When establishing a company in Turkey, in order to handle all activities related to company management the steps that need to be taken differs for each type of company. Joint stock companies and limited liability companies are the most popular companies to be established in Turkey.
Management of Joint Stock Companies in Turkey
The joint stock company is managed and represented by the board of directors. With a provision to be included in the articles of association, the board of directors may be authorized to transfer the management partially or completely to one or more members of the board of directors or to a third party, in accordance with an internal directive to be issued.
If the founders, members of the board of directors, managers and liquidators violate their obligations arising from the law and the articles of association, they are liable for the damage they have caused to both the company, the shareholders and the company's creditors.
Who is Liable for the Debts of the Joint Stock Company?
A joint stock company is a company whose capital is determined and divided into shares, and which is solely responsible for its debts with its assets. The responsibility of the partners is only against the company with the capital shares they have committed. In Joint stock companies, the creditors of the company cannot initiate proceedings before the partners.
However, the legal representative is responsible for the public debts (taxes, duties, fees, court costs, tax penalty) of joint stock companies that fall under the scope of Law No. 6183. Unless the authority to represent in the joint stock company is left to the executive directors or to third parties as a manager, it is the legal representative of all the members of the board of directors.
The board of directors may delegate its representation authority to one or more executive members or to third parties as a manager. At least one member of the board of directors must have the authority to represent. If the authority to represent the company is left to a member or members of the board of directors and to third parties as a manager, the public receivables are followed up and collected from them, and no action is taken against other members of the board of directors.
What is the Liabilities of the Founders of Joint Stock Companies?
The partners are liable for the payment of capital and anything they have undertook with the bylaws. The partner are not held liable as a person for the debts of the company.
According to article 553/1 of Law no. 6102; If the founders, members of the board of Directors, managers and liquidators violate their obligations arising from the law and the articles of association, they are held responsible for the damage they have caused to both the company, the shareholders and the company's creditors. What should be understood from the concept of 'manager' mentioned here is the general manager, assistant general managers, general coordinators and similar officials who take and execute the decision on behalf of the joint stock company and have the authority to sign.
Members of the Board of Directors are responsible with all their personal assets for public receivables that cannot be collected or understood to be uncollectible from the assets of the joint stock company. The members of the board of directors are responsible with all their assets for their debts arising from this responsibility.
Management of Limited Companies in Turkey
In a limited liability company, the management and representation of the company is regulated by the company contract. The management and representation of the company can be given to one or more partners holding the title of manager, or to all partners or third parties. Limited company directors are not required to be partners of the company. At least one partner must have the right to manage and represent the company.
The company is responsible for the tortious act committed by the person authorized by the management and representation of the company while performing his duties regarding the company.
Who is Liable for the Debts of Limited Company?
Partners in limited companies are not responsible for the debts of the company, they are only obliged to pay the basic capital shares they have committed and to fulfil the additional payment and ancillary performance obligations stipulated in the company contract.
In terms of public receivables, limited company partners are directly responsible for the public receivables that cannot be collected or understood to be uncollectible from the company, in proportion to their capital shares, and are subject to follow-up in accordance with the provisions of the Law.
In order for the partners to be held liable for the debt in a limited company, it must be understood that the public receivables could not/cannot be collected from the company. In this case, the responsibility of the partners is not limited to the capital share, but the partners are responsible in proportion to their shares. In case the partner transfers the capital share in the company, the persons transferring the share and the transferee are jointly responsible for the payment of the public receivables before the transfer. In case the shareholders are different persons when the public receivable arises and has to be paid, these persons shall be jointly responsible for the payment of the public receivables.
In the collection of public receivables, the directors and representatives of the limited company are jointly and severally liable for the entire debt of the company.