature of the Report
Within the systematic framework of the TCC, special audit is not regulated as a general audit mechanism covering all company activities, but as an exceptional inspection tool limited to the clarification of specific and concrete events. Accordingly, the special auditor is bound by the scope defined in the court decision and may not review the expediency or discretionary judgments of the board of directors. The function of special audit is not to make legal evaluations, but to contribute to the determination of factual circumstances.
The special auditor must be independent, impartial, and possess the professional expertise required by the purpose of the audit. These qualifications ensure that the auditor can conduct an objective examination vis-à-vis both management and shareholders and prepare a reliable report. Upon completion of the audit, the report is submitted to the court and duly served on the company. Prior to finalization of the report, the opinions of the company and shareholders must be obtained and appended to the report in order to protect company secrets and legitimate corporate interests. However, such opinions must not concern the completeness or accuracy of the report. Once finalized, the report is presented to shareholders at the first general assembly meeting, thereby enabling shareholders to evaluate the results of the special audit.
Special audit may only be conducted upon acceptance of the request by the general assembly or, in the event of rejection, by court decision following an application by the entitled parties. Although the special audit report does not have binding legal force, it constitutes a strong discretionary piece of evidence that may be freely assessed by the judge in potential liability actions, annulment actions, or actions for dissolution for just cause. Despite doctrinal debates as to whether the report qualifies as definitive or discretionary evidence, it is generally accepted that it possesses evidentiary value due to its capacity to shape judicial conviction.3 Particularly in liability actions under Article 553 of the TCC, the report plays a critical role by facilitating proof of fault, damage, and causal link with respect to board members. The findings set forth in the report may also form the basis for administrative sanctions or criminal investigations under capital markets legislation.
VI. Legal Consequences and Corporate Effects
The special auditor’s report may serve as a basis for liability actions against board members, annulment of general assembly resolutions, or criminal investigations. As a general rule, the costs of the audit are borne by the company. However, where justified by special circumstances, such costs may be partially or fully imposed on the requesting shareholders. In this respect, special audit functions not only as an individual protection mechanism, but also as a systematic supervisory instrument that enforces discipline within corporate management and strengthens principles of corporate governance.
VII. CONCLUSION
The appointment of a special auditor in joint stock companies is a fundamental legal institution that safeguards shareholders’ access to information, protects minority shareholders against majority dominance, and enhances transparency in corporate governance. While the conditions set forth by the TCC prevent abuse of this right, the flexible standard of proof ensures its effectiveness. Ultimately, special audit should be regarded not merely as an audit mechanism, but as one of the cornerstones of corporate trust, accountability, and shareholder democracy in modern company law.
B. KEY TAKEAWAYS
(1)The request for appointment of a special auditor constitutes an inalienable and non-waivable individual shareholder right aimed at protecting shareholders’ private interests.
(2)This right functions as a complementary audit mechanism where shareholders’ right to information and inspection proves insufficient.
(3)Special audit does not serve as a general audit, but is limited to specific and concrete events.
(4)Its purpose is to enable shareholders to exercise voting rights, annulment actions, and liability actions in an informed and effective manner.
(5)Upon rejection by the general assembly, the right to request special audit transforms into a minority right.
(6)At the judicial stage, persuasive indications and strong presumptions are deemed sufficient rather than strict proof.
(7)The court’s decision regarding the appointment of a special auditor is final and not subject to appeal.
(8)As a general rule, audit costs are borne by the company.
(9)Special audit exerts a deterrent effect on the board of directors and contributes to increased corporate transparency.
(10)This institution represents one of the most significant reflections of modern corporate governance principles within Turkish company law.
