Fiduciary Transactions in Turkish Law: What Foreign Investors Should Know Before Trusting a Nominee

Foreign investors entering the Turkish market sometimes prefer to hold assets — company shares, real estate, receivables — through a trusted local person rather than in their own name. The motives vary: banking convenience, confidentiality from competitors, an operating partner who runs the business day to day, or simply habit carried over from other jurisdictions. Turkish law has a name for the legal instrument behind these arrangements: the fiduciary transaction, or inançlı işlem. It is a workable and, within limits, enforceable construction. It is also the source of some of the most painful disputes we see in practice, almost always for the same reason — the parties never put their understanding in writing.

This article outlines how Turkish courts treat fiduciary transactions, with references to the leading precedents of the Court of Cassation (Yargıtay), and closes with the practical safeguards that decide whether the real owner keeps the asset.

The concept: a real transfer with a contractual promise behind it
A fiduciary transaction is not codified as such in Turkish statute; it rests on freedom of contract and nearly eight decades of case law. The Court of Cassation's General Assembly of Civil Chambers has defined it as an agreement determining the parties' rights and obligations, the grounds for termination of the fiduciary relationship, and the terms on which the transferred right must be returned (Yargıtay HGK, 14.07.2010, E. 2010/14-394, K. 2010/395). Two features of the construction matter more than any other.

First, the transfer of title is genuine. The fiduciary (the nominee) becomes the true legal owner vis-à-vis the entire world — the trade registry, the land registry, banks, tax authorities, his own creditors and heirs. The beneficiary holds only a contractual claim against the fiduciary for performance and return of the asset. Turkish law does not recognize a split between legal and beneficial ownership in the common-law trust sense; there is no tracing of the asset into the hands of third parties who acquired it in good faith.

Second, the arrangement is, in principle, valid between the parties. The Court of Cassation has long held that a concealed agreement standing behind an apparent one is enforceable unless it violates mandatory law or morality, is impossible to perform, or fails a statutory form requirement (Yargıtay 11. HD, 18.05.1999, E. 1998/9242, K. 1999/4123). The line is crossed where the structure is used to circumvent the law — statutory prohibitions, creditors' rights, licensing regimes. In that territory the courts reach for the doctrine of simulation (muvazaa) and related nullity grounds, and the arrangement can collapse for both sides. A separate line of cases treats undisclosed joint ventures on the same logic: where the parties' real relationship amounts to a hidden ordinary partnership, the dispute is resolved under the partnership dissolution and liquidation rules of the Code of Obligations (arts. 620 et seq. TBK), with return of contributions and division of profits (Yargıtay 13. HD, 08.06.1987, E. 1987/1962, K. 1987/3398).

Everything in this field ultimately turns on a single, remarkably durable precedent. By its case-law unification decision of 5 February 1947 (İçtihadı Birleştirme Kararı, E. 1945/20, K. 1947/6), the Court of Cassation held that a fiduciary transaction — including acquisitions through a borrowed name (nam-ı müstear) — can be proven only by a written document bearing the parties' signatures. The ruling binds all courts, and it is applied with full force today. The General Assembly of Civil Chambers reaffirmed the strict written-evidence standard as recently as 2023 (HGK, 22.11.2023, E. 2022/1-544, K. 2023/1117), and the 7th Civil Chamber has confirmed that, absent a written instrument or at least a “commencement of written proof,” the claimant cannot establish the fiduciary relationship even through the witness-evidence exceptions of the Code of Civil Procedure (Yargıtay 7. HD, 02.05.2024, E. 2023/2703, K. 2024/2325).

Three practical corollaries follow from this line of authority.

The document need not be elaborate, but it must exist and be signed. Case law accepts that the writing may be drawn up before or after the transfer itself; what matters is a signed record of the fiduciary understanding. A sophisticated bilingual agreement is best, yet even a short signed protocol has saved claims that would otherwise have failed.

Where there is no signed agreement, a “commencement of written proof” (delil başlangıcı — HMK art. 202) can open the door to witness testimony. Bank transfer records referencing the arrangement, signed correspondence, or documents emanating from the opposing party may qualify. Unreferenced cash payments and verbal assurances do not. In the complete absence of such material, the claimant is left with the opposing party's admission or the decisory oath; the General Assembly has stressed that trial courts must remind a claimant of the right to tender the oath before dismissing the case (HGK, 09.12.2015, E. 2014/14-516, K. 2015/2838). A narrow statutory exception also permits witness evidence in disputes among close relatives (HMK art. 203/1-a), though its application to fiduciary claims is fact-sensitive and contested.

Claims arising from a fiduciary agreement are subject to the general ten-year limitation period (art. 146 TBK), generally running from the date the asset should have been returned.

What is at stake when the structure fails
Because title genuinely vests in the fiduciary, the beneficiary who cannot prove the agreement is not an owner with a defective registration — he is a stranger to the asset. The share or property remains with the nominee; a sale or pledge to a good-faith third party will normally stand; the nominee's personal creditors may attach the asset; on the nominee's death it falls into his estate, and on divorce it may enter the matrimonial property regime. In the best case, an investor who documented his payments may recover the money itself under unjust enrichment or loan theories. The business he financed, and its appreciation, stay on the other side of the table.

One further layer deserves emphasis for cross-border clients. Since 2021, Turkish companies must report their ultimate beneficial owners — the natural persons who ultimately control the company or hold twenty-five percent or more — to the Revenue Administration under General Communiqué No. 529 on the Tax Procedure Law, with misreporting sanctioned by a threefold special irregularity fine, and with banks and other obliged entities under Law No. 5549 (MASAK) testing the declared ownership in their own onboarding. A fiduciary structure may therefore remain valid and confidential toward the market while the beneficiary is nonetheless disclosed to the state. Planning that ignores this reporting layer is planning for a compliance problem.

Practical safeguards

The pattern of the case law dictates the drafting agenda. A written, signed fiduciary agreement — in cross-border matters, a parallel dual-language text so that both parties sign the same understanding — executed no later than the first payment. Funding routed through bank transfers that reference the agreement. A security package that prevents a quiet disposal of the asset: a pledge over the shares, pre-signed transfer instruments and irrevocable powers of attorney held in escrow, buy-out and valuation mechanics, and express provisions for the failure scenarios the courts see most — death, unreachability, the nominee's personal creditors, a funding cut. Finally, a dispute-resolution clause chosen while relations are still good; disputes over fiduciary structures are, in substance, races for the asset, and interim measures (ihtiyati tedbir, ihtiyati haciz) obtained early often matter more than the eventual judgment.

Fiduciary transactions in Turkey work exactly as well as they are documented. The 1947 rule is not a technicality; it is the whole game.