Liquidation of a Turkish Limited Liability Company or Joint Stock Company: Legal Framework and Procedure

The liquidation of a company in Turkey is a mandatory legal process that precedes the final closure of a business. Whether it concerns a Turkish Limited Liability Company (Ltd. Şti.) or a Joint Stock Company (A.Ş.), once the resolution of dissolution has been adopted, the legal entity continues to exist, but its activities are strictly limited to liquidation. During this phase, the company’s trade name in the commercial register is supplemented with the designation “in Liquidation / Tasfiye Halinde.” The company thereby enters a stage devoted exclusively to the orderly winding-up of its affairs.

The process of company dissolution in Turkey follows clearly defined stages: terminating ongoing business operations, collecting receivables, settling all liabilities, liquidating the company’s assets, and finally distributing any remaining balance to the shareholders. Only once these steps have been fully completed will the company be permanently deleted from the commercial register. In other words, liquidation represents an essential transitional phase between dissolution and complete deregistration.

For both domestic and international investors seeking to close their business in Turkey, it is crucial to conduct the liquidation process in full compliance with the provisions of the Turkish Commercial Code (TCC). Failure to do so results in an incomplete closure, leaving legal and tax-related obligations of the company still in force.

Reasons for The Dissolution of Turkish Companies

According to the Turkish Commercial Code (TCC), companies are generally incorporated for an indefinite period of time. However, there are specific circumstances under which dissolution and subsequent liquidation become inevitable. The most common grounds for the termination of a company in Turkey can be summarized as follows:

·       Shareholders’ Resolution: In a Turkish Limited Liability Company (Ltd. Şti.), dissolution may be decided by a qualified majority of shareholders. In a Turkish Joint Stock Company (A.Ş.), the resolution is subject to the quorum requirements set forth in the TCC and the company’s Articles of Association. In practice, dissolution by shareholders’ resolution represents the most common path to liquidation.

·       Expiry of the Company’s Duration: If a company was established for a fixed term, the expiration of this period leads to dissolution. If business operations continue in practice, the company is deemed indefinite in duration; if activities cease, dissolution takes effect.

·       Fulfillment or Impossibility of Purpose: Once the company’s original purpose has been achieved, or if it becomes permanently impossible to pursue (e.g., completion of a project or prohibition of the activity), dissolution occurs.

·       Contractual Grounds in the Articles of Association: Specific dissolution events stipulated in the Articles of Association—such as the reduction of shareholders below the statutory minimum—trigger termination.

·       Court Decision: If mandatory company organs are not formed for a significant period of time or the general assembly cannot convene, a court may first grant a deadline and subsequently order dissolution. Serious shareholder disputes or violations of law may also be deemed “just cause” for judicial dissolution.

·       Insolvency: When a court opens insolvency proceedings, the company is terminated. Liquidation is then carried out by the bankruptcy administration in accordance with Turkish insolvency law.

Once any of these events occurs, the company is deemed legally dissolved and the liquidation procedure is initiated. Particularly in the case of dissolution by shareholders’ resolution, the decision is notarized, registered with the Turkish Trade Registry and published in the Turkish Trade Registry Gazette (Türkiye Ticaret Sicili Gazetesi). From that point onward, the company’s trade name bears the designation “in Liquidation / Tasfiye Halinde”; all commercial activities cease, and only winding-up measures remain permissible.

Resolution on Liquidation and Registration with the Trade Registry

For a company in Turkey to formally enter the liquidation phase, a resolution of dissolution adopted by the General Assembly of Shareholders is required. Under the Turkish Commercial Code (TCC), such a resolution—unless stricter quorums are stipulated in the Articles of Association—must be passed by a qualified majority. To take legal effect, the resolution is notarized, registered with the competent Trade Registry Office, and published in the Turkish Trade Registry Gazette (Türkiye Ticaret Sicili Gazetesi). Only through these steps does the liquidation become officially recognized and communicated to the public.

From that moment on, the company continues to exist as a legal entity but transitions into the status of “in Liquidation / Tasfiye Halinde.” This means that no new business activities may be initiated; permitted are only actions directly related to liquidation, such as winding up ongoing operations, collecting receivables, and settling liabilities. Even though the previous corporate bodies—managing directors in a Ltd. Şti. or the board of directors in a JSC—remain in office, their authority is restricted exclusively to liquidation-related matters. The legislator’s intent here is to safeguard the company during liquidation and prevent risk-bearing transactions. 

As part of the registration process, specific documentation must be submitted to the Trade Registry, including the notarized copy of the shareholders’ resolution, the attendance list (Hazirun List), and the application form. Today, the procedure is initiated electronically through the MERSİS system, with the required documents subsequently submitted in physical form to the registry office.

Appointment and Role of Liquidators

The first step in the liquidation of a Turkish company is the appointment of liquidators. In practice, this decision is usually taken simultaneously with the shareholders’ resolution on dissolution. If no explicit appointment is made, the provisions of the Turkish Commercial Code (TCC) apply, and the existing corporate bodies automatically assume this role—managing directors in a Turkish Limited Liability Company (Ltd. Şti.) and the board of directors in a Turkish Joint Stock Company (A.Ş.).

The number of liquidators may vary; one or several individuals can be appointed. In practice, it is expected that at least one liquidator be resident in Turkey and maintain a local service address to ensure proper handling of official procedures. Holders of a “Blue Card (Mavi Kart)” also enjoy rights comparable to Turkish citizens and may therefore act as liquidators.

Liquidators assume the management and representation of the company solely for the purpose of liquidation. Their core responsibilities include:

·       Winding up ongoing business operations

·       Collecting outstanding receivables

·       Settling existing liabilities

·       Realizing company assets (real estate, machinery, other assets)

·       Distributing the remaining balance to shareholders

The appointment and dismissal of liquidators generally falls within the competence of the shareholders’ assembly. However, in cases of “just cause,” shareholders or creditors may petition the court to request a replacement.

Liquidators are subject to personal liability if they violate statutory obligations, contravene the Articles of Association, or cause damage through negligence. Their role is therefore bound by a high standard of duty of care and fiduciary responsibility, safeguarding the interests of the company, its shareholders, and its creditors.

Duties of a Company During Liquidation In Turkey

Even during liquidation proceedings, a company in Turkey continues to exist as a legal entity. Its scope of action, however, is strictly limited to the orderly settlement of assets and liabilities. The objective is to ensure full transparency of all assets and debts and to complete the liquidation process in compliance with the law.

1. Inventory and Opening Balance Sheet

At the beginning of their mandate, the liquidators prepare an inventory of the company’s assets and liabilities, as well as an opening balance sheet. All payments made and receivables collected during the liquidation must be recorded. At the end of the process, a final balance sheet is presented and must be approved by the shareholders.

2. Notification of Creditors

All known creditors must be notified in writing. In addition, three public announcements are published in the Turkish Trade Registry Gazette (Türkiye Ticaret Sicili Gazetesi), thereby allowing unknown creditors to file their claims within the prescribed deadlines.

3. Management of Receivables and Liabilities

Liquidators are responsible for collecting outstanding receivables and settling all debts, including:

·       Salaries, severance and notice payments owed to employees

·       Taxes and social security contributions (SGK)

·       Liabilities arising from contracts and commercial obligations

If a creditor cannot be reached, the owed amount is deposited with a bank designated by the authorities, ensuring creditor protection.

4. Contingent or Disputed Liabilities

During liquidation, certain debts may not yet be due or may be subject to pending litigation. In such cases, provisions must be set aside or amounts otherwise secured, so that future claims can be satisfied even after the company has been deregistered.

5. Prohibition of New Business Activities

During the liquidation phase, companies are strictly prohibited from engaging in new commercial activities. Only measures aimed at concluding existing obligations are permitted. If transactions exceeding this scope are carried out and third parties are aware—or ought to be aware—of the company’s liquidation status, such transactions are not binding on the company.

Only once all statutory deadlines have expired and all liabilities have been fully settled may the remaining assets be distributed to the shareholders in proportion to their equity participation.

Completion of Liquidation and Deregistration from the Trade Register

Once all assets have been realized, liabilities settled, and any surplus prepared for distribution, the liquidators must draw up a final balance sheet. This document demonstrates that all assets and debts have been duly processed and that the liquidation has been legally completed.

The liquidators then convene the general assembly of shareholders to approve both the final balance sheet and the formal conclusion of the liquidation. By passing this resolution, the shareholders confirm that the process was carried out in accordance with the law and that the company has been terminated.

Following approval, the resolution is notarized, filed with the relevant Turkish Trade Registry, and published in the Turkish Trade Registry Gazette (Türkiye Ticaret Sicili Gazetesi). With this registration, the company is legally dissolved, and the designation “in Liquidation / Tasfiye Halinde” is permanently removed. The publication serves as public notice of the company’s termination.

However, deregistration does not mean that all documents are destroyed. Under Turkish law, commercial books and liquidation records must be preserved for ten years. The general assembly appoints a responsible custodian—typically one of the liquidators or the last board member. Only after the expiry of this period may the documents be destroyed, provided no tax or legal restrictions remain.

The termination of the liquidation must also be reported to the relevant authorities, in particular the tax office and the Social Security Institution (SGK). Upon this notification, the company ceases to exist as a legal entity.

Subsequent Liquidation and Reversal of Liquidation

Even after deregistration, circumstances may arise requiring a subsequent liquidation under Article 547 of the Turkish Commercial Code (TCC). This applies, for example, if previously undisclosed assets are discovered—such as a forgotten bank account or a property still registered in the company’s name. In such cases, the commercial court may, upon application by shareholders, creditors, or liquidators, re-register the company solely for the purpose of completing these additional steps.

Furthermore, Article 548 TCC provides for the reversal of liquidation. If liquidation was initiated by a shareholder resolution and no assets have yet been distributed, the general assembly may, with a qualified majority, decide to terminate the liquidation and continue business operations as an active enterprise. This resolution must also be registered and published in the Trade Registry Gazette.

OUR SERVICES – VURAL & DEMIR LAW AND CONSULTING

Whether involving Turkish or international shareholders, the liquidation of a company requires a high level of legal precision, expertise, and organizational coordination.

We assist you in every stage of the process:

·       Legal advice even prior to the resolution of dissolution

·       Preparation and submission of all necessary documents

·       Trade registry and publication procedures

·       Acting as liquidators

·       Communication with creditors

·       Fulfillment of tax and social security obligations

·       Preparation of the final balance sheet and deregistration from the Trade Register

For international clients not physically present in Turkey, we provide comprehensive representation by power of attorney, direct dealings with authorities, and multilingual communication in German, English, and Turkish.

Our goal is to ensure that your liquidation process in Turkey is conducted swiftly, in full legal compliance, and without unnecessary burdens—turning the closure of your company into a strategic and manageable step in your business development.