ABSTRACT

Pursuant to Article 357 of the Turkish Code of Obligations¹ numbered 6098 (“TCO”), a usufructuary lease is a type of bilateral agreement under which the lessor grants the lessee both the right to use and the right of usufruct, with rent directly tied to the revenue generated. This study examines the concept of “product,” the rights and assets that may constitute the subject matter of such a lease, and the significance of transferring elements such as operating licenses, fixtures, and commercial reputation to the lessee. Additionally, pursuant to Articles 362 and following of the TCO, the study explores termination, renewal, and extraordinary termination in usufructuary leases, including special termination events such as the lessee’s bankruptcy or death. In light of legislation, doctrinal perspectives, and leading Court of Cassation rulings, this study seeks to clarify the boundaries of the usufructuary lease regime as applied to commercial premises.

Keywords: Usufructuary Lease, Revenue Lease, Covered Commercial Premises, Lease, Lease Agreement, Termination, Eviction

I. INTRODUCTION

The TCO classifies lease agreements into three principal categories: ordinary leases, residential and covered commercial premises leases, and usufructuary leases. Articles 357–378 of the TCO, addressing usufructuary leases, have historically been applied in areas such as agricultural production mining operations, or fishery leases However, with the development commercial life, they have also become applicable to covered commercial premises with high turnover potential, such as restaurants, cafés, tourism businesses, and shopping mall stores.

Particularly, the leasing of covered commercial premises within the scope of a usufructuary lease entails not only the physical premises of the business but also elements such as the operating license, fixtures and the customer base, this results in a more complex legal structure compared to classical lease agreements.  In this context, the relationship between product leases and the protective provisions specific to residential and covered commercial premises leases, the balance of power between the parties, and the limits of termination possibilities gain significance.

II. LEGAL SCOPE OF USUFRUCTUARY LEASES AND THEIR APPLICATION WITH RESPECT TO COVERED COMMERCIAL PREMISES

Pursuant to Article 357 of the TCO, a usufructuary lease is an agreement whereby the lessor undertakes to grant the lessee the use of a thing or a right that yields products, together with the products obtained therefrom, in return for a fixed or determinable consideration. The definition set forth in this provision reveals two essential elements for understanding the legal scope of a usufructuary lease the transfer to the lessee not only of the right of use but also of the right of usufruct and the linking of the rent directly to the products obtained. Accordingly, it is possible to state that the usufructuary lease is a fully bilateral agreement.

The product which is the subject of a usufructuary lease may be defined, in an economic sense, as any yield obtained through the use of a thing in accordance with its purpose. The subject matter of a product lease may consist of rights and assets that yield legal products, as well as land and businesses that produce agricultural products².

In the specific context of businesses classified as covered commercial premises, a usufructuary lease entails the transfer to the lessee not only of the premises themselves, but also of the fixtures and furnishings of the premises, the operating right, the customer portfolio, the elements constituting the commercial goodwill and, in particular, the operating license. The operating license constitutes an indispensable requirement, as it enables the lessee to conduct the business in their own name and on their own account, to benefit from the products independently, and to render the business fully operational³. In examining whether a business has been leased under a usufructuary lease, the Court of Cassation applies the criteria of (i) delivery of  the leased premises together with the fixtures and the operating license, (ii) agreement of the rent as a certain proportion of the monthly turnover⁴. The Court of Cassation’s consistent position is that determining the rent solely on the basis of turnover is not sufficient to establish the existence of a usufructuary lease relationship. An examination of the Court of Cassation’s precedents reveals that, in cases where the operating license has not been transferred, the agreement cannot be classified as a usufructuary lease even if the rent is indexed to turnover.

The requirement, in practice, that the transfer of the operating license be a prerequisite for applying the provisions on revenue leases to lease agreements has been subject to criticism in the legal doctrine, as under the TCC, the existence of an operating license is not an essential element to carry out business activities. In such a case, an element not provided for in the legislation is being introduced into the concept of a usufructuary lease agreement through case law. Within the scope of this study, we take the view that the Court of Cassation’s well-founded and consistent approach in taxi plate leasing cases ⁵, where the factual relationship constitutes a usufructuary lease, and the absence of license transfer alone does not render that relationship as something other than a usufructuary lease, should likewise be applied in the context of commercial premises leases.

III. TERMINATION OF USUFRUCTUARY LEASES

ITermination of usufructuary lease agreements is regulated under Articles 362 and the following of the TCO, distinguishing between fixed-term and indefinite-term agreements. In both cases, if the lessee fails to pay rent or ancillary charges post-delivery, the lessor may, by giving the lessee a written grace period of at least sixty days, notify the lessee that the agreement will be terminated if the payment is not made within that period. Fixed-term leases expire automatically upon term completion, without need for notice. Unless the usufructuary lease agreement is expressly or tacitly renewed, it terminates automatically⁶. Article 367/2 of the TCO stipulates that renewal is deemed valid for one year rather than for an indefinite term, contrary to the general provisions. Accordingly, the lessor’s claims regarding the tacit renewal of the agreement may only be valid for a period of one year, and in this respect it may be said that the lessor’s ability to obtain eviction is considerably strong.

If the parties have not specified a term when concluding a usufructuary lease agreement, the agreement is considered to be of indefinite duration. Pursuant to Article 368 of the TCO, unless a different termination notice period has been agreed in the agreement or established by local custom, either party to an indefinite-term usufructuary lease may terminate the agreement by giving at least six months’ prior notice. Such notice must be served at least six months before the end of the lease year. In addition, under the heading of extraordinary termination in usufructuary leases, the legislator has provided under Articles 369 and the following provisions of the TCO that extraordinary termination may take place in the presence of significant reasons.  It then addresses the cases of lessee’s bankruptcy and death as specific instances of extraordinary termination⁷.  Pursuant to Article 370 of the TCO, in the event of the lessee’s bankruptcy, the agreement terminates automatically upon the opening of bankruptcy proceedings, without the need for any termination notice from either the lessee or the lessor. However, if the lessee provides sufficient security for the current rent and for the property recorded in the inventory, they may continue the agreement until the end of the lease year. In the event of the lessee’s death, both the lessee’s heirs and the lessor may terminate the agreement by complying with the statutory six-month termination notice period.

IV. OPINIONS ON THE APPLICABILITY OF THE TERMINATION AND EVICTION PROVISIONS GOVERNING THE LEASE OF RESIDENTIAL AND COVERED COMMERCIAL PREMISES TO USUFRUCTUARY LEASES

Pursuant to Article 347 of the TCO, in the lease of residential and covered commercial premises, unless the lessee gives notice at least fifteen days prior to the expiry of a fixed-term agreement, the agreement is deemed to have been renewed for one year under the same terms. As can be seen, in the lease of residential and covered commercial premises, the legislator, has provided for the extension of the agreement in a protective approach of the lessee, making such extension contingent upon the lessee’s failure to give notice, whereas in a usufructuary lease the agreement terminates automatically at the end of the term.

Pursuant to Article 352 of the TCO, in the lease of residential and covered commercial premises, , in the case of leases with a term of less than one year, the lessee, fails to pay the rent within the lease term, or, in the case of leases with a term of one year or longer, fails to pay the rent within a lease year or within a period exceeding a lease year, thereby causing the lessor to serve two justified written notices, the lessor may terminate the lease agreement through legal action within one month following the end of the lease term or, in the case of  agreements longer than one year , within one month after the end of the lease year in which the notices were served. In usufructuary leases, however, while the agreement may be terminated at the end of each lease year subject to compliance with the applicable notice periods, both parties retain the right to extraordinary termination at any time if the lease relationship becomes intolerable.

In addition, in the lease of residential and covered commercial premises, the partners of a deceased lessee, or the heirs of such partners who engage in the same profession or trade, as well as those who resided with the deceased lessee in the same dwelling, may continue the lease as parties to the agreement, provided that they comply with the terms of the agreement and the relevant legal provisions. However, as noted in this study, in usufructuary leases, upon the death of the lessee, both the lessor and the heirs may terminate the lease agreement by complying with the applicable notice periods.

Where covered commercial premises are leased under a usufructuary lease arrangement, the applicability of termination and eviction provisions requires a separate assessment. One view in the legal doctrine maintains that such agreements should be governed entirely by the provisions on usufructuary leases, and that the restrictive provisions set forth in Articles 346 and the following of the TCO for residential and covered commercial leases should not apply⁸. The opposing view argues that, due to the nature of covered commercial premises, certain lessee-protective provisions should be applied by analogy⁹.

Within the scope of this study, we agree with the view that where covered commercial premises are leased under a usufructuary lease arrangement, the agreement should be governed entirely by the provisions applicable to usufructuary leases. This is because the lessor undertakes additional commercial and organizational responsibilities, prepares the premises for operation in terms of fixtures and even transfers the operating license to the lessee, thereby assuming obligations that are significantly more burdensome than those in a standard covered commercial premises lease. The protective provisions for the lessee under the TCO in relation to residential and covered commercial leases are premised on the assumption that the lessee occupies a weaker position than the lessor and therefore requires protection. However, in the case of covered commercial premises leased under a usufructuary lease, it cannot be said that the lessee is in a weaker position vis-à-vis the lessor. The Court of Cassation likewise holds the view that, the lessee does not occupy a disadvantaged position in usufructuary leases¹⁰.

V. CONCLUSION

The leasing of covered commercial premises under a usufructuary lease arrangement creates a complex legal relationship, in which the lessor transfers not only the physical premises but also elements that directly affect the operation of the business, such as operating licenses, fixtures, and customer base, to the lessee. In terms of termination and eviction, different regimes apply depending on whether the agreement is fixed-term or indefinite term, and in special situations such as the lessee’s bankruptcy or death, the rules on extraordinary termination apply.

We are of the opinion that the lessee-protective provisions specific to residential and covered commercial leases should not be applied to usufructuary lease agreements, since the legal relationship between the parties is more balanced and the lessee cannot be regarded as the weaker party. In such cases, contractual freedom should be respected in the parties’ commercial dealings. Considering the additional obligations and commercial responsibilities assumed by the lessor, the legal framework of usufructuary leases allows the parties to determine the terms freely, thereby providing flexibility in commercial life.

References

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1. ↩︎
2. Gözdenur Güllü İmamoğlu, Ürün Kirası, 2025, p. 27-28 ↩︎
3. Mustafa Koca, Türk Hukukunda Ürün Kirası, 2016, p. 16 ↩︎
4. Court of Cassation, 6th CC., Decision No. 2014/12899, Case No. 2014/11996, dated November 24, 2014 ↩︎
5. Court of Cassation, GACC., Decision No. 2023/419, Case No. 2022/583, dated May 3, 2023 ↩︎
6. Şeyhmus Darcan, Ürün Kirası Sözleşmesi, 2020, p. 194 ↩︎
7. İmamoğlu, op. cit., p. 192 ↩︎
8. İmamoğlu, op. cit., p. 91 ↩︎
9. Darcan, op. cit., p. 196 ↩︎
10. Court of Cassation, GACC., Decision No. 2004/222, Case No. 2004/11-222, dated April 14, 2004 ↩︎

ABSTRACT

A legal personality is a structure that emerges in areas where individual effort falls short and is defined as a legal existence independent of the person. In capital companies, the principles of limited liability and separation apply; within this framework, shareholders are liable only to the extent of the capital they have committed and only toward the company. However, despite these principles, legal personality is sometimes abused and instrumentalized in a manner that harms third parties.

In such cases, pursuant to Article 2 of the Turkish Civil Code¹ numbered 6427 (“TCC“), the principle of good faith and the prohibition of abuse of rights come into play, and the corporate veil is pierced to hold the real persons behind the personality directly liable. In this study, the concept of legal personality will be explained, and the procedures for piercing the corporate veil, as well as how and under what circumstances it occurs, will be examined in detail together with the theory of organic connection and its differences.

Keywords: Legal Personality, Principle of Limited Liability, Principle of Separation, Piercing the Corporate Veil, Abuse of Rights, Principle of Good Faith, Organic Connection

I. INTRODUCTION

In modern legal systems, the concept of personhood includes not only real persons but also legal personalities that are established for specific purposes and recognized as independent legal existences. Real personality is an important legal tool that enables the collective execution of economic and commercial activities. However, this structure may sometimes be abused by shareholders or managers to serve the purpose of harming third parties.

In such cases, it becomes possible to circumvent the boundaries of separation and non-liability recognized by the legal order and to avoid responsibility by hiding behind the corporate personality. In situations that constitute an exception to the principle of separation and non-liability between the legal personality and its shareholders, namely, when the structure of the legal personality is abusively used in violation of the legal order or when the distinction between the company and the shareholders clearly contradicts the principle of good faith, the theory of “piercing the corporate veil” is invoked.

II. THE CONCEPT OF LEGAL PERSONALITY

When evaluated from a legal standpoint, the concept of “person” refers to entities that have the capacity to hold rights and assume obligations. Although real persons come to mind at first in line with this definition, due to the inadequacy of individual effort in achieving certain goals and the compulsion of social needs, some groups of persons and assets have also been recognized as “persons” by the legal order. These collectives, referred to as legal persons, are entities formed through contracts and are defined as legal personalities separate and independent from the real or legal persons who execute such contracts².

Legal personality can be defined by reference to the first paragraph of Article 47 of the TCC. A legal person is a group of persons or assets that is organized to achieve a specific and continuous objective, and is independent from the individuals who have established it³.

III. CERTAIN PRINCIPLES GOVERNING LEGAL PERSONALITY

A. The Principle of Limited Liability

In general, what is meant by limited liability in partnership law is the limitation of partners’ liability to creditors for partnership debts⁴. The principle of limited liability in capital companies expresses that shareholders are liable only to the extent of the capital they have committed or actually brought into the company; third parties may resort solely to the assets of the company to satisfy company debts. For joint stock companies, it is explicitly regulated that shareholders are liable only with their committed share capital and only towards the company⁵.

Additionally, due to the company’s debts to third parties, a shareholder bears no liability whatsoever toward the company’s creditors; nor does the shareholder have any obligation to fulfill these debts. In other words, since companies are liable for their debts only with their own assets, company creditors may not make any personal claim against shareholders, whether directly or indirectly. A shareholder is deemed to have fulfilled their obligation by paying the committed share capital to the company, and upon such payment, their liability toward the company ceases.

B. The Principle of Separation

The principle of separation refers to the legal personality’s possession of capacity to hold rights and undertake obligations independently from both its members and third parties, and in this context, to its ownership of a distinct and separate estate. In this regard, capital companies are liable for partnership debts only with their own assets. Accordingly, real or legal persons who come together under the roof of a legal personality are not held liable for the debts of the partnership, thanks to the principle of separation⁶.

In this respect, the principle of separation can be examined under two subcategories. Under the scope of personal separation, legal personalities are permanent organizations that are distinct from their founders, members, and shareholders, and are unaffected by the lifespan of those individuals meaning that the persons forming the legal personality and the legal personality itself are different from one another.

Asset separation means that the legal personality possesses a property that is separate and independent from the persons who constitute it. Thanks to the principle of asset separation, the legal personality becomes directly liable for the legal transactions to which it is a party, and in principle, the individuals forming the legal personality do not bear liability. Accordingly, legal personalities are liable only to their own creditors and are fully liable with all of their assets. As a rule, shareholders cannot be held liable for the debts of the legal personality, and likewise, the debts of shareholders cannot be claimed from the legal personality⁷.

The principle of separation establishes a legal distinction and distance between the legal person and the real persons who constitute it. This is a natural consequence of the separation principle and essentially aims to limit the personal liability of shareholders toward third parties. However, in certain exceptional circumstances, this distinction may be breached, and the individuals behind the legal personality may be held directly liable.

IV. PIERCING THE CORPORATE VEIL

Piercing the corporate veil, in its most basic sense, refers to the disregard of the principle of separation of the legal person in a concrete case, thereby allowing third-party creditors of the legal personality to hold the individuals constituting that legal personality liable⁸.

Circumventing legal rules to commit fraud against the law; individuals using a separate legal personality as a shield to avoid fulfilling contractual obligations they are party to through that legal personality, or causing harm to third parties and subsequently hiding behind such a structure, these are incompatible with the principle of good faith and the prohibition of abuse of rights and cannot be protected by the legal order. In such cases, as the second paragraph of Article 2 of the TCC stipulates that the abuse of a right shall not be protected, the corporate veil must be pierced, and the real persons behind the personality must, where necessary, be held directly liable.

Circumstances such as the mixing of the legal personality’s assets and organizational structure with those of the shareholders, the shareholders acting as if there is no legal separation between them and the legal person, or failing to observe a boundary between their personal property and the company’s property, or continuing operations with insufficient capital, especially when the legal personality is intentionally used in a manner that causes harm to third parties, are among the primary grounds for piercing the corporate veil.

In legal doctrine, the theory of piercing the corporate veil is addressed in three distinct forms: direct (straight), indirect (reverse), and lateral (cross) piercing. In the case of direct piercing, the controlling or sole shareholder who abuses the legal personality to avoid liability is held personally liable toward the creditors of the legal personality. The Court of Cassation decisions also acknowledge and apply the concept of direct veil piercing⁹. In reverse piercing, however, the creditors of a shareholder are permitted to pursue claims against the legal personality over which the shareholder exercises control, holding both the shareholder and the legal personality jointly liable¹⁰. Cross piercing of the veil arises not only between parent and sister companies but also among sister companies within a corporate group or holding structure.

If a decision is made to pierce the corporate veil, the legal personality and those who constitute or control it are treated as if they were the same person. In the case of direct veil piercing, the debts of the legal personality are extended to the shareholders, making them personally liable for satisfaction of such debts¹¹.

V. THE THEORY OF ORGANIC CONNECTION

Alongside the theory of piercing the corporate veil, another theory that must be discussed is the theory of organic connection. In corporate law, the term organic connection refers to relationships between different companies. It can be said that the term denotes the execution of commercial transactions and dealings among related persons, such as in cases of ownership or creditor relations, without establishing a formal company partnership or corporate group structure, thereby concealing the actual owners and transactions behind different companies, persons, or representatives and disguising the economic and commercial activities accordingly¹². Organic connections reveal that although companies appear to be independent personalities, they are in fact part of a network managed by the same individuals or organizations.

The concept of organic connection is not regulated under Turkish law by statute, but has emerged through customary practice and case law of the Court of Cassation. It may be said that proving the existence of an organic connection requires a lesser evidentiary burden compared to piercing the corporate veil¹³. The Court of Cassation recognizes that organic connection can be identified through similarities in companies’ addresses, fields of activity, shareholders, and representatives, as well as by establishing the legal relationships between them¹⁴.

The concepts of piercing the corporate veil and organic connection are closely related but nonetheless distinct theories within corporate law. Both theories ultimately aim at broadening the scope of liability. Piercing the corporate veil typically enables a creditor to reach beyond the company to the real person shareholders behind it and to hold them liable. By contrast, the theory of organic connection allows different legal personalities to be held jointly and severally liable if a relationship between them exists. The fundamental difference between the two theories is that piercing the veil targets the liability of real persons, whereas the organic connection theory assigns liability to another legal personality.

VI. CONCLUSION

The concept of legal personality is a fundamental building block in the regulation of complex economic and social relations within modern legal systems. Legal persons, which are recognized as legal personalities independent of real persons, operate as collectives organized for a specific purpose; and thanks to the inherent principles of separation and limited liability, the personal assets of shareholders are protected and risks are confined within defined limits.

However, particularly in cases where legal personality is abused with the intent to harm third parties, such conduct is clearly contrary to the principle of good faith, and in such circumstances, the piercing of the corporate veil comes to the fore. Although the principles of limited liability and separation constitute the foundational elements of legal personality, when these principles are abused, the legal order may pierce the corporate veil and impose direct liability on the real persons behind it. This mechanism serves the administration of justice by preventing the abuse of rights.

References

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1. Official Gazette dated 21.11.2001 and numbered 24607 ↩︎
2. Prof. Dr. Hasan PULAŞLI, Şirketler Hukuku Şerhi Volume I, Edition 4, Adalet Yayınevi, Ankara, 2022, p. 169 ↩︎
3. Fahri Erdem KAŞAK, Tüzel Kişilik Kavramı ve Tüzel Kişilik Perdesinin Kaldırılması, Marmara Üniversitesi Hukuk Fakültesi Hukuk Araştırmaları Dergisi, Edition 26, December 2020, p. 1243 ↩︎
4. Dr. Emrullah KERVANKIRAN, Sermaye Ortaklıklarında Sınırlı Sorumluluk İlkesine Karşı Önemli Bir İstisna: Tüzel Kişilik Perdesinin Kaldırılması, Erzincan Üniversitesi Hukuk Fakültesi Dergisi, Edition 11, Issue 3-4, December 2007, p. 456 ↩︎
5. Turkish Commercial Code (TTC), Article 329 ↩︎
6. PULAŞLI, p. 175 ↩︎
7. KAŞAK, p. 1250 ↩︎
8. KAŞAK, p. 1251 ↩︎
9. Court of Cassation. 9th Chamber, Dated 04.07.2008, Numbered 2008/12981, Decision 2008/18875 (www.legalbank.net); Court of Cassation. 23rd Chamber, Dated. 11.10.2012, Numbered. 2012/4160, Decision. 2012/5938 (www.lexpera.com.tr). ↩︎
10. KAŞAK, p. 1258 ↩︎
11. KAŞAK, p. 1260 ↩︎
12. Dr. Namık Kemal UYANIK, Tüzel Kişilik Perdesinin Kaldırılması ve Organik Bağ, Edition 3, Seçkin Yayınevi, Ankara, 2023, p. 927 ↩︎
13. UYANIK, p. 971 ↩︎
14. Court of Cassation. 9th Chamber, Dated. 14.11.2018, Numbered. 2018/2125, Decision. 2018/20573 (www.lexpera.com.tr). ↩︎