In corporate structures, particularly limited liability companies (LLCs) and joint-stock companies (JSCs) operating in Turkey, directors and legal representatives are normally shielded from personal responsibility. However, Turkish law imposes personal liability on directors in a range of circumstances—especially when corporate mismanagement, tax noncompliance, or fraudulent behavior leads to public or private debt.
Our Turkish Law Firm provides legal representation and risk assessment services for company directors, foreign managers, shareholders, and board members. We advise on how to limit personal exposure under Turkish Corporate Law, respond to tax enforcement claims, and prepare legal defenses in lawsuits alleging director liability for company debts in Turkey. With decades of combined experience, our English Speaking Turkish Lawyers ensure you are protected both in commercial planning and during litigation. As the best lawyer firm in Turkey for corporate responsibility cases, we act fast to mitigate financial and reputational damage.
Overview: When Does Director Liability Arise in Turkey?
Under normal conditions, Turkish law follows the principle of legal personality. The company, not its shareholders or directors, is the responsible party. However, both the Turkish Commercial Code (TTK) and the Tax Procedure Law make exceptions. A company director can be held personally liable if:
- They act outside the scope of their authority
- They intentionally harm creditors or the state
- They fail to perform public law obligations such as tax or social security payments
- They commit fraudulent or negligent acts during the course of management
The most common scenario involves tax and SGK debts, where the company has no assets left, and the state initiates legal proceedings directly against the director. Our Turkish Law Firm steps in early to block collection actions and shift the burden of liability back to the company where appropriate.
Legal Basis: TTK Article 370–375 and Related Provisions
Articles 370 to 375 of the Turkish Commercial Code (Law No. 6102) clearly define the role, duties, and responsibilities of company directors. Key obligations include:
- Duty of care and diligence (özen yükümlülüğü)
- Duty of loyalty and honesty (sadakat yükümlülüğü)
- Avoiding conflicts of interest
- Maintaining accurate accounting and reporting systems
- Preventing insolvency and notifying partners in case of capital loss
When a director breaches these duties, the TTK allows shareholders, creditors, or even the company itself to initiate claims for compensation. Our English Speaking Turkish Lawyers draft defenses, counterclaims, and director resignation documents in such high-risk cases.
Director Liability for Public Debts: Tax and Social Security Obligations
One of the most frequent causes of director liability in Turkey arises from unpaid public debts, particularly tax obligations and social security contributions (SGK). According to Law No. 6183 on the Collection of Public Claims, if a legal entity such as a limited company fails to pay its tax debts, and its assets are insufficient for enforcement, the state may pursue collection from its legal representatives.
This creates a serious financial risk, as directors may be held personally liable for unpaid:
- Income tax (gelir vergisi)
- Value-added tax (KDV)
- Corporate tax (kurumlar vergisi)
- Withholding tax on salaries or rent
- Employee social security premiums (SGK prim borçları)
Our Turkish Law Firm files pre-collection objections, prepares defense files to limit the director's liability to their term of office, and appeals tax office decisions in tax courts and administrative courts across Turkey. We also analyze accounting ledgers and perform signature circular reviews to distinguish legal vs. actual responsibility.
Criminal Liability of Company Directors in Turkey
In addition to civil liability, company directors may face criminal prosecution under Turkish Penal Code (TCK) if fraudulent acts are involved. Examples include:
- Issuing false balance sheets or accounting records
- Fraudulent bankruptcy (hileli iflas)
- Concealing company assets before enforcement
- Forgery of commercial documents or signatures
Our English Speaking Turkish Lawyers provide criminal defense in white-collar crime prosecutions related to commercial fraud, fake invoices (naylon fatura), or evasion of tax through fictitious partnerships. As the best lawyer firm in Turkey for white-collar crime and commercial litigation, we manage both criminal and civil processes in coordination.
Resignation, Mitigation and Legal Exit Strategy
Many foreign and domestic company directors are unaware that resigning from management positions must be properly notified and registered in the Turkish Trade Registry. Otherwise, public institutions and creditors may continue to hold them liable even years after they leave office. To mitigate this risk, our Turkish Law Firm advises:
- Filing notarized resignation declarations
- Ensuring trade registry updates
- Delivering resignation notice to tax office and SGK
- Preparing a final management report to limit retroactive liability
We also negotiate personal release agreements and shareholder waivers to avoid future disputes after resignation.
Can Foreign Directors Be Held Liable in Turkey?
Yes. Foreign company directors in Turkey—whether appointed in joint stock companies or limited companies—can be held personally liable for company debts or mismanagement, just like Turkish nationals. In fact, because of cross-border enforcement challenges, authorities may initiate proceedings faster against foreign managers for:
- Neglecting legal obligations
- Failing to ensure compliance with local tax laws
- Improperly using proxy directors
- Operating without physical presence or oversight
Our English Speaking Turkish Lawyers advise international clients on how to structure corporate governance in a way that preserves control but avoids personal risk in Turkish commercial law.
Litigation Process for Director Liability Claims
When a director is sued for personal liability in Turkey—either by public authorities or private creditors—the case typically proceeds through the Commercial Court of First Instance (Asliye Ticaret Mahkemesi). Key elements of the process include:
- Burden of proof: Claimants must show causation between director’s conduct and the debt
- Expert opinion: Court-appointed accountants review books and balance sheets
- Management records: Signature circulars, meeting minutes, shareholder resolutions are reviewed
- Timeline: Most cases take 12–24 months, with possible appeal to regional court and Supreme Court (Yargıtay)
As the best lawyer firm in Turkey for commercial litigation and director liability cases, we represent directors at all stages of trial and protect against unjust personal enforcement of corporate obligations.
Internal Legal Resources
- Company Debt Enforcement in Turkey
- Tax Liability for Companies
- Commercial Litigation Overview
- Limited Company Law in Turkey
- Director Resignation Process
FAQ: Director Liability for Company Debts in Turkey
- Q1: Can directors be personally liable for company tax debt?
Yes. If the company cannot pay its taxes and the director was negligent or responsible, tax office may collect from the director personally. - Q2: Does limited liability protect directors?
Generally yes, but not in cases of mismanagement, negligence, or public debt collection. - Q3: Are foreign directors treated differently?
No. Turkish law applies equally, and foreign nationals are regularly held accountable when liability arises. - Q4: Can I avoid liability by resigning?
Only if properly registered and documented. Backdated or informal resignations don’t protect you. - Q5: What if I didn’t sign anything?
Courts review de facto control. Even shadow directors can be liable. - Q6: Can I be sued years later?
Yes. Tax and SGK can pursue you years later if debts occurred during your management term. - Q7: What documents help in my defense?
Resignation proof, limited representation, board decisions, and external audit reports help show lack of fault. - Q8: Can shareholders sue me as a director?
Yes, if they believe you caused company losses through bad faith or gross negligence. - Q9: How can a Turkish Law Firm protect me?
By preparing resignations, defending in court, appealing collection notices, and handling cross-border enforcement issues. - Q10: What’s the first thing I should do if sued?
Contact a lawyer immediately. You only have limited time to file objections or prepare a statement of defense.
Protect Yourself from Director Liability with a Turkish Law Firm
As a director, you carry legal and financial responsibility not only to your company, but also to creditors, the state, and shareholders. Understanding and mitigating director liability in Turkey is essential—especially if you’re involved in cross-border business or acting as a foreign executive.
At ER&GUN&ER Law Firm, our English Speaking Turkish Lawyers deliver commercial protection strategies tailored to your role, company type, and sector. We proactively defend directors against company debt enforcement, public law collections, and shareholder disputes. As the best lawyer firm in Turkey for corporate legal defense, we stand by our clients from boardroom to courtroom.