Board members of Turkish joint stock companies (anonim şirketler) play a critical role in corporate governance and business integrity. However, with great authority comes significant legal exposure. Directors may face civil and criminal liability under Turkish law for mismanagement, violations of fiduciary duty, tax irregularities, and financial misconduct. Both shareholders and third parties can initiate legal proceedings if a director breaches obligations defined under the Turkish Commercial Code (TCC - Law No. 6102).
At ER&GUN&ER Law Firm, we advise board members, investors, company secretaries, and foreign executives on risk mitigation and corporate compliance. Our English Speaking Turkish Lawyers offer legal strategies to prevent liability, respond to shareholder claims, and manage investigations by tax and criminal authorities. As the best lawyer firm in Turkey for commercial litigation and corporate governance, we provide legal clarity in boardrooms and courtrooms alike.
Board Structure and Duties Under Turkish Company Law
In a Turkish JSC, the board of directors (yönetim kurulu) is responsible for:
- Managing the company and representing it before third parties
- Maintaining financial records and corporate books
- Approving annual reports and dividend decisions
- Monitoring tax filings and compliance
- Acting in the company’s best interest with due care and loyalty
According to TCC Article 369, directors must perform their duties with the diligence of a prudent executive and uphold fiduciary principles. Breach of these duties may trigger personal liability even if the company is a separate legal entity.
Personal Civil Liability of Directors – TCC Article 553
The cornerstone of director liability under Turkish law is Article 553 of the Turkish Commercial Code, which states:
“Directors who breach their obligations arising from the law and the articles of association through fault shall be liable to the company, shareholders, and creditors for the resulting damage.”
This means that directors can be personally sued for:
- Misuse of company funds or abuse of voting power
- Failure to declare or pay taxes properly
- Deliberate neglect in record keeping or compliance
- Conflicts of interest or unauthorized transactions
- Neglecting duties that lead to financial harm
Our Turkish Law Firm defends directors in shareholder lawsuits, prepares internal liability assessments, and negotiates indemnity clauses during board member appointments.
Tax and Public Debt Liability of Board Members
Under the Law on Collection of Public Receivables (No. 6183) and related tax regulations, directors may be held personally liable for unpaid taxes, social security premiums (SGK), and administrative fines if:
- The company fails to pay its debts
- The director is responsible for financial management
- Negligence or misconduct contributed to the default
In such cases, the Tax Office or SGK may pursue asset seizure or legal action directly against the director. We prepare objection petitions, representation before tax courts, and strategies to limit liability to the director’s term of service.
Criminal Liability of Board Members Under Turkish Law
Directors of Turkish joint stock companies may face criminal charges if their actions violate provisions of the Turkish Penal Code (TCK). Common criminal offenses arising from board-level misconduct include:
- TCK 155 – Breach of Trust: Misuse of company funds or unauthorized transactions
- TCK 204 – Document Forgery: Falsification of meeting minutes, financial records, or contracts
- TCK 158 – Aggravated Fraud: Deceiving shareholders or third parties for gain
- TCK 161 – Insolvency Fraud (Hileli İflas): Hiding assets or false declarations in bankruptcy filings
Our English Speaking Turkish Lawyers provide criminal defense for executives facing prosecution, negotiate with prosecutors for deferred sentencing or conversion to fines, and manage media-sensitive cases with discretion and legal depth.
Shareholder Lawsuits Against Board Members
Shareholders may file a director liability lawsuit (sorumluluk davası) against board members for financial harm. These lawsuits may seek:
- Reimbursement of company losses
- Removal from office and court oversight
- Injunctions to prevent further harmful conduct
Our Turkish Law Firm prepares board resolutions, court filings, and expert accounting reports to support or defend director liability actions depending on representation side.
Liability of Foreign Directors in Turkish Companies
Foreign citizens who serve as board members in Turkish joint stock companies have the same responsibilities and exposure as Turkish nationals. However, they face additional risks related to:
- Language barriers in compliance reporting
- Lack of familiarity with Turkish corporate filing obligations
- Residence status and in absentia liability
We structure limited liability protections, prepare board resolutions in dual language, and secure D&O insurance where appropriate to mitigate risk for foreign executives.
Internal Legal Resources
- How to Form a Company in Turkey
- Corporate Governance and Board Structure in Turkey
- Director Liability in Turkey (LLC and JSC)
- Contract Enforcement and Shareholder Litigation
- Criminal Liability in Corporate Offenses
FAQ: Board Member Liability in Turkish Corporate Law
- Q1: Can directors be personally liable in Turkey?
Yes. TTK Article 553 allows shareholders and creditors to sue board members for damages due to fault or negligence. - Q2: Are board members liable for tax debts?
Yes. Under Law No. 6183, they can be personally pursued for public debts if negligent or noncompliant. - Q3: Can directors go to jail?
Yes. For crimes such as fraud, forgery, and tax evasion, criminal prosecution may result in prison sentences. - Q4: How can board members protect themselves?
By documenting all decisions, complying with audit requirements, and securing proper legal and financial advice. - Q5: Can foreign nationals be sued?
Yes. Foreigners serving on Turkish boards are subject to Turkish civil and criminal jurisdiction. - Q6: What is the limitation period for director lawsuits?
Generally 2 years from discovery, and 5 years from the breach event. - Q7: Can I resign to avoid liability?
Resignation limits future liability but does not eliminate responsibility for past breaches. - Q8: Can I be held liable if I’m only a symbolic director?
Yes. Even if inactive, formal board membership carries full legal obligations. - Q9: Is insurance available?
Yes. D&O (Directors & Officers) insurance is increasingly used in Turkish corporate governance. - Q10: How can a Turkish Law Firm help?
We review compliance, defend against claims, draft safe resolutions, and manage all commercial litigation risk for directors.
Protect Your Personal and Corporate Position with Strategic Legal Support
Board membership brings influence—but also risk. Whether you're a Turkish executive or a foreign investor appointed as director, legal mistakes in governance, reporting, or oversight can lead to civil liability, criminal prosecution, or reputational damage.
At ER&GUN&ER Law Firm, our English Speaking Turkish Lawyers defend directors in lawsuits, provide boardroom counsel, and prevent conflict through structured compliance. As the best lawyer firm in Turkey for board member liability and corporate governance, we turn law into protection—and protection into confidence.