Statutory Liability of Limited Company Managers
Introduction
The Turkish Commercial Code No. 6102 (“TCC”) regulates the management and representation system of limited companies under a structure that differs significantly from that under the repealed Turkish Commercial Code No. 6762. The concept of “foundation organ” (özden organ), under which shareholders of limited companies, as a rule, automatically have management authority, has been abandoned; instead, the principle that the management and representation of the company shall be determined by the articles of association has been adopted.[1]
Pursuant to Article 623 of the TCC, the management and representation of the company are regulated by the articles of association. Such duty and authority may be granted to one or more shareholders, all shareholders, or third parties. However, at least one shareholder must have the right to manage and the authority to represent the company. A legal entity may also be appointed as manager; in such cases, the legal entity appoints a natural person to perform the managerial duty on its behalf.[2]
Where there is more than one manager, the managers operate as a board. One of the managers is appointed by the general assembly as the chairman of the board of managers, and unless otherwise stipulated in the articles of association, decisions are taken by majority. In the event of equality of votes, the chairman’s vote prevails.[3]
The liability of limited company managers, however, is not governed by a uniform regime under a single provision. While the private law liability of managers is assessed primarily within the framework of Articles 625, 626 and 644 of the TCC and, by virtue of the reference made therein, Articles 549 to 561 of the TCC, different liability regimes are prescribed in the Tax Procedure Law No. 213 (“VUK”), the Law on Procedure for Collection of Public Receivables No. 6183 (“AATUHK”) and the Social Insurance and General Health Insurance Law No. 5510 with respect to taxes, social security premiums and other public receivables.
Therefore, in determining the liability of a limited company manager, it must first be established which obligation has been breached, who has suffered the damage, the manager’s fault and term of office, and the specific statutory provision applicable to the dispute.
Non-Delegable and Inalienable Duties of Managers
Article 625 of TCC is of particular importance in determining the scope of liability of limited company managers. The provision lists the following among the non-delegable and inalienable duties of managers: the high-level management of the company and the issuance of the necessary instructions; the establishment of the company’s management organization; the establishment of accounting, financial auditing and financial planning to the extent necessary for the management of the company; the supervision of whether persons entrusted with duties act in compliance with the law, the articles of association, internal regulations and instructions; except for small limited companies, the establishment of a committee for the early detection and management of risks; the preparation of the financial statements, the annual activity report and, where necessary, the group financial statements and annual activity report; the preparation of the general assembly meeting and the implementation of general assembly resolutions; and, where the company is over-indebted, notification of such situation to the court.[4]
This provision is important from the perspective of liability law for two reasons. First, the delegation by a manager of a non-delegable duty to another manager or employee does not release the manager from liability arising from the performance of such duty. Second, the fact that certain decisions have been submitted to the approval of the general assembly does not eliminate the liability of the managers. Indeed, Article 625/2 of the TCC expressly provides that the liability of managers shall not be eliminated even in cases where the law grants the general assembly the authority to approve such decisions.[5]
Therefore, particularly in large-scale limited companies, the existence of an internal allocation of duties does not create an absolute exemption from liability for managers. The scope of the allocation of duties and the manager’s non-delegable duties must be assessed separately.
Capital Loss and Over-Indebtedness
One of the significant sources of managers’ liability in practice is the failure to take timely action when the company’s financial condition deteriorates. Pursuant to Article 633 of the TCC, Article 376 of the TCC concerning capital loss and over-indebtedness of joint stock companies applies to limited companies by analogy. This provision should be considered together with the obligation imposed on managers under Article 625 of the TCC to notify the court in the event of over-indebtedness.[6]
Accordingly, managers are required to monitor the company’s financial condition on an ongoing basis, rather than only at the stage of preparing the annual financial statements, and to take the measures prescribed by law in a timely manner when indications of capital loss or over-indebtedness arise. This obligation should be assessed not by way of a retrospective evaluation after the company’s financial structure has deteriorated, but by reference to whether the managers’ decision-making and supervisory processes were operated in a timely manner.
Duty of Care and Loyalty
Pursuant to Article 626 of TCC, managers and persons entrusted with management are obliged to perform their duties with due care and to safeguard the interests of the company in accordance with the principle of good faith. The same provision also regulates the non-compete obligation of managers.[7]
This obligation does not mean that the manager guarantees the success of every commercial decision of the company. Since commercial activities inherently involve risk, the mere fact that an investment results in a loss or that a commercial expectation is not realized should not, in itself, give rise to the manager’s liability. In assessing liability, consideration should be given to the information available to the manager at the time the decision was taken, the review conducted by the manager, whether the decision was aimed at protecting the interests of the company, any potential conflicts of interest, and the degree of care exercised in the decision-making process.
At this point, the “business judgment rule” approach, which is also reflected in the reasoning of Article 369 of the TCC concerning joint stock companies, may have explanatory value. However, Article 369 of the TCC is not among the provisions specified in Article 644 of the TCC as being applicable to limited companies. Therefore, with respect to limited company managers, this approach should not be regarded as an independent statutory rule excluding liability, but rather as a criterion assisting in the assessment of fault and due care within the framework of Articles 626 and 553 of the TCC.
General Principles of the Legal Liability of Managers
Article 644/1-(a) of the TCC provides that Articles 549 to 551, 553, and 554 to 561 of the TCC concerning the liability regime of joint stock companies shall also apply to limited companies. The principal provision governing the general liability of managers is Article 553 of the TCC.[8]
Accordingly, managers are liable to the company, the shareholders and the company’s creditors for losses caused by their culpable breach of obligations arising from the law and the articles of association. Therefore, for liability to arise within the meaning of Article 553 of the TCC, it is not sufficient merely for the company to have incurred a loss. As a rule, there must be a breach of an obligation attributable to the manager, damage, fault, and an adequate causal link between the breach and the damage.
The phrase “unless they prove that they were not at fault”, which was included in the original wording of Article 553 of the TCC, was removed from the provision by Law No. 6335. Accordingly, the presumption of fault in respect of managers’ liability was abandoned; while the principle that liability is based on fault was preserved, it was adopted that the burden of proof would be determined in accordance with the general provisions.[9]
Recent decisions of the Court of Cassation also assess the personal liability of managers based on a specific breach of obligation. For example, in 2025, the 11th Civil Chamber of the Court of Cassation upheld a decision holding managers liable under Article 553 of the TCC for causing loss to the company through a borrowing transaction and the issuance of a promissory note that were not reflected in the company’s records.[10]
Special Cases of Liability Arising from Documents and Declarations
Article 549 of the TCC regulates a specific case of liability for losses arising from documents, declarations, undertakings and guarantees used in transactions such as incorporation, capital increases and reductions, mergers, demergers and conversions being contrary to the truth or concealing the truth. The provision expressly requires the existence of fault with respect to those who “participate” in such documents and declarations. Therefore, the distinction made in the wording of the provision between those who prepare the document, those who make the declaration, and those who participate in the document or declaration should be observed, and the conditions of liability should be determined on the basis of the specific circumstances of each case.[11]
Article 550 of the TCC regulates liability arising from the representation of capital as having been fully subscribed although it has not been fully subscribed, and from knowingly approving a capital subscription made by a person lacking the ability to pay; Article 551 of the TCC regulates liability arising from the overvaluation or otherwise inaccurate valuation of capital in kind, or of businesses and assets to be acquired.[12]
Delegation of Authority and Supervisory Liability
Pursuant to Article 553/2 of the TCC, where a duty or authority arising from the law or the articles of association has been delegated to another person in accordance with the law, the delegating person is, as a rule, not liable for the acts and decisions of the person to whom such duty or authority has been delegated. However, liability may arise if it is proven that reasonable care was not exercised in the selection of such person.[13]
An important distinction should be made in this regard. The proper delegation of authority does not eliminate a manager’s liability arising from his or her own non-delegable duties. In particular, the overarching supervisory and organizational duties under Article 625 of the TCC continue to be relevant in assessing the liability of managers.
Conversely, pursuant to Article 553/3 of the TCC, no person may be held liable for violations of the law or the articles of association, or for irregularities, that are beyond his or her control. This exemption from liability may not be rendered ineffective by invoking the duties of supervision and care. Accordingly, the duty of supervision cannot be transformed into an unlimited form of guarantee liability whereby a manager would be held liable, solely by virtue of his or her capacity as manager, for every unlawful act occurring within the company.[14]
Differentiated Joint and Several Liability
Where more than one manager has contributed to the same loss, the principle of differentiated joint and several liability under Article 557 of the TCC applies. Accordingly, where more than one person is liable to compensate for the same loss, each person is liable jointly with the others only to the extent that the loss may be personally attributed to him or her, taking into account his or her fault and the circumstances of the case.[15]
Accordingly, the existence of more than one manager in a limited company does not mean that all managers may automatically and equally be held liable for the entirety of the company’s loss. Each manager’s area of responsibility, authority, participation in the relevant decision or transaction, knowledge, and degree of fault must be assessed separately. This approach is particularly important in professional management structures where duties are allocated among different managers.
Distinction Between Direct and Indirect Loss
Another issue that requires particular attention with respect to managers’ liability is the person who has suffered the loss. Pursuant to Article 555 of the TCC, the company and each shareholder may claim compensation for the loss suffered by the company. However, in an action brought by a shareholder in respect of loss directly suffered by the company, the shareholder may request that compensation be paid only to the company.[16]
However, if the manager’s unlawful conduct causes a loss directly to the shareholder’s personal assets, independently of any loss suffered by the company, the shareholder may claim compensation for such direct loss in his or her own right.
In its decision dated 22 September 2025, the 11th Civil Chamber of the Court of Cassation also held that, in an action based on allegations that the manager of a limited company caused loss to the company by transferring gains to his own company and breached the non-compete obligation, the loss asserted constituted indirect loss on the part of the shareholder; and that, pursuant to Article 555/1 of the TCC, compensation for such loss could be claimed only in favor of the company, and not in favor of the shareholder.[17]
A distinction should also be made between an action for liability brought by the company itself against the manager and an action brought by a shareholder under Article 555 of the TCC seeking compensation for the loss suffered by the company. In its decision dated 18 September 2025, the 11th Civil Chamber of the Court of Cassation did not endorse the approach that made a shareholder’s right to bring an action for liability against a manager conditional upon the adoption of a general assembly resolution and held that an action brought by a shareholder is not subject to such a procedural prerequisite.[18]
The right of the company’s creditors to bring an action in respect of loss suffered by the company is subject to a more restrictive regime. Pursuant to Article 556 of TCC, in the event of the company’s bankruptcy, the company’s creditors may also claim that compensation be paid to the company; however, the law contains a specific provision regarding the priority of the bankruptcy administration. Accordingly, it would not be accurate to adopt a general view that shareholders and company creditors may, in all circumstances, bring claims in respect of loss suffered by the company for their own benefit.[19]
Release and Limitation Periods
Pursuant to Article 558 of the TCC, a resolution of release has significant consequences for liability actions. A general assembly resolution releasing managers from liability extinguishes, with respect to disclosed material facts, the right of action of the company and of shareholders who voted in favor of the release or who acquired shares with knowledge of the release resolution. The right of action of the other shareholders, however, lapses upon the expiry of six months from the date of the release.[20]
Article 560 of the TCC applies with respect to the limitation period for liability actions. A claim for compensation becomes time-barred two years after the date on which the injured party becomes aware of the loss and the person liable, and in any event five years after the date on which the act causing the loss occurred. If the act also constitutes a criminal offence subject to a longer limitation period for prosecution, the criminal limitation period applies.[21]
Appointment of a Legal Entity as Manager
Where a legal entity is appointed as the manager of a limited company, the title of manager belongs to the legal entity itself, rather than to the natural person designated to act on behalf of the legal entity. Pursuant to Article 623/2 of the TCC, the legal entity designates a natural person to perform the managerial duty on its behalf, and such person is registered and announced.[22]
Therefore, under the TCC, the legal entity is, as a rule, the primary party subject to the legal liability attached to the capacity of manager. However, any liability of the natural person acting on behalf of the legal entity arising from his or her own personal tortious acts, criminal liability, or special statutory provisions imposing obligations directly on such person must be assessed separately. Accordingly, the appointment of a legal entity as manager cannot be construed as eliminating all forms of personal liability of the natural person acting on its behalf.
Liability Arising from Public Debts
One of the most significant areas in which the liability of limited company managers differs markedly from private law liability concerns public receivables. In this respect, a distinction must first be made between liability arising from the capacity as a shareholder of a limited company and liability arising from the capacity as a legal representative. The liability of limited company shareholders for the company’s public debts is regulated under Article 35 of the AATUHK, whereas the liability of legal representatives is regulated, depending on the nature of the receivable, under Article 10 of the VUK, Repeated Article 35 of the AATUHK and specific legislation. Where a manager is also a shareholder, the grounds of liability arising from each capacity must be assessed separately.[23]
Article 10 of the VUK in Respect of Tax Debts
Pursuant to Article 10 of the VUK, tax-related obligations incumbent upon legal entities are fulfilled by their legal representatives. Where such obligations are not fulfilled and, as a result, taxes and related receivables cannot be collected, in whole or in part, from the assets of the taxpayer or tax responsible, such amounts may be collected from the assets of the legal representatives who failed to fulfil their statutory obligations.[24]
With respect to this liability, it is particularly important that there be a connection between the period during which the manager held office and the tax-related obligation that was not fulfilled. In its decision dated 21 May 2025 and numbered E. 2024/56, K. 2025/408, the Council of Tax Chambers of the Council of State held that a former legal representative could not be held liable under Article 10 of the VUK on the basis of a failure to fulfil tax-related obligations that became due after his or her capacity as legal representative had ceased. The Council linked liability not merely to the relevant taxation period, but to the date on which the tax-related obligation alleged to have been breached was required to be fulfilled and to the person’s representative capacity as of that date.[25]
Liability of Legal Representatives under Repeated Article 35 of the AATUHK
Repeated Article 35 of the AATUHK provides for the collection, from the personal assets of legal representatives, of public receivables that cannot be collected, in whole or in part, from the assets of legal entities or that are understood to be uncollectible from such assets. The provision regulates the liability of legal representatives within a secondary enforcement mechanism that is contingent upon the existence of the company’s public debt.[26]
The legislative history of this provision is significant. By its decision dated 19 March 2015 and numbered E. 2014/144, K. 2015/29, the Constitutional Court annulled the fifth paragraph added to Repeated Article 35 by Law No. 5766, which provided that where different legal representatives were in office during the periods in which the public receivable arose and became due, such persons would be held jointly and severally liable; it also annulled the sixth paragraph providing that liability under Article 10 of the VUK would not eliminate liability under Repeated Article 35.[27]
The matter was brought before the Constitutional Court again in 2025. In its decision dated 26 November 2025 and numbered E. 2025/55, K. 2025/240, the Constitutional Court held that the first paragraph of Repeated Article 35 of the AATUHK was not contrary to the Constitution. However, the Court emphasized that, where different persons served as legal representatives during different periods, liability should be determined in light of the circumstances of the specific case, and that particular importance should be attached to whether the legal representative had the opportunity to intervene in, or prevent, the accrual or non-payment of the public receivable.[28]
This decision is of particular importance in establishing the current constitutional framework governing the liability of legal representatives following the annulment decision of 2015. Establishing a link between liability, the relevant term of office and the legal representative’s ability to intervene constitutes a fundamental criterion of assessment that prevents the mere capacity as legal representative from constituting a basis for unlimited liability irrespective of the relevant period.
Completion of Enforcement Proceedings against the Principal Debtor Company
Given the secondary nature of the liability of legal representatives, it is of great importance that enforcement proceedings against the principal debtor company be conducted in accordance with the law. In its decision dated 21 May 2025 and numbered E. 2023/1210, K. 2025/406, the Council of Tax Chambers of the Council of State (“VDDK”) held that the principal debtor company being struck off the trade registry without liquidation pursuant to Provisional Article 7 of the TCC does not, in itself, mean that the public receivable cannot be collected from the company. The Council found it unlawful to issue a payment order against the former legal representative before the enforcement proceedings against the company had been duly completed.[29]
Similarly, in its decision dated 21 May 2025 and numbered E. 2023/1542, K. 2025/395, the VDDK concluded that the enforcement proceedings against the principal debtor company had not been duly completed because the payment order issued in the name of the company had been served at the residence address of the legal representative without first attempting proper service at the company’s last known address. Accordingly, the payment order issued in the name of the legal representative was found to be unlawful.[30]
These decisions demonstrate that, in enforcement proceedings for public receivables against a legal representative, not only the existence of the debt but also the lawfulness of the assessment, service and enforcement process concerning the principal debtor company must be examined separately.
Commencement and Termination Dates of the Managerial Office
In determining the term of office of a legal representative, the date of registration with the trade registry is not always decisive on its own. In its decision dated 21 May 2025 and numbered E. 2023/706, K. 2025/400, the VDDK held that, with respect to the liability of a person whose signature appeared on the general assembly resolution appointing him or her as manager, registration with the trade registry was not constitutive and that the liability arising from the managerial office commenced as of the date on which the general assembly resolution was adopted. The same decision also stated that a former legal representative could not be held liable for a judicial fee that arose after his or her capacity as legal representative had ceased.[31]
This approach requires that, in addition to the formal trade registry records, the dates on which the managerial office actually and legally commenced and terminated also be examined for purposes of liability for public debts. Therefore, the registration and announcement of resolutions concerning the appointment and removal of managers without delay constitute an important risk management tool for both the company and the manager.
Liability for Social Security Premiums
Article 88 of the Social Insurance and General Health Insurance Law No. 5510 contains a specific liability provision concerning insurance premiums and other receivables of the Institution owed by legal entity employers. Where the conditions stipulated by law are met, senior executives or authorized persons and legal representatives of legal entity employers may be held jointly and severally liable together with the employer vis-à-vis the Institution.[32]
Since this liability constitutes a specific statutory regime independent of the legal liability under the TCC and the liability for public receivables under the VUK and the AATUHK, the manager’s capacity, scope of authority, term of office and the period to which the premium debt relates must be assessed separately.
Conclusion
Serving as a manager of a limited company is not merely a status conferring authority to represent the company, but a function that gives rise to extensive obligations under both private law and public law.
Under the TCC, the starting point should be the identification of the specific duty imposed on the manager, rather than the manager’s capacity as such. As a rule, for a manager to be held liable, there must be a breach of an obligation arising from the law or the articles of association, damage, fault and an adequate causal link. Therefore, the mere fact that the company has suffered a loss or that a commercial decision has resulted unsuccessfully is not sufficient to establish the manager’s personal liability.
On the other hand, the delegation of duties and authority does not create an absolute exemption from liability. Although a manager may benefit from the protection afforded by Article 553 of the TCC with respect to duties duly delegated in accordance with the law, the manager remains liable for his or her non-delegable duties under Article 625 of the TCC and for any culpable breach of his or her own supervisory obligations.
In companies with more than one manager, rather than automatically attributing liability to all managers, the principle of differentiated joint and several liability adopted under Article 557 of the TCC should apply, and each manager’s personal contribution to the loss, degree of fault and scope of duties should be determined separately.
With respect to public debts, a different and stricter liability regime applies. Nevertheless, the Constitutional Court’s 2025 decision and the recent decisions of the VDDK demonstrate that the liability of legal representatives cannot be applied mechanically solely on the basis that the person is registered as a “manager” in the trade registry. The relevant term of office, the event giving rise to the public receivable or payment obligation, the representative’s ability to intervene, and whether the enforcement proceedings against the principal debtor company have been duly completed in accordance with the law must each be assessed separately.
Within this framework, while the fundamental statutory framework governing the liability of limited company managers has essentially remained unchanged from 2020 to 2026, recent decisions of the higher courts, in particular, indicate that liability is being subjected to a more detailed assessment based on the manager’s term of office, the specific obligation concerned, the manager’s fault, and his or her ability to intervene in the relevant act.
In practice, in order to manage these risks, it is important to clearly and expressly determine in writing the allocation of duties and authority among managers, to regularly document the grounds for significant commercial decisions and the relevant decision-making processes, to systematically monitor the company’s financial condition as well as its tax and social security obligations, and to register and announce changes in managers without delay.
- Article 623 of the Turkish Commercial Code No. 6102 (“TCC”); see also Kendigelen, Abuzer: Yeni Türk Ticaret Kanunu Değişiklikler, Yenilikler ve İlk Tespitler, XII Levha Yayıncılık, Istanbul, 2011, p. 472.
- Article 623/1-2 of the TCC. For further information on legal entities acting as managers, see also Tekinalp, Ünal:Sermaye Ortaklıklarının Yeni Hukuku, 4th ed., Vedat Kitapçılık, Istanbul, 2015, p. 594.
- Article 624 of the TCC.
- Article 625/1 of the TCC.
- Article 625/2 of the TCC.
- Articles 633 and 376 of the TCC.
- Article 626 of the TCC.
- Articles 644/1-(a) and 553 of the TCC.
- Article 28 of the Law No. 6335 Amending the Turkish Commercial Code and the Law on the Entry into Force and Implementation of the Turkish Commercial Code, Official Gazette dated 30 June 2012, No. 28339.
- 11th Civil Chamber of the Court of Cassation, File. 2024/4655, Decision. 2025/4478, dated 24 June 2025.
- Article 549 of the TCC.
- Articles 550-551 of the TCC.
- Article 553/2 of the TCC.
- Article 553/3 of the TCC.
- Article 557 of the TCC.
- Article 555/1 of the TCC.
- 11th Civil Chamber of the Court of Cassation, File. 2025/820, Decision. 2025/5555, dated 22 September 2025.
- 11th Civil Chamber of the Court of Cassation, File. 2024/6095, Decision. 2025/5476, dated 18 September 2025.
- Article 556 of the TCC.
- Article 558 of the TCC.
- Article 560 of the TCC.
- Article 623/2 of TCC; Tekinalp, p. 594.
- Article 35 and Repeated Article 35 of the Law on Procedure for Collection of Public Receivables No. 6183 (“AATUHK”); Article 10 of the Tax Procedure Law No. 213 (“VUK”).
- Article 10 of the VUK.
- Council of Tax Chambers of the Council of State (“VDDK”), File. 2024/56, Decision. 2025/408, dated 21 May 2025; Bulletin of Decisions of the Council of Tax Chambers of the Council of State, Issue No. 33.
- Repeated Article 35/1 of the AATUHK.
- Constitutional Court, File. 2014/144, Decision. 2015/29, dated 19 March 2015, Official Gazette dated 3 April 2015, No. 29315.
- Constitutional Court, File. 2025/55, Decision. 2025/240, dated 26 November 2025, Official Gazette dated 18 March 2026, No. 33200.
- Council of Tax Chambers of the Council of State (“VDDK”), File. 2023/1210, Decision. 2025/406, dated 21 May 2025; Bulletin of Decisions of VDDK, Issue No. 33.
- VDDK, File. 2023/1542, Decision. 2025/395, dated 21 May 2025; Bulletin of Decisions of the VDDK, Issue No. 33.
- VDDK, File. 2023/706, Decision. 2025/400, dated 21 May 2025; Bulletin of Decisions of the VDDK, Issue No. 33.
- Article 88 of the Social Insurance and General Health Insurance Law No. 5510.
All rights of this article are reserved. This article may not be used, reproduced, copied, published, distributed, or otherwise disseminated without quotation or Erdem & Erdem Law Firm's written consent. Any content created without citing the resource or Erdem & Erdem Law Firm’s written consent is regularly tracked, and legal action will be taken in case of violation.
Other Contents
Legal personality is one of the cornerstones of corporate law. The principles of asset independence and limited liability afforded by legal personality directly affect commercial predictability and investor confidence…
As a rule, the termination of a commercial company does not simultaneously result in the cessation of its legal personality. Subject to the exceptions provided by law, a company that has terminated enters into liquidation and retains…
The widespread use of e-commerce platforms has made the scope of intermediary service providers’ legal liability one of the most actively debated topics in contemporary consumer law. In particular, the extent to which intermediary service providers…
The emergence of disputes between shareholders in limited liability companies and the inability to resolve such disputes may directly affect the company’s operations, particularly in structures consisting of only two shareholders. Indeed, in two-shareholder limited liability companies…
With the proliferation of group of companies’ structures, the need to protect the trust placed in the reputation of the group has gained importance. Article 209 of the Turkish Commercial Code ("TCC") regulates the liability of the parent company arising from the trust created in third parties using the group's reputation…
A change in control within a publicly held company should not be regarded merely as a quantitative shift in shareholding structure; rather, it constitutes a qualitative transformation that has significant implications for minority shareholders’ property rights, investment…
This legal post examines the decision of the 11th Civil Chamber of the Court of Cassation numbered E.2024/1865, K.2025/478 (“Decision”). The Decision is significant in terms of the rejection of transfers of registered shares in joint stock companies by the board of directors, the legal validity of such rejection…
Capital increase in privately held joint stock companies is an important transaction that allows the company to grow and meet its financing needs by strengthening its equity structure. A capital increase means an increase in the amount of the company's ordinary/registered capital and is realized with the...
Article 408, paragraph 2, subparagraph (f) of the Turkish Commercial Code No. 6102 ("TCC") lists the "wholesale of a significant amount of company assets" among the unassignable and exclusive duties and powers of the general assembly. However, this provision does not clearly regulate what is meant by the...
To ensure economic stability in Turkiye and preservere the value of the Turkish Lira, an amendment was introduced to Decree No. 32 on the Protection of the Value of the Turkish Currency through Presidential Decree No. 85, published in the Official Gazette No. 30534, dated September 13, 2018. This regulation...
In an extraordinary dissolution, ex officio cancellation from the trade registry without liquidation is regulated under the provisional Article 7 of the Turkish Commercial Code No. 6102 (“TCC”). Under Paragraph 15 of the relevant provision, the creditors of the company or cooperative, which was ex officio canceled...
As the global business landscape evolves, foreign companies increasingly seek to expand their presence in promising markets. Türkiye, positioned between Europe and Asia, offers suitable opportunities for this expansion. Among the methods foreign companies use to establish a foothold but not a company in...
In joint stock companies, the body in charge of managing and representing the company is the board of directors. The members of the board of directors are liable to the company for the damages caused by their negligence in the performance of their duties...
Sales contracts are the most common and most important contracts of commercial life . Determining the rights and obligations of the parties as a result of the defects encountered in the goods subject to the sale is one of the most common legal problems in commercial sales...
Under Article 365 of the Turkish Commercial Code No. 6102 ("TCC"), each member of the board of directors, which is the body responsible for the administration and representation of a joint stock company, is obliged to fulfill their duties arising from the law and the articles of association within the limits...
Law No. 7262 dated 27.12.2020 introduced an obligation to notify the Central Registry Agency (“CRA”) regarding the issuance and transfer of bearer shares under the Turkish Commercial Code No. 6102 (“TCC”) and stipulates that those who violate the notification requirement under Art. 486/2 of the TCC shall be...
Similar to previous years, in 2024, mergers and acquisitions (“M&A”) transactions continue to be shaped by global economic dynamics, geopolitical risks and technological innovations...
The common goal (in the ideal world) of people who become shareholders by participating in the capital of a company or managers by participating in the management body is to manage the company in the best way and to obtain maximum economic benefit...
The most common forms of agency agreements can be categorized under three main headings. These can be listed as an Agency Agreement, Distributorship Agreement, and Franchise Agreement...
Employee shareholding, which means the ownership of some or all of the capital of a publicly traded or closed company by employees, has attracted great interest in many countries around the world, particularly in the United States of America, due to the advantages it provides to the national economy, the...
There are many different rules that newly established companies must consider and comply with when starting their commercial activities. One of these rules is the "Evasion of Law" article regulated under Article 356 of the Turkish Commercial Code No. 6102 ("TCC"). The relevant rule aims to prevent the...
The Turkish automobile and light commercial vehicle market left the 2000s behind with steadily rising sales figures and the 2010s with high and stable sales figures as well. In this period, the growth of the market was driven not only by high purchase power but also by easy access to credit and product diversity...
Turkish Commercial Code No. 6102 ("TCC") provides the right to exit from the company to the shareholders of limited liability companies and the right to squeeze out the shareholder from the company, unlike the structure of joint stock companies, with the exit and squeeze out institutions specially regulated for...
Turkish Commercial Code No. 6102 (“TCC”) preserves the rule that the board of directors shall manage and represent joint stock companies. The TCC regulates how the power of representation shall be exercised, the registration and announcement of the persons authorized to represent, the transfer of the...
Merger and acquisition processes are one of the legal processes that most seriously affect the identities and legal status of companies. After the completion of legal, tax, financial and operational due diligence reports, the parties initiate the negotiation process in case they reach an agreement on proceeding with the...
A popular business model for expanding market reach and brand recognition worldwide is franchising. Despite being less common than distribution agreements in the form of mono-brand store agreements, franchising is another significant method for extending luxury brands' distribution networks. Luxury brands use...
In the decision dated 14.06.2022 and numbered 2019/149 E. 2022/894 K., the Court of Cassation General Assembly (“CCGA”) evaluated the theory of piercing the corporate veil in the context of the relationship between the guarantor and the borrowing company in a dispute arising from a loan agreement...
The European Union continues to be an important investment center for foreign investors. According to data from the European Commission's "Second Annual Report on the monitoring of foreign direct investment in the European Union", the European Union received €117 billion worth of foreign direct investment in...
Transfer of shares is arguably the first legal transaction that comes to mind among the legal transactions regarding the shares of a capital company, and the most common transaction in practice. However, the shares of a capital company may also be subject to various transactions, other than share purchase...
Law No. 6563 on the Regulation of Electronic Commerce (E-commerce Law or Law) has recently undergone a radical change in order to regulate the behavior of the players in the rapidly growing and developing e-commerce sector. The new regulations that came into force as of January 1, 2023 envisage important...
On 11 June 2021, the German Federal Parliament approved the German Supply Chain Due Diligence Act (Lieferkettensorgfaltsgesetz) (“Act”) which affects not only German entities but also their suppliers in foreign countries (including Turkish entities). The main focus of the Act, which entered into force on...
On 21 December 2007, the Federal Council approved the draft revision of the Swiss Code of Obligations, which also includes amendments to company law. On 28 November 2014, the Federal Council referred the draft revision for consultation. Following extensive discussions and a long enactment process, the...
The Turkish Commercial Code No. 6102 ("TCC") regulates maritime trade contracts under the fourth part of the fifth book of the Code. Among the types of contracts regulated in this section, the most frequently used contract in international maritime transport practice is the freight contract regulated under...
Prohibition on hidden income shifting is one of the most important issues that is broadly regulated under Capital Markets Law No. 6362 (“CML”). In conjunction with CML Article 21, which has a broader context than Article 15 of the abrogated Capital Markets Law No. 2499, another significant step has been taken...
As a result of developing commercial activities and large-scale investments, especially concluded in the fields of construction, energy and mining, companies are seeking to participate in these investments by uniting their powers and expertise to take advantage of financial opportunities together. This tendency...
The Turkish Commercial Code (“TCC” or “Law”) has enabled companies to apply different structural models and to implement new legal formations by including spin-off provisions to its Article 159 et seq. In accordance with the provisions of the law, companies may transfer a certain element, or elements, of their...
The International Federation of Consulting Engineers is a professional association established in 1913, known as the FIDIC (Fédération Internationale Des Ingénieurs-Counseils). Its members are duly elected from consultant-engineer associations of various countries, and membership to the association is...
Incoterms are a set of rules introduced by the International Chamber of Commerce (ICC) to explain the commercial terms that are widely used in international trade. The purpose of Incoterms rules is to facilitate and expedite international trade in a safe and secure manner...
The regulation applicable to all Turkish ports prepared by the Ministry of Transport, Maritime Affairs and Communications that entered into force after being published in the official gazette on October 31, 2012 (˝the Regulation˝), consolidates all the bylaws, regulations and instructions in a single Regulation...
As a rule, rights and obligations arising from an agreement have legal consequences only between the creditor and the debtor which are parties to the agreement. This principle is referred to as "privity of contract." In general, contracts for the benefit of third parties, where the fulfillment of an...
The rules of e-commerce, which grow and develop with the digitalizing world, are changing. E-commerce has become the driving force of the digital economy. However, considering the growth rate of e-commerce and the transformation it has undergone in a short time, it is obvious that some...
The dissolution of a company is a specific type of dissolution, which results in the cancellation of the legal personality which was gained by registration at incorporation. The specific proceeding which leads to the dissolution, and thus, the termination of a company upon the constitutive decision...
Companies in which shares or authority to manage is held by members of a family are considered to be “family businesses”. Family members can hold shares that control the company, as well as retain management authority. Having a family business means opportunity, security and income for...
Turkey ratified the Convention on the Contract for International Carriage of Goods by Road (“CMR”) in accordance with Act No. 3939 dated 7 December 1993, and the CMR entered into force in Turkey on 31 October 1995. In accordance with Article 1 / 1 of the CMR, the carriage of goods by road...
Ordinary partnerships are governed by Article 620 et seq. of the Turkish Code of Obligations No. 6098 (“TCO”). An ordinary partnership agreement is defined as an agreement whereby two or more persons undertake to join efforts and/or goods to reach a common goal...
The concept of disguised profit transfer in joint stock companies, in its broadest meaning, covers the transfer of company assets to related parties and may occur in different ways. This concept is regulated in detail under capital markets legislation...
Share subscription agreements, which are commonly encountered in start-up investments, set out the terms and conditions of an investor’s participation in a company as a shareholder by subscribing the new shares issued in a capital increase...
The electronic signature, which has the same legal consequences as wet signatures if it meets certain conditions, has taken its place in many legal systems and has enhanced commercial life. Although there are various types and applications in different legal systems...
INCOTERMS are a set of rules introduced by the International Chamber of Commerce (ICC) to explain the commercial terms that are widely used in international trade. The purpose of the Incoterms rules is to contribute to and facilitate the safe and swift conduct of international trade...