Selling a startup is often described as the final stage of a successful entrepreneurial journey. The founders sell their shares, receive the purchase price and transfer control of the company to the buyer.

However, signing a share purchase agreement does not necessarily mean that every legal risk connected with the startup disappears for the former founders on the closing date.

One of the most important questions in a startup acquisition in Turkey is therefore:

Do former founders remain liable for company debts after selling the startup?

The general answer is:

A founder who sells shares in a Turkish joint stock company or limited liability company does not automatically remain personally liable for the company’s ordinary commercial debts merely because those debts arose while the founder owned the company.

In a share sale, the legal entity itself normally remains unchanged.

The company still exists.

Its contracts continue.

Its receivables continue.

Its employees remain employed by the same legal entity.

And, most importantly, its debts normally remain debts of the company.

This is fundamentally different from a transaction in which the business or assets themselves are transferred.

Nevertheless, there are several important exceptions.

A former founder may remain personally exposed after the sale because of:

• personal guarantees or suretyships;
• unpaid capital commitments;
• public debts of a limited liability company;
• tax liabilities arising from a period in which the founder acted as legal representative;
• Social Security Institution liabilities;
• director or manager liability;
• representations and warranties given in the Share Purchase Agreement;
• indemnities concerning historic liabilities;
• fraud or concealment of liabilities;
• or obligations specifically agreed to survive closing.

For this reason, the statement:

“I sold the startup, so nothing relating to the company can ever reach me again.”

is too broad.

The correct legal analysis requires distinguishing between:

1. liability of the company itself;
2. statutory personal liability of the former founder;
3. liability arising from the founder’s former management role;
4. liability arising from personal guarantees;
5. and contractual liability toward the buyer under the sale agreement.

This article explains whether former startup founders remain liable for company debts after a company sale in Turkey, with particular attention to share sales, asset sales, limited company public debts, tax liabilities, SGK debts, personal guarantees, representations and warranties, indemnification clauses and post-closing claims.

The First Question: Was It a Share Sale or an Asset Sale?

The legal structure of the transaction is critical.

When people say:

“We sold the startup,”

they may be describing two very different transactions.

Share Sale

The founders sell their shares in the company to the buyer.

Asset or Business Sale

The company or entrepreneur transfers the business, assets or operating undertaking itself.

These transactions have fundamentally different consequences for existing debts.

What Happens to Company Debts in a Share Sale?

Consider a Turkish startup called:

Alpha Teknoloji A.Ş.

The company owes:

• TRY 4 million to suppliers;
• TRY 2 million under a bank loan;
• TRY 1 million in employee-related liabilities;
• and TRY 500,000 under a software licence agreement.

Founder A owns 70% of the shares.

Founder B owns 30%.

A buyer acquires 100% of Alpha Teknoloji A.Ş.

After closing, Alpha Teknoloji A.Ş. still exists.

The shareholders have changed, but the debtor under the existing agreements remains:

Alpha Teknoloji A.Ş.

The buyer does not normally become personally liable for each company debt merely because it acquired the shares.

Likewise, the former founders do not normally remain personally liable merely because they previously held those shares.

The company’s legal identity remains intact.

This distinction is supported by the fundamental limited-liability provisions of the Turkish Commercial Code.

For an A.Ş., Article 329 states that the company is liable for its debts solely with its own assets, while shareholders are responsible only for the capital they have undertaken to contribute and only toward the company.

For a Ltd. Şti., Article 573 similarly provides that shareholders are not responsible for company debts and are instead required to perform their capital contribution and any valid additional payment or ancillary obligations under the articles.

Therefore, the ordinary rule is:

selling the shares does not transfer a company’s historic debts from the company to the former founders.

The company already owed those debts, and it generally continues to owe them after closing.

A Share Sale Does Not Erase the Company’s Debts

This point is important from the buyer’s perspective as well.

Suppose the buyer purchases a startup for EUR 10 million.

After closing, the buyer discovers:

• TRY 20 million of unpaid supplier invoices;
• a pending lawsuit;
• historic employee claims;
• tax exposure;
• and an undisclosed customer refund obligation.

The buyer cannot normally argue:

“We bought the shares, but we did not buy the company’s liabilities.”

When a buyer acquires shares, it acquires ownership of a company that already possesses both assets and liabilities.

The debts remain inside the corporate entity.

The buyer’s primary remedy may therefore be against the sellers under the Share Purchase Agreement, rather than a denial that the company owes the underlying third-party debt.

This is one of the principal reasons why M&A transactions contain extensive:

• legal due diligence;
• representations and warranties;
• indemnification provisions;
• purchase price adjustments;
• escrow arrangements;
• and liability caps.

The Most Important Distinction: Creditor Liability vs Buyer Liability

Former founders often misunderstand this issue.

Suppose a hidden debt is discovered after closing.

Two different questions must be asked.

Question One

Can the creditor directly pursue the former founder?

Question Two

Can the buyer pursue the former founder under the Share Purchase Agreement?

The answer to Question One may be:

No. The company is the debtor.

At the same time, the answer to Question Two may be:

Yes. The seller may have breached a representation or indemnity.

These are completely different legal relationships.

Example: Undisclosed Lawsuit

Assume a startup is sold for EUR 15 million.

The sellers represent in the Share Purchase Agreement:

“There are no pending lawsuits against the Company other than those disclosed in Schedule 7.”

Six months after closing, the buyer discovers that a former customer had already filed a TRY 8 million lawsuit before closing.

The creditor’s defendant remains the startup company.

However, if the founders knowingly or contractually warranted that no undisclosed proceedings existed, the buyer may potentially claim compensation from the sellers under the SPA.

The former founders’ exposure therefore comes from the sale contract, not automatically from their former shareholder status.

Representations and Warranties Can Survive Closing

A startup sale agreement typically contains a substantial list of statements made by the sellers concerning the company.

These may include representations relating to:

• corporate authority;
• ownership of shares;
• financial statements;
• tax compliance;
• employee liabilities;
• intellectual property;
• litigation;
• regulatory compliance;
• customer contracts;
• data protection;
• cybersecurity;
• loans;
• related-party transactions;
• government investigations;
• and undisclosed liabilities.

The seller may represent, for example:

“The Company has no liabilities other than those properly reflected in the accounts or disclosed to the Buyer.”

If that statement is inaccurate, the founder may face a post-closing contractual claim.

Therefore, founders should never assume that:

“Closing happened, therefore my exposure ended.”

Many SPA obligations are intentionally drafted to survive closing.

What Is an Indemnity in a Startup Sale?

An indemnity is a contractual mechanism allocating a defined risk to one party.

For example:

“The Sellers shall indemnify the Buyer for any tax liability attributable to periods ending on or before Closing.”

This is particularly common where due diligence identifies a specific risk.

Examples may include:

• a pending tax inspection;
• disputed employee classification;
• unregistered intellectual property;
• an existing lawsuit;
• data protection exposure;
• unpaid social security premiums;
• or a related-party transaction.

An indemnity is different from a general warranty because it can be drafted to respond to a specifically identified liability.

A founder who signs such an indemnity may therefore remain economically exposed for years after ceasing to be a shareholder.

Founders Should Negotiate Survival Periods

SPA liability should not necessarily continue forever.

The contract commonly specifies how long particular claims survive after closing.

For example:

• general warranties: 18 months;
• tax warranties: longer period linked to statutory limitation periods;
• title to shares: longer or unlimited period;
• fraud: special treatment;
• specific indemnities: individually negotiated duration.

The exact periods depend on the transaction.

From a seller’s perspective, the agreement should clearly identify:

• when claims must be notified;
• when liability expires;
• whether a claim must merely be notified or formally filed;
• and which liabilities survive beyond the general warranty period.

Without a clear survival regime, founders may face long-term uncertainty after exit.

Liability Caps, Baskets and De Minimis Thresholds

Startup acquisition agreements frequently limit seller liability through contractual mechanisms.

Liability Cap

The maximum aggregate amount recoverable from sellers.

For example:

“Total seller liability shall not exceed 20% of the purchase price.”

De Minimis Threshold

Small individual claims below a specified amount are disregarded.

Example:

Claims below EUR 5,000 cannot be pursued.

Basket

Claims become recoverable only after aggregate losses exceed a defined threshold.

Example:

Buyer cannot claim until qualifying losses exceed EUR 100,000.

These provisions are extremely important for founders.

Without them, even minor post-closing issues could generate repeated disputes.

However, particular risks such as:

• ownership of shares;
• taxes;
• fraud;
• or specific indemnities

may be negotiated outside ordinary caps.

Personal Guarantees Do Not Disappear Merely Because the Startup Is Sold

This is one of the most important practical exceptions.

Suppose a startup borrows TRY 20 million from a bank.

The bank requires Founder A to sign a personal guarantee.

The founder later sells all shares in the company.

Does the guarantee disappear automatically?

Generally, no.

The debtor under the loan remains the same company.

Only the shareholder has changed.

Unless:

• the guarantee expires under its own terms;
• the bank expressly releases the founder;
• the obligation is replaced;
• or another legally effective release mechanism occurs,

the former founder may remain personally liable.

This means that a founder can sell 100% of a startup and still remain exposed to the company’s bank debt because of a guarantee signed years earlier.

Never Assume the Buyer Will “Take Over” Your Guarantee

A clause between buyer and seller saying:

“The Buyer shall replace all founder guarantees after closing”

does not necessarily release the founder vis-à-vis the creditor by itself.

If the creditor is a bank, landlord or supplier, the creditor may need to expressly agree to release the existing security.

Therefore, closing conditions should often require delivery of:

• bank releases;
• cancellation of founder guarantees;
• replacement guarantees;
• mortgage releases;
• pledge releases;
• or other creditor confirmations.

The founder should ideally obtain documentary proof that the personal security has actually been discharged.

Change of Control Can Trigger Existing Contracts

A share sale does not normally change the identity of the company, but it can trigger contractual change-of-control provisions.

For example, a bank facility might state:

“A change in control constitutes an event of default unless lender consent is obtained.”

A major customer may have a termination right following a change in ownership.

A licence agreement may require consent.

The transaction team should therefore review whether the startup’s contracts contain:

• change-of-control clauses;
• acceleration provisions;
• termination rights;
• mandatory notifications;
• or consent requirements.

If these provisions are overlooked, the sale itself may create new company liabilities.

The Major Exception for Limited Companies: Public Debts

Former shareholders of a Turkish Ltd. Şti. face a particularly important statutory risk.

Article 35 of Law No. 6183 provides that limited company shareholders are directly responsible, in proportion to their capital shares, for public receivables that cannot be fully or partially collected from the company or are understood to be uncollectible.

More importantly for company sales, Article 35 expressly addresses share transfers.

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

This creates one of the clearest examples in which selling a startup does not necessarily eliminate historic founder exposure.

Example: Limited Company Tax Debt Discovered After Sale

Founder A owns 80% of Startup Ltd. Şti.

Founder A sells the shares on 1 September 2026.

One year later, the tax administration assesses a public receivable connected with the pre-transfer period.

The startup cannot satisfy the debt.

Founder A cannot automatically defend the claim by saying:

“I sold the company last year.”

Article 35 contains specific rules preserving liability associated with pre-transfer public receivables and allowing pursuit of transferors and transferees under the statutory conditions.

This is a major difference between:

ordinary company debt

and

public debt of a limited company.

The Buyer of a Ltd. Şti. Also Needs Public Debt Due Diligence

The rule affects buyers as well.

A person acquiring shares in a limited company should not assume that only post-closing public liabilities matter.

Article 35 means that the buyer may also face statutory exposure concerning pre-transfer public debts within its scope.

Therefore, a buyer should investigate:

• tax debt;
• customs/public receivables where relevant;
• public penalties;
• outstanding filings;
• tax audits;
• payment orders;
• restructuring arrangements;
• and undisclosed assessments.

The SPA may then contain specific tax indemnities protecting the buyer economically.

A.Ş. Shareholders Are Different

An ordinary shareholder in a Turkish A.Ş. does not have the same proportional public-debt liability imposed on limited company shareholders by Article 35.

Under Article 329 of the Turkish Commercial Code, the shareholder’s general liability is limited to the subscribed capital contribution owed to the company.

However, many startup founders are not merely shareholders.

They are also:

• board members;
• CEOs;
• legal representatives;
• or authorised signatories.

That creates a separate source of liability.

Former Legal Representatives May Remain Exposed for Public Debts

Repeated Article 35 of Law No. 6183 regulates responsibility of legal representatives.

Public receivables that cannot be collected or are understood to be uncollectible from a legal person’s assets may be collected from legal representatives’ personal assets under the statutory framework. The provision also states that liquidation or completion of liquidation does not eliminate responsibility relating to periods before entry into liquidation.

The Revenue Administration’s guidance similarly explains that legal-representative responsibility depends on the relevant corporate and statutory representation structure.

Therefore, selling shares and resigning as director does not necessarily eliminate all liability for periods during which the founder served as legal representative.

The relevant time period must be examined carefully.

Resignation From the Board Should Be Properly Documented

A founder selling the company should not merely stop attending meetings.

The transaction should clearly address:

• resignation from the board;
• resignation as manager;
• termination of representation authority;
• trade registry filings;
• revocation of signature authority;
• bank authorities;
• tax administration records;
• SGK authorisations;
• and other registrations.

Revenue Administration guidance specifically takes into account the point at which legal representative status begins and ends when determining responsibility.

Poor post-closing corporate housekeeping can therefore create significant problems.

Tax Liability Under the Tax Procedure Law

Article 10 of the Turkish Tax Procedure Law provides that tax obligations of legal entities are performed through their legal representatives.

Where failure to perform those duties results in tax and related receivables being wholly or partly uncollectible from the legal entity, the amounts may be collected from those who failed to perform the relevant legal duties. The provision also expressly states that entry into liquidation or completion of liquidation does not remove representatives’ responsibility relating to periods before liquidation.

This means a former founder may remain exposed after selling the startup where:

• the founder was a legal representative;
• statutory tax duties were not fulfilled;
• the debt relates to the relevant period;
• and the conditions of Article 10 are satisfied.

Again:

the liability does not arise merely because the individual was the founder.

It arises because of the person’s legal-representative role.

Example: Historic VAT Exposure

A startup is sold in 2026.

The buyer later discovers that during 2025 the company:

• incorrectly reported VAT;
• failed to submit certain declarations;
• or used problematic invoices.

A tax assessment is issued.

Several different liability layers may arise:

Company

The company itself may owe the assessed tax.

Former Ltd. Şti. Shareholder

Article 35 of Law No. 6183 may become relevant.

Former Legal Representative

VUK Article 10 and repeated Article 35 may need to be examined.

Seller Under SPA

The buyer may bring a tax warranty or tax indemnity claim.

The same historic tax issue can therefore create several legally distinct claims.

SGK Debts Can Also Survive the Exit for Former Managers

Social Security Institution liabilities must be analysed separately.

Article 88 of Law No. 5510 provides a special joint and several responsibility mechanism for unpaid premiums and related SGK receivables involving, among others:

• company board members;
• senior managers or authorised persons;
• and legal representatives

where the statutory conditions exist. Official SGK legal analysis confirms this structure.

Therefore, a founder who served as:

• board member;
• general manager;
• authorised executive;
• or legal representative

during the relevant premium period may face personal exposure even after selling their shares.

A post-closing SPA clause cannot eliminate SGK’s statutory rights against persons who are personally liable under legislation.

It can only regulate the economic relationship between buyer and seller.

Example: Unpaid Employee Premiums

A startup has 100 employees.

During the final six months before the sale, cash flow becomes difficult.

Management postpones SGK premium payments.

The buyer acquires the company.

After closing, SGK begins collection.

The company remains primarily involved as employer.

However, depending on the statutory conditions and persons holding relevant authority during the period, former managers or legal representatives may also face liability under Article 88.

The share sale itself does not erase this historic management exposure.

Management Liability Can Survive Sale of the Shares

The Turkish Commercial Code creates a separate liability regime for:

• founders;
• board members;
• managers;
• and liquidators.

Article 553 provides that these persons may be liable to the:

• company;
• shareholders;
• and company creditors

for damage caused by culpable breaches of obligations arising from the law or articles of association.

Importantly, Article 644 makes the relevant Article 553 liability provisions applicable to limited companies as well.

Selling the shares does not retroactively erase misconduct committed while serving as director or manager.

Example: Founder Diverts Company Assets Before Sale

Suppose the founder knows a company sale is approaching.

Before closing, the founder:

• transfers company money to a related party;
• sells a company asset substantially below value;
• removes intellectual property from the company;
• or causes the company to assume an undisclosed related-party obligation.

The founder later sells the shares and says:

“I am no longer a shareholder.”

That does not automatically prevent liability for earlier conduct.

The buyer, company or creditors may investigate whether statutory management duties were breached.

A Discharge Resolution Does Not Solve Every Liability Question

M&A transactions sometimes involve general assembly resolutions releasing former board members from liability.

The legal effects of a release should be analysed carefully.

Founders should not assume that a corporate discharge automatically eliminates:

• third-party creditor claims;
• statutory public debt liability;
• tax authority claims;
• SGK claims;
• fraud claims;
• or contractual seller obligations under the SPA.

Different liabilities arise under different legal bases.

The Sale Agreement Should Address Management Claims

Founders leaving the company may seek protection in the SPA against new management using the company to bring aggressive historic claims.

Depending on the transaction, the agreement may regulate:

• director releases;
• D&O insurance;
• covenant not to bring certain company claims;
• preservation of company records;
• defence of historic claims;
• cooperation obligations;
• and access to documents after closing.

These issues can be particularly important where founders will have no access to corporate records after the buyer assumes control.

Why D&O Insurance Matters

Directors’ and officers’ liability insurance can be important in larger startup transactions.

A founder may cease being a director at closing but still face a claim two years later concerning an act performed before the sale.

A run-off or tail D&O policy can sometimes provide continued insurance protection for historic acts.

The SPA should therefore consider:

• whether D&O coverage exists;
• when it expires;
• whether run-off coverage will be purchased;
• who pays the premium;
• and which former directors are covered.

Insurance does not remove liability, but it may materially reduce personal financial exposure.

Hidden Debts Are One of the Main M&A Risks

Buyers frequently investigate whether the startup has liabilities that do not appear clearly on the balance sheet.

Examples include:

• pending employee claims;
• unpaid overtime;
• tax risks;
• SGK risks;
• pending litigation;
• customer refund obligations;
• guarantees given to third parties;
• data protection penalties;
• licence violations;
• intellectual property disputes;
• unpaid consultancy fees;
• related-party loans;
• convertible instruments;
• and contractual penalties.

The buyer’s legal due diligence process attempts to identify these issues before closing.

The sellers’ representations and warranties protect against risks that were missed or inaccurately disclosed.

Disclosure Is the Founder’s Strongest Protection

A founder should generally avoid giving an unqualified warranty if a known exception exists.

For example, instead of representing:

“The Company has no litigation.”

when litigation exists, the seller should disclose the proceedings accurately in the disclosure schedule.

An effective disclosure may prevent the matter from later being characterised as a breach of the relevant warranty, depending on the SPA language.

This creates one of the most important rules for startup sellers:

Do not hide a liability simply because you are afraid the buyer will reduce the price.

An undisclosed problem discovered after closing may be much more expensive than negotiating it before closing.

What If the Founder Fraudulently Hides a Debt?

Intentional concealment can create much greater exposure than an innocent warranty error.

Suppose a founder:

• receives a TRY 15 million tax assessment;
• removes the document from the data room;
• falsely states that no tax assessment exists;
• and sells the company at a valuation calculated on the assumption of no tax liability.

After closing, the buyer discovers the assessment.

The claim may extend beyond an ordinary technical warranty dispute.

Depending on the circumstances, issues concerning:

• fraud;
• intentional misrepresentation;
• contractual damages;
• tort;
• and potentially criminal law

may arise.

Contractual liability caps should not be assumed to protect deliberate fraudulent conduct in all circumstances.

Earn-Outs and Holdbacks Can Be Used to Manage Historic Risk

Buyers sometimes retain part of the purchase price after closing.

For example:

Purchase price: EUR 20 million.

Paid at closing: EUR 17 million.

Escrow: EUR 2 million.

Earn-out: EUR 1 million.

The escrow may secure:

• warranty claims;
• tax liabilities;
• specific indemnities;
• or other post-closing risks.

This can reduce the need to pursue founders personally years later.

From a seller’s perspective, however, the escrow mechanism should specify:

• claim process;
• release date;
• permitted deductions;
• dispute procedure;
• and interest.

Share Sale vs Business Transfer: Why the Difference Matters

A startup can also be sold through transfer of its business rather than transfer of shares.

The Turkish Code of Obligations contains a specific rule for acquisition of a business or pool of assets.

Article 202 provides that a person acquiring an asset pool or business with its assets and liabilities becomes responsible toward creditors from the relevant notification or announcement.

It further provides that the former debtor remains jointly liable with the acquirer for two years. For debts already due, the period begins from notification or announcement; for debts becoming due later, it begins from maturity. If the required notification or announcement is not made, the two-year period does not begin to run.

This regime is fundamentally different from a share sale.

Important Nuance: Article 202 Does Not Automatically Make Shareholders Personally Liable

Suppose Startup A.Ş. itself sells its entire operating business to Buyer Company.

Under Article 202, the relevant previous debtor may be the selling company.

That does not automatically mean the founders personally become liable merely because they were shareholders.

If the founder personally owns and transfers the business, the position may be different.

Therefore, transaction structure matters.

A founder should distinguish:

shareholder selling shares

from

company selling its business

from

individual entrepreneur selling a personally owned business.

They are not interchangeable.

Why Buyers Sometimes Prefer Asset Deals

A buyer may prefer to acquire selected assets rather than the shares of the entire startup.

For example, it may want:

• software;
• trademark;
• customer contracts;
• employees;
• domain names;
• and intellectual property,

but not every historic corporate problem.

However, an asset transaction does not necessarily mean that all liabilities can simply be left behind.

Article 202 and other special legislation must be examined, as must:

• employee transfer rules;
• tax consequences;
• licence requirements;
• contract assignments;
• data protection;
• and regulatory approvals.

An asset deal therefore requires its own legal structuring.

Buyer Cannot Simply Rely on the SPA Against Public Authorities

This principle is crucial.

Suppose the SPA says:

“All taxes arising before closing shall be the exclusive responsibility of the Seller.”

That provision can regulate liability between buyer and seller.

But it does not necessarily bind:

• the tax administration;
• SGK;
• another public authority;
• or a third-party creditor.

If legislation gives a public authority a claim against:

• the company;
• former legal representative;
• limited company shareholder;
• or another responsible person,

the SPA cannot unilaterally remove that statutory right.

The person who pays may instead seek contractual reimbursement from the other party.

Former Founders Should Negotiate Conduct of Claims

Suppose a tax audit begins after closing concerning a pre-closing period.

The former founder may be required to indemnify the buyer.

But the buyer now controls the company.

Who decides whether:

• the company contests the assessment;
• settles it;
• pays immediately;
• files a lawsuit;
• appoints experts;
• or accepts liability?

The SPA should regulate conduct of claims.

A seller expected to bear the economic cost should normally seek rights to:

• receive prompt notice;
• access documents;
• participate in defence;
• approve material settlements;
• and avoid admissions being made without consultation.

Otherwise, the buyer could settle a disputed claim and simply send the bill to the former founders.

Records Must Be Available After Closing

Former founders often lose access to:

• accounting software;
• emails;
• contracts;
• tax files;
• board records;
• HR systems;
• and correspondence

on closing day.

Years later, a historic claim arises.

The founder may need those records to defend themselves.

The SPA should therefore address:

• record retention;
• reasonable access;
• cooperation;
• production of documents;
• and confidentiality.

This is particularly important for tax, SGK and director-liability claims.

What Happens If Only Some Founders Give Warranties?

Not every seller must necessarily accept the same liability.

For example:

Founder A owns 60% and actively manages the company.

Founder B owns 20% and is a passive investor.

Investor C owns 20%.

The parties may negotiate different warranty structures.

Possible approaches include:

• founders giving business warranties;
• all sellers giving title warranties;
• institutional investors limiting warranties to ownership and authority;
• founders having several liability;
• founders having joint liability;
• liability apportioned by sale proceeds.

The allocation should be explicit.

Joint Liability Can Be Dangerous for Founders

A founder should pay close attention to whether seller liability is:

several

or

joint and several.

Suppose there are three founders.

Each receives one-third of the purchase price.

A EUR 3 million warranty claim arises.

If liability is several and proportionate, each founder may bear EUR 1 million.

If they are jointly and severally liable, the buyer may potentially seek the entire amount from one founder, leaving that founder to pursue contribution from the others.

This is a major negotiation point in startup exits.

Founder Liability Should Ideally Be Proportionate to Sale Proceeds

A common seller position is that a founder should not normally bear liability exceeding the consideration actually received, subject to negotiated exceptions.

For example:

Founder receives EUR 500,000.

An uncapped EUR 10 million warranty exposure would create a commercially extreme outcome.

Founders should therefore negotiate:

• individual liability caps;
• pro-rata allocation;
• exclusions;
• survival periods;
• baskets;
• and specific indemnities.

What About Debts Arising After Closing From Pre-Closing Events?

This is a very common issue.

Example:

The startup dismisses an employee before closing.

The employee files a lawsuit after closing.

The judgment is issued two years later.

When did the liability arise?

From the company’s perspective, the company may remain responsible because it was the employer.

Between buyer and seller, the SPA must determine whether the liability is treated as:

• a pre-closing matter;
• a warranty claim;
• a specific indemnity;
• or a post-closing company expense.

The date on which a court judgment is issued is not necessarily the only relevant date.

The underlying event may have occurred before the sale.

Tax Audits Create the Same Problem

The company may be audited in 2028 for the 2025 tax year.

The company was sold in 2026.

The assessment may be issued long after closing, but it concerns a pre-closing period.

This is why tax indemnities frequently cover:

taxes attributable to periods ending on or before closing, regardless of when the assessment is issued.

A carefully drafted SPA should define this clearly.

Checklist for Founders Before Selling a Startup

Before signing a company sale agreement, founders should review:

1. Is the transaction a share sale or business/asset sale?
2. Is the company an A.Ş. or Ltd. Şti.?
3. Are all capital contributions fully paid?
4. Does the founder have any personal guarantee?
5. Has the bank agreed to release the guarantee?
6. Are there personal mortgages or pledges securing company debt?
7. Have landlord guarantees been released?
8. Are there unpaid public debts?
9. Are there tax audits?
10. Are tax returns complete?
11. Are SGK premiums fully paid?
12. Was the founder a legal representative?
13. Was the founder a board member?
14. Was the founder a limited company manager?
15. When will resignation become legally effective?
16. Are trade registry filings required?
17. Does the founder retain any signature authority after closing?
18. Are there pending lawsuits?
19. Are employee claims pending?
20. Are there unpaid bonuses or severance obligations?
21. Are customer refund liabilities disclosed?
22. Are there cybersecurity incidents?
23. Are there KVKK investigations?
24. Are IP rights properly owned by the company?
25. Are convertible instruments outstanding?
26. Have SAFEs or investment rights been disclosed?
27. Are any company guarantees given for third parties?
28. Are all related-party transactions disclosed?
29. What warranties will the founder give?
30. How long do the warranties survive?
31. What is the liability cap?
32. Is there a de minimis threshold?
33. Is there a basket?
34. Which liabilities are uncapped?
35. Are tax claims separately regulated?
36. Are specific indemnities included?
37. Is seller liability several or joint and several?
38. Is an escrow required?
39. How long will escrow remain?
40. Who controls post-closing litigation?
41. Who controls tax audits?
42. Must the buyer notify the seller before settling claims?
43. Will the founder have access to records after closing?
44. Is D&O run-off insurance required?
45. Are all known liabilities included in the disclosure letter?
46. Are there change-of-control clauses?
47. Have required creditor consents been obtained?
48. Do any contracts automatically terminate on sale?
49. Does the buyer assume any founder guarantees contractually?
50. Has the actual creditor formally released the founder?

If these questions are not answered before closing, the founder’s “exit” may not be as final as expected.

Frequently Asked Questions About Former Founder Liability After a Startup Sale

Does selling all shares eliminate liability for ordinary company debts?

Generally, the company remains the debtor. In an A.Ş., shareholders are ordinarily responsible only for their subscribed capital toward the company; in a Ltd. Şti., shareholders are similarly not responsible for ordinary company debts merely because of shareholder status.

If the startup has a supplier debt from before the sale, can the supplier sue the former founder?

Not normally merely because the person was a shareholder. A separate basis for personal liability would normally be needed, such as a guarantee or personal wrongdoing.

What if the founder guaranteed the supplier or bank debt?

The guarantee may continue after the share sale unless it is validly released or otherwise terminated.

Are former Ltd. Şti. shareholders responsible for pre-sale public debts?

Potentially yes. Article 35 of Law No. 6183 expressly provides a proportional responsibility regime and also addresses joint responsibility of transferor and transferee for pre-transfer public receivables.

Can a former A.Ş. founder be liable for tax debts?

A mere shareholder does not have the same Article 35 shareholder liability applicable to a Ltd. Şti. However, a founder who served as legal representative may face separate liability under the Tax Procedure Law and public receivable legislation where the statutory conditions exist.

Can a former board member remain liable for SGK debts?

Potentially. Article 88 of Law No. 5510 contains a statutory responsibility regime involving board members, senior managers, authorised persons and legal representatives under the prescribed conditions.

Does resignation as director eliminate historic liability?

No. Resignation can end future management responsibility, but it does not automatically erase liability arising from acts, omissions or statutory responsibilities connected with the period in which the individual held office.

Can the buyer claim against the founders for an undisclosed company debt?

Potentially yes if the relevant liability breaches a representation, warranty, covenant or indemnity contained in the Share Purchase Agreement.

Does the buyer need to prove that the creditor can sue the founders personally?

Not necessarily. The buyer’s claim under the SPA is contractually separate from the creditor’s underlying claim against the company.

Is there a difference between a share sale and sale of the operating business?

Yes. Article 202 of the Turkish Code of Obligations contains a specific regime for transfer of an asset pool or business with its assets and liabilities, including two-year joint responsibility of the former debtor and acquirer.

Does TBK Article 202 automatically make former shareholders personally liable in an asset deal?

No. The identity of the transferor and previous debtor must be identified. Where the corporate company itself transfers the business, the previous debtor may be the company rather than its shareholders.

Can the SPA say that all historic taxes belong to the founder?

Yes, as an allocation of risk between buyer and seller. But that contractual provision does not automatically prevent public authorities from pursuing persons who are statutorily liable.

How can former founders reduce post-closing liability?

Through careful due diligence, complete disclosure, release of guarantees, clearly drafted liability caps, survival periods, baskets, tax indemnities, claim procedures, escrow limits, D&O coverage and proper resignation from corporate offices.

Conclusion: Do Former Startup Founders Remain Liable for Company Debts After a Sale?

The sale of a startup does not automatically mean either that former founders remain liable for every company debt or that every possible liability disappears at closing.

The correct answer depends on the legal basis of the claim.

In a normal share sale, the company continues to exist as the same legal entity.

Its shareholders change, but its assets, contracts and liabilities generally remain with the company.

For a Turkish A.Ş., Article 329 establishes that the company is responsible for its debts with its own assets and that shareholders are responsible only for the capital they have undertaken toward the company.

For a Turkish Ltd. Şti., Article 573 similarly provides that shareholders are not responsible for ordinary company debts merely because of their shareholder status.

Therefore, if a startup owes a supplier TRY 5 million before closing, the former founder does not ordinarily become personally responsible for that TRY 5 million merely because the debt arose while they owned the shares.

The debtor normally remains the startup company.

But founders must understand five major exceptions.

First, personal guarantees survive independently of share ownership.

If the founder signed a:

• bank guarantee;
• suretyship;
• lease guarantee;
• mortgage;
• pledge;
• or personal payment undertaking,

selling the shares does not automatically release it.

The creditor should formally release the founder.

Second, Ltd. Şti. public debt creates a specific statutory exception.

Article 35 of Law No. 6183 allows qualifying public receivables that cannot be collected from a limited company to be pursued against shareholders in proportion to their capital shares. More importantly in M&A transactions, the provision specifically preserves responsibility involving the transferor and transferee for public receivables relating to the pre-transfer period.

Accordingly, a founder selling a limited company should never treat historic tax and other public receivable due diligence as a mere buyer concern.

It may remain a personal concern after the sale.

Third, management and legal-representative liability can survive the exit.

A founder who was:

• board member;
• manager;
• authorised executive;
• or legal representative

may have statutory responsibilities independent of shareholder status.

Tax Procedure Law Article 10 permits certain tax and related receivables to be collected from persons who failed to perform legal-representative obligations where the statutory requirements are satisfied.

Repeated Article 35 of Law No. 6183 similarly addresses liability of legal representatives for public receivables that cannot be collected from the legal entity.

Article 88 of Law No. 5510 separately creates potential personal exposure for SGK receivables concerning persons such as board members, senior managers, authorised persons and legal representatives in the prescribed circumstances.

And Article 553 of the Turkish Commercial Code can create personal liability for damage caused by culpable breaches of statutory or articles-of-association duties by founders, board members, managers and liquidators.

Selling the company therefore does not rewrite history.

If legally actionable conduct occurred while the founder managed the company, a later transfer of the shares does not automatically erase that conduct.

Fourth, the Share Purchase Agreement can create substantial post-closing liability.

This is often the largest practical source of founder exposure in successful exits.

A founder may have no personal liability to the supplier but still owe the buyer compensation because the founder represented that:

• there were no undisclosed debts;
• no litigation existed;
• taxes were properly paid;
• employees had no outstanding claims;
• the accounts were accurate;
• or all material contracts had been disclosed.

This is why the SPA should clearly regulate:

• warranty scope;
• disclosure;
• indemnities;
• survival periods;
• liability caps;
• de minimis thresholds;
• baskets;
• claim notification;
• defence of third-party claims;
• and escrow.

The safest rule for founders is simple:

Disclose known liabilities rather than hoping the buyer will never discover them.

A risk negotiated before closing can be reflected in price, escrow or a specific indemnity.

A concealed liability discovered after closing can become a major contractual dispute.

Fifth, a business or asset sale should not be confused with a share sale.

Article 202 of the Turkish Code of Obligations provides a specific liability regime where an asset pool or business is transferred with its assets and liabilities.

The acquirer becomes responsible toward creditors after the required notification or announcement, while the previous debtor remains jointly liable with the acquirer for two years under the statutory timing rules.

This does not automatically make every shareholder personally liable.

It does, however, demonstrate why transaction structure matters.

For founders, the best approach is therefore to analyse post-sale exposure under separate headings:

Company Debt
Who legally owes the creditor?

Shareholder Liability
Does company law or public receivable law create personal responsibility?

Management Liability
Was the founder a director, manager or legal representative during the relevant period?

Security Liability
Did the founder personally guarantee the obligation?

SPA Liability
Did the seller give a warranty, indemnity or covenant covering the matter?

When these categories are kept separate, the question becomes much easier to answer.

The practical goal in a startup exit should be to make closing genuinely final wherever possible.

That requires more than transferring shares and receiving the purchase price.

Founders should obtain:

• release of personal guarantees;
• proper resignation from management and representation positions;
• comprehensive disclosure of liabilities;
• sensible warranty periods;
• negotiated liability caps;
• clearly defined tax indemnities;
• D&O run-off coverage where appropriate;
• access to historic records;
• and a precise post-closing claims procedure.

A founder who carefully negotiates these matters may complete an exit with relatively limited residual exposure.

A founder who signs broad unlimited warranties, leaves personal guarantees outstanding and ignores historic tax or SGK issues may discover years later that the startup was sold but the legal risk was not.

For Turkish startup acquisitions, the central principle is therefore:

Selling the shares generally transfers ownership of the company—not the former founders’ personal statutory, contractual or guarantee liabilities.

The exit is complete only when both the corporate ownership and the residual liability structure have been properly addressed.