Foreign shareholders and foreign managers of foreign-owned companies established in Türkiye, who are company managers in limited liability companies and members of the board of directors in joint stock companies, have certain responsibilities to the State, banks and persons and institutions with whom they have business relations.

In this article, we will discuss the responsibilities of limited liability company shareholders and managers in general. Apart from the explanations we will make, of course, there will be special situations arising from other laws, contracts and other legislation, so it is important to note that each situation should be evaluated in its own special way.

In Limited Liability Companies, the Managers Have Signature Authority

According to the Turkish Commercial Code, the signature authority in limited liability companies is used through managers. In other words, limited liability companies are represented by managers.

Signature Authority in Limited Liability Companies can be gathered in one or more than one manager

In limited liability companies, it is legally obligatory for one of the shareholders to be an authorized signatory manager. In limited liability companies with more than one shareholder, all shareholders can be managers. The authority of the manager may be in the form of each manager representing the company unlimitedly with his/her signature alone, or a regulation may be made that obliges more than one manager to sign together in all transactions or in some transactions.

Limited Liability Company Shareholders are liable for Public Debts in proportion to their shares

Limited liability companies are liable to the tax office, social security institutions, special provincial administrations, municipalities and other public institutions with all their assets.

For instance, for debts and all kinds of obligations to the tax office, the tax office first applies to the company. The shareholders of the company are responsible for the debt that cannot be met from the assets of the company in proportion to their shares. In the event that the company does not or cannot pay its debt, the tax office can collect its receivables by seizing the company’s assets such as real estate, vehicles, fixtures, receivables from customers and other persons, money in the bank, stocks and other assets.

If the monetary sum of the company’s assets cannot cover the debt to the public, the shares of the company’s shareholders may be registered as non-saleable.

Public Debt that cannot be Collected from the Assets of a Limited Liability Company can be Collected from the Company Shareholder

Moreover, the assets of the company’s shareholders may be seized and converted into cash. In the absence of assets of the company’s shareholders, the remaining public receivable remains as a debt both on the company and on the company’s shareholders. Each shareholder can pay their share of the debt to the tax office. In this way, the company shareholder who pays his/her share of the debt is released from this obligation. Public institutions can request the collection of the debt from company managers as well as company shareholders.

Recourse Lawsuit Can Be Filed for the Director’s Deliberate Behavior

For public debts incurred due to the actions of the company shareholders and company managers, but not their personal fault or intent, other shareholders and managers may file a recourse lawsuit against the company manager and shareholder who committed this action. The filing of this lawsuit is not binding for the public institution. The public institution may request the collection of its receivables from all shareholders and managers within the scope of Law No. 6183 for the collection of its own receivables.

If Personally Guaranteed, the Shareholder and Manager are also held responsible for Bank Loans

Company shareholders and directors are not personally liable for debts to banks and other financial institutions taken on behalf of the company. However, if the company’s shareholders or directors personally vouch for these borrowing agreements, for example, a loan agreement, they are liable for the personal guarantees, not for their partnership or directorship. In this way, the bank or financial institution may demand the full amount of the debt from those who are under obligation due to suretyship without going to the assets of the company. Banks or financial institutions are not obliged to go to the assets of the company first, as is the case with public institutions.

No Personal Assets Due to Commercial Transactions

Company shareholders and managers are not liable for the debts and obligations arising from the commercial activities of companies with their personal assets, except in cases of intent, unless there are situations determined by special contracts. Businesses that cannot collect their receivables due to commercial transactions cannot demand payment of the debt from company shareholders and managers without a valid reason. They can only go to the assets of the company.

As we stated at the outset, the explanations provided above are merely meant to provide broad information. The personal obligations of limited corporations to public institutions, as well as to people and institutions with whom they have business relationships, may alter depending on the nature of the work and transactions, parties, specific laws, and many other circumstances. Making a thorough review of rights and obligations is crucial when starting a business, serving as a partner, manager, or signatory at another level of an existing business, and paying close attention to the crucial circumstances that arise when utilizing the signing authority. This is why thoroughly and completely understanding the rights and obligations before acting can help to avoid potential complaints.

Ali KARAKUŞ

CPA, Independent Auditor

Karen Audit & Consulting

Istanbul


Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.