SHA is the contract between the investor and the founder that governs the exit and decision mechanisms. 7 basic clauses: drag-along, tag-along, liquidation preference, ROFR, anti-dilution, protective provisions, board composition.
Drag-Along & Tag-Along
Drag-along: If the majority shareholder (usually investor + founder 50%+) wants to sell all shares, minority shareholders have to sell by force. There is usually a minimum amount/threshold requirement.
Tag-along: If a shareholder sells his shares to an outside buyer, the others have the right to be sold on the same terms. Classic clause protecting the minority.
Liquidation Preference
- 1x non-participating: The investor receives the money he invested first, and the rest is distributed according to his shares. Standard.
- 1x participating: Gets back the money he invested + then shares the rest according to his share (double profit).
- 2x preferred: 2x ago; aggressive investor.
ROFR (Right of First Refusal)
Priority to other partners in share sales. Offered in 30-60 days with the same conditions; If it refuses, it can be sold to a foreign buyer.
Anti-Dilution
- Full ratchet: If the next round is at a lower value, the investor gets full protection (loss to the founder).
- Weighted average: Standard; hedging with the weighted average formula. Founder friendly.
Board Composition & Protective Provisions
The investor appoints at least 1 board member. Protective provisions: Certain decisions (new round, M&A, closing, ESOP pool increase) require investor approval.
What should be the drag-along threshold?
In Türkiye application, approval from 66.7-75% share + minimum amount (e.g. 10x entry). In a founder-friendly structure, "blocking right" is given to the minority.
Can SHA be applied in Türkiye?
Yes. "Partnership agreements" are recognized after TCC Article 491. However, clauses that conflict with the articles of association are invalid; e.g. drag-along must be defined in the articles of association.
Jurisdiction dispute (court/arbitrage)?
If the investor is abroad: ICC or LCIA arbitration is selected. Within Türkiye: Istanbul İht. Arbitration Center (ISTAC) is recommended.
Can Founder vesting be rejected?
Depending on investor demand; It's almost mandatory after A series. If the founder has bargaining power, an accelerated clause (single/double trigger) is added.
Is NDA required in SHA?
Yes. The investor and founder undertake not to disclose the SHA to external stakeholders. Penalty clauses are typical in case of violation.
Relevant legislation
- Turkish Commercial Code art.331-644 — A.Ş. and LTD establishment, share transfer.
- FSEK art.2/1-1 — Protection of software as a work.
- SMK No. 6769 — Trademark, patent, utility model, design.
- KVKK article 12 — Data security, by-design principle.
- TBK art.193 et seq. — Contracts, guarantees, indemnification.