3 October 2025

Author: Av. Onur Puğ Does the phrase “I invested my capital, the rest is the company’s problem” actually reflect reality in Turkish limited companies?

Sometimes yes.

Sometimes absolutely not.

Especially once tax debts, SGK premiums (Turkish Social Security Institution liabilities), public receivables, or signatures placed under the title of “company manager” enter the picture.

Under Turkish Commercial Code, limited liability mainly protects shareholders against ordinary commercial debts.

But public debts are a very different discussion.

General Liability of Shareholders

Under Articles 573 and 602 of the Turkish Commercial Code, a limited company is generally liable for its debts with its own assets.

As a rule, shareholders are only responsible for their committed capital contributions.

Meaning:

ordinary company debts usually do not directly affect the personal assets of shareholders. But there are important exceptions.

Under Article 35 of the Law on the Collection of Public Receivables:

if public debts such as taxes or SGK obligations cannot be collected from the company itself, shareholders may become personally liable in proportion to their shareholding ratios.

And yes, this risk may continue even after liquidation or share transfer under certain conditions.

The Reality of Being a “Manager”

The word “manager” may look elegant on a business card.

The financial consequences may look less elegant later.

Under Turkish law, company managers carry significantly broader responsibility than ordinary shareholders.

This applies whether the manager is also a shareholder or not.

Under Turkish Commercial Code Article 553, managers may become liable for damages caused by violations of legal obligations, the articles of association, or managerial duties.

If multiple managers exist, joint liability may also arise.

Meaning:

the claimant may sometimes pursue the full amount from a single manager first, regardless of internal fault distribution.

And under public receivable legislation together with Tax Procedure Law provisions, managers may become personally liable for the entire unpaid public debt with their personal assets.

Not only their proportional share. The entire debt.

Shareholder vs. Manager

In practice, the distinction becomes very important:

shareholder but not manager usually liable only proportionally for certain public debts shareholder and manager potentially liable for the entire debt not shareholder but manager still potentially liable for the entire debt

This surprises many people entering Turkish company structures for the first time.

Especially foreign investors.

Share Transfers Do Not Always End Liability

Another common misunderstanding:

transferring company shares does not automatically erase previous public liability. Under Turkish public receivable rules:

both the transferor and transferee may remain jointly liable for certain debts originating before the transfer date.

Even carefully drafted share transfer clauses may not fully protect against claims from public authorities. Because contract freedom usually stops where mandatory public law begins.

Criminal Liability

Criminal responsibility remains personal under Turkish law.

But in practice, unclear management structures may create serious problems during investigations.

False declarations, misleading company documents, unlawful capital transactions, accounting irregularities, or tax-related allegations may trigger both civil and criminal consequences.

And if internal authority distribution was never documented properly, prosecutors may start from the assumption of shared responsibility.

Which usually creates a very uncomfortable conversation later.

Practical Reality

In Turkish limited companies, “limited liability” is real.

But only up to a point. Once public debts, managerial authority, representation powers, tax obligations, or regulatory issues become involved, liability may expand very quickly.

That is why properly drafted authority structures, internal responsibility allocation, signature powers, and written task distribution matter much more than many companies initially expect.

Sometimes the most valuable corporate document is simply the one proving:

This was not my responsibility.