One of the most serious disputes inside a privately held company begins with a simple discovery.

The company should have money.

The bank account says otherwise.

When the accounting records are examined, substantial amounts appear to have been transferred to another company controlled by the majority shareholder, a director, a family member or a business partner.

The transfers may be described as:

“loan,” “advance,” “consultancy fee,” “commercial debt,” “group-company payment,” “shareholder current account,” or “service fee.”

But no meaningful service appears to have been provided.

No repayment schedule exists.

No security was obtained.

The recipient company has little commercial activity.

The transferring company is becoming weaker while the recipient company is becoming stronger.

The minority shareholder eventually asks:

“Can a shareholder simply move company money to another company before creditors or the other shareholders can reach it?”

Under Turkish law, the answer is generally no where the transfer lacks a legitimate corporate basis and causes loss to the company.

However, the correct legal remedy depends on several important distinctions.

Was the shareholder also a director or manager?

Did the shareholder control both companies?

Was the transfer genuine but commercially disadvantageous, or completely fictitious?

Was the purpose to benefit another group company?

Was the company already indebted to creditors?

Did the recipient company know that the transfer was intended to remove assets from creditors?

And perhaps most importantly:

Who suffered the legal loss — the company, the minority shareholder or a creditor?

The answers determine whether the case should be pursued through directors’ liability, group-company liability, recovery of company assets, unfair competition, fraudulent-transfer litigation, simulation rules or even criminal proceedings.

1. The First Principle: Company Money Does Not Belong to the Shareholder

This is the starting point of every such dispute.

A company and its shareholders are legally separate.

Even a person who owns 100% of the shares does not personally own the money sitting in the company’s bank account.

The money belongs to the company.

A controlling shareholder therefore cannot lawfully treat company funds as a personal wallet merely because he controls shareholder votes or appoints management.

The same principle applies where the shareholder owns 90%, 70% or 51%.

Corporate control gives decision-making power.

It does not transfer ownership of corporate assets to the shareholder.

This distinction becomes particularly important where a shareholder transfers corporate money to another business that he also owns.

The legal question is not:

“Did he control both companies?”

It is:

“What legitimate reason did the first company have for transferring its money to the second company?”

2. Shareholder Status Alone Is Not Always Enough: Identify Who Actually Made the Transfer

Before selecting a lawsuit, counsel should identify the legal role of the person responsible.

A shareholder may be:

• merely a shareholder;
• a shareholder and board member of an A.Ş.;
• a shareholder and manager of a limited company;
• an authorised signatory;
• the person exercising factual control over management;
• the controlling enterprise in a corporate group.

This matters because management liability is primarily directed at persons responsible for corporate decision-making.

For an anonim şirket, Article 369 TCC requires board members and persons entrusted with management to perform their duties with the care of a prudent manager and to protect the company’s interests in accordance with good faith.

For a limited company, managers are likewise subject to duties of care and loyalty, and the liability provisions applicable to directors under Article 553 are expressly extended to limited companies through Article 644 TCC.

Therefore, if the shareholder is also the person who controls the company bank account or approves transfers, management liability becomes a central issue.

3. A Transfer to Another Company Is Not Automatically Unlawful

Intercompany payments are common in legitimate business.

For example, Company A may lawfully:

lend money to Company B;

purchase goods from Company B;

pay for genuine services;

participate in group financing;

repay a genuine debt;

purchase an asset;

make an investment.

Therefore, simply showing that TRY 20 million moved from one company to another does not establish wrongdoing.

The investigation must ask:

What did the first company receive in return?

A genuine commercial transaction should ordinarily have an identifiable economic explanation.

For example, there may be:

a written agreement,

an invoice,

a delivery,

a loan repayment schedule,

interest,

security,

board approval,

a commercial purpose,

or another objectively measurable benefit.

The absence of these factors does not automatically establish liability, but several missing simultaneously create serious warning signs.

4. The Classic Asset-Stripping Pattern

Consider the following example.

Shareholder A owns 70% of Alpha A.Ş.

He also owns 100% of Beta Ltd.

A controls Alpha’s board.

Alpha has TRY 40 million in its bank account.

A dispute begins with Alpha’s 30% minority shareholder.

Alpha then transfers TRY 30 million to Beta.

The payment is recorded as:

“commercial advance.”

However:

Beta has not supplied goods.

There is no purchase agreement.

There is no repayment date.

No interest is charged.

No security is taken.

Beta uses the money to purchase real estate.

Alpha is subsequently left unable to distribute dividends or satisfy significant creditors.

This is no longer simply an accounting question.

It may represent a transfer of economic value from Alpha to a business benefiting the controlling shareholder.

5. Directors and Managers May Be Personally Liable Under Article 553 TCC

Article 553 TCC establishes the principal civil-liability regime for founders, directors, managers and liquidators.

Where such persons culpably breach duties arising from the law or the articles of association, they may be liable for damage caused to:

the company,

shareholders,

and company creditors.

For limited companies, this liability regime is applicable through Article 644 TCC.

Accordingly, a director who transfers corporate money to another company without a genuine corporate purpose may face personal liability if the statutory elements are established.

The analysis normally requires:

breach of duty + fault + damage + causal connection.

The claimant should therefore identify exactly what the director did wrong.

Saying merely:

“The company lost money”

is not enough.

A stronger allegation is:

“The director caused TRY 15 million to be transferred to a company he controlled without consideration, commercial justification, security or repayment, thereby reducing the company’s assets by TRY 15 million.”

That identifies both the conduct and the loss.

6. Recent Court of Cassation Practice Shows Why Accounting Evidence Matters

Recent Court of Cassation decisions illustrate the seriousness with which Turkish courts approach managers who expose companies to liabilities or transactions that are not properly reflected in company records.

In a 24 June 2025 decision, the 11th Civil Chamber upheld liability findings against former limited-company managers who had caused the company to become liable under promissory notes while the alleged underlying funds were not properly reflected in the company’s books or accounts. The courts treated the managers’ conduct as a breach capable of creating liability under Article 553. Court of Cassation, 11th Civil Chamber, E. 2024/4655, K. 2025/4478.

The lesson extends beyond promissory notes.

Where millions leave a corporate account, management should be able to explain the transaction through corporate and accounting evidence.

7. A Manager Cannot Use Representation Authority Against the Company’s Own Interests

Another important recent decision came from the Court of Cassation General Assembly in 2025.

A limited-company manager caused the company to become an aval guarantor for the manager’s own personal debt.

The General Assembly held that using corporate representation authority in this way breached the manager’s duties of care and loyalty and amounted to abuse of representation authority where the counterparty could not be regarded as acting in good faith. Court of Cassation General Assembly, E. 2024/177, K. 2025/257, 30 April 2025.

This reasoning is highly relevant to asset-diversion disputes.

Management authority exists to manage the company.

It is not a licence to use the company’s assets for the manager’s private benefit or to enrich another business at the company’s expense.

8. If the Company Suffers the Loss, Where Must the Compensation Go?

This distinction is critical.

Suppose a 40% minority shareholder discovers that the manager diverted TRY 20 million from the company.

The minority shareholder may think:

“I own 40%, so I lost TRY 8 million. Pay me TRY 8 million.”

That is normally not the correct formulation where the primary loss belongs to the company.

Article 555 TCC provides that both the company and each shareholder may seek compensation for loss suffered by the company.

However, where an individual shareholder brings the action, the shareholder may request that compensation be paid to the company.

This is one of the most important procedural principles in director-liability litigation.

If TRY 20 million was removed from the company, the objective is ordinarily to restore TRY 20 million to the company.

The shareholder benefits indirectly because the company’s assets are restored.

9. The Minority Shareholder Does Not Need to Control the Company to Bring Every Liability Claim

This rule can be strategically powerful.

Where those controlling the company are the very persons accused of stripping its assets, expecting the company itself voluntarily to sue them may be unrealistic.

Article 555 gives each shareholder standing to seek compensation for company loss, subject to the statutory requirements, while requiring recovery to be paid to the company.

Recent Court of Cassation material also confirms the continuing significance of shareholders’ ability to pursue management-liability claims rather than treating management control as an absolute barrier.

Thus, a controlling shareholder cannot necessarily neutralise a claim simply by controlling the board.

10. What If Both Companies Belong to the Same Corporate Group?

This creates a separate layer of analysis.

Suppose Parent Company controls Subsidiary A and Subsidiary B.

Parent causes Subsidiary A to transfer funds to Subsidiary B.

Turkish company-group rules do not say that every transaction within a group must benefit every company equally.

But Article 202 TCC expressly prohibits the controlling company from using its dominance to cause the subsidiary to suffer loss.

The statute specifically refers to measures including requiring the subsidiary to:

transfer business, assets, funds, personnel, receivables or debts;

reduce or transfer profits;

make payments;

provide guarantees;

or undertake measures harming its financial position.

Such a loss is permissible only within the statutory compensation mechanism: the loss must be actually compensated within the relevant financial year or the subsidiary must receive an equivalent enforceable claim within the statutory period.

The wording of Article 202 is remarkably relevant to the classic asset-stripping scenario because it expressly mentions fund transfers and payments.

11. Example: Parent Company Moves the Subsidiary’s Cash to Another Group Company

Assume Holding A controls Subsidiary B and Subsidiary C.

B has generated TRY 100 million from its own operations.

Holding A instructs B to transfer TRY 60 million to C.

C is financially distressed.

B receives no repayment, meaningful security or equivalent asset.

At the end of the financial year, B’s loss has not been compensated and B has not been granted an equivalent claim complying with Article 202.

This may create liability under the statutory group-company regime.

Article 202 expressly permits every shareholder of the dependent company, where the loss has not been properly compensated, to seek compensation from the controlling company and responsible directors. Creditors may also have rights to request payment of the subsidiary’s loss to the company.

Therefore, the controlling shareholder cannot simply respond:

“Both companies are mine, so I can move the money wherever I want.”

From the perspective of company law, the assets belong to different legal entities.

12. Genuine Group Financing Must Be Distinguished From Asset Stripping

Group companies often provide intercompany financing legitimately.

A loan from one group company to another is not automatically prohibited.

Relevant questions include whether:

the loan has a written basis;

interest is commercially reasonable;

repayment is realistically expected;

the borrower has the capacity to repay;

security was considered;

the transaction serves a rational corporate purpose;

the lender company’s solvency is preserved;

the transaction was properly approved and recorded.

A commercially justifiable intercompany financing arrangement looks very different from an unexplained transfer to an insolvent company owned by the same shareholder.

The court must assess economic substance rather than labels.

Calling a transaction a “loan” does not make it one if nobody genuinely expects repayment.

13. Related-Party Transactions Require Particular Scrutiny

Some of the strongest warning signs arise when money moves to:

the shareholder’s second company;

the shareholder’s spouse’s company;

a sibling’s company;

a director’s company;

a newly established affiliated company.

Kinship or common ownership does not itself make the payment unlawful.

But it can be important evidence when combined with:

no contract,

no genuine service,

below-market terms,

no repayment,

unusual timing,

continued financial deterioration of the paying company.

The more economically irrational the transaction appears from the paying company’s perspective, the more important it becomes to examine who actually benefited.

14. Follow the Money, Not the Invoice Description

A sophisticated asset-diversion case should reconstruct the complete financial chain.

Imagine the accounting entry says:

“Management Consultancy — TRY 5 million.”

The investigation should ask:

Who issued the invoice?

Who owns that company?

What service was provided?

Where is the consulting report?

Who performed the work?

Was similar work previously performed internally?

How was the price calculated?

What happened to the TRY 5 million after it reached the recipient’s account?

If it immediately moved to the controlling shareholder personally, the economic picture becomes significantly more problematic.

Forensic analysis should connect:

corporate resolution → contract → invoice → bank transfer → accounting entry → recipient → ultimate use of funds.

15. Bank Records and Commercial Books Are Usually the Core Evidence

In these cases, witness testimony is rarely enough.

The strongest evidence normally includes:

company bank account statements;

general ledger entries;

journal records;

shareholder current accounts;

e-invoices;

recipient-company accounting records;

contracts;

board or managers’ resolutions;

loan agreements;

bank payment instructions;

related-party ledgers;

tax filings.

The original company’s records should also be compared with the recipient company’s records.

For example, Company A may record a payment as a loan receivable.

Company B may record the same money as capital contribution or an unrelated payable.

That inconsistency can be significant.

16. What If the Documents Are Being Hidden?

The shareholder should not remain passive.

Depending on whether the company is an A.Ş. or limited company, statutory information and inspection rights can be used to obtain corporate financial information.

In a limited company, Article 614 provides shareholders with broad information and inspection rights regarding company affairs and accounts.

In an A.Ş., Article 437 creates a more structured information and inspection regime.

Where management refuses access, judicial enforcement may become possible.

Where there is a danger that evidence will disappear, evidence preservation (delil tespiti) and appropriate interim protection should also be considered.

In asset-stripping disputes, speed matters because financial records may be altered, companies liquidated or money transferred again.

17. Can the Recipient Company Be Sued?

Potentially, yes, depending on the legal basis.

The case should not automatically focus only on the individual director.

The recipient company may become relevant where:

there was no valid underlying debt;

the payment was made without legal basis;

the transaction was simulated;

the recipient knowingly participated in a scheme prejudicing creditors;

the transaction falls within the corporate-group provisions;

or another restitution or contractual remedy applies.

The correct cause of action will depend on whether the transaction was legally valid, whether consideration existed and what the recipient knew.

This is why identifying the underlying transaction is essential.

18. Sham Transactions: Article 19 of the Turkish Code of Obligations

Sometimes the alleged transaction exists only on paper.

For example:

Company A transfers TRY 10 million to Company B.

The accounting documents say it is payment for machinery.

No machinery exists.

No delivery occurs.

The invoice is merely intended to give the transfer the appearance of an ordinary commercial transaction.

Article 19 of the Turkish Code of Obligations requires the parties’ real and common intention to be considered rather than the terminology used to disguise their actual purpose.

Accordingly, if a supposed sale, loan or service agreement is entirely fictitious, simulation — muvazaa — may become relevant.

The label placed on a bank payment is not determinative.

The court may investigate its real economic purpose.

19. If the Purpose Was to Escape Creditors, the Creditors Have Separate Remedies

A different legal analysis arises where the company itself has creditors.

Assume Debtor A.Ş. owes TRY 50 million.

Enforcement becomes likely.

The controlling shareholder causes the company to transfer its valuable assets or cash to another related company so that creditors will find nothing to seize.

This may bring the actio pauliana — tasarrufun iptali — provisions of Articles 277 and following of the Enforcement and Bankruptcy Law into play.

Article 277 identifies the persons entitled to bring such proceedings, while Articles 278–280 regulate categories of transactions that can be challenged under the statutory conditions.

Article 280 is particularly important where a debtor whose assets are insufficient performs transactions intending to prejudice creditors and the other party knows, or circumstances indicate it should know, of the debtor’s financial condition and harmful intent.

A related company controlled by the same persons may face serious difficulty claiming complete ignorance of the circumstances where the evidence establishes close organisational and economic connections.

20. Tasarrufun İptali and Muvazaa Are Not the Same Lawsuit

This distinction should not be overlooked.

A fraudulent-transfer action under Articles 277 and following of the Enforcement and Bankruptcy Law generally assumes a legally valid transaction that creditors can nevertheless neutralise against themselves under statutory conditions.

A simulation claim under Article 19 TBK alleges that the apparent legal transaction does not reflect the parties’ genuine intention.

The Court of Cassation General Assembly has emphasised that these remedies have different factual requirements and legal structures and should not simply be treated as identical proceedings. Court of Cassation General Assembly, E. 2019/351, K. 2019/624.

Recent Court of Cassation practice continues to distinguish claims based on Article 19 simulation from statutory fraudulent-transfer litigation.

Therefore, a creditor alleging “asset stripping” must determine which legal model the evidence actually supports.

21. Example: A Real Sale Intended to Harm Creditors

Suppose Company A genuinely sells a warehouse to Company B.

The sale is real.

Company B pays something.

Ownership genuinely changes.

But:

Company A is deeply indebted;

Company B is controlled by the same family;

the sale occurs immediately before enforcement;

the price is dramatically below market value;

the proceeds disappear.

The issue may be a fraudulent disposition rather than a purely fictitious sale.

The creditor may therefore examine the Enforcement and Bankruptcy Law remedies.

22. Example: A Completely Fictitious Sale

Now change the facts.

Company A supposedly sells machinery worth TRY 30 million to Company B.

The machinery never moves.

Company A continues using it.

No genuine price is paid.

The parties only create documents to make it appear that ownership changed.

This produces a much stronger simulation question under Article 19 TBK.

The factual difference matters because the legal remedies are not identical.

23. Criminal Liability May Also Arise — But Not Every Bad Corporate Decision Is a Crime

Civil liability should not automatically be converted into criminal allegations.

Directors are allowed to make commercial decisions.

Companies may make bad investments.

Loans may default.

A loss does not automatically establish criminal conduct.

However, the position can change dramatically where the person entrusted with control of corporate assets intentionally appropriates company funds or diverts them for personal or another person’s benefit.

Article 155 of the Turkish Criminal Code regulates breach of trust and provides an aggravated form where the offence arises from a commercial, professional or service relationship or authority to manage another person’s property.

The factual elements must be assessed carefully before alleging criminal responsibility.

24. Court of Cassation Decisions Show That Company Managers Can Face Criminal Proceedings for Diverting Corporate Funds

Court of Cassation criminal jurisprudence contains important examples.

In one case, persons who were shareholders with joint representation authority transferred money from the company account into their own accounts and failed to record certain company collections properly. Their convictions for aggravated breach of trust were upheld. Court of Cassation, 23rd Criminal Chamber, E. 2015/7319, K. 2016/5857.

In another case, an administrative and financial officer transferred TRY 25,000 from a company account to his personal account and took additional cash from the company; the Court of Cassation upheld the conclusion that the conduct constituted aggravated breach of trust.

Another decision concerned a company manager alleged to have used corporate funds for personal expenses and treated company money as his own.

These cases do not mean that every intercompany transfer constitutes a crime.

They show why intentional appropriation of corporate assets must be distinguished from ordinary commercial mismanagement.

25. The Recipient Company’s Knowledge Can Be Crucial

Suppose the money is transferred to a completely independent supplier that genuinely believes it is receiving payment under a valid contract.

That is different from a company where:

the transferring shareholder owns both businesses;

the same directors manage both companies;

both operate from the same address;

the same accountant records both transactions;

the recipient knows no actual debt exists.

In civil litigation, such organic links can become significant evidence of knowledge and common purpose.

This is particularly important in creditor litigation based on allegations that assets were deliberately removed from the debtor’s reach.

26. The Timing of the Transfer Often Tells the Story

Transfers deserve especially close examination when they occur immediately after:

a shareholder dispute begins;

a minority shareholder asks to inspect accounts;

a major lawsuit is filed;

an enforcement proceeding begins;

a creditor sends a demand;

the company becomes insolvent;

management becomes aware that liability is imminent.

Timing alone is not proof.

But timing combined with related-party ownership, lack of consideration and rapid depletion of assets can create a powerful evidential picture.

27. What If the Money Is Later Returned?

Repayment can affect the calculation of damage.

If TRY 10 million is transferred without justification but returned three days later with no loss to the company, the damages analysis differs from a transfer that remains unpaid for five years.

However, repayment does not necessarily erase every legal issue.

The company may have suffered:

lost interest;

financing costs;

penalties;

lost business opportunities;

tax consequences;

other consequential losses.

The purpose and circumstances of the transaction may also remain relevant to management responsibility.

28. Directors Cannot Defend Every Transaction by Saying “The Majority Approved It”

A majority-shareholder instruction does not automatically legalise conduct contrary to management duties.

Directors and managers have duties toward the company, not merely toward the shareholder who appointed them.

This principle is particularly important in companies controlled by one shareholder.

A director should not assume:

“The 80% shareholder told me to make the payment, therefore I cannot be liable.”

If the transaction has no corporate justification and unlawfully damages the company, management responsibilities must still be examined.

The statutory company-group rules provide specific exceptions and compensation structures in genuine group situations; outside those rules, majority approval is not a universal defence.

29. How Should the Loss Be Calculated?

The simplest situation is a completely unrecovered transfer.

Company A transfers TRY 15 million to Company B without legal basis.

Nothing is returned.

The starting loss may appear to be TRY 15 million.

But a complete damages analysis may also consider, depending on the legal basis and proof:

interest;

financing costs;

currency loss;

lost profit;

enforcement costs;

tax consequences;

other directly caused losses.

Conversely, any genuine benefit received by the company should be deducted.

The claimant should seek economic restoration, not an artificial windfall.

30. A Practical Evidence Pattern

Consider the following case.

Two shareholders own a limited company equally.

Shareholder A is also the manager.

The company has TRY 25 million in cash.

Relations between the shareholders deteriorate.

The following month, TRY 18 million is transferred to NewCo Ltd., a company owned by A’s spouse.

The accounting description reads:

“advance payment for future services.”

The investigation reveals:

no written service agreement;

NewCo was incorporated only two weeks earlier;

NewCo has no employees;

NewCo has never provided the relevant services;

no repayment occurs;

TRY 12 million is subsequently used by NewCo to purchase property;

the original company can no longer pay dividends or several creditors.

From a practical litigation perspective, several routes may require simultaneous consideration.

The manager’s conduct may raise TTK 553 liability.

The transaction itself may raise restitution or simulation issues depending on its true structure.

If the transfer was designed to defeat existing creditors, Articles 277–280 İİK may become relevant.

Depending on intention and control over the funds, criminal-law analysis under TCK 155 may also be necessary.

The case should therefore not be reduced to a single allegation that:

“My partner stole the money.”

The strongest litigation strategy separates each legal consequence.

31. What Should the Minority Shareholder Do First?

The initial goal should be to prevent the money trail from disappearing.

Counsel should reconstruct:

who authorised the transfer;

which bank account sent it;

which account received it;

what accounting entry was used;

what contract supposedly justified it;

who owns and manages the recipient company;

what happened to the money afterwards.

Corporate information and inspection rights should be exercised promptly.

Trade registry information for the recipient company should be obtained.

Bank and accounting records should be preserved.

If there is a genuine danger of further transfers, available interim protective measures should be assessed immediately.

Only after reconstructing the transaction should the final causes of action be selected.

32. The Most Important Question Is Usually “Why?”

A transfer between related companies should have an answer to a basic commercial question:

Why was this transaction beneficial to the company that paid the money?

If the answer is:

“It received inventory,”

that can be proved.

If the answer is:

“It made a loan at commercial terms,”

the loan agreement, maturity and repayment should exist.

If the answer is:

“The recipient provided services,”

those services should be identifiable.

But if the answer is simply:

“The majority shareholder wanted the money moved,”

the transaction enters a very different legal territory.

33. Final Takeaway

A shareholder does not acquire ownership of corporate cash merely because he controls the company.

If company money is transferred to another company controlled by the shareholder, Turkish law requires the transaction to be analysed according to its genuine commercial substance.

Where the shareholder is also a director or manager and causes corporate funds to be transferred without proper consideration or corporate justification, Articles 369, 553 and related provisions of the Turkish Commercial Code may create personal management liability. In limited companies, the Article 553 liability system also applies through Article 644.

Where the transfer occurs within a genuine corporate group, Article 202 specifically prevents a controlling company from using its dominance to extract funds or otherwise cause uncompensated loss to a subsidiary.

Where the company itself suffered the loss, a shareholder may have standing under Article 555 to pursue the responsible managers, but compensation for company loss is ordinarily sought for payment to the company, not as the shareholder’s personal percentage of the missing money.

Where funds or assets are moved to defeat company creditors, the fraudulent-transfer provisions of the Enforcement and Bankruptcy Law may allow qualifying transactions to be challenged. If the supposed transaction is merely fictitious, Article 19 TBK on simulation presents a legally different route.

And where the person entrusted with corporate money intentionally appropriates or diverts it for an unauthorised benefit, the circumstances may also require analysis under the criminal-law rules concerning breach of trust.

For that reason, when a shareholder says:

“The company had TRY 30 million, and my partner transferred it to his other company,”

the most important question is not simply whether the bank transfer occurred.

The real investigation is:

What did the company receive in return?

Who approved the transfer?

Who ultimately benefited?

Was repayment ever genuinely expected?

Was the transaction recorded honestly?

Was the purpose to weaken the company or keep assets away from shareholders and creditors?

Because when money leaves one company and reappears in another company controlled by the same person, the transaction may be described in the accounts as an advance, loan or service payment.

But Turkish courts are ultimately entitled to examine something more important than the description:

the economic reality behind the transfer.