The Liquidator (Tasfiye Memuru) in Turkey: Appointment, Duties and Personal Liability

Once a Turkish company's dissolution is registered, its directors stop managing it. Every act from that day — every payment, every filing, every signature — is made by the liquidator (tasfiye memuru). For a foreign-owned company the liquidator is usually the single most important choice in the whole procedure, because the Commercial Code attaches to the role both a residence requirement and personal liability.

Who can be the liquidator

Liquidators may be named in the articles of association or appointed by a shareholders' resolution — normally the same resolution that dissolves the company. If neither names anyone, the board of directors (or the managers of a limited liability company) become the liquidators by law. A shareholder, a director, an employee or an outside professional can all be appointed; there is no requirement that the liquidator be a shareholder.

Two rules matter for foreign-owned companies. First, at least one liquidator must be a Turkish citizen whose place of residence is in Turkey (Commercial Code, Article 536). Second, the liquidator must be able to act in Turkey in practice: attend the registry, sign at the bank, correspond with the tax office and receive service of documents. A liquidator who lives abroad satisfies neither, which is why foreign shareholders typically appoint a Turkish lawyer to the role, alone or alongside a shareholder representative.

Appointment and registration

The liquidator's appointment is registered with the trade registry together with the dissolution and published in the Trade Registry Gazette. The registration records the liquidator's identity and signing authority; from then on the company's name is used with the suffix “in liquidation” and the liquidator signs under that name. The liquidator's signature declaration is obtained before the registry or a notary, and a Turkish tax number is required. Where more than one liquidator is appointed they act jointly unless the resolution authorises them to act alone.

What the liquidator must do

1. Opening inventory and balance sheet. Immediately after appointment the liquidator draws up the company's asset and liability position as at dissolution and submits it to the shareholders for approval.
2. Creditor notices. Three announcements in the Trade Registry Gazette, one week apart, inviting creditors to file their claims, plus registered letters to creditors known from the books (Article 541).
3. Winding up the business. Completing or terminating pending contracts, collecting receivables, selling assets, closing the bank accounts and the lease, and ending employment properly with severance where due.
4. Paying debts. All known debts are paid; for disputed or not-yet-due claims a corresponding amount is deposited (Article 542).
5. Tax and social security. The liquidation-period returns, the tax office's examination and the closure of the social security workplace file are the liquidator's responsibility — see our note on tax clearance before deregistration.
6. Closing balance sheet and distribution. After six months have passed from the third creditor notice, the liquidator prepares the closing balance sheet, obtains the shareholders' approval and distributes the surplus in proportion to the shares (Article 543).
7. Deregistration and books. The liquidator applies for the deletion of the company from the registry (Article 545) and ensures that the books and records are kept for ten years.

Throughout, the liquidator may do only what the liquidation requires. New business is outside the liquidator's authority, and a liquidator who enters into it binds themselves rather than the company.

Personal liability

The liquidator's liability is the Code's way of protecting creditors in a procedure the shareholders control. The main heads are:

• Early distribution. A liquidator who distributes assets to the shareholders before the waiting period has run, or before known debts are paid or secured, is personally liable to the unpaid creditors.
• Taxes. Under Article 17 of the Corporate Tax Law, liquidators are jointly liable for taxes assessed for the liquidation period if they distributed assets to shareholders without settling them.
• Insolvency ignored. If during the liquidation it becomes clear that the company cannot pay its debts, the liquidator must notify the court so that bankruptcy can be opened; continuing the liquidation of an insolvent company exposes the liquidator to creditors' claims.
• General duty of care. Liquidators are subject to the same duty of care and loyalty as directors and answer to the company, the shareholders and creditors for damage caused by breach of duty.

What this means when you appoint one

For a foreign shareholder the practical questions are three: who will be resident in Turkey, who will carry the liability, and who will actually do the work. Appointing a lawyer answers all three and keeps the shareholder's own exposure to what the law already imposes on shareholders — nothing more. Our company liquidation service includes acting as liquidator where the company has no one in Turkey; the shareholders retain control through the resolutions the Code reserves to the general meeting, including approval of the balance sheets and, until distribution begins, the right to revoke the liquidation altogether.

Frequently asked questions

Does the liquidator have to be a Turkish citizen?

At least one liquidator must be a Turkish citizen whose residence is in Turkey. Additional liquidators may be foreign nationals or live abroad, but a company with only foreign, non-resident liquidators cannot be registered.

Can a shareholder be the liquidator?

Yes. A shareholder, a director or an outside professional can all be appointed. The residence requirement still applies to at least one of them.

Can the liquidator be replaced during the liquidation?

Yes. The shareholders can dismiss and replace a liquidator by resolution at any time, and a court can do so on the application of a shareholder or creditor for good cause. The change is registered and announced.

Is the liquidator paid?

The liquidator is entitled to reasonable remuneration, normally fixed in the appointing resolution or agreed with the shareholders. For a lawyer acting as liquidator this is part of the engagement.

What happens if the liquidator finds that the company cannot pay its debts?

The liquidator must notify the commercial court, which opens bankruptcy. Liquidation cannot continue for an insolvent company, and a liquidator who continues it is personally exposed to creditors.