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One of the main reasons investors establish or acquire a company rather than operating a business personally is the protection provided by limited liability.

A foreign investor may invest EUR 1 million in a Turkish company but naturally wants to know whether a creditor could later pursue the investor’s:

• personal bank accounts;
• property outside Türkiye;
• other investments;
• salary;
• or unrelated assets

if the Turkish company becomes unable to pay its debts.

The general answer is reassuring:

A person does not normally become personally liable for all debts of a Turkish company merely because that person is a shareholder.

However, this rule has important exceptions.

The position is particularly different between a Turkish:

• joint stock company — anonim şirket (A.Ş.); and
• limited liability company — limited şirket (Ltd. Şti.).

Foreign investors must also distinguish between:

1. ordinary commercial debts;
2. unpaid capital commitments;
3. tax and other public debts;
4. social security liabilities;
5. liability arising from being a director or manager;
6. personal guarantees;
7. personal wrongdoing;
8. and liabilities created by specific contracts.

A foreign investor who understands only the phrase “limited liability” may therefore underestimate its actual exposure.

This guide explains when foreign shareholders can — and cannot — become personally liable for debts of Turkish companies.

1. Does Being a Foreign Shareholder Change the Liability Rules?

Generally, no.

The fundamental liability rules apply according to:

• the type of Turkish company;
• the person’s legal role;
• the nature of the debt;
• and the circumstances giving rise to liability.

The fact that a shareholder holds a German, British, American, Dutch, UAE or other foreign passport does not by itself create greater shareholder liability.

A foreign shareholder and a Turkish shareholder holding the same type of shares are generally subject to the same corporate-law framework.

The more important question is:

Is the foreign investor only a shareholder, or is that person also a director, manager, guarantor or legal representative?

Those additional roles can dramatically change the answer.

2. The Company Is a Separate Legal Person

Turkish joint stock companies and limited liability companies have their own legal personality.

The company owns its own:

• bank accounts;
• receivables;
• real estate;
• intellectual property;
• contractual rights;
• and other assets.

At the same time, the company’s debts are ordinarily debts of the company.

Consider a simple example.

A foreign investor owns 30% of a Turkish technology company.

The company owes a supplier:

TRY 10 million.

The company’s financial difficulties prevent payment.

The supplier cannot ordinarily say:

“You own 30% of the company, so you personally owe me TRY 3 million.”

Shareholding alone does not normally convert an ordinary company debt into the personal debt of the shareholder.

However, the legal analysis changes significantly depending on whether the company is an A.Ş. or Ltd. Şti. and whether the debt is private or public.

3. Liability of Shareholders in a Turkish Joint Stock Company

The anonim şirket, or A.Ş., generally provides strong shareholder liability protection.

The Turkish Ministry of Trade summarizes the statutory principle clearly: a joint stock company is responsible for its debts with its own assets, while shareholders are responsible only for the capital they have undertaken to contribute and that responsibility is toward the company.

This creates an important distinction.

Suppose:

Foreign Investor owns 40% of Company A.Ş.

Company A.Ş. owes a bank EUR 5 million.

The foreign investor has fully paid its subscribed capital and has not personally guaranteed the loan.

As a general corporate-law rule, the bank’s debtor is:

Company A.Ş.

The shareholder does not automatically become personally responsible for 40% of the EUR 5 million simply because it owns 40% of the company.

This is one of the reasons why institutional investors often prefer the joint stock company structure.

4. Shareholders Still Have to Pay the Capital They Promised

Limited liability does not mean that a shareholder can ignore its capital commitment.

Suppose a foreign investor subscribes for shares representing:

TRY 10 million of capital

but has paid only part of the amount legally due.

The investor cannot rely on limited liability to avoid the remaining capital obligation.

The shareholder’s obligation to pay subscribed capital is fundamentally an obligation to the company.

Accordingly, before purchasing or subscribing for shares, a foreign investor should determine:

• the nominal value of the shares;
• whether the shares are fully paid;
• whether additional capital remains due;
• whether calls for payment have been made;
• and whether historic shareholders have properly fulfilled their capital commitments.

A share described commercially as “fully paid” should be verified legally and through the company’s records.

5. Ordinary Commercial Debts of an A.Ş. Usually Remain With the Company

Ordinary private-law liabilities can include:

• supplier invoices;
• rent;
• software contracts;
• consultancy agreements;
• commercial loans;
• customer claims;
• contractual damages;
• and trade receivables.

As a general rule, a creditor of an A.Ş. pursues the company.

The creditor may:

• commence enforcement proceedings against the company;
• attach company bank accounts;
• attach company receivables;
• attach company property;
• or initiate appropriate insolvency proceedings.

The creditor cannot normally move directly from:

“The company owes me money”

to:

“Therefore the shareholder personally owes me money.”

There must be a separate legal basis for personal liability.

6. Limited Companies Have a Similar Rule for Ordinary Debts

The starting point for Turkish limited liability companies is also limited shareholder liability.

Article 573 of the Turkish Commercial Code states that limited company shareholders are not responsible for the company’s debts. Their obligations generally consist of paying the capital they have undertaken and fulfilling additional payment or ancillary-performance obligations provided for in the company’s articles.

Accordingly, consider this situation:

Foreign Investor owns 50% of a Turkish Ltd. Şti.

The company owes a landlord:

TRY 2 million.

The investor:

• has fully paid its capital;
• is not personally a party to the lease;
• has not guaranteed the lease;
• and has committed no independent wrongful act.

The landlord cannot ordinarily pursue the investor personally for TRY 1 million merely because the investor holds 50% of the company.

But there is a critical exception.

Public debts are different.

7. The Major Difference: Public Debts of a Turkish Limited Company

This is one of the most important issues for anyone buying or investing in a Turkish limited liability company.

Article 35 of Law No. 6183 on the Collection Procedure of Public Receivables creates a special rule for limited company shareholders.

Where a public receivable cannot be collected, completely or partially, from the limited company — or is understood to be uncollectible — shareholders can become directly responsible in proportion to their capital shareholding.

This is a major exception to the ordinary limited-liability principle.

For example:

Turkish Ltd. Şti. has an unpaid qualifying public debt:

TRY 10 million

Foreign Shareholder owns:

30%

If the statutory conditions for shareholder liability are satisfied, the shareholder’s exposure under Article 35 may potentially correspond to:

TRY 3 million.

This responsibility arises because of a specific statutory public-debt rule, not because the ordinary commercial debts of the company automatically pass to shareholders.

8. What Is a Public Receivable?

Law No. 6183 governs the collection of various public receivables belonging to authorities such as the State, provincial administrations and municipalities, including categories such as:

• taxes;
• duties;
• charges;
• certain administrative monetary liabilities;
• tax penalties;
• interest;
• late-payment amounts;
• and related collection costs.

The statute excludes certain obligations arising purely from contract, tort or unjust enrichment from its general public-receivable framework.

The practical result is that an investor must clearly distinguish between:

Company owes a private supplier

and

Company owes a public authority.

The shareholder-liability consequences may be entirely different.

9. A Limited Company Shareholder’s Exposure Is Not Simply Limited to the Amount Invested

This is a particularly important point.

Suppose a foreign investor owns 40% of a Turkish limited company.

The investor originally paid only:

TRY 200,000

to acquire its shares.

Later, the company accumulates a qualifying public debt of:

TRY 20 million.

If the statutory requirements under Article 35 are satisfied, it would be incorrect to assume that the shareholder’s public-debt exposure can never exceed the TRY 200,000 originally invested.

Article 35 links shareholder responsibility to the capital share ratio, not simply to the cash amount originally paid for the shares.

The official Revenue Administration guidance explains that limited company shareholders are responsible for qualifying public receivables that cannot be recovered from the company in proportion to their shareholdings.

This makes limited-company public-debt due diligence extremely important for foreign investors.

10. Buying an Existing Limited Company Can Bring Historical Public-Debt Risk

A foreign investor purchasing shares in an existing Turkish limited company should not review only current debts.

Article 35 contains an especially important rule relating to share transfers.

Where a shareholder transfers its limited company share, the transferor and transferee can be jointly liable, within the statutory framework, for public receivables relating to the period before the transfer.

The law also contains rules dealing with circumstances where the shareholder at the time the public receivable arose differs from the shareholder when the debt became payable.

This creates a serious acquisition risk.

Imagine:

Foreign Investor purchases 100% of a Turkish Ltd. Şti. in 2026.

Purchase Price:

EUR 2 million.

Six months later, the company is assessed for significant historical tax liabilities relating to periods before the acquisition.

The investor cannot automatically respond:

“I was not the shareholder when the underlying business activity occurred, so this cannot affect me.”

The Article 35 rules concerning share transfers must be examined carefully.

11. This Is Why Tax Due Diligence Is Essential Before Buying a Ltd. Şti.

Before acquiring an existing Turkish limited company, a foreign investor should investigate matters including:

• outstanding tax debts;
• tax returns;
• VAT filings;
• withholding tax;
• payroll tax;
• tax inspections;
• tax assessment notices;
• payment orders;
• tax litigation;
• restructuring arrangements;
• social security liabilities;
• and other public receivables.

The Share Purchase Agreement should also contain appropriate:

• tax warranties;
• public-debt warranties;
• indemnification provisions;
• disclosure obligations;
• escrow arrangements;
• holdbacks;
• and conditions precedent.

A seller’s simple statement that:

“The company has no debt.”

should never replace independent due diligence.

12. Selling the Limited Company Shares Does Not Necessarily Eliminate Old Public-Debt Exposure

Foreign shareholders should also understand the reverse problem.

Suppose a foreign investor owns shares in a Turkish limited company for three years and later sells its entire interest.

The investor may assume:

“I sold my shares, so I have no further exposure.”

That conclusion can be incorrect for qualifying public receivables relating to the relevant previous period.

Article 35 expressly addresses the responsibility of transferors and transferees for public debts predating the share transfer.

Therefore, public-debt exposure should be examined not only when entering an investment but also when exiting one.

13. Are A.Ş. Shareholders Personally Liable for the Company’s Tax Debts?

A passive shareholder of a Turkish joint stock company is generally in a stronger position than a limited company shareholder regarding this specific public-debt rule.

Article 35 of Law No. 6183 specifically imposes proportional shareholder responsibility on limited company shareholders.

It does not create the same general proportional shareholder liability merely because someone owns shares in an A.Ş.

Therefore:

Foreign Investor owns 30% of Turkish A.Ş.

The company has unpaid tax debt.

If the investor is purely a shareholder and has no separate legal basis for responsibility, ownership of 30% of the shares does not by itself mean that the investor automatically owes 30% of the tax debt.

However, the answer changes if the investor is also:

• a board member;
• legal representative;
• executive;
• or another person carrying statutory responsibilities.

14. Shareholder and Director Are Two Different Legal Roles

This is perhaps the most common misunderstanding among foreign founders.

A person may simultaneously be:

1. a shareholder; and
2. a director or manager.

The liability arising from those two capacities is different.

Imagine a German investor who owns:

60% of a Turkish A.Ş.

and also serves as a member of its board of directors.

If a liability arises, the question is not simply:

“Is he protected because shareholders have limited liability?”

The analysis must also ask:

“Does he have personal responsibility because of his role on the board?”

Limited shareholder liability does not eliminate independent director or legal-representative liability.

15. Directors and Managers Can Be Liable for Their Own Breaches

Article 553 of the Turkish Commercial Code provides that founders, board members, managers and liquidators may be liable to:

• the company;
• shareholders;
• and company creditors

for damage resulting from culpable breaches of duties arising under law or the articles of association.

This is fundamentally different from shareholder liability.

A board member is not being held liable because:

“You own shares.”

The potential liability arises because:

“You held a management position and breached a legal or corporate duty through fault.”

Therefore, a foreign investor joining a Turkish company’s board should understand that board membership is not merely a ceremonial title.

16. Public Debts Can Also Create Liability for Legal Representatives

Law No. 6183 contains another important rule under Repeated Article 35 concerning legal representatives.

Where qualifying public receivables cannot be fully or partially collected from a legal entity, or are understood to be uncollectible, the statute permits collection from the personal assets of legal representatives in accordance with the applicable conditions.

The rule also expressly refers to representatives of foreign persons and institutions in Türkiye.

Consequently, the personal exposure of a foreign shareholder can change substantially if the shareholder also becomes a legal representative of the Turkish company.

17. Tax Law Contains an Additional Legal Representative Rule

Article 10 of the Turkish Tax Procedure Law contains another important responsibility framework.

Where tax duties of a legal entity are required to be performed through its legal representatives, taxes and related receivables that cannot be recovered from the taxpayer because those legal duties were not properly fulfilled may, subject to the statutory conditions, be recovered from the persons who failed to perform those legal obligations.

The rule also expressly applies to representatives in Türkiye of taxpayers located outside Türkiye.

For foreign investors, this means that becoming:

• company manager;
• board member;
• representative;
• or person responsible for legal compliance

can create exposure very different from passive share ownership.

18. Management Position Can Be More Important Than Ownership Percentage

Consider two investors.

Investor A

Owns 70% of a Turkish A.Ş.

Not a director.

No signature authority.

No personal guarantee.

Investor B

Owns 5%.

Board member.

Authorized to represent the company.

In a dispute involving certain management or public-law responsibilities, Investor B may face materially greater personal exposure than Investor A despite owning far fewer shares.

Ownership percentage therefore does not always measure legal risk.

Foreign investors should distinguish:

economic ownership

from

management responsibility.

19. Limited Company Shareholder and Manager Can Have Two Separate Bases of Liability

This distinction becomes particularly important in limited liability companies.

Suppose a person is:

• 50% shareholder; and
• company manager.

That person may potentially face one category of responsibility because of being a shareholder under Article 35 of Law No. 6183 and another category because of being a manager or legal representative.

The Revenue Administration’s guidance separately discusses the responsibility of limited company shareholders and legal representatives under Article 35 and Repeated Article 35.

Accordingly, simply resigning as manager does not necessarily eliminate liability arising from share ownership for relevant public debts, and selling shares does not necessarily erase responsibilities relating to a previous period.

The dates of:

• share ownership;
• management authority;
• tax liability;
• payment due date;
• resignation;
• share transfer;
• registration;
• and announcement

can all become important.

20. SGK Debts Can Create Additional Personal Exposure

Social security liabilities deserve separate attention.

The Social Security Institution’s own legal literature explains that limited company shareholders may face proportional responsibility for qualifying public receivables under Article 35 of Law No. 6183 once the statutory conditions are satisfied.

It also notes that individuals who are simultaneously senior managers can face a different and potentially broader responsibility under social security legislation.

This distinction can be commercially significant.

A foreign investor who is only a limited company shareholder may face one type of exposure.

A foreign investor who is both:

• shareholder; and
• company manager

may face greater risk.

Therefore, payroll and SGK due diligence should form part of any acquisition of an operating Turkish business.

21. Personal Guarantees Can Completely Change the Result

One of the most common ways shareholders lose limited-liability protection is not through company law at all.

It is through a personal guarantee.

Banks financing relatively new or privately held Turkish companies frequently request additional security.

A foreign shareholder may be asked to sign:

• a surety;
• personal guarantee;
• joint and several guarantee;
• aval;
• pledge;
• mortgage;
• or another form of personal security.

Once a valid personal guarantee is signed, the shareholder can no longer simply argue:

“The loan belongs to the company, not me.”

The shareholder has created a separate personal contractual obligation.

22. Example: Bank Loan With Personal Guarantee

Assume:

Turkish Startup receives a bank loan:

EUR 2 million.

Foreign Founder owns:

80%.

The company later defaults.

Scenario A — No Personal Guarantee

The bank generally pursues the company and the security provided by the company, subject to other statutory bases of responsibility.

Scenario B — Founder Signed a Valid Personal Guarantee

The bank may also pursue the founder according to the terms and legal validity of that guarantee.

This is why the most important document for shareholder liability is sometimes not the articles of association or Shareholders’ Agreement.

It may be the loan agreement signed with the bank.

23. Turkish Law Imposes Formal Requirements on Surety Agreements

A personal guarantee should not be assumed to be legally valid simply because the document uses the word “guarantor.”

Turkish surety law contains mandatory formal requirements.

Article 583 of the Turkish Code of Obligations requires a surety agreement to be in writing and requires matters including the maximum amount of liability and the date of the surety to be specified. Certain information must be written personally by the surety, including wording concerning joint-and-several surety where applicable.

Accordingly, the validity and extent of a personal guarantee should be analysed separately.

24. Spousal Consent Is Not Required in Every Corporate Guarantee

Turkish law generally contains a spousal-consent rule for certain sureties given by married individuals.

However, there are statutory exceptions.

One relevant exception concerns guarantees given by:

• owners of registered commercial enterprises;
• company shareholders;
• and company managers

in connection with the relevant enterprise or company.

Judicial decisions apply this statutory exception in appropriate commercial guarantee circumstances.

Foreign founders should therefore not assume that a personal guarantee is invalid merely because a spouse did not sign it.

The exact structure and statutory requirements must be reviewed.

25. A Shareholder Can Also Become Personally Liable Through an Independent Contract

A personal guarantee is not the only example.

Suppose the shareholder personally enters into:

• a lease;
• debt assumption;
• indemnification agreement;
• share purchase payment obligation;
• side letter;
• settlement agreement;
• or financing commitment.

The resulting personal responsibility arises from that agreement.

A foreign investor should therefore distinguish carefully between signing:

“for and on behalf of XYZ Teknoloji A.Ş.”

and

signing:

“personally as shareholder and guarantor.”

The difference can be millions of euros.

26. Signature Capacity Matters

Contracts should clearly identify the capacity in which a foreign investor signs.

For example:

John Smith, acting solely on behalf of ABC Teknoloji A.Ş. as authorized representative

is very different from:

John Smith, personally and as joint and several guarantor.

Foreign investors should never assume that the commercial purpose of the document determines liability.

The actual language and signature block matter.

27. Shareholders Can Be Liable for Their Own Wrongful Acts

Limited liability protects a person from automatic liability for company debts.

It does not provide immunity for a person’s own unlawful conduct.

If a shareholder personally commits:

• fraud;
• a tort;
• unlawful asset diversion;
• misrepresentation;
• or another independently actionable wrongful act,

personal liability may arise from that conduct.

For example, a shareholder who personally gives fraudulent information to induce a creditor to advance funds cannot necessarily hide behind the company’s legal personality if the legal requirements for personal liability are independently satisfied.

This should not be confused with ordinary shareholder responsibility.

The person is liable because of the person’s own conduct, not merely because the person holds shares.

28. Directors Should Be Particularly Careful When the Company Is in Financial Distress

The risk profile of management changes when a company begins experiencing serious financial problems.

Directors and managers should carefully assess:

• capital loss;
• insolvency indicators;
• inability to meet debts;
• statutory corporate duties;
• accounting obligations;
• creditor treatment;
• and required board or court procedures.

Continuing to conduct business without addressing mandatory corporate-law duties can create additional risk for management.

Foreign investors who sit on the board should therefore receive legal advice at an early stage if the Turkish subsidiary or startup develops serious liquidity or balance-sheet problems.

Waiting until enforcement proceedings begin may significantly reduce available options.

29. Can a Creditor “Pierce the Corporate Veil” in Türkiye?

Foreign investors from common-law jurisdictions often use the expression:

“piercing the corporate veil.”

Turkish law recognizes the separate legal personality of companies as a fundamental principle.

It does not mean, however, that corporate personality can always be used abusively to defeat mandatory rules or justify fraudulent conduct.

Cases involving:

• abuse of legal personality;
• complete intermingling of shareholder and company assets;
• sham structures;
• fraudulent conduct;
• or misuse of corporate form

may require analysis under broader principles of Turkish private law, including the prohibition of abuse of rights and the specific statutory rules applicable to the conduct in question.

However, corporate veil arguments should not be treated as an automatic mechanism allowing every unpaid company creditor to sue shareholders personally.

The general rule remains separate legal personality.

30. Group Companies Require Additional Care

Foreign investors frequently operate through structures such as:

European Parent Company
↓
Turkish Subsidiary A.Ş.

The fact that the parent owns 100% of the Turkish subsidiary does not ordinarily make every subsidiary debt a parent-company debt.

However, group arrangements should be examined carefully where the parent:

• guarantees Turkish company loans;
• controls cash pooling;
• enters contracts directly;
• provides letters of comfort;
• gives binding undertakings;
• directs problematic transactions;
• receives unlawful asset transfers;
• or assumes specific liabilities.

Corporate group structures do not automatically eliminate separate legal personality.

But the actual contracts and conduct within the group matter.

31. A Parent Company Guarantee Is Different From Share Ownership

Consider:

Dutch Holding BV owns 100% of Turkish Company A.Ş.

Turkish Company obtains a EUR 20 million loan.

The lender requires Dutch Holding BV to provide a parent guarantee.

If Turkish Company defaults, the holding company may face liability because it signed the guarantee.

The relevant legal basis is not:

100% share ownership.

It is:

the guarantee contract.

This distinction is fundamental in cross-border finance.

32. Can Creditors Pursue the Shareholder’s Assets Outside Türkiye?

If a foreign shareholder becomes personally liable under a valid legal basis, the fact that the shareholder’s assets are outside Türkiye does not necessarily prevent enforcement.

The practical enforcement route depends on:

• where the judgment or enforceable instrument originates;
• where assets are located;
• applicable international treaties;
• domestic recognition and enforcement rules;
• and the type of debt.

For example, if a Turkish court issues a personal judgment against a foreign shareholder and that shareholder owns assets only in Germany, enforcement may require recognition or enforcement procedures under German law.

International location of assets can therefore affect enforcement mechanics, but it does not itself eliminate valid personal liability.

33. Can a Foreign Shareholder’s Turkish Bank Account Be Attached?

If the shareholder personally becomes the debtor under:

• a court judgment;
• valid guarantee;
• public-debt responsibility;
• or another enforceable legal basis,

assets belonging personally to that shareholder in Türkiye may potentially become relevant to enforcement proceedings.

This may include, depending on the applicable procedure:

• bank accounts;
• receivables;
• real property;
• vehicles;
• or other attachable assets.

But a creditor cannot generally attach a shareholder’s personal bank account merely because a company in which that person owns shares owes money.

A personal basis of liability must exist.

34. What Happens If the Shareholder Also Lent Money to the Company?

Shareholder debt and shareholder liability are two different subjects.

A foreign shareholder may lend money to the Turkish company through a shareholder loan.

For example:

Equity investment: EUR 1 million.

Shareholder loan: EUR 2 million.

The company then owes the shareholder EUR 2 million under the loan arrangement, subject to applicable law and contractual terms.

That does not generally make the shareholder personally responsible for unrelated company debts.

However, shareholder loans may raise:

• tax;
• thin capitalization;
• transfer pricing;
• interest withholding;
• foreign exchange;
• and insolvency

issues.

These should be reviewed separately.

35. Can Shareholders Be Required to Inject More Money Into the Company?

Not automatically.

A shareholder who invested EUR 1 million does not usually have an unlimited obligation to continue financing the company merely because it is losing money.

However, additional funding obligations may arise from:

• the articles of association where legally permissible;
• Shareholders’ Agreements;
• capital commitment agreements;
• investment agreements;
• financing commitments;
• additional payment obligations in limited companies;
• or specific contractual undertakings.

Foreign investors should therefore review whether the investment documentation contains provisions such as:

“Each shareholder shall fund future working-capital requirements pro rata.”

Such contractual commitments can create obligations beyond the original equity investment.

36. Limited Company Articles May Contain Additional Payment Obligations

Article 573 of the Turkish Commercial Code expressly refers to the possibility of additional payment and ancillary performance obligations included in the limited company’s articles.

A foreign investor acquiring Ltd. Şti. shares should therefore review the articles carefully.

Simply asking:

“What percentage of the company do I own?”

is insufficient.

The investor should also ask:

“What obligations are attached to these shares?”

37. Does Limited Liability Protect Against Criminal Responsibility?

No corporate structure should be understood as protecting individuals from criminal responsibility for their own conduct.

If a founder, shareholder, director or manager personally participates in conduct constituting a criminal offence, company ownership does not automatically shield that person.

Potential corporate situations can involve allegations relating to:

• fraud;
• fraudulent bookkeeping;
• misuse of documents;
• tax offences;
• breach of trust;
• market offences;
• bribery;
• money laundering;
• or other offences.

Criminal responsibility is distinct from civil shareholder liability.

Foreign investors involved in management should therefore ensure that compliance systems are genuine and operational.

38. Due Diligence Questions Foreign Investors Should Ask

Before acquiring shares in a Turkish company, a foreign investor should ask:

Corporate

• Is the target an A.Ş. or Ltd. Şti.?
• Are shares fully paid?
• Do the articles contain additional shareholder obligations?
• Will the investor become a director or manager?

Tax

• Are there outstanding tax debts?
• Are there pending tax inspections?
• Has the company received payment orders?
• Are historical declarations complete?

Social Security

• Are SGK premiums fully paid?
• Are there historical payroll liabilities?
• Are there disputes involving employee registration?

Banking

• Has any shareholder guaranteed company loans?
• Will the bank require the new investor to provide a guarantee?
• Are there mortgages or pledges?

Contracts

• Is the investor personally signing any indemnity?
• Does the Shareholders’ Agreement contain funding obligations?
• Are there capital-call commitments?

Management

• Will the investor have representation authority?
• Will the investor join the board?
• Who controls tax and accounting compliance?
• Who can bind the company?

These questions should be answered before the investment documents are signed.

39. How Can a Foreign Investor Reduce Personal Liability Risk?

Practical measures may include:

1. Choose the correct company form.

The A.Ş. and Ltd. Şti. structures do not create identical public-debt risks.

2. Pay subscribed capital properly.

Do not leave unclear unpaid capital obligations.

3. Conduct tax and SGK due diligence.

This is particularly important before acquiring an existing limited company.

4. Avoid unnecessary personal guarantees.

Where possible, negotiate company-level security instead.

5. Limit guarantees.

If a guarantee is commercially unavoidable, consider negotiating:

• a maximum amount;
• expiry date;
• release triggers;
• or limited scope.

6. Understand board and manager responsibilities.

Do not accept management titles casually.

7. Register changes in management promptly.

Resignation should be properly documented and reflected in the relevant corporate records.

8. Review Shareholders’ Agreement obligations.

Pay particular attention to future funding commitments.

9. Keep personal and company assets separate.

Avoid informal withdrawals and undocumented related-party transactions.

10. Maintain tax, payroll and accounting compliance.

Many personal-liability problems arise from regulatory non-compliance rather than ordinary business failure.

40. A.Ş. or Ltd. Şti.: Which Offers Better Liability Protection for a Foreign Investor?

For a purely passive investor, a Turkish joint stock company can generally provide stronger protection regarding public debt exposure arising solely from share ownership, because Article 35 of Law No. 6183 specifically creates proportional responsibility for limited company shareholders.

In both company forms, ordinary private company debts generally remain debts of the company, subject to specific exceptions.

The key distinction can be summarized as follows:

Turkish Joint Stock Company — A.Ş.

A shareholder is generally responsible only for the subscribed capital toward the company. Share ownership by itself does not ordinarily create proportional personal responsibility for the company’s ordinary debts or the specific Article 35 limited-company public-debt exposure.

Turkish Limited Liability Company — Ltd. Şti.

The shareholder is generally not personally responsible for ordinary company debts under Article 573 of the Turkish Commercial Code.

However, Article 35 of Law No. 6183 can impose proportional personal responsibility for qualifying public receivables that cannot be collected from the company.

This distinction is particularly important for:

• foreign founders;
• venture investors;
• private equity buyers;
• holding companies;
• and foreign businesses establishing Turkish subsidiaries.

Practical Examples

Example 1 — Supplier Debt of an A.Ş.

Foreign shareholder owns:

30%.

Supplier debt:

TRY 5 million.

No personal guarantee.

Share capital fully paid.

General result: The company is the debtor. The shareholder is not ordinarily liable for TRY 1.5 million merely because it owns 30%.

Example 2 — Supplier Debt of a Ltd. Şti.

Foreign shareholder owns:

50%.

Supplier debt:

TRY 5 million.

No personal guarantee.

General result: Article 573 provides that limited company shareholders are not responsible for ordinary company debts merely because they are shareholders.

Example 3 — Tax Debt of a Ltd. Şti.

Foreign shareholder owns:

40%.

Qualifying public receivable that cannot be collected from company:

TRY 10 million.

Potential shareholder exposure under Article 35: proportionate responsibility corresponding to the 40% share, subject to the statutory conditions.

Example 4 — Tax Debt of an A.Ş.

Foreign investor owns:

40%.

Not a director or representative.

General result: Article 35’s special proportional shareholder liability applies to limited company shareholders, not ordinary passive A.Ş. shareholders.

A separate legal basis would be necessary to pursue the investor personally.

Example 5 — Foreign Shareholder Is Also a Director

Foreign investor owns:

20%.

Also serves as board member.

The company incurs losses because of an alleged culpable breach of statutory board duties.

Result: The investor’s shareholder status and director status must be analysed separately. Article 553 can create liability for board members and managers where statutory conditions are satisfied.

Example 6 — Personal Bank Guarantee

Foreign founder owns:

75%.

Company bank debt:

EUR 3 million.

Founder signed a valid personal guarantee.

Result: Limited shareholder liability does not prevent enforcement of the separate guarantee obligation.

Frequently Asked Questions

Are foreign shareholders automatically responsible for Turkish company debts?

No.

Being a shareholder does not normally make a foreign investor personally responsible for every debt of a Turkish company.

The answer depends on the company’s legal form, nature of the debt and the investor’s additional roles and contractual obligations.

Is an A.Ş. shareholder personally liable for company debts?

As a general corporate-law rule, an A.Ş. shareholder is responsible for the capital subscribed toward the company, while the company is responsible for its debts with its own assets.

Separate liability may nevertheless arise from directorship, legal representation, personal guarantees or the shareholder’s own conduct.

Is a Ltd. Şti. shareholder personally liable for company debts?

For ordinary private company debts, the general rule under TCC Article 573 is no.

However, limited company shareholders can be personally responsible for qualifying public debts under Article 35 of Law No. 6183 where the statutory requirements are satisfied.

Can a limited company shareholder be liable for tax debts?

Yes.

Where qualifying public receivables cannot be fully or partially collected from the limited company, shareholders can be responsible in proportion to their capital shares under Article 35.

Can a former shareholder still be responsible?

Potentially, particularly in relation to public debts of a limited company.

Article 35 contains specific joint-liability rules involving the transferor and transferee for public receivables relating to periods before a share transfer.

Is a company director personally liable for tax debts?

Different rules apply to legal representatives and managers.

Law No. 6183 Repeated Article 35 and Article 10 of the Tax Procedure Law can create personal exposure for legal representatives where the statutory conditions are satisfied.

Can a foreign shareholder lose personal assets because of a bank loan to the company?

Not merely because of share ownership.

However, if the shareholder has signed a valid personal guarantee, surety or other security obligation, personal assets may potentially be exposed according to that obligation.

Does resigning as director immediately eliminate liability?

Not necessarily.

Responsibility may depend on the period during which the person held authority and the dates when the relevant obligation arose or became payable.

Corporate resignation, registration and announcement dates should therefore be properly documented.

Is a 100% shareholder personally liable simply because it owns the whole company?

No.

Owning 100% of a company does not by itself eliminate the company’s separate legal personality.

Other grounds of liability — such as public-debt rules applicable to limited companies, management responsibility, guarantees or personal wrongdoing — must be considered separately.

Is an A.Ş. safer than a Ltd. Şti. for foreign investors?

From the narrow perspective of personal liability arising solely from share ownership for public receivables, an A.Ş. can offer an important advantage because Article 35’s proportional shareholder responsibility specifically concerns limited company shareholders.

However, company-form selection should also consider:

• investment structure;
• governance;
• fundraising;
• transfer of shares;
• taxation;
• regulatory requirements;
• future exit;
• and management structure.

Conclusion

The statement:

“A shareholder is never personally responsible for company debts”

is too broad under Turkish law.

The more accurate rule is:

Ordinary company debts generally remain with the company, but personal liability can arise under specific statutory or contractual exceptions.

For foreign investors, the most important distinction is between a Turkish joint stock company (A.Ş.) and a limited liability company (Ltd. Şti.).

A passive A.Ş. shareholder generally enjoys strong liability protection and is principally responsible for its subscribed capital toward the company.

A limited company shareholder is likewise generally protected from ordinary private company debts, but Article 35 of Law No. 6183 creates an important exception for qualifying public receivables that cannot be collected from the company.

Foreign investors should also remember that limited liability can be materially affected where they:

• become directors or managers;
• obtain legal representation authority;
• sign personal guarantees;
• fail to pay subscribed capital;
• undertake additional funding obligations;
• personally commit wrongful acts;
• or acquire an existing limited company carrying historical public liabilities.

The practical question for a foreign investor should therefore not simply be:

“Am I a shareholder?”

It should be:

“In what legal capacities am I involved with this Turkish company, and what liabilities attach to each of those capacities?”

Before investing in, acquiring or managing a Turkish company, foreign shareholders should separately review:

shareholder liability + management liability + public debt exposure + contractual guarantees + historical liabilities.

That analysis can make the difference between an investment in which the investor risks only the agreed capital and one in which the investor’s personal assets may also become exposed.

This article provides general information regarding Turkish corporate, tax and public receivables law and does not constitute legal or tax advice. Personal liability should be assessed according to the company’s legal form, the type and period of the relevant debt, the shareholder’s management and representation authority, applicable agreements and the specific circumstances of the case.

Related reading: Director liability to foreign creditors.