Liability of Shareholders for a Limited Liability Company’s Debts

A Turkish limited liability company has a legal personality separate from its shareholders. As a general rule, the company is liable for its own debts with its own assets. Shareholders must pay their subscribed capital and comply with any additional payment or ancillary obligations expressly set out in the articles of association. Merely holding shares does not make a person personally liable for every private-law debt of the company.

There are important exceptions. Under Law No. 6183, shareholders may be pursued directly, in proportion to their capital interests, for public receivables that cannot be collected, or are understood to be uncollectible, from the company. Liability following a transfer of shares requires separate analysis.

A shareholder who is also a company manager or legal representative occupies a different position. Liability arising from management or representation follows rules distinct from liability as a shareholder. A person may also assume a separate personal obligation by signing a guarantee or surety for a bank loan, lease or supply agreement.

Unpaid capital, improper distributions and breaches of managerial duties can raise further questions of personal liability. The type and timing of the debt, shareholding, management role, signatures and security documents should be examined together.

This article is for general information only. The outcome depends on the relevant documents and circumstances.