Turkey: Liquidation Procedures For Joint Stock Companies

i. Notifications: According to the Article 532 of the TCC, the first notification to be made in the liquidation process is the registration and announcement of the liquidation of the company by the board of directors in the trade registry.

Following the registration and announcement, the tax office, banks, creditors and frequently transacted persons should be informed about the liquidation.

Moreover, an important notification to be made by the liquidator is the situation where the company's debts exceed its assets. Liquidator shall immediately inform the court in the event of mentioned situation occurs. Following this notification, the court will examine and confirm whether the debts are more than assets and decide the bankruptcy of the company.

ii. Preparation of the first inventory and balance sheet: Following the registration and announcement of the liquidation status in the trade registry, the liquidator will begin the duty. Accordingly, the first thing to be done after the liquidator takes office is to prepare the first inventory and balance sheet showing the relationship between the assets and liabilities of the company.

This duty may not be transferred by the liquidators to third parties, including accountants, but experts may be consulted for valuation if necessary.

iii. Approval of the general assembly: The first inventory and balance sheet prepared by the liquidator should be approved by the general assembly of the company. The call for this general assembly meeting shall made by the liquidator and after the meeting the books and document of the company shall be given to the liquidator.

iv. Seizure of the assets and books: Before the approval of the first inventory and balance sheet from the general assembly, company assets, books and documents under the management of company managers shall be seized by the liquidator after the approval of the general assembly.

v. Call to the creditors: In order to protect the creditors from liquidation, the liquidators will notify the creditors of the company of the termination of the company and call on them to submit their claims to the company within the specified time.

The call should be made by registered letter with return receipt to the creditors whose identity is known, but in addition, the call should also be made by announcement in order to protect the creditors whose existence is unknown.

vi. Keeping books: In addition to the pre-liquidation books of the company, it will be useful for the liquidation officers to keep the liquidation transactions book, movable and immovable property sales book, liquidation debtors and creditors in order to ensure the regular execution of the liquidation related works.

vii. Regulating the financial statements and the ordinary general assembly meeting: In the event that the liquidation process of the company takes a long time, the liquidator should prepare the financial statements related to the liquidation for each year-end and submit them to the general assembly for approval.

In any case, before the application for registration of the general assembly resolution on the end of liquidation, the ordinary general assembly meeting of the company should be held, and the necessary documents should be submitted to the relevant trade registry directorate.

viii. Completion of ongoing works: Although it is necessary to carry out transactions within the scope of liquidation procedures within the liquidation process, the works started before the liquidation should be completed. The works started before the liquidation process starts should be followed and completed during the liquidation process as in the case of the continuation of the company.

ix. Collection of receivables: The liquidators, if in need, may ask the collection of the share prices which haven't been paid by the shareholders yet.

In addition, normally it is not possible to complete the liquidation process unless the receivables of the company are collected. Therefore, the liquidators shall collect the present receivables of the company.

x. Turn into cash of assets: The liquidator should turn into cash all the assets before the liquidation is completed. This requirement shall also apply if the company's cash assets are sufficient to pay its debts.

As a rule, the assets of the company shall be sold one by one, however it is possible to sell the assets collectively if they worth being sold together. The sale method of assets shall be determined by the liquidation officer considering the benefit of the company.

xi. Depositing the collected amounts to the bank: Since the receivables and assets of the company will be collected and managed by the liquidator during the liquidation process, it will be appropriate to keep the collected amounts in the bank account to be opened in the name of the company.

xii. Closing the branches: Before the completion of the liquidation process of the company entering liquidation, all branches, if any, should be closed before the relevant trade registry directorates.

xiii. Tax transactions: Since the company will be represented by the liquidator in external relations during the liquidation period, tax transactions should also be followed by the liquidator. Accordingly, transactions such as corporate tax, submission of liquidation declarations, submission of the list of money distributed to shareholders should be carried out by the liquidators on behalf of the company.

xiv. Returning of the share prices: Following the collection of the company's receivables, turning into cash of its assets and payment of its debts, the shareholders who were shareholders at the time of the return transaction should be refunded for the share prices.

xv. Calculation and sharing the liquidation share: Unless otherwise agreed in the articles of association of the company, the remaining assets of the company should be distributed among the shareholders in proportion to their shares after the collection of the company's receivables, turn into cash of assets, payment of its debts and payment of the share prices to the shareholders.

xvi. Final balance sheet: The liquidator should prepare the final balance sheet stating that all the above-mentioned transactions have been completed and therefore the liquidation procedures have been completed. This balance sheet should also be approved by the general assembly, registered and announced.

xvii. Deletion from the trade registry and notification: The minutes of the general assembly meeting where it is decided to approve the last balance sheet and to finalise the liquidation procedures shall be registered at the relevant trade registry office and announced trade registry gazette. With this registration and announcement, the title of the company shall be deleted from the trade registry and the legal entity of the company shall be ended.

xviii. Storage of books and documents: At the end of the liquidation, the books and all documents of the company, including those related to the liquidation, should be kept by the civil court for 10 years. However, it should be noted that in practice, the civil court refrains from fulfilling this article.