Turkey: Liability Of Legal Representatives Of Joint Stock Companies From Public Debts

The liability of legal persons from public debts, and the determination of the scope of this liability are of great importance in practice, since it is possible that the public debts that cannot be collected from joint stock companies may be collected from the legal representatives of the company. This issue is analyzed in this article, in light of the relevant provision of Law no. 6183 on Collection Procedure of Public Receivables.


Reiterated Art. 35 of Law no. 6183 on Collection Procedure of Public Receivables ("Law no. 6183") regulates the collection of public debts of legal persons. Pursuant to this article, public receivables that may not be wholly or partially collected from the assets of legal persons, or that possibly may not be collectable from the assets of legal persons, shall be collected from the personal assets of legal representatives of legal persons, or of those who administer those unincorporated organizations, pursuant to the provisions of the relevant law.

Pursuant to this article, in the event public receivables cannot be collected from joint stock companies, legal representatives of such companies would be liable for these uncollectable debts with their personal assets.

Notion of "Legal Representative"

Initially, with the analysis of liability of legal representatives of joint stock companies, the scope of the term "legal representative" must be determined.

Pursuant to Art. 365 of Turkish Commercial Code no. 6102 ("TCC"), joint stock companies shall be directed and represented by the board of directors ("BoD"). In other words, the BoD is authorized by law to direct and represent the company. This article also sets forth that the provisions of the TCC regulating exceptions for this rule are reserved. Within this context, pursuant to Art. 367/1 of the TCC, the BoD may be authorized to transfer the direction of the company pursuant to an internal directive, in whole or in part, to one or more directors, or to third persons, with a provision to be put in the articles of association. Therefore, the BoD may, wholly or partially, transfer the direction of the company.

As the BoD is the organ that is competent for the direction and representation of the company pursuant to the TCC, the BoD members are "legal representatives" within the meaning of Reiterated Art. 35 of Law no. 6183. The Court of Cassation has rendered many decisions on this issue1. The Court of Cassation emphasizes that the person to be held liable shall be competent to represent and bind the company. The BoD members may transfer their representation authority to executive members (murahhas üye) or to executive directors (murahhas müdür) pursuant to Art. 370/2 of the TCC. However, in this case, at least one member of the BoD must have the authority to represent the company. Unless they transfer their authority to represent the company, the BoD members shall be liable pursuant to this provision.

If the authority to represent the company is transferred to executive members, or to executive directors, the liability shall be on those to whom the authority has been transferred. If the representation authority has been transferred, the public receivables shall be collected from these persons, and the other BoD members will not be subject to any debt collection proceedings. The Council of State has stated in one of its decisions that the payment order with regard to collection of the receivables from other BoD members is to be cancelled, if the authority to represent the company has been transferred to the specified executive members within the BoD2. The Court of Cassation has decided that if the authority to bind the company has been transferred to one or some of the BoD members, the other directors shall be exonerated from liability, and the BoD members to whom the authority to bind has been transferred, shall be severally liable3.

In light of the decisions referred to above, both the Court of Cassation and the Council of State are of the opinion that the executive directors or executive members shall be liable for public debts, if the authority to represent the company has been entrusted to these directors or members.

The Communique (Serial: A Item No: 5) pertaining to Amendment of General Communique of Collection (Serial: A Item No: 1) published in the Official Gazette dated 11.09.2013 and numbered 28762, contains provisions on the determination of the legal representatives of joint stock companies. Under the title "VIII. Liability of Legal Representatives" of the Communique, it states that "The representatives are BoD members appointed through the articles of association of the company, pursuant to Law no. 6102, or elected by the general assembly, or third persons elected as directors by the BoD, under condition that at least one of the BoD members shall have the authority to represent the company."

Liability of Commercial Agents

The persons who have been granted the authority to represent without having the title of executive member or executive director shall be distinguished from the legal representatives. Pursuant to Art. 368 of the TCC, the BoD may appoint commercial agents. The commercial agent is not a legal representative, but is a representative voluntarily appointed pursuant to Art. 551 of Code of Obligations no. 6098. The representation authority of the commercial agent does not arise from legal provisions, but from the contractual relationship between the agent and the company.

As the commercial agent has been voluntarily appointed through a proxy, it cannot be considered as "legal representative" within the meaning of Reiterated Art. 35 of Law no. 6183. If the opposite of this statement is accepted, each person who has been granted a voluntary representation authority, such as customs brokers who have been granted an authority to pursue customs operations, these persons will be liable pursuant to this article; however, it is clear that Reiterated Art. 35 of Law no. 6183 has no such intention.

Pursuant to the explanations under the title "VIII. Liability of Legal Representatives" of the Communique (Serial: A Item No: 5) pertaining to Amendment of General Communique of Collection (Serial: A Item No: 1), the "Legal representative pursuant to Reiterated Art. 35 of Law no. 6183 shall be;

  • Pursuant to Law no. 6762 (abrogated), a person or persons who have been authorized to represent the company by the articles of association, or who have been granted representation authority by the BoD or general assembly, with the authority that arises from the articles of association,
  • Pursuant to Law no. 6102, BoD members who have been appointed pursuant to the articles of association or elected by the general assembly, or under the condition to have at least one BoD member, third persons who have been appointed as director by the BoD."

Liability Pursuant to Tax Procedure Law

Art. 10 of Tax Procedure Law No. 213 ("TPL") regulates the liability of legal representatives. Pursuant to this Article, in the event that the legal persons or minors and wards, and institutions which do not have legal personality, such as foundations or communities, are taxpayers or are tax responsible, their obligations shall be performed by their legal representatives, by those who direct the institutions that do not have a legal personality, and by their representatives, if any. Tax receivables, and other receivables related to tax receivables that could not be collected from taxpayers or tax responsibles because of the failure of those persons to perform their obligations, will be collected from the personal assets of the persons who did not perform their legal obligations.

Art. 1 of the TPL defines the scope of the relevant law. Pursuant to this article, the TPL shall be applied to taxes, duties and charges within the general budget, and taxes, duties and charges that belong to special provincial administrations and municipalities.

At this point, if public debts are classified as tax debts, it is important to define which provisions shall be applied. Pursuant to the decision of the 7th Chamber of the Council of State dated 09.06.2003 and numbered 2002/4619 E., 2003/3476 K., for those receivables that fall within the scope of Art. 10 of the TPL, and related receivables, Reiterated Art. 35 of Law no. 6183 shall not be applied.

With regard to the scope of "legal representative" in terms of the TPL, in a decision of the General Assembly of Tax Chambers of the Council of State4, it ruled on the fact that a person having the title of vice general manager who has the signing authority of 2nd Degree and 2nd Group does not grant him the title of legal representative. The jurisprudence within TPL is in parallel with our explanations with regard to Law no. 6183.


The liability of legal representatives of joint stock companies from public debts is set forth by the reiterated Art. 35 of Law no. 6183. Pursuant to this article, the receivables that cannot be collected from these companies, may be collected from the legal representatives of such companies. The decisions of the Court of Cassation and Council of State emphasize that the term 'legal representative' shall be construed as a person or persons having the authority to direct and bind the company. If the public debt is classified as a tax debt, Art. 10 of the TPL shall be applied. In the jurisprudence regarding this article, it is emphasized that the granting of a specific signature authority is not sufficient for liability.


1. Decision dated 09.11.2005 and numbered 2005/9158 E., 2005/11380 K. of the 10th Civil Chamber of the Court of Cassation, Decision dated 08.03.2011 and numbered 2010/379 E., 2011/2028 K. of the 21st Civil Chamber of the Court of Cassation. Source: www.kazanci.com.tr.

2. Decision dated 24.02.2000 and numbered 1998/4697 E., 2000/745 K. of the 11th Chamber of the Council of State.

3. Decision dated 14.06.2011 and numbered 2011/4753 E., 2011/7389 K. of the 21st Civil Chamber of the Court of Cassation.

4. Decision dated 13.11.2013 and numbered 2013/353 E., 2013/546 K. of the General Assembly of Tax Chambers of the Council of State.

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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