Liquidating a Joint Stock Company in Türkiye: Dissolution, Liquidators, the Creditors' Call and Deregistration (TCC 529-548)

A foreign investor who wants to close a Turkish subsidiary or joint venture soon meets a set of procedural questions. What ends the company, and when does liquidation begin? Who runs the liquidation, and must one of the liquidators be a Turkish citizen? How are creditors told, and when may the remaining assets be paid out to the shareholders? What happens if the debts turn out to be larger than the assets, and how is the company finally deleted from the trade registry? The Turkish Commercial CodeTTKTurkish Commercial Code No. 6102The statute that governs merchants, companies, commercial paper, insurance and carriage — the framework a foreign business actually operates inside.Glossary → (TCC, Law No. 6102) answers these questions for joint stock companies (anonim şirket) in Articles 529 to 548; the liability of liquidators sits in Article 553. This guide follows the statute step by step, in the order in which the stages occur.

1. How the Company Comes to an End and Enters Liquidation (TCC 529-534)

Grounds for ending. Under TCC 529(1), a joint stock company comes to an end:

• when the period fixed in the articles of association expires, unless the company has become one of indefinite duration by actually continuing its business after the period expired (TCC 529(1)(a));
• when its business purpose is achieved or its achievement becomes impossible (TCC 529(1)(b));
• when any ground for ending provided in the articles of association occurs (TCC 529(1)(c));
• by a general assembly resolution taken in accordance with the third and fourth paragraphs of TCC 421 (TCC 529(1)(d));
• when bankruptcy is declared (TCC 529(1)(e));
• in the other cases provided in laws (TCC 529(1)(f)).

TCC 421(3) provides that the amendments of the articles of association it lists (a complete change of the business purpose, the creation of privileged shares and the restriction of the transfer of registered shares) are taken with the affirmative votes of the holders of shares, or their representatives, forming at least seventy-five percent of the capital, and TCC 421(4) provides that if the quorums set in the second and third paragraphs are not reached at the first meeting, the same quorum is required at the following meetings. TCC 529(1)(d) refers to these two paragraphs for the general assembly resolution that ends the company.

Court routes. Under TCC 530(1), if for a long time one of the organs required by law is missing or the general assembly cannot meet, the commercial court of first instanceAsliye ticaret mahkemesiCommercial court of first instanceThe specialised first-instance court that hears commercial cases — and, unless the law says otherwise, it hears them whatever the amount in dispute.Glossary → (asliye ticaret mahkemesi) at the company's seat, at the request of shareholders, company creditors or the Ministry of Customs and Trade (the name used in the statute), hears the board and sets a period for the company to bring its situation into line with the law. If the situation is not corrected within that period, the court decides on the dissolution of the company. Once the action is filed, the court may take the necessary measures at the request of either party (TCC 530(2)).

Under TCC 531(1), where there are just causes, holders of shares representing at least one tenth of the capital, and at least one twentieth in publicly held companies, may ask the commercial court of first instance at the company's seat to decide on dissolution. Instead of dissolution, the court may decide that the claimant shareholders are paid the real value of their shares on the date closest to the decision date and removed from the company, or decide on another solution that suits the situation and is acceptable.

Registration and the move into liquidation. If the ending results from a reason other than bankruptcy or a court decision, the board has it registered with the trade registry and announced (TCC 532(1)). A company that has ended enters liquidation, subject to the exceptions in the law (TCC 533(1)). Under TCC 533(2), a company in liquidation keeps its legal personality until the end of liquidation, including in its relations with shareholders. It uses its trade name with the words “in liquidation” (tasfiye hâlinde) added, and the powers of its organs are limited to the purpose of liquidation.

Bankruptcy. Where the company ends through bankruptcy, liquidation is carried out by the bankruptcy administration under the Enforcement and Bankruptcy Law; the company organs keep their power of representation for the matters in which the company is not represented by the bankruptcy administration, and not beyond them (TCC 534(1)).

2. The Organs and the Liquidators: Appointment, Removal and Powers (TCC 535-539)

The organs. Once the company enters liquidation, the duties and powers of the organs are limited to acts that are compulsory for liquidation but, by their nature, cannot be performed by the liquidators (TCC 535(1)). The general assembly is convened by the liquidators to decide on matters that liquidation requires (TCC 535(2)).

Appointment. Unless a liquidator is separately appointed by the articles of association or by a general assembly resolution, the liquidation is carried out by the board of directors. Liquidators may be shareholders or third persons, and those assigned are entitled to ordinary remuneration unless the articles of association or the appointment decision provide otherwise (TCC 536(1)). The board has the liquidators registered with the trade registry and announced, and this also applies where the board itself carries out the liquidation (TCC 536(2)). Where the court decides on dissolution, the court appoints the liquidator (TCC 536(3)).

Citizenship and residence. Under TCC 536(4), at least one of the liquidators authorised to represent the company must be a Turkish citizen and have a place of residence in Türkiye. A foreign shareholder should check this condition when the liquidators are chosen.

Sale of assets. Unless the general assembly decides otherwise, the liquidators may also sell the company's assets by negotiation (TCC 538(1)). The sale in bulk of significant assets requires a general assembly resolution, and TCC 421(3) and (4) apply to that resolution (TCC 538(2)).

Powers. Powers granted to liquidators by law cannot be transferred, but one liquidator may give another liquidator or a third person power of representation so that specific implementation acts can be carried out (TCC 539(1)). Transactions that the liquidators conclude with third persons outside the purpose of liquidation bind the company, unless it is proven that the third person knew the transaction was outside the purpose of liquidation or could not fail to know it in the circumstances; the registration and announcement of the liquidation alone is not sufficient evidence of this (TCC 539(2)). Where there is more than one liquidator, and unless the general assembly resolution or the articles of association provide otherwise, two liquidators authorised to sign must sign under the trade name for the company to be bound; the liquidators represent the company in courts and in external relations on matters concerning liquidation (TCC 539(3)). The company is also liable for a wrongful act that a liquidator commits while performing the duty (TCC 539(4)).

3. The Opening Inventory and the Liquidators' Duties (TCC 540 and 542)

Inventory and balance sheet. As soon as they start their duties, the liquidators examine the company's situation at the beginning of liquidation. Where necessary, they consult experts to value the company's assets, prepare an inventory and a balance sheet showing the company's asset position and financial position, and submit them to the general assembly for approval (TCC 540(1)). After the inventory and balance sheet are approved, the liquidators take possession of all the assets, documents and books listed in the inventory (TCC 540(2)).

Duties. TCC 542(1) lists what the liquidators do:

• they complete current transactions, collect the unpaid portions of share prices where necessary, convert assets into cash and pay the company's debts, where it has been established, on the basis of the first liquidation balance sheet and the result of the call to creditors, that the debts do not exceed the company's assets (TCC 542(1)(a));
• they cannot carry out a new transaction that liquidation does not require (TCC 542(1)(b));
• where liquidation takes long, they prepare the financial statements relating to liquidation for each year-end, and the final balance sheet at the end of liquidation, and submit them to the general assembly (TCC 542(1)(d));
• they take the necessary measures to protect all the company's assets and rights as a regular and conscientious manager would, and finish the liquidation in the shortest time possible (TCC 542(1)(e));
• they keep the books needed for the orderly conduct and security of the liquidation (TCC 542(1)(f));
• they deposit, in a bank in the company's name, the money obtained during liquidation, apart from the money needed for the company's current expenses (TCC 542(1)(g));
• they immediately pay debts that are not yet due, discounting them at the rate the Central Bank of the Republic of Türkiye applies to short-term loans; creditors must accept this payment, and claims that cannot be discounted by law are excluded from this provision (TCC 542(1)(h));
• they give shareholders information on the state of the liquidation and, if requested, a signed document on it (TCC 542(1)(i)).

The liquidators therefore give the shareholders information on the state of the liquidation and, if the shareholders request it, a signed document on it (TCC 542(1)(i)), and where liquidation takes long, the general assembly receives the liquidation financial statements for each year-end (TCC 542(1)(d)).

4. The Creditors' Call and the Three-Month Distribution Ban (TCC 541 and 543(2))

How creditors are called. Under TCC 541(1), persons who are understood from the company's books or other documents to be creditors and whose places of residence are known are informed by registered letter that the company has ended, and are called to notify their claims to the liquidators. The other creditors are informed and called through three announcements made one week apart in the Turkish Trade Registry Gazette and on the company's website, and also in the manner provided in the articles of association.

Known creditors who do not respond. If creditors who are known to be creditors do not make a notification, the amount of their claims is deposited in a bank to be determined by the Ministry of Customs and Trade (TCC 541(2)).

Debts not yet due or in dispute. An amount of money sufficient to cover the company's debts that are not yet due or are in dispute is deposited with a notary, unless such debts have been adequately secured or the distribution of the company's assets among the shareholders has been made conditional on the payment of these debts (TCC 541(3)).

Liability. Liquidators who act contrary to these provisions are liable under TCC 553 for the money they pay wrongfully (TCC 541(4)).

The distribution ban. Under TCC 543(2), the remaining assets cannot be distributed until three months have passed from the date of the third call to creditors. However, if, depending on the circumstances, there is no danger to creditors, the court may permit distribution before three months have passed. The paragraph was amended by Law No. 6728 (15 July 2016) and Law No. 7341 (4 November 2021), so older commentary may refer to a longer period; the text in force says three months.

The date of the third call to creditors is the starting point of the three-month period in TCC 543(2).

5. Debts Exceeding Assets, Payment of Debts and Distribution to Shareholders (TCC 542 and 543)

Over-indebtedness. Under TCC 542(1)(c), if the company's debts exceed its assets, the liquidators immediately notify the commercial court of first instance at the company's seat, and the court decides on the opening of bankruptcy. Where bankruptcy is declared, liquidation is carried out by the bankruptcy administration (TCC 534(1)).

Paying debts first. The liquidators are obliged to pay the company's debts where it has been established, on the basis of the first liquidation balance sheet and the result of the call to creditors, that the debts do not exceed the company's assets (TCC 542(1)(a)).

The remaining assets. Under TCC 543(1), the assets that remain after the debts of the company in liquidation have been paid and the share prices have been returned are distributed among the shareholders in proportion to the capital they have paid and their privileges, unless the articles of association provide otherwise. Where a privilege exists in the liquidation share, the arrangement in the articles of association applies. Under TCC 543(3), unless the articles of association or a general assembly resolution provide otherwise, the distribution is made in cash.

The provisions discussed above lead to distribution through the following steps:

1. inventory and opening balance sheet approved by the general assembly (TCC 540);
2. letters to known creditors and three announcements one week apart (TCC 541(1));
3. deposit of amounts for creditors who did not notify their claims and for debts not yet due or in dispute (TCC 541(2)-(3));
4. payment of the debts (TCC 542(1)(a));
5. return of the share prices (TCC 543(1));
6. distribution of the remaining assets among the shareholders, which cannot take place until three months have passed from the third call, or earlier if the court permits (TCC 543(1)-(2)).

6. Closing the File: Deregistration, Books, Disputes, Additional Liquidation and Returning from Liquidation (TCC 544-548)

Deregistration. On the end of liquidation, the liquidators ask the registry directorate to delete the company's trade name from the registry; on that request the deletion is registered and announced (TCC 545(1)).

Books and documents. At the end of liquidation, the books and the documents, including those relating to liquidation, are kept in accordance with TCC 82 (TCC 544(1)). Under TCC 82(5), the documents listed in TCC 82(1)(a) to (d) are kept for ten years, and under TCC 82(6) the period begins at the end of the calendar year in which the last entry was made in the commercial books, the inventory was drawn up, the interim balance sheet was drawn up, the year-end financial statements and the consolidated financial statements were prepared, the commercial correspondence took place or the accounting document arose. Under TCC 82(8), where a legal entity has ended, the books and papers are kept, in accordance with the first paragraph, for ten years by the sulh court (sulh mahkemesi).

Disputes and resolutions. Disputes between shareholders and the liquidator or liquidators are resolved under the simplified trial procedure (basit yargılama usulü); the court gives its decision within thirty days and, if it considers it necessary, hears the shareholders concerned with the liquidators before it decides (TCC 546(1)). General assembly resolutions relating to liquidation are taken in accordance with TCC 418 (TCC 546(3)). Under TCC 418(1) and (2), and except where the Code or the articles of association prescribe a heavier quorum, the general assembly meets with the presence of holders of shares covering at least one quarter of the capital, this quorum must be maintained throughout the meeting, no quorum is required for the second meeting if the quorum is not reached at the first, and decisions are taken by the majority of the votes present at the meeting.

Additional liquidation. If, after liquidation has been closed, it becomes understood that additional liquidation acts must be carried out, the last liquidators, board members, shareholders or creditors may ask the commercial court of first instance at the company's seat for the re-registration of the company until those additional acts are concluded (TCC 547(1)). If the court finds the request well founded, it decides on the re-registration of the company for additional liquidation and has the last liquidators, or one or more new persons appointed as liquidators, registered and announced so that they can carry out these acts (TCC 547(2)).

Returning from liquidation. If the company has ended by expiry of its period or by a general assembly resolution, the general assembly may decide that the company continues, provided that distribution of the company's assets among the shareholders has not begun. The continuation decision must be taken with the votes of at least sixty percent of the capital; the articles of association may make this quorum heavier and provide for other measures. The liquidator has the decision registered and announced (TCC 548(1)). Where the company ended through bankruptcy, TCC 548(2) provides that the company continues if the bankruptcy is lifted or ended through the implementation of a concordat.

7. Liability of the Liquidators, Limited Companies and a Checklist (TCC 553, 643)

Liquidators' liability. Under TCC 553(1), founders, board members, managers and liquidators who breach, by their fault, the obligations arising from the law and the articles of association are liable for the damage they cause to the company, to the shareholders and to the company's creditors. Under TCC 546(2), TCC 553 applies to the liability of liquidators. TCC 553(2) provides that organs or persons who transfer a duty or power to another by relying on the law are not liable for the acts and decisions of the persons who take over those duties and powers, except where it is proven that they did not show reasonable care in selecting them. TCC 553(3) provides that no one can be held liable for breaches of the law or the articles of association, or for irregularities, that remain outside their control, and this non-liability cannot be set aside by relying on the duty of supervision and care.

Limited companies. Under TCC 643(1), the provisions on joint stock companies apply to the liquidation procedure and to the powers of the company organs in liquidation of a limited company (limited şirket). TCC 644(1)(a) lists TCC 553, on the liability of founders, board members, managers and liquidators, among the provisions on joint stock companies that also apply to limited companies.

Checklist for a foreign shareholder or director:

1. Identify the ground on which the company ends and, if it is a general assembly resolution, check the quorum in TCC 421(3) and (4) (TCC 529(1)(d)).
2. Have the ending registered and announced where TCC 532(1) requires it, and use the words “in liquidation” in the trade name (TCC 533(2)).
3. Check who the liquidators are: the board if nobody else is appointed (TCC 536(1)), and at least one authorised liquidator who is a Turkish citizen with a place of residence in Türkiye (TCC 536(4)).
4. Have the opening inventory and balance sheet approved by the general assembly (TCC 540(1)).
5. Send registered letters to known creditors and make three announcements one week apart (TCC 541(1)), and note the date of the third call.
6. Deposit the amounts required by TCC 541(2) and (3).
7. If debts exceed assets, notify the commercial court of first instance immediately (TCC 542(1)(c)).
8. Do not distribute before three months have passed from the third call, unless the court permits it (TCC 543(2)).
9. Ask for deletion of the trade name from the registry (TCC 545(1)) and keep the books as TCC 544(1) and TCC 82 require.

Lexin Legal advises foreign investors, shareholders and directors on the liquidation of Turkish companies, from the appointment of liquidators to the final deregistration.

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