A foreign investor establishing or acquiring a business in Türkiye may be asked to become a member of the board of directors, a company manager or an authorized representative.

At first glance, accepting such a position may appear to be a simple corporate formality.

It is not.

Under Turkish law, there is an important distinction between being:

• a shareholder;
• a board member;
• a limited company manager;
• an authorized representative;
• and a personal guarantor.

A foreign shareholder may ordinarily benefit from limited liability, but once that investor also becomes involved in the management or legal representation of the Turkish company, additional personal liability risks can arise.

These may include liability relating to:

• breach of directors’ duties;
• company losses;
• tax debts;
• other public receivables;
• social security premiums;
• insolvency and capital-loss obligations;
• unlawful transactions;
• personal guarantees;
• regulatory violations;
• and, in appropriate circumstances, criminal conduct.

The fact that the director lives outside Türkiye does not automatically eliminate these responsibilities.

For this reason, foreign investors should understand what accepting a Turkish board or management position actually means before allowing their name to be registered in the trade registry.

Can a Foreigner Become a Director of a Turkish Company?

Yes.

A foreign national can generally serve as a member of the board of directors of a Turkish joint stock company.

The Turkish Ministry of Trade’s current company guide expressly states that there is no requirement for board members of a joint stock company to be Turkish citizens or residents of Türkiye.

Foreign board members are therefore common in:

• foreign-owned Turkish subsidiaries;
• joint ventures;
• venture-backed startups;
• private equity investments;
• multinational groups;
• and international family businesses.

Official investment guidance also confirms that directors do not need to be shareholders and that there is no nationality restriction, although a foreign director generally needs a Turkish tax identification number for relevant corporate procedures.

However, the ability to become a director and the liability resulting from becoming one are two completely different questions.

Does a Foreign Director Have the Same Responsibilities as a Turkish Director?

As a general rule, yes.

Turkish corporate law does not ordinarily provide foreign directors with reduced responsibilities merely because:

• they live abroad;
• they do not speak Turkish;
• they own only a small percentage of shares;
• they were appointed by a foreign parent company;
• or another director manages the company on a daily basis.

A foreign director who accepts a board position becomes part of the company’s corporate governance structure.

The practical question is therefore not:

“Am I foreign?”

but:

“What legal duties arise from the corporate position I accepted?”

1. Shareholder Liability and Director Liability Are Different

This distinction is fundamental.

Imagine a foreign investor who owns 40% of a Turkish joint stock company.

If that person is only a shareholder, the general principle is that ordinary company debts belong to the company.

Now assume the same investor also becomes a board member.

The investor may now potentially face liability not because of the 40% shareholding but because of:

• decisions made as a director;
• failure to perform statutory duties;
• public debt rules applicable to legal representatives;
• SGK obligations;
• insolvency-related duties;
• or another independent legal basis.

A foreign investor should therefore analyse two separate risk categories:

Risk as shareholder

and

Risk as director.

They should never be treated as identical.

2. The General Liability Rule Under Article 553 of the Turkish Commercial Code

One of the principal provisions governing directors’ civil liability is Article 553 of the Turkish Commercial Code.

Under this provision, founders, board members, managers and liquidators who culpably breach obligations arising from law or the articles of association may be responsible for the resulting damage suffered by:

• the company;
• shareholders;
• or company creditors.

This is important because being a board member does not automatically mean being personally responsible for every loss suffered by the company.

There must generally be a legally relevant breach of duty and the other requirements for liability must be established.

However, once a foreign director participates in management, their conduct may be examined against the obligations imposed on directors under Turkish law.

3. Directors Have a Duty of Care and Loyalty

Article 369 of the Turkish Commercial Code requires board members and third persons entrusted with management to perform their duties with the care of a prudent manager and to protect the interests of the company in accordance with good-faith principles.

This means directors cannot simply act according to:

• instructions from a shareholder;
• their own personal interests;
• the interests of the foreign parent company;
• or the interests of another group company

if doing so unlawfully harms the Turkish company.

For example, suppose a foreign parent company instructs its Turkish subsidiary’s board to transfer an important asset to another group company for significantly less than market value.

A foreign director sitting on the Turkish board should not assume:

“I was appointed by the parent company, so I must follow the parent’s instructions.”

The director also owes legal duties within the Turkish company’s governance structure.

4. Directors Must Protect the Turkish Company’s Interests

Foreign-owned companies often create an especially difficult situation.

Consider the following structure:

German Parent Company
↓
100% ownership
↓
Turkish Subsidiary A.Ş.

Three executives from the German parent company sit on the Turkish subsidiary’s board.

Those individuals may naturally view themselves as representatives of the parent company.

However, when acting as directors of the Turkish company, they must also take into account their statutory duties toward that company.

Transactions involving:

• management fees;
• intra-group loans;
• asset transfers;
• intellectual property licenses;
• cash pooling;
• guarantees;
• or related-party agreements

should therefore be structured carefully.

A transaction beneficial to the parent company may not necessarily be beneficial to the Turkish subsidiary.

5. A Director Is Not Automatically Liable Because the Business Failed

Business activity involves risk.

A company can:

• lose an important customer;
• launch an unsuccessful product;
• invest in technology that does not succeed;
• enter a market that later contracts;
• or make a commercial investment that ultimately loses money.

The fact that a business decision turned out badly does not automatically establish personal director liability.

Article 553 focuses on culpable breach of duties imposed by law or the articles of association.

The legal question is therefore not simply:

“Did the company lose money?”

It is more likely to involve questions such as:

• Did the director act with appropriate care?
• Was adequate information obtained?
• Was there a conflict of interest?
• Was the decision within lawful authority?
• Were mandatory procedures followed?
• Was relevant financial information ignored?
• Was the director acting in the company’s interests?

Commercial failure and unlawful management should not be confused.

6. Some Board Duties Cannot Simply Be Delegated Away

A common foreign-investor strategy is to appoint a local CEO and assume that the foreign board members therefore have no meaningful responsibility.

Turkish law does allow management functions to be delegated in appropriate circumstances.

Article 367 permits the board, where the articles of association allow it and an internal directive is prepared, to transfer management partially or entirely to one or more board members or third persons.

However, Article 375 identifies duties and powers of the board that are non-transferable and indispensable.

These include matters such as:

• top-level management of the company;
• determination of the management organization;
• establishment of accounting and financial-control systems;
• appointment and removal of managers and authorized signatories;
• high-level supervision of management;
• corporate books and reporting obligations;
• preparation of the general assembly;
• execution of general assembly decisions;
• and notification to the court where the company is over-indebted.

Therefore, appointing a professional CEO does not automatically turn the board into a purely symbolic institution.

7. Proper Delegation Can Nevertheless Reduce Certain Liability Risks

Article 553 also contains an important protection.

Where a duty or authority is legally delegated to another person, the delegating directors are generally not responsible for the acts and decisions of the person receiving the delegation unless they failed to exercise reasonable care in selecting that person.

The same article also states that nobody can be held responsible for unlawful acts or irregularities outside their control merely by relying on a general supervision or duty-of-care argument.

This makes corporate governance documentation extremely important.

Foreign boards should clearly determine:

• who manages daily operations;
• who controls tax filings;
• who supervises accounting;
• who has banking authority;
• who manages employees;
• and who reports to the board.

Informal management structures can create unnecessary uncertainty when liability is later investigated.

8. A Foreign Director Should Not Accept a “Nominee” Position Lightly

A foreign investor may sometimes be told:

“We only need your name on the board. You do not have to do anything.”

That arrangement can be dangerous.

Being registered as a board member is not necessarily an honorary role.

A director who:

• never reads financial statements;
• never attends meetings;
• does not request information;
• ignores warnings;
• or leaves all decisions to another shareholder

should not assume inactivity automatically provides protection.

The correct strategy is not to become a passive director.

It is to create a proper corporate governance system where responsibility, reporting and delegation are clearly documented.

9. Tax Debts Can Create Personal Liability for Legal Representatives

One of the most important risks for foreign directors arises from Turkish public-debt legislation.

Repeated Article 35 of Law No. 6183 provides that public receivables that cannot be collected, fully or partially, from a legal entity — or are understood to be uncollectible — may be collected from the personal assets of its legal representatives, subject to the statutory conditions.

The law expressly states that this rule also applies to representatives in Türkiye of foreign individuals and institutions.

Official Revenue Administration guidance confirms that the concept of legal representatives under this framework includes persons determined under corporate law and corporate registry records and explains the application of this responsibility to public receivables.

This means that a foreign director with relevant legal-representation status may potentially face personal exposure for certain public debts.

10. Tax Procedure Law Article 10 Must Also Be Considered

The Tax Procedure Law contains a separate legal-representative responsibility regime.

Where tax obligations of a company must be carried out through its legal representatives and taxes cannot be collected from the company due to failure to perform those statutory duties, the relevant representatives may potentially face personal liability under the applicable conditions.

This is particularly important for individuals with authority over:

• tax declarations;
• accounting;
• withholding taxes;
• VAT;
• payroll;
• and statutory payments.

A foreign director should therefore know exactly who is legally responsible for tax compliance within the Turkish company.

Delegating practical accounting work to an external accountant does not necessarily mean that corporate decision-makers can ignore tax compliance entirely.

11. “Our Accountant Handles Everything” Is Not a Complete Defence

Almost every Turkish company uses:

• an accountant;
• certified public accountant;
• financial adviser;
• or tax adviser.

These professionals may prepare declarations and perform accounting functions.

However, a foreign director should not assume that appointing an accountant eliminates every management responsibility.

The board should maintain reasonable systems to monitor:

• tax filings;
• outstanding tax balances;
• payroll;
• bank payments;
• public debts;
• and formal notices received from authorities.

A monthly or quarterly reporting structure can significantly reduce governance risk.

12. Social Security Premium Debts Create a Separate Risk

SGK liabilities require particular attention.

Under the social security framework, senior executives, authorized persons, legal representatives and — importantly — board members can face joint and several liability for unpaid social security premiums in relevant circumstances.

Recent SGK legal analysis explains that Article 88 of Law No. 5510 includes company board members among those who may be jointly and severally responsible together with the employer for unpaid premiums, subject to the statutory framework and the possible existence of just cause.

The same SGK publication notes that current Court of Cassation case law under Law No. 5510 treats board membership itself as sufficient for this statutory premium-debt responsibility without additionally requiring the board member to hold representation and binding authority.

This is particularly important for foreign non-executive board members.

13. A Non-Signatory Board Member May Still Face SGK Risk

Consider:

Foreign Investor A owns 10%.

Foreign Investor A is a board member.

Foreign Investor A has no signature authority.

The CEO and finance director handle payroll.

The company fails to pay substantial SGK premiums.

The foreign board member should not automatically assume:

“I never had access to the bank account, so this has nothing to do with me.”

The statutory SGK regime must be examined separately from ordinary representation authority.

The SGK’s published analysis specifically explains that current case law does not require separate representation authority for board-member responsibility regarding post-5510 premium debts.

For foreign board members, this is one of the most important personal-liability issues to understand before accepting appointment.

14. Limited Company Managers Also Have Personal Responsibilities

Not every Turkish company has a board of directors.

A Turkish limited liability company is managed by one or more managers — müdürler.

Article 626 of the Turkish Commercial Code requires managers and persons entrusted with management to perform their duties with due care and to protect the company’s interests in accordance with good faith.

The liability provisions applicable to joint stock company directors under Article 553 are also applied to limited companies through Article 644.

Therefore, a foreign individual registered as manager of a Turkish Ltd. Şti. should not assume that the title is merely administrative.

15. General Assembly Approval Does Not Automatically Protect a Limited Company Manager

This point is particularly important.

The Turkish Commercial Code provides that a limited company’s articles may require managers to submit certain decisions to the general assembly for approval.

However, the statute expressly states that general assembly approval does not remove or limit the managers’ liability.

Therefore, a foreign manager should be cautious about relying on:

“The shareholders approved it.”

Shareholder approval may not automatically eliminate liability for an unlawful management decision.

16. Financial Distress Creates Higher Risk for Directors

The responsibilities of directors become particularly important when a company is experiencing:

• serious losses;
• cash-flow problems;
• inability to pay creditors;
• loss of capital;
• or over-indebtedness.

Article 376 of the Turkish Commercial Code establishes specific duties when capital and legal reserves are significantly lost or where signs of over-indebtedness appear.

Where half of the total capital and statutory reserves have been lost due to accumulated losses, the board must immediately call the general assembly and present appropriate remedial measures.

More serious capital loss triggers additional statutory consequences.

A foreign board member should therefore never ignore financial statements showing severe deterioration.

17. Directors Have a Specific Duty in Cases of Over-Indebtedness

The most serious situation arises where there are indications that the company is over-indebted.

Under Article 376, the board must prepare an interim balance sheet based on the statutory valuation approaches.

If the assets are insufficient to cover creditor claims, the board must, subject to the statutory exceptions, notify the commercial court at the company’s registered seat and request bankruptcy.

Notification of over-indebtedness is also expressly listed among the board’s non-transferable duties under Article 375.

This is a major reason why foreign directors should receive immediate legal advice when a Turkish company becomes financially distressed.

18. Ignoring Insolvency Indicators Can Be Dangerous

Imagine that a Turkish startup has:

• significant unpaid tax debt;
• several months of unpaid salaries;
• bank defaults;
• negative equity;
• lawsuits from suppliers;
• and no realistic funding source.

The board nevertheless continues operating for another year without analysing Article 376.

A foreign director cannot safely treat this as:

“A finance department issue.”

Capital loss and over-indebtedness can trigger direct statutory board responsibilities.

Board minutes should therefore document:

• financial information reviewed;
• remedial measures considered;
• funding alternatives;
• shareholder discussions;
• restructuring measures;
• and professional advice obtained.

19. Directors Should Demand Regular Financial Reporting

One of the simplest risk-management tools is also one of the most important.

Foreign directors should insist on receiving reliable periodic information.

At minimum, depending on the company, this may include:

• cash position;
• unpaid taxes;
• SGK liabilities;
• employee payroll;
• bank debt;
• accounts receivable;
• overdue supplier balances;
• litigation;
• regulatory issues;
• and monthly financial statements.

A director who lives in London, Berlin or Dubai should not remain dependent on occasional WhatsApp messages from the founder.

Corporate reporting should be formalized.

20. Representation Authority Can Create Additional Practical Risk

Under the Turkish Commercial Code, the board of directors manages and represents the joint stock company.

Representation authority may be delegated under the statutory framework, but at least one board member must generally retain representation authority.

A foreign director who receives signatory authority should clearly understand:

• whether signature is individual or joint;
• whether limits have been registered;
• which transactions can be signed;
• bank authority;
• financing authority;
• hiring authority;
• and whether powers of attorney can be granted.

Internal agreements between shareholders are not always sufficient to protect against third-party consequences.

Corporate representation should therefore be structured through legally effective mechanisms.

21. Signing a Contract for the Company Does Not Normally Make the Director Personally Liable

A foreign director may validly sign:

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

If the director is properly authorized and clearly signs for the company, the contractual debtor is generally the company.

The director does not ordinarily become personally liable simply because their signature appears on the contract as the company’s authorized representative.

However, this changes if the director separately signs:

• as guarantor;
• as surety;
• as aval provider;
• as co-debtor;
• or under a personal indemnity.

Signature capacity should therefore always be clearly identified.

22. Personal Guarantees Are One of the Biggest Risks for Foreign Directors

Banks and commercial counterparties may request directors or shareholders to provide personal security.

For example:

Turkish Startup obtains:

EUR 4 million bank financing.

Foreign director signs:

Personal Guarantee – EUR 4 million.

If the company defaults, limited liability protection does not automatically protect the director against enforcement of the separate guarantee.

The director created an independent personal obligation.

Foreign directors should therefore carefully review documents labelled:

• guaranty;
• surety;
• aval;
• joint and several liability;
• indemnity;
• security undertaking;
• or payment undertaking.

23. A Director Should Never Sign a Document Without Understanding the Capacity

A foreign director may receive a Turkish document and be told:

“This is only a standard bank form.”

That is not enough.

Before signing, the director should determine:

Am I signing for the company, or am I personally undertaking an obligation?

The signature section should be examined carefully.

A single additional paragraph creating personal joint liability can fundamentally change the director’s risk.

24. Directors Can Be Personally Liable for Their Own Unlawful Conduct

Corporate personality does not protect individuals from responsibility for their own wrongful acts.

If a foreign director personally participates in conduct such as:

• fraud;
• false representations;
• unlawful diversion of company assets;
• falsification of documents;
• breach of trust;
• bribery;
• tax offences;
• or other unlawful conduct,

personal civil, administrative or criminal consequences may arise depending on the facts.

The company structure is not a general immunity mechanism.

25. Directors Must Pay Attention to Conflicts of Interest

Foreign directors frequently sit on boards of several group companies.

This can create conflicts.

Consider:

Foreign Director serves on the board of:

Parent Company A

and

Turkish Subsidiary B.

A contract is proposed under which Turkish Subsidiary B transfers a highly valuable customer portfolio to Parent Company A at a low price.

The director must consider the duties owed in the Turkish company capacity.

Group interests and the interests of the Turkish company should not automatically be treated as identical.

Related-party transactions therefore require appropriate:

• valuation;
• corporate approvals;
• disclosure;
• documentation;
• and tax analysis.

26. Competition With the Company Can Create Liability

For managers of limited companies, Article 626 expressly addresses both duty of loyalty and restrictions on competing activities unless the required permission exists.

Foreign executives who operate several companies in the same sector should therefore consider whether:

• their other board positions;
• personal businesses;
• consultancy arrangements;
• or investments

create conflicts or competition problems.

27. Directors Should Understand Their Right to Information

A director cannot properly perform management and supervision duties without information.

Foreign board members should therefore actively obtain:

• management reports;
• financial data;
• major contracts;
• regulatory correspondence;
• tax notices;
• litigation updates;
• and auditor findings.

A director who repeatedly requests information and documents concerns in board minutes is in a very different practical position from a director who signs resolutions without reading them.

28. Board Minutes Can Become Crucial Evidence

Foreign directors should treat board minutes seriously.

If a director disagrees with a proposed decision because of:

• regulatory risk;
• insufficient information;
• conflict of interest;
• insolvency concerns;
• or financial irregularities,

the objection should be properly documented.

Simply saying privately:

“I told the CEO I disagreed.”

may provide far less evidentiary value than a formally recorded dissent.

Important decisions should identify:

• information reviewed;
• alternatives considered;
• professional advice obtained;
• conflicts disclosed;
• and dissenting votes.

29. Resigning From the Board Does Not Necessarily Erase Historical Liability

A foreign director may resign when problems emerge.

Resignation can stop future board responsibilities after it becomes legally effective, but it does not automatically erase responsibility relating to the period during which the person served.

For example, if the relevant breach or public debt relates to the director’s period of authority, subsequent resignation does not necessarily remove historical exposure.

Dates therefore matter.

Relevant dates may include:

• appointment;
• commencement of authority;
• tax periods;
• due dates;
• board resolutions;
• resignation;
• trade registry registration;
• and announcement.

30. Resignation Should Be Properly Registered

Foreign directors should not rely solely on an email saying:

“I resign effective today.”

The resignation should be handled through the appropriate corporate and registry procedures.

Trade registry records are particularly important when determining who represented a company during a specific period.

If a foreign director leaves the company, corporate records should be updated promptly.

31. Being Released by the General Assembly Does Not Solve Every Liability Issue

Turkish companies may adopt general assembly resolutions releasing directors in relation to their management activities.

However, a release resolution should not be treated as universal protection against every possible claim.

Different consequences can arise depending on:

• who brings the claim;
• whether information was disclosed;
• the nature of the damage;
• creditor rights;
• public debts;
• tax liability;
• SGK liability;
• and criminal or regulatory issues.

Foreign directors should therefore avoid assuming that an annual “discharge” resolution eliminates all personal risk.

32. D&O Insurance Can Be Useful

Directors’ and Officers’ liability insurance — commonly called D&O insurance — can provide an additional layer of protection for directors.

Depending on the policy, coverage may potentially address defence costs and certain civil-liability claims.

However, policies typically contain exclusions.

For example, coverage may not extend to:

• intentional misconduct;
• fraud;
• criminal fines;
• certain taxes;
• or liabilities expressly excluded under the policy.

Foreign investors appointing executives to Turkish company boards should consider whether appropriate D&O insurance is available and whether coverage extends to Turkish proceedings.

33. Indemnification From the Parent Company Can Also Be Considered

A foreign executive may serve on a Turkish board only because their employer — the international parent company — asks them to do so.

In that situation, the executive may consider requesting a contractual indemnification from the parent company, to the extent legally permissible.

However, an indemnity is not the same as immunity.

If Turkish law imposes personal liability on the director, the director may still be pursued.

The indemnity may only provide a contractual right to recover qualifying amounts from the parent company afterwards.

34. Foreign Directors Should Consider Work-Permit Rules Separately

Corporate-law eligibility and immigration-law requirements are separate questions.

Official investment guidance states that non-resident board members of joint stock companies may fall within certain work-permit exemptions, while foreign individuals actually working in executive capacities in Türkiye may be subject to different rules depending on their circumstances.

A foreign director should therefore distinguish:

being legally appointed to the board

from

physically working in Türkiye in an executive capacity.

Immigration and employment authorization should be checked separately.

35. Foreign Director Liability in a Joint Venture

Joint ventures create particular risks.

Suppose:

Foreign Investor: 50%

Turkish Partner: 50%.

Each appoints two board members.

The foreign-appointed directors may believe their function is simply to protect the foreign investor’s interests.

However, they are also directors of the Turkish company.

The Shareholders’ Agreement may establish:

• reserved matters;
• veto rights;
• board composition;
• information rights;
• deadlock mechanisms;
• and reporting arrangements.

But these contractual arrangements do not necessarily eliminate statutory board obligations.

Foreign investors should therefore avoid creating governance structures in which nominated directors are instructed simply to vote according to shareholder instructions without independent consideration of Turkish-law duties.

36. What Happens When a Foreign Director Lives Abroad?

Physical residence outside Türkiye does not automatically remove board obligations.

A director may participate in governance while living abroad, subject to the applicable corporate procedure.

The Turkish Ministry of Trade expressly confirms that board members of joint stock companies do not generally need to reside in Türkiye.

However, foreign residence can make compliance more difficult because the director may not regularly see:

• tax notices;
• banking problems;
• employee disputes;
• or deteriorating finances.

A reliable local reporting system therefore becomes even more important.

37. Can Turkish Authorities Pursue a Foreign Director’s Assets Abroad?

If personal liability is validly established, the fact that the director lives outside Türkiye does not necessarily eliminate the debt.

Whether a Turkish judgment, administrative claim or other liability can be enforced abroad depends on factors including:

• type of claim;
• country where assets are located;
• applicable international agreements;
• recognition and enforcement requirements;
• and local law.

Cross-border enforcement can be more complicated than domestic enforcement, but foreign residence should not be treated as a liability shield.

38. What Should a Foreign Director Check Before Accepting Appointment?

Before joining the board or becoming manager of a Turkish company, the foreign individual should review at least:

Corporate Structure

• Is the company an A.Ş. or Ltd. Şti.?
• What does the articles of association provide?
• Who appoints the director?
• Is the director also expected to become a shareholder?

Representation

• Will the director have signature authority?
• Is signature individual or joint?
• Can the director operate bank accounts?
• Can the director grant powers of attorney?

Financial Position

• Does the company have unpaid tax debt?
• Does it have unpaid SGK premiums?
• Is it profitable?
• Is its equity negative?
• Are there insolvency indicators?

Litigation and Regulatory Risk

• Are there pending lawsuits?
• Government investigations?
• Tax audits?
• Administrative penalties?
• Licensing problems?

Personal Security

• Is the director expected to guarantee bank loans?
• Sign an aval?
• Provide an indemnity?
• Pledge personal assets?

Governance

• How often does the board meet?
• What financial reporting will directors receive?
• Is management formally delegated?
• Is there an internal directive?
• Is D&O insurance available?

A foreign executive should not accept appointment until these questions have been answered.

39. How Can Foreign Directors Reduce Personal Liability Risk?

There is no mechanism that completely removes legitimate director responsibility.

However, good governance can substantially reduce unnecessary exposure.

Practical measures include:

1. Understand the legal role before accepting appointment.

Do not confuse shareholder status with board membership.

2. Conduct due diligence before joining an existing company.

Especially review tax and SGK debts.

3. Establish formal management delegation.

Use legally compliant internal directives where appropriate.

4. Do not ignore non-transferable board duties.

Delegation does not eliminate Article 375 responsibilities.

5. Receive regular financial reporting.

Monitor cash, tax, SGK, debt and litigation.

6. Document board decisions properly.

Keep reliable minutes.

7. Record objections.

If you disagree with a risky decision, ensure the position is documented.

8. Monitor public debts.

Tax and SGK liabilities create special risks.

9. Act immediately when financial distress appears.

Article 376 obligations should not be postponed.

10. Avoid unnecessary personal guarantees.

Do not personally guarantee company debt merely because the bank presents it as standard paperwork.

11. Understand every signature.

Clearly distinguish corporate signature from personal undertaking.

12. Consider D&O insurance.

Review coverage and exclusions.

13. Register resignation properly.

Do not leave outdated registry records.

14. Obtain Turkish legal advice for major decisions.

Particularly for insolvency, related-party transactions, tax problems and shareholder disputes.

40. The Most Important Difference: Passive Investor vs Active Director

Consider two foreign investors.

Investor A

Owns 40%.

Not a director.

No management authority.

No personal guarantees.

Investor B

Owns 5%.

Board member.

Authorized signatory.

Personally guarantees bank debt.

Responsible for financial oversight.

From a purely ownership perspective, Investor A appears more important.

But Investor B may have substantially greater personal legal exposure.

This illustrates the central point:

Director liability is primarily about legal role, authority, conduct and statutory duties — not simply shareholding percentage.

Practical Examples

Example 1 — Company Cannot Pay a Supplier

Foreign director owns 20%.

Company owes supplier TRY 8 million.

No personal guarantee.

No wrongful conduct.

General position: The supplier debt belongs to the company. Board membership alone does not automatically make the director personally liable for every ordinary contract debt.

Example 2 — Breach of Director Duty

Foreign director approves transfer of company property to a related company at a seriously undervalued price despite clear warnings.

Company suffers significant loss.

Potential result: Personal liability may be examined under TCC Article 553 if the statutory requirements, including culpable breach and damage, are satisfied.

Example 3 — Unpaid Tax Debt

Foreign director is also the relevant legal representative.

Company’s public debt cannot be collected.

Potential result: Legal representative responsibility under Law No. 6183 and applicable tax legislation must be examined.

Example 4 — Unpaid SGK Premiums

Foreign individual serves as a board member.

Company fails to pay significant social security premiums.

Potential result: Article 88 of Law No. 5510 and the current case-law approach concerning board-member responsibility require specific analysis; SGK’s published legal review notes that board membership itself may be sufficient under the current statutory regime.

Example 5 — Company Becomes Over-Indebted

Financial statements show that company assets no longer cover creditor claims.

Board ignores the issue.

Potential result: Article 376 imposes specific board duties concerning interim balance sheets and court notification.

Example 6 — Personal Bank Guarantee

Foreign director signs a EUR 5 million personal guarantee for company financing.

Company defaults.

Result: The director’s personal contractual guarantee must be analysed independently from limited shareholder liability.

Frequently Asked Questions

Can a foreigner serve on the board of a Turkish company?

Yes. Joint stock company board members generally do not need to be Turkish citizens or residents of Türkiye.

Does a foreign director automatically become responsible for all company debts?

No.

Ordinary company debts do not automatically become the personal debts of directors merely because they serve on the board.

Personal liability requires a separate statutory, contractual or wrongful-act basis.

Can foreign directors be liable for tax debts?

Potentially, yes.

Where the foreign director qualifies as the company’s legal representative and the statutory requirements are satisfied, Turkish public-debt and tax legislation may create personal liability.

Can a board member be liable for SGK debts?

Potentially, yes.

Law No. 5510 provides a special responsibility regime, and SGK’s current legal analysis explains that board members may face joint and several responsibility for unpaid premiums under the statutory conditions.

Does a director need signature authority to face every type of liability?

No.

Different liability regimes have different requirements.

In particular, current case-law discussed by SGK treats board membership as sufficient for certain social security premium liabilities without requiring separate representation authority.

Can directors delegate responsibility to the CEO?

Certain management functions may be delegated under Article 367, subject to the statutory requirements.

However, Article 375 contains non-transferable board duties. Proper delegation also does not protect a director who failed to exercise reasonable care in selecting the delegate.

Can a director be liable if the company goes bankrupt?

Bankruptcy itself does not automatically create director liability.

However, breaches of duties relating to management, over-indebtedness, public debts or other statutory obligations can create separate exposure.

Does resignation eliminate previous liability?

Not necessarily.

Resignation generally does not erase liability relating to conduct or statutory responsibilities arising during the period when the individual served.

Can a foreign director be personally liable for a bank loan?

Not merely because the company obtained the loan.

However, the director may become personally liable if they separately signed a valid guarantee, surety or other personal security undertaking.

Is a foreign non-executive director risk-free?

No.

A non-executive role may affect the factual liability analysis, but simply calling a director “non-executive” does not automatically eliminate statutory responsibilities.

Does living outside Türkiye protect the director?

No.

Board members of Turkish joint stock companies may reside abroad, but foreign residence does not itself eliminate obligations arising from Turkish law.

Conclusion

Foreign investors should never treat appointment as a director or manager of a Turkish company as a simple administrative requirement.

A shareholder generally risks the economic value of the investment.

A director may additionally assume legal duties relating to:

• management;
• supervision;
• financial controls;
• tax compliance;
• social security obligations;
• insolvency;
• company reporting;
• related-party transactions;
• and corporate representation.

Under Article 553 of the Turkish Commercial Code, directors who culpably breach statutory or articles-of-association duties may be liable for resulting damage to the company, shareholders or creditors.

Tax and public-debt legislation may separately create exposure for legal representatives.

The social security regime can also impose significant responsibility on board members for unpaid premiums.

When financial distress arises, Article 376 imposes specific responsibilities concerning capital loss and over-indebtedness.

The key principle for foreign investors is therefore:

Do not accept a Turkish director or manager position until you understand exactly what authority and statutory responsibility comes with it.

Before appointment, foreign directors should determine:

What debts already exist?

Will I be a legal representative?

Will I have signature authority?

Who controls tax and SGK payments?

What duties are formally delegated?

What duties cannot legally be delegated?

Will I be required to give personal guarantees?

What happens if the company becomes insolvent?

A properly structured governance system can allow foreign directors to participate effectively in Turkish businesses while significantly reducing avoidable personal risks.

This article provides general information regarding Turkish corporate, tax, public receivables and social security law and does not constitute legal advice. Director liability should be assessed according to the company’s legal form, the director’s specific authority and duties, the period of appointment, applicable corporate records, the nature of the relevant debt or breach and the circumstances of the individual case.