Foreign investors in Türkiye must ensure at least one board member holds unlimited representation authority, duly registered with the trade registry. Without it, companies risk legal incapacity, tax penalties, and even dissolution. Strategic compliance with Turkish governance rules is key to business continuity and legal certainty.
Introduction
Türkiye's legal and regulatory framework governing joint-stock companies has evolved in parallel with increasing foreign direct investment. The system blends civil law traditions with modern corporate governance principles, particularly in areas such as board appointments, delegation of authority, and trade registry filings. This article outlines the key legal and procedural requirements under the Turkish Commercial Code ("TCC") and the Trade Registry Regulation ("Regulation"), with a focus on governance and representation standards relevant to international investors operating in Türkiye.
Unlimited Representation Authority: Legal Framework and
Practice
Under Turkish company law, representation is not merely an internal
delegation of will; it is the statutory means through which a
company acquires legal capacity. A joint-stock company can only act
through individuals legally authorized to represent it. This is
reflected in Article 370(2) of the TCC, which mandates that at
least one board member be granted the power to represent the
company individually and without limitation.
This provision is mandatory and cannot be altered by contract. It is fundamental to the company's external legal capacity and must be strictly followed. Failure to comply with this requirement renders the company legally incapacitated—from executing contracts to participating in litigation.
To grant unlimited authority, the board must adopt a formal resolution that:
- Is notarized;
- Is registered with the local trade registry;
- Is published in the Trade Registry Gazette.
The resolution must include identifying details of the appointed individual: full name, nationality, ID or passport number, and residential address.
When appointing foreign nationals, the process is more document-intensive. A notarized Turkish translation of the passport is required. If the individual resides in Türkiye, a notarized copy of the residence permit must be submitted. If a legal person is appointed as a board member, a natural person must be designated to act on its behalf, supported by documentation detailing the legal entity's tax number, Central Registration System ("MERSIS") number, and registration data, along with a resolution authorizing the named individual.
Trade registries scrutinize these filings closely. A critical but often overlooked rule prohibits a single individual from holding both sole and joint representation authority simultaneously. This is strictly enforced to maintain internal checks and balances.
Consequences of Non-Compliance
Failure to comply with these formalities carries serious risks. A company without a validly registered representative is deemed legally unrepresented. This status is not merely procedural—it renders the company unable to:
- Sign contracts;
- File official documents;
- Submit tax returns;
- Initiate or respond to lawsuits.
In such cases, the trade registry issues a formal warning. If the company does not appoint and register a valid representative within three months, the matter may be referred to the Public Prosecutor, who can initiate judicial dissolution proceedings. Meanwhile, the company faces1:
- Administrative penalties for non-compliance;
- Tax fines for missed obligations;
- Reputational damage due to failure to meet commercial commitments.
This is particularly crucial for foreign parent companies with Turkish subsidiaries. Delays in registering board changes abroad or assumptions that board authority is automatically recognized in Türkiye can lead to costly consequences.
It is therefore essential that companies proactively monitor the status of their board registrations and ensure that at least one individual with unlimited authority is always validly appointed and registered.
Limited Representation via Internal Directive
While at least one board member must hold unlimited representation authority, Turkish company law permits the delegation of limited representation to non-board individuals under certain conditions. Article 371(7) of the TCC allows the board to authorize such individuals—such as managers or department heads—through the adoption of an internal directive.
This directive serves as a formal delegation mechanism that becomes legally binding on third parties once registered. It defines specific scopes of authority, including:
- Financial limits (e.g., authority to commit the company only up to a specified amount);
- Operational boundaries (e.g., signing contracts only for particular functions);
- Role-based designations (e.g., authority conferred to positions like "branch manager" or "finance director").
A key feature is that the directive must refer to job functions or organizational roles rather than naming individuals. This ensures flexibility, eliminating the need for amendments and re-registration whenever personnel changes occur.
For legal validity, the internal directive must:
- Be approved via a formal board resolution;
- Be notarized and signed on every page by the board or authorized signatories;
- Be registered with the trade registry;
- Be referenced by its official registry number in subsequent resolutions that rely on its framework.
Importantly, internal directives must not be used to bypass the mandatory rules regarding unlimited representation. The Istanbul Chamber of Commerce and legal practitioners consistently advise that such directives be limited to operational-level authority and not used to confer executive-level powers equivalent to full representation.
Board Changes and Successor Appointments
The composition of a joint-stock company's board must always reflect its actual status. Any change—whether resignation, dismissal, term expiration, or death—must be documented and promptly filed with the trade registry.
Article 363 of the TCC provides a safeguard: if a board member departs mid-term, the remaining members may appoint a temporary replacement. However, this appointment is only valid until the next general assembly, where it must be ratified. If not confirmed, the appointment is deemed null.
Prompt registration is essential to ensure that board actions remain legally valid. Failure to update the trade registry may lead to:
- Doubts over the legitimacy of board decisions;
- Claims that the company was improperly represented;
- The potential annulment of contracts signed by unregistered individuals.
In single-shareholder joint-stock companies, an additional obligation applies: the identity of the sole shareholder must also be disclosed in the trade registry. This promotes transparency and legal certainty, particularly in corporate groups where ownership structures may otherwise be unclear.
Documentation Standards and Registry Process
The procedural requirements for valid representation and board updates are defined in the TCC and Regulation. To ensure that filings are accepted and accurately recorded, companies must submit a complete documentation set, which typically includes:
- A notarized board resolution detailing the scope of representation;
- The internal directive, if limited delegation is involved;
- A signed acceptance by the appointee;
- A notarized signature declaration (or submission via the MERSIS system);
- For foreign nationals: notarized passport translation and residence permit, if applicable;
- For legal entities: proof of registration, tax ID, MERSIS number, and natural person proxy documentation.
Trade registries, especially in major cities such as Istanbul and Ankara, enforce strict compliance, particularly in cases involving foreign nationals or cross-border structures. Legal advisors often recommend coordinating with the registry in advance and using standardized templates to minimize the risk of rejections or delays.
Conclusion
Maintaining valid corporate representation is not merely a regulatory requirement—it is fundamental to legal capacity and business continuity. Without a duly appointed and registered representative, a company cannot enter into binding contracts, interact with public authorities, or defend its legal interests.
Should this representation lapse, the trade registry will issue a warning. If the issue remains unresolved within three months, the matter may be escalated to the Public Prosecutor, risking judicial dissolution. Beyond legal consequences, companies may face financial penalties, tax liabilities, and reputational damage.
Foreign investors must be particularly vigilant. Errors in structuring representation or delays in updating trade registry information can lead to serious disruptions. To mitigate these risks, companies should work closely with experienced legal counsel, routinely review governance structures, and ensure full compliance with both the TCC and trade registry procedures.
References
Turkish Commercial Code (TCC), Law No. 6102, Official Gazette No. 27846, 14 February 2011.
Trade Registry Regulation, Official Gazette No. 28861, 27 January 2013.
Istanbul Chamber of Commerce, Ticaret Sicili Uygulama Rehberi [Trade Registry Implementation Guide], 2023 Edition.
Ministry of Trade of the Republic of Türkiye, MERSİS User Manual and registry application documentation, https://www.mersis.gov.tr
Footnote
1 Turkish Commercial Code Article 530 – Grounds for judicial dissolution for companies lacking a functional board.
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.
