Turkey: Voluntary Termination Of A Joint Stock Company And The Liquidation Process

Last Updated: 9 February 2016
Article by Att. Erman Öncel, LL.M.

Most Popular Article in Turkey, February 2016

Below explanations are provided for companies that are not in the state of bankruptcy (i.e. assets of such companies are sufficient to cover all of their debts and liabilities.) The Board of Directors of the companies that are in the state of bankruptcy must apply to the relevant court to commence the bankruptcy proceedings. Some stages of the liquidation process that is initiated due to bankruptcy are different than the liquidation based on voluntary termination and the said process is carried out according to the specific bankruptcy legislation (i.e. bankruptcy estate is formed, the proceeds of the liquidation are distributed first to those with preemption rights such as employees, etc.).

That said, even after the liquidation process starts based on a voluntary termination decision as mentioned below, the liquidators must convert the process to bankruptcy liquidation if it is determined in the balance sheet that the liabilities of the company exceed its assets.

All of the below stages should be followed with the assistance and strict guidance of legal and financial and legal advisors.

Step 1: General Assembly Decision (GAM No. 1) for Terminating the Company:

According to Article 529/d of the Turkish Commercial Code ("TCC"), the General Assembly of the company must first convene and decide to terminate and dissolve the company with the affirmative votes of the shareholders/proxies owning/representing shares which represent at least 75% of the capital of the company (required in all meetings until the required quorum is met).

In the said General Assembly resolution, the shareholders may appoint one or more independent liquidators (at least one of the liquidators having representation authority must be a Turkish citizen and reside in Turkey). Shareholders can also be appointed as liquidators. If no liquidator is appointed in the said General Assembly meeting, the Board of Directors of the company will automatically act as the liquidator according to Article 536 of the TCC. Therefore, the word "liquidator" used in our below explanations also refers to the Board of Directors.

Step 2: Registration of the Termination Resolution with the Trade Registry / Application to the Trade Registry:

The above-mentioned termination (dissolution) resolution of the General Assembly must be registered with the relevant Trade Registry by the Board of Directors of the company pursuant to Article 532 of the TCC and announced in the Trade Registry Gazette, in order to commence the liquidation proceedings. In this regard, an application must be made to the relevant Trade Registry with the copies of the above-mentioned General Assembly resolution and other related application documents.

If an independent liquidator is appointed in the above-mentioned General Assembly resolution, signature declaration and acceptance letter obtained from the liquidator must also be submitted to the Trade Registry in the same application.1

Immediate Effects of the Registration with the Trade Registry:

  • The trade name of the company will change and the word "in liquidation" (in Turkish, tasfiye halinde) will be added to the beginning of the trade name.
  • The legal entity (personality) of the company will continue and the company will still have the legal capacity to act and carry out its activities. However, as mentioned in detail below, during liquidation, the company's main purpose shifts from making profit for its shareholders to liquidating its assets, paying off the its debts and finalizing pending transactions.
  • The corporate bodies of the company will continue their existence, however their authorities will mitigate significantly (not applicable for the Board of Directors if it acts as the liquidator, however even in that case, most of the authorities will be used by the Board of Directors in the capacity of a liquidator) and the said corporate bodies will be permitted to use their powers only in relation to and to the benefit of the liquidation process.
  • The company's tax liability and liability towards other administrative and governmental institutions will continue.

Step 3: Notification to the Relevant Tax Authorities

According to the relevant tax legislation, the liquidator must notify the relevant tax authority about the liquidation process within 3 days following the registration of the above-mentioned termination resolution of the General Assembly.

Step 4: Preparation of the First Inventory and the Balance Sheet:

As the first action to be taken within the context of the liquidation procedures, the liquidator - immediately after taking office - must investigate and review the financial status of the company and accordingly prepare the first inventory and balance sheet. The liquidator may2 consult with experts if necessary in order to assess the value of the company assets. The period which the liquidator will take into account for reviewing the company's status starts on the day the above-mentioned termination resolution of the General Assembly is registered with the Trade Registry.

Step 5: Approval of the First Inventory and Balance Sheet by the General Assembly (GAM No. 2):

The liquidator must submit the first inventory and the balance sheet to the approval of the General Assembly. Accordingly, the General Assembly can be held with the presence of shareholders (or their proxies) owning/representing shares which represent at least 1/4 of the capital of the company. This quorum must be maintained throughout the entire meeting. If the quorum is not met in the first meeting, no meeting quorum will be required for the second meeting. The decision to approve the first inventory and the balance sheet may be adopted with the majority of the votes that are represented in the meeting. This General Assembly resolution must be registered with the Trade Registry and announced in the Trade Registry Gazette.

After the approval of the first inventory and the balance sheet by the General Assembly, the liquidator seizes all the assets, books and records of the company, that are indicated in the first inventory.

Step 6: Invitation to and Protection of the Creditors:


The creditors of the company, which are determined according to the books of the company or other related documents, must be invited to declare their receivables to the liquidator. The creditors whose addresses are known will be invited by registered letter. Other creditors must be invited to declare their receivables by an announcement made 3 times, one per week, in the Trade Registry Gazette. Said announcement is made by way of applying to the Trade Registry with the necessary forms signed by the liquidator under the stamp of the company.

Receivables of the creditors who do not notify their receivables despite the announcements must be deposited in a bank account which will be determined pursuant to the relevant communiqué published by the Ministry of Customs and Trade, provided that such receivables are due and not disputed. As for receivables that are not yet due or subject to a dispute, an amount which is sufficient to cover such receivables must be deposited to a notary public unless such receivables are guaranteed or distribution of the liquidation proceeds is preconditioned to the payment of such receivables.

Step 7: Sale of Assets of the company

The liquidator has the authority to sell the company's assets. However, in order to sell a significant amount of assets as a whole, a General Assembly resolution must be obtained with the affirmative votes of the shareholders/proxies owning/representing shares which represent at least 75% of the capital of the company (required in all meetings until the required quorum is met).

Unless otherwise mandated by a General Assembly resolution, the liquidator may sell the company's assets at a bargain price.

Step 8: Other Actions that will be taken by the Liquidator (before, simultaneously with or after Step 7)

  • Completion/finalization of the ongoing business activities of the company which started before the liquidation process.  Liquidator cannot engage in new transactions that are not necessary for the liquidation.
  • If the liabilities of the company do not exceed its assets; payment of the company's debts which are determined according to the balance sheet prepared by the liquidator and as a result of the announcements made to the creditors.
  • If the liabilities of the company exceed its assets; - as mentioned above - the liquidator is required to immediately notify this situation to the relevant court. If the court decides in favor of bankruptcy, the liquidation process will be carried out according to the provisions of the bankruptcy legislation.
  • Collection of the unpaid amounts of share subscriptions of the shareholders.
  • Liquidating the assets of the company (e.g. converting into cash) (Step 7).
  • Immediate payment of the debts that are not due, by applying a discounted interest rate as for a short-term loan as determined by the Central Bank of the Republic of Turkey. The creditors are obliged to accept such payments.
  • Keeping the necessary books and records related to the liquidation.
  • Depositing all the money collected the during the liquidation process to a bank account of the company after deducting the necessary ongoing expenses of the company.
  • Continuing and finalizing pending lawsuits of the company.
  • If liquidation process takes more than one year, preparation of the necessary financial statements for each calendar year.

Step 9: Preparation of the Final Balance Sheet by the Liquidator and Approval by the General Assembly (GAM No. 3)


At the end of the liquidation process, the liquidator must prepare (or have prepared) the final balance sheet and submit it to the approval of the General Assembly. Accordingly, the General Assembly can be held with the presence of shareholders (or their proxies) owning/representing shares which represent at least 1/4 of the capital of the company. This quorum must be maintained throughout the entire meeting. If the quorum is not met in the first meeting, no meeting quorum will be required for the second meeting. The decision to approve the first inventory and the balance sheet may be adopted with the majority of the votes that are represented in the meeting. This General Assembly resolution must be registered with the Trade Registry and announced in the Trade Registry.

In the said General Assembly resolution, it must be decided to finalize the liquidation processes, release of the liquidator from legal liabilities and determine how and by whom the corporate books and records of the company will be kept after the liquidation (as mentioned below).

Step 10: Distribution of the Proceeds Obtained from Liquidation

Article 543 of the TCC regulates how the distribution of the proceeds obtained as result the liquidation will take place. After the registration of the GAM No.3 with the Trade Registry, the remainder of liquidation proceeds of the company, following payment of all of its debts/liabilities and the refunding of the share value to the shareholders, must be distributed in cash to the shareholders in proportion to the capital share they paid for.

Step 11: Keeping the Company Books and Records

Following the completion of the liquidation, the ledgers and the documents including those related to liquidation must be kept pursuant to Article 82 of the TCC which regulates principles of keeping the documents and the term for such requirement.

Step 12: Application to the Trade Registry for the Deletion of the Company from the Trade Registry Records

After all the above procedures are finalized, the liquidator must apply to the Trade Registry with 2 copies of the GAM No. 3 and other application documents for the deletion of the name of the company from the Trade Registry Records.

Step 13: Notification to the Tax Authorities about the Finalization of the Liquidation Process


1. Pursuant to Article 537/1 of the TCC, the General Assembly may always dismiss the appointed liquidators or the members of the Board of Directors who carry out the liquidation process, and re-appoint new liquidators.

2.Although not required by law, we strongly suggest that this process is carried out with the assistance of experts.

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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