Statutory Independent Audit of a Turkish Joint Stock Company: Who Must Be Audited, Who May Audit, Audit Opinions and the Effect of a Missing Report (TCC 397-406)
Which Turkish joint stock companies (anonim şirket) need a statutory independent audit? Under Article 397(4) of the Turkish Commercial Code (TCC, Law No. 6102), the companies subject to audit under TCC 398 are determined by the President, and Presidential Decision No. 6434 does so through a list of companies audited regardless of size and through size thresholds for other companies. Under TCC 397(2), financial statements and the board's annual activity report that were not audited although the company is subject to audit are deemed not to have been prepared (düzenlenmemiş hükmündedir). This guide is written for foreign shareholders and investors. It is based on the statutory text and the Decision as read on 4 November 2026.
1. Which Turkish Companies Must Have an Independent Audit? (TCC 397(4) and Presidential Decision No. 6434)
The direct answer. TCC 397(4) provides that the companies subject to audit under TCC 398 are determined by the President. The instrument in force is the Decision on the Determination of Companies Subject to Independent Audit (Bağımsız Denetime Tabi Şirketlerin Belirlenmesine Dair Karar), Presidential Decision No. 6434, Official Gazette of 30 November 2022, No. 32029, last amended by Decision No. 11066, Official Gazette of 17 March 2026, No. 33199. Under its Article 3(1), the companies in List I are subject to independent audit without being tied to any criterion, and other companies are subject to it if they exceed the threshold values of at least two of three criteria in two consecutive accounting periods.
List I. The list includes, among others, investment institutions and portfolio management companies regulated by the Capital Markets Board; joint stock companies whose capital market instruments are traded on an exchange or other organised market, or that hold a valid approved prospectus or issue document for that purpose; banks and certain other companies regulated by the Banking Regulation and Supervision Agency; insurance, reinsurance and pension companies; payment and electronic money institutions; and state economic enterprises and their subsidiaries.
The thresholds. Article 3(1)(b) of the Decision sets three groups.
| Group (Decision 6434, Art. 3(1)(b)) | Total assets | Annual net sales revenue | Employees |
|---|---|---|---|
| (1) Companies whose capital market instruments are not traded on an exchange or other organised market but which are deemed publicly held under Capital Markets Law No. 6362 | TRY 30 million | TRY 40 million | 50 |
| (2) Companies in List II | TRY 120 million | TRY 150 million | 100 |
| (3) Companies outside groups (1) and (2) | TRY 500 million | TRY 1 billion | 150 |
List II covers companies regulated by the Information and Communication Technologies Authority (other than call centre companies), certain affiliates of and companies taken over by the Savings Deposit Insurance Fund (TMSF), and companies at least 50 per cent of whose capital belongs to municipalities. The group (3) figures were set by Decision No. 11066 for determining audit status in accounting periods beginning on or after 1 January 2026, and the group (2) figures by Decision No. 9774 for determining it in accounting periods beginning on or after 1 January 2025. Check the text in force for the period in question.
Entry and exit. Under Article 5(1), a company subject to the thresholds becomes subject to independent audit from the following accounting period if it exceeds the threshold values of at least two of the three criteria in two consecutive accounting periods. Under Article 5(2), it leaves the audit from the following accounting period if it stays below the threshold values of at least two criteria in two consecutive accounting periods, or below at least two of them by twenty per cent or more in one accounting period.
Measuring a group. Under Article 5(4), companies are taken into account together with their subsidiaries (bağlı ortaklık) and affiliates (iştirak): the parent's and the subsidiary's financial statement items are added together, with intra-group transactions eliminated if there are any, as are their average employee numbers, and an affiliate's items count in proportion to the company's share in it.
Other companies. Article 4 of the Decision excludes certain companies, subject to the exceptions in that Article. TCC 397(5) provides that joint stock companies outside paragraph 4 are audited under the rules of paragraph 5, whose procedures are to be set by a regulation issued by the President; whether such a regulation applies to a company should be checked at the time.
2. What Does the Statutory Audit Cover? (TCC 397-398)
The direct answer. Under TCC 397(1), the financial statements of companies and groups subject to audit are audited under the Turkish Auditing Standards (Türkiye Denetim Standartları), published by the Public Oversight, Accounting and Auditing Standards Authority (Kamu Gözetimi, Muhasebe ve Denetim Standartları Kurumu, KGK) and aligned with international auditing standards. The audit also covers whether the financial information in the board's annual activity report is consistent with the audited financial statements and reflects the truth.
The items examined. TCC 398(1) lists the inventory, the accounting and, to the extent the Turkish Auditing Standards provide, internal audit, together with the reports given under TCC 378 and the annual activity report. The audit also examines compliance with the Turkish Accounting Standards, the law and the provisions of the articles of association on financial statements. It must state honestly whether the assets and financial position are reflected in line with the true and fair picture principle (dürüst resim ilkesi) of TCC 515 and, if not, the reasons.
Groups. Under TCC 398(3), the group auditor examines the financial statements of the companies taken into the consolidated tables. The exception is a consolidated company already audited in accordance with these provisions, and it also covers a company with its seat abroad that has undergone an audit equivalent to the one the Code provides.
Risk reporting. Under TCC 398(4), the auditor gives the board a separate report, together with the audit report, on whether it has set up the system and the competent committee provided for in TCC 378. TCC 378(1) makes the committee mandatory in companies whose shares are traded on a stock exchange; in other companies it is set up immediately if the auditor considers it necessary and notifies the board in writing.
Labelling and later changes. Under TCC 397(2), companies subject to audit must state clearly in the heading of the financial statements whether they have been audited and, if so, the auditor's opinion, and the same rule applies to the annual activity report. Under TCC 397(3), if these documents are changed after the audit report has been submitted and the change may affect the audit reports, they are audited again.
3. What Happens if the Required Audit Report Is Missing? (TCC 397(2) and (6))
The direct answer. Financial statements and the board's annual activity report that were not audited although the company is subject to audit are deemed not to have been prepared. That is TCC 397(2) (düzenlenmemiş hükmündedir), and TCC 397(6) uses the same words for companies subject to audit under TCC 397(5) that do not have that audit carried out.
The link to the general assembly. Under TCC 514(1), the board prepares these documents in the first three months of the accounting period following the balance sheet date and submits them to the general assembly. The ordinary meeting, held within three months from the end of each activity period, deliberates and decides on them (TCC 409(1)), and decisions on them and on the disposal of annual profit are non-delegable powers of the general assembly (TCC 408(2)(d)). Audit reports must be available for inspection at least fifteen days before the meeting (TCC 437(1)).
What the Code does not say. TCC 397 does not state what happens to a general assembly resolution taken on such documents.
The routes for a shareholder. Under TCC 445, the persons listed in TCC 446 may file an action for annulment against general assembly resolutions contrary to the law or the articles of association, and in particular to the rule of good faith, within three months from the resolution date, before the commercial court of first instance at the company's seat. One of those persons is the shareholder who attended, voted against and had that dissent recorded in the minutes (TCC 446(1)(a)). TCC 447 states that certain resolutions are null (batıldır), giving examples introduced by the word özellikle (in particular); it does not name a missing audit report. Which route fits a given resolution is for the court to assess on the facts. See our guide to annulment and nullity of general assembly resolutions.
Steps at the meeting. A shareholder who sees that no report is on the table can vote against, have the dissent recorded in the minutes and diarise the three-month period. Shareholders holding one tenth of the capital, or one twentieth in publicly held companies, can have the deliberation of the financial statements and related matters postponed by one month by the chair's decision, without a general assembly decision (TCC 420(1)). A dividend decision falls under the same clause of TCC 408(2)(d); see dividend distribution under TCC 507.
The board's position. Under TCC 553(1), board members who breach the duties arising from the law and the articles of association through their fault are liable to the company, the shareholders and the company's creditors for the damage they cause. See our guide to directors' duties and personal liability.
4. Who May Act as Auditor, and Who May Not? (TCC 400)
The direct answer. Under TCC 400(1), the auditor may be a person who holds the title of sworn financial adviser (yeminli mali müşavir) or independent accountant and financial adviser (serbest muhasebeci mali müşavir), licensed under Law No. 3568 and authorised by KGK, and/or a capital company whose partners are such persons.
Who is disqualified. TCC 400(1) sets out situations in which the adviser or capital company, one of their partners, persons employed by their partners, or persons with whom they practise cannot be auditor. Among other cases, this applies to one of those persons who:
- is a shareholder in the company to be audited (a);
- is its manager or employee, or held that capacity in the three years before appointment as auditor (b);
- took part or contributed, other than through the audit, in keeping its books or preparing its financial statements (e);
- in the last five years earned more than thirty per cent of the total income from auditing activity from audit and consultancy services to the company, or to companies holding more than twenty per cent in it, and is expected to do so in the current year too (h).
Sub-paragraphs (c), (d), (f) and (g) add links through connected entities, family ties and employment.
Rotation. Under TCC 400(2), an auditor elected for a total of seven years in ten years for the same company cannot be elected again until three years have passed. KGK may set the procedures for this paragraph and may shorten these periods.
Other services. Under TCC 400(3), the auditor may not provide consultancy or services to the audited company, or do so through a subsidiary, apart from the exceptions named in that paragraph.
5. How and When Is the Auditor Chosen? (TCC 399 and 408)
The direct answer. Under TCC 399(1), the auditor is elected by the company's general assembly, and the group auditor by the general assembly of the parent company. The election must take place for each activity period and in any event before the end of the activity period in which the auditor will perform the duty. TCC 408(2)(c) lists the election and removal of the auditor among the non-delegable powers of the general assembly, except as provided by law.
Registration and announcement. After the election, the board without delay registers with the trade registry which auditor it has given the engagement to, and announces this in the Turkish Trade Registry Gazette (Türkiye Ticaret Sicili Gazetesi) and on the website (TCC 399(1)).
If no auditor has been elected. Under TCC 399(6), if no auditor has been elected by the fourth month of the activity period, the auditor is appointed by the commercial court of first instance at the company's seat on the request of the board, of any board member or of any shareholder. The same rule applies if the elected auditor rejects the engagement or terminates the contract, if the appointment resolution is annulled or null, or if the auditor cannot perform the duty or is prevented from performing it. The court's decision is final (kesindir). TCC 399(6) has a separate rule for companies whose trusteeship is carried out by TMSF.
Fees of a court-appointed auditor. Under TCC 399(7), the court determines, taking comparable cases into account, the advance to be deposited with the court for the fee and likely expenses. These amounts can be objected to within three business days, and the court's decision is final.
6. How Can an Auditor Be Replaced, and When May the Auditor Leave? (TCC 399(2), (4), (5) and (8))
The direct answer. Under TCC 399(2), the audit engagement can be taken back from the auditor only (sadece) in the manner provided in TCC 399(4) and if another auditor has been appointed. TCC 399(4) gives this decision to the commercial court of first instance at the company's seat.
Who may apply. The court acts on the request of (a) the board or (b) shareholders representing ten per cent of the capital, or in publicly held companies five per cent of the share capital or issued capital.
The ground. The court hears those concerned and the elected auditor. It may appoint another auditor where a just cause relating to the person of the elected auditor requires it, in particular where there is a suspicion that the auditor is acting in a biased way (TCC 399(4)).
The time limit. Under TCC 399(5), the action for removal and appointment of a new auditor is filed within three weeks from the announcement of the auditor's election in the Turkish Trade Registry Gazette.
Conditions for the minority. For the minority, TCC 399(5) requires that they:
- voted against the auditor's election at the general assembly;
- had the dissenting vote recorded in the minutes; and
- have been shareholders of the company for at least three months counted back from the date of the general assembly meeting at which the election took place.
Termination by the auditor. Under TCC 399(8), the auditor may terminate the audit contract only if there is just cause or if a removal action has been filed against the auditor. Disagreements about the content of the opinion, the company's limiting of the audit, or refraining from giving an opinion cannot count as just cause. The termination must be in writing and reasoned, and the results obtained up to that date are turned into a report in line with TCC 402 and given to the general assembly.
7. What Must the Board Give the Auditor? (TCC 401)
The direct answer. Under TCC 401(1), the board gives the auditor the financial statements and the annual activity report without delay and provides the facilities needed to examine the company's books, correspondence, documents, assets, debts, cash, negotiable instruments and inventory.
Information on request. Under TCC 401(2), the auditor asks the board for all the information needed for a lawful and careful audit and for the supporting documents. Where the preparations for the year-end audit require it, the auditor holds these powers also before the financial statements are drawn up; where a careful audit requires it, the auditor may also use them for subsidiaries and parent companies.
If the board holds back. The audit report must state clearly whether the board gave the explanations the auditor asked for and handed over the documents (TCC 402(4)(b)), and significant restrictions by the company on the matters to be audited can lead the auditor to refrain from giving an opinion (TCC 403(4)).
8. What Opinions Can the Auditor Give, and What Follows From Each? (TCC 402-403)
The direct answer. Under TCC 403, the auditor may give a positive opinion, limit the positive opinion, give an adverse opinion or refrain from giving an opinion. An adverse opinion and refraining from an opinion lead to the new-board procedure in TCC 403(5), subject to TCC 403(6), and a limited positive opinion requires the general assembly to decide on measures and corrections.
The report. Under TCC 402(1), the auditor prepares a report on the type, scope, nature and results of the audit, and a separate report evaluates the annual activity report (TCC 402(2)). The result of the audit is explained in an opinion letter (görüş yazısı) (TCC 403(1)), which also indicates whether there is a reason requiring the board's responsibility in matters relating to the financial statements (TCC 403(2)).
| Opinion | When the Code provides for it | What follows |
|---|---|---|
| Positive (olumlu görüş) | No breach of the Turkish Accounting Standards and other requirements was found, and the financial statements are correct and the picture they give is true and fairly reflected (TCC 403(1)) | TCC 403(5) prescribes no step |
| Limited positive (sınırlandırılmış olumlu görüş) | The statements contain breaches that the company's competent bodies can correct, and their effects on the result shown are not extensive and large (TCC 403(3)) | The general assembly also decides on the necessary measures and corrections (TCC 403(5)) |
| Adverse (olumsuz görüş) | The auditor has reservations and gives an adverse opinion (TCC 403(3)) | New-board procedure in TCC 403(5), subject to TCC 403(6) |
| Refraining from an opinion (görüş vermekten kaçınma) | Uncertainties in the books that do not allow the audit to be carried out in line with these provisions and conclusions to be reached, or significant restrictions by the company on the matters to be audited (TCC 403(4)) | The consequences of an adverse opinion (TCC 403(4)) |
After an adverse opinion. Under TCC 403(5), the board calls the general assembly to a meeting within four business days from the date the opinion was delivered to it, and the general assembly elects a new board. Unless the articles of association provide otherwise, the former board members may be re-elected. The new board has financial statements prepared in line with the law, the articles of association and the standards within six months, and submits them with the audit report to the general assembly. Under TCC 403(6), paragraph 5 does not apply, for as long as the trustee's duty continues, in companies for which a trustee was appointed under Article 133 of the Code of Criminal Procedure on terrorism-related grounds.
Group relationships. Under TCC 406(1), if the auditor wrote a limited positive opinion or a refraining letter on the company's relations with the controlling company or group companies, or if the board has declared an uncompensated loss caused by the group, the commercial court may appoint a special auditor on the request of any shareholder.
9. How Are Disputes Between the Company and the Auditor Resolved? (TCC 405)
The direct answer. Under TCC 405(1), differences of opinion between the company and the auditor on the interpretation or application of the relevant law, administrative act or articles of association, concerning the year-end accounts, the financial statements and the board's activity report, are decided on the file (dosya üzerinden) by the commercial court of first instance at the company's seat, on the request of the board or the auditor. The decision is final, and the debtor of the costs of the proceedings is the company (TCC 405(2)). TCC 405(1) does not name shareholders as applicants.
10. When Is the Auditor Liable? (TCC 404 and 554-561)
The direct answer. Under TCC 554(1), auditors and special auditors who act with fault in performing their statutory duties are liable for the damage they cause to the company, the shareholders and the company's creditors.
Who may claim what. Under TCC 555(1), the company and each shareholder may claim compensation for the damage suffered by the company, and shareholders may claim only that the compensation be paid to the company. Under TCC 557(1), where several persons must compensate the same damage, each is jointly and severally liable to the extent the damage can be personally attributed to that person according to fault and the circumstances.
Time limit. Under TCC 560(1), the right to claim compensation is time-barred (zamanaşımına uğrar) two years after the claimant learned of the damage and the liable person and in any event five years after the day of the act that caused the damage; a longer limitation period under the Turkish Criminal Code applies if the act is punishable and subject to one.
Honesty and secrecy. Under TCC 404(1), the auditor, the special auditor, their assistants and the representatives who help with the audit must carry out the audit honestly and impartially and keep secrets. Those who breach these duties intentionally or by negligence are liable to the company and, if they cause damage, to controlled companies (bağlı şirketler). TCC 404(2) sets monetary ceilings per audit for negligent breach. The duty to compensate cannot be removed or narrowed by contract (TCC 404(4)), and claims on the auditor's liability under this Article are time-barred five years from the report date, with the same rule for a longer criminal limitation period (TCC 404(5)).
Approving the balance sheet. Under TCC 424, a general assembly resolution approving the balance sheet results in the release of the board members, managers and auditors unless the resolution clearly says otherwise, and the same Article sets out when approval has no release effect.
11. What Can Shareholders Do, and Do the Rules Apply to Limited Companies? (TCC 407, 437-439 and 635)
The direct answer. A shareholder can read the audit reports before the meeting, question the auditor at the meeting and, on the conditions in the Code, seek a special audit. The rules on the auditor, the audit and special audit also apply to limited companies under TCC 635, other than TCC 397(5) and (6).
At the meeting. Under TCC 407(2), the auditor attends the general assembly. Under TCC 437(2), a shareholder may ask the auditors at the general assembly about how the audit was carried out and its results.
A special audit is a different tool. Under TCC 438(1), any shareholder may ask the general assembly for specific events to be clarified by a special audit, if necessary for the exercise of shareholder rights and if the right to information or inspection has been used before. TCC 438(2) and 439 set out the application to the commercial court after approval or refusal. See our guide to shareholder information rights and the special auditor.
Limited companies. Decision No. 6434 also covers them, because its Article 2(1)(b) defines a company as the capital companies regulated in the Code, and TCC 644(1)(a) applies TCC 554 to 561 on the liability of auditors to limited companies as well.
Frequently asked questions
Does every Turkish joint stock company need an independent audit?
The audit under TCC 398 applies to the companies determined by the President under TCC 397(4). Decision No. 6434 names companies audited without any criterion (List I) and sets thresholds for others. TCC 397(5) separately provides for joint stock companies outside paragraph 4, with procedures to be set by a Presidential regulation; whether such a regulation applies should be checked at the time.
What are the current size thresholds?
As read on 4 November 2026, Article 3(1)(b)(3) of Decision No. 6434 sets TRY 500 million total assets, TRY 1 billion annual net sales revenue and 150 employees for companies outside the two other groups, for determining audit status in accounting periods beginning on or after 1 January 2026. Groups (1) and (2) have lower figures. Exceeding at least two of the three in two consecutive accounting periods brings the audit from the following accounting period.
If the required audit was not carried out, is the general assembly resolution void?
TCC 397(2) says that the unaudited financial statements and the board's annual activity report are deemed not to have been prepared; TCC 397 does not state what happens to a resolution. A shareholder can look at the annulment action under TCC 445, filed by the persons listed in TCC 446 within three months from the resolution date, and at TCC 447. Which route fits a given resolution is for the court to assess on the facts.
Can a minority shareholder remove the auditor?
Through the court. Shareholders representing ten per cent of the capital, or five per cent of the share capital or issued capital in publicly held companies, may ask the commercial court to appoint another auditor where a just cause relating to the person of the elected auditor requires it (TCC 399(4)). The action is filed within three weeks from the announcement of the election, and the conditions in TCC 399(5) on the dissenting vote and three-month shareholding apply.
What if the general assembly does not elect an auditor?
If no auditor has been elected by the fourth month of the activity period, the commercial court of first instance at the company's seat appoints one on the request of the board, any board member or any shareholder, and the decision is final (TCC 399(6)). A separate rule applies in companies whose trusteeship is carried out by TMSF.
What happens to the board after an adverse opinion?
Under TCC 403(5), the board calls the general assembly within four business days from delivery of the opinion and the general assembly elects a new board; unless the articles of association provide otherwise, the former members may be re-elected. The new board has compliant financial statements prepared within six months. Refraining from giving an opinion has the consequences of an adverse opinion (TCC 403(4)), and TCC 403(6) contains an exception for certain trustee companies.
Can shareholders or creditors claim against the auditor?
Under TCC 554(1), auditors who act with fault in performing their statutory duties are liable for the damage they cause to the company, the shareholders and the company's creditors. For damage suffered by the company, shareholders may claim only that the compensation be paid to the company (TCC 555(1)). The time limits are in TCC 560(1).
