Turkey: Liquidation of Capital Companies

Last Updated: 1 July 2010
Article by Ayça Bayburan

There are different types of commercial companies that are available to establish by investors in Turkey in accordance with the Turkish Commercial Code (TCC). Such commercial companies are governed by specific legal rules which regulate their formation, operation and dissolution. Capital companies are the most common form of commercial entities in Turkey. The most common capital companies which are; joint stock companies ("Corporations" / Anonim Şirket in Turkish) and limited liability companies ("LLC's" / Limited Şirket in Turkish) and their liquidation procedures will be reviewed by this article.

Under Article 269 of the TCC, Corporations can be described as companies, whose capital is determined and divided into shares, being liable for its debts only up to the amount of its estate. The liability of Corporation shareholders is limited by the shares of capital that they own. Article 503 of TCC defines LLC's as companies founded under a trade name by two or more real persons or legal entities, which has a determined basic capital and in which the liability of members is again limited by the capital subscribed by them. However for LLC companies it shall be noted that such limitation of liability is not effective against government related debts such as employee social security premiums and taxes.

Capital companies are formed in order to provide a specific economic purpose. Furthermore, realization of such purpose or an impossibility of its realization, the expiration of the term of the entity, the loss of two thirds of the share capital or the reduction of the number of shareholders below five for joint stock companies and below two for limited liable companies shall result in the dissolution and liquidation of such entities. Except for cases of mergers into another entity and conversions of company types, the capital companies shall liquidate in conditions mentioned.

All types of capital companies are not regulated under one section of the TCC and TCC designates different corporate governance rules for each type separately however, according to Article 552 of TCC, provisions of joint stock corporations regarding appointment and dismissal of liquidators, procedures of liquidation, cancellation of entry in the Trade Registry and preservation of accounting books shall also be applied to LLC's.

The company that will dissolve shall enter into a phase titled liquidation. Under Article 440 of TCC, the company is wound up, duties and powers of its organs shall be limited to operations that are indispensable for such dissolution procedure.

In principal, the winding up of operations shall be carried out by the board of directors. However, if a liquidator is designated by General Assembly Resolution or by the Articles of Association of the company, than the Board may delegate such responsibility. Even if the winding up is performed by the Board, liquidators shall be registered to the Trade Registry and be announced accordingly. If not decided otherwise, the liquidators shall be entitled to an appropriate amount for their activities. The same rights may be applied to the Board or one of its members accordingly.

In cases of LLC's it shall be noted that there is no General Assembly or Board of Directors but instead only one management body that is titled 'Board of Shareholders', accordingly all the references to the Board or General Assembly shall be read to mean Board of Shareholders for LLC's).

Liquidators shall be appointed by the Articles of Association (AoA) or by a resolution of the General Assembly and accordingly dismissed with a similar procedure. General Assembly is entitled to limit or extend their powers. On the contrary, a liquidator that is appointed by the Judge (in cases of Court decisions for an involuntary dissolution or technical bankruptcy) then they cannot be dismissed by General Assembly resolutions. During liquidation, General Assembly is also entitled to decide upon amending AoA, increasing the basic capital and collecting unfulfilled commitments of share contributions from shareholders. However, it should be noted that such powers of General Assembly shall be limited to the operations that are indispensable for the liquidation only and in principle the companies that are being liquidated cannot operate commercially if not authorized specifically by a Court decision otherwise.

As soon as liquidators start to perform their duties, they shall examine the situation of the company at the beginning and shall draw up inventory and balance sheet as a consequence. They shall then submit those to the attention and approval of General Assembly of the company. Liquidators than take possession all of the records, documents and the ledgers of the companies and take control of the assets. Thereafter, persons who have been ascertained to be creditor according to the books of the company or the contents of other instruments shall be invited to declare their debts and credits. If those who are known to be creditors do not make any action accordingly the amounts of their debts noted in the company records shall be deposited to the administrative authorities to be named by the Courts under their name and benefit.

In pursuit of realizing the assets and collecting debts, if the liquidator foresees that the debts of the company would be very much likely to exceed its assets, then the liquidator shall immediately inform the Court. In such case, the Court will decide the execution of bankruptcy proceedings, if necessary (it shall be noted that liquidation in most cases is a voluntary procedure and unlike bankruptcy, in liquidation the balances of the company shall read a zero sum meaning that the company shall have no debts or credits remaining to finalize the procedure). If the winding up lasts a longer time, the liquidators shall draw up an interim balance sheet for each year which shall be submitted to the attention of General Assembly.

After payment of the debts, the remaining net assets of the company in liquidation shall be distributed in cash among the shareholders proportional to their capital commitments and the privileges attaching to such shares unless otherwise is decided by AoA of the company. Such procedure is titled 'liquidation margin right'. After the distribution of such assets, the liquidators shall draw up a final balance sheet at the end of the liquidation which shall be submitted to General Assembly.

At the end of the procedures the trade name shall be deleted from the Trade Registry permanently (please also note that at the commencement of the liquidation the company title is amended to include a phrase to show that the company is in liquidation) and such fact shall be announced.

Finally liquidators shall hand over all of the books and documents of the company to a notary public designated by the Court for preservation for a period of ten years following the liquidation. Naturally relevant tax offices are also informed of the liquidation and company's tax registration is also erased from tax database.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions