Company Director Liability in Turkey 2026: Risks & Protection

One of the most dangerous misconceptions for foreign investors in Turkey is the idea of “Limited Liability.” They believe: “I opened a Limited Company (LTD) or Joint Stock Company (A.Ş.), so if the business fails, I only lose the money I put in.”

This is wrong.

While this is true for commercial debts (suppliers, banks), it is NOT true for “Public Debts” (Taxes and Social Security / SGK Premiums). Under strict Turkish Laws (specifically Law No. 6183), the state can pierce the corporate veil and seize the personal assets (house, car, bank accounts) of directors and managers.

This guide explains specifically who is at risk in 2026 and how to structure your board to minimize exposure.

1. The “Public Debt” Nightmare (Law No. 6183)

In Turkey, the State is a “privileged creditor.” If a company cannot pay its Taxes or SGK premiums, the Tax Office does not wait for bankruptcy proceedings. It goes directly after the management.

Who is liable?

• For Joint Stock Companies (A.Ş.): The Members of the Board of Directors are personally and jointly liable. Shareholders who are NOT board members are safe.
• For Limited Companies (LTD): The Managers AND the Shareholders are liable. (This is why A.Ş. is safer for investors).

2. Commercial Liability (TTK Art. 553)

Apart from taxes, directors are also liable to the company and its shareholders for “negligence.”

Article 553: “Founders, board members, managers, and liquidators who violate their obligations arising from the law or the articles of association are liable for the damages they cause.”

Key Liability Triggers:

1. Imprudent Investments: Buying a property for 2x its market value (suspected embezzlement).
2. Missing Capital Increases: Failing to call for a capital increase when the company is “Technically Bankrupt” (loss of 2/3 of capital).
3. Untrue Financial Statements: Signing false balance sheets.

3. The “Check Law” Risk (Criminal Liability)

This is unique to Turkey. Issuing a “Bad Check” (Bouncing Check / Karşılıksız Çek) is a CRIME.

• Penalty: Judicial Fine. If not paid -> Prison Sentence (up to 1500 days).
• Who goes to jail? The Person who Signed the check. If you satisfy the company debts but sign a check that bounces, you serve the time, not the shareholders.

4. Criminal Liability Beyond Checks (Fraud & Smuggling)

Besides bad checks, directors can face serious prison time for other corporate crimes under the Turkish Penal Code (TCK) and Bankruptcy Law (İİK).

A. Fraudulent Bankruptcy (Hileli İflas - TCK 161)

If you intentionally bankrupt the company to avoid paying creditors (e.g., hiding assets, selling machines to your cousin for cheap), this is “Fraudulent Bankruptcy”.

• Penalty: 3 to 8 Years Imprisonment.
• Effect: You can never run a company again.

B. Breach of Trust (Güveni Kötüye Kullanma - TCK 155)

Using company assets for personal benefit (e.g., buying a personal car with company money, paying for family holidays with the company card).

• Penalty: 1 to 7 Years Imprisonment.

C. Smuggling (Tax Evasion - VUK 359)

Issuing “Fake Invoices” (Naylon Fatura) to reduce tax.

• Penalty: 3 to 5 Years Imprisonment.
• Warning: Even if your accountant did it, as the calm, you are responsible for supervision.

5. How to Protect Yourself: The “Internal Directive” (İç Yönerge)

As a foreign investor or director, you cannot sign every paper. You need to delegate. But if you delegate wrongly, you remain liable.

The Solution: Issue an “Internal Directive” (Ref: TTK Art. 367).

1. The Concept: You formally divide the board’s powers into “Strategic Duties” (cannot be delegated) and “Management Duties” (can be delegated).
2. Registration: Register this Directive with the Trade Registry.
3. Result: If a specific manager is assigned the duty of “Paying Taxes” and fails to do so, the Board Members may avoid liability by proving they delegated this duty properly (limitations apply under Law 6183, but it helps significantly in commercial liability).

6. Top 5 Mistakes Foreign Directors Make

Mistake 1: Resigning Without Registration

You resigned from the Board properly, but it wasn’t registered in the Trade Gazette.

• Risk: To the outside world (and Tax Office), you are still a Director. You will receive payment orders for debts incurred after you left. Always ensure publication!

Mistake 2: Ignoring “Technical Bankruptcy” (Borca Batıklık)

If the company loses 2/3 of its capital, the Board MUST call a meeting (TTK 376). If you ignore this and continue trading, you become personally liable for all new debts.

Mistake 3: Signing Blank Promissory Notes (Senet)

Never sign a company bill/note without a “Protocol” stating what it is for. A blank signature can be filled with a Million Dollar figure later.

Mistake 4: Giving Unlimited PoA to Accountants

Giving a “General Power of Attorney” to a local accountant is risky. If they take loans or sell assets, you are responsible for “Lack of Surveillance” (Gözetim Yükümlülüğü).

Mistake 5: Assuming “Force Majeure” for Tax Debts

“Business was bad due to economic crisis” is NOT a valid excuse for not paying TAX/SGK. The court rejects this defense.

Konya Commercial Attorney

We advise international boards on compliance, liability protection, and crisis management.

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📧 Email: fevziyaskir@gmail.com

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