As well as the company establishment, an investor may take
decision for termination of his/her company or a company's
termination conditions stated in the laws may occur such that start
of a liquidation process becomes unavoidable for the company.
Liquidation process is a period which may take long time and in
which a company's transactions and taxation procedures are
subject to different terms and conditions than a general operation
of company's activities.
A capital company may be terminated due to different reasons
stated by the laws such as
expiration of the company's period,
realization or impossibility of realization of company's
deficiency of company organs or impossibility of general
bankruptcy of the company,
decision of general meeting about termination of the
existence of justified reasons,
other reasons stated by the laws.
Despite the existence of termination reasons and conditions, the
termination of a company is completed within the frame of
completion of a liquidation process.
According to the Turkish Commercial Code ("TCC"), a
company enters into a liquidation period in case of realization of
above mentioned termination reasons. In liquidation period, all
transactions regarding the liquidation of the company may be
implemented and the authority of company organs are limited to the
liquidation purposes. The liquidation procedures are transacted by
liquidator which are appointed by the company under conditions of
the related provisions of the TCC. After their appointment,
liquidators shall be notified to the commercial register.
Liquidators have responsibilities and liabilities regarding the
liquidation processes. Liquidators are entitled to sell the company
assets in negotiation procedures and there are also obligations
such as to take an inventory and financial statement of the company
assets, to liquidate the company assets, to pay the claims of
company creditors, to keep books, to submit the financial
statements to the general meeting regularly and to declare and pay
the taxes accruing to the company. Liquidators' liability is
similar to the liability of company representatives and they are
liable for all transactions regarding the liquidation of the
company to third parties and to the company personally with their
assets unless they are able to prove the absence of their
As in other cases, the question comes to the fore, how the
taxation during the liquidation process has been regulated and if
there are any exemptions. As is known, the company's existence
continues also in a liquidation process with a difference that the
company is subject to the liquidation conditions. According to the
related tax laws, start and completion of liquidation of a company
shall be notified to the tax office within the time period stated
in the tax laws. All accrued taxes such as VAT and corporate tax
shall be paid and the liquidation period is regarded as accounting
period. This liquidation period is independent on the other
specific accounting periods which may generally be used by the
company. Moreover, there are specific documents and information
concerning the liquidation process which have to be added to the to
the corporate tax declaration.
One of the principal rights of shareholders is to obtain a
profit share from the company. In liquidation process, the
shareholders are entitled to obtain share from the residual amount
after payment of company's debts and share prices completely.
This subject is relevant by the decision for cancellation of
liquidation such that after starting of distribution of the
reaidusl amount from liquidation process a cancellation of
liquidation is impossible.
Pursuant to the provisional article 7 of the TCC, inactive
capital companies will be deregistered ex officio, in the event
that the conditions which have been stated in the TCC are
determined by commercial registers, other institutions or third
parties until 01.07.2014. In this case, these companies will be
deregistered without liquidation procedures which is called
"simplified liquidation". This liquidation process takes
a shorter time and it's procedures are more simplified than the
general liquidation procedures. Through this simplified liquidation
which has been provided by the New Turkish Commercial Code, it is
expected that the number of companies on paper will decrease.
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.
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