A liquidator is responsible for protecting company assets, collecting receivables, paying debts and completing the liquidation in accordance with the law. If the liquidator breaches these duties through fault and causes loss, liability for damages may arise. Removal from office, however, is a separate legal route: every shareholder may apply to court on good cause, whereas creditors have no right to remove the liquidator within the same scope. The route to follow depends on whether the loss belongs to the company or directly to a person, on how the liquidator was appointed, and on the stage the liquidation has reached. [1]
In which companies, and in what capacity, does a liquidator act?
The explanations here relate mainly to the non-bankruptcy liquidation of joint-stock and limited liability companies. In joint-stock companies, TTK 536 and following apply; for limited companies, TTK 643 governs the liquidation procedure and TTK 644 is the link for liability. The liquidation of a simple partnership and liquidations carried out under special laws are not fully subject to the same rules. The title of liquidator does not by itself make the person a public official. [1]
A company does not cease to exist immediately upon entering liquidation; it retains its legal personality until the end of the liquidation. A liquidator may be a shareholder or an outside person. Where no separate appointment is made in a joint-stock company, the board of directors conducts the liquidation; in a limited company, the managers do so under the applicable provisions. Where the court orders dissolution, the court appoints the liquidator. An act performed during the period of former management and an omission during the period as liquidator must be examined separately, by date and by office. [1] The article Limited and Joint-Stock Company Liquidation also examines this subject from a different angle.
Recording, notice to creditors and protection of assets
Opening inventory, balance sheet and information duties
The liquidator must start by establishing the company's real position. Under TTK 540, an inventory and an opening balance sheet are prepared, a valuation expert is consulted where necessary, and the documents are submitted for approval by the general assembly. Merely transferring the figures shown in the accounting ledger may not satisfy the duty to investigate collectable receivables, ongoing lawsuits or unrecorded assets. [1]
If liquidation lasts long, annual financial statements are prepared, and a final balance sheet is drawn up at the end. Books must be kept properly, the company's rights must be protected with care, and money not needed for day-to-day purposes must be deposited with a bank in the company's name. The right of shareholders to request information about the liquidation, and signed documents on any matter they choose, is regulated in TTK 542. The weight of a failure to provide information is assessed by the subject of the request, the number of repetitions and the extent to which it prevents supervision of the liquidation. [1]
If liabilities exceed the company's assets, no distribution to shareholders may continue. Under TTK 542/1-c, the situation must be reported immediately to the commercial court of first instance at the company's seat, and the court decides whether to open bankruptcy. At this stage, continuing an ordinary liquidation plan must be clearly distinguished from a transition to bankruptcy liquidation. [1]
Separate notice to a known creditor and two different deposit obligations
A registered letter is sent to a person who appears from the company's books or documents to be a creditor and whose address is known. Other creditors are summoned through three announcements, one week apart, in the media specified in TTK 541. Where a creditor is known from a pending lawsuit or enforcement file, a newspaper announcement alone does not satisfy the separate notice obligation. [1]
The deposit obligations must not be confused. If a known creditor does not respond, the amount of the creditor's claim is deposited with a bank designated by the Ministry. Money covering debts that are not yet due, or debts subject to dispute, is deposited with a notary. In the second case, the statutory exceptions are adequate security, or making distribution to shareholders conditional on payment of the debts. The liquidator's refusal to accept a disputed debt does not by itself remove the duty to protect the amount in dispute. [1]
For the distribution of the remaining assets to shareholders under TTK 543, the general rule is to wait three months from the third creditor call. The period was amended by Article 17 of Law No. 7341; earlier references to six months or one year are out of date. Where there is no danger to creditors, the court may allow distribution earlier. This period is neither a preclusive period for a creditor's claim nor a guarantee that the whole liquidation will be completed within three months. [1]
Does a sale below market value always create liability?
TTK 538 permits sale by negotiation unless the general assembly decides otherwise. Not every asset must be sold by public auction. However, for the sale of a substantial part of the assets in bulk, a general assembly resolution meeting the special quorum prescribed by law is required. Having permission or general assembly approval does not make a loss caused by a defective act to the company lawful. [1]
Hypothetically, suppose machinery was sold at a low price to a relative of one partner. The review does not rest on a price comparison with listings on sales websites alone: the technical condition at the time of sale, an independent valuation, offers received, transport and dismantling costs, payment terms and the relationship with the buyer are examined. The liquidator may defend the act with documented faults and the low level of alternative offers. The shareholder may show that a higher, genuine offer was rejected without justification. The loss calculation must rest on the actual net loss in value under comparable conditions; not every low price is also a fault.
Distinguishing acts outside the liquidation purpose from unauthorised representation
No new commercial activity unnecessary for the liquidation should be undertaken. Nevertheless, under TTK 539/2, an act outside the liquidation purpose performed by a liquidator who holds duly granted representation authority generally binds the company. The result changes if it is proven that the counterparty knew, or could not have been unaware, that the act went beyond the purpose. The registration of the liquidation in the trade registry alone does not prove this knowledge. That the company is bound by the contract does not preclude an internal liability claim against the liquidator. [1]
Where the person acting had no representation authority at all, or the necessary signatures are missing, the matter is examined separately. Where there are several liquidators, the rule is two authorised signatures; the articles of association or a general assembly resolution may provide a different arrangement. In a real case of unauthorised representation, TBK 46–48 and the provisions specific to companies are considered together. The debts under a contract that is not ratified do not automatically pass to the person who concluded it; liability for loss arising from the invalidity of the act may arise under the conditions of TBK 47. [1][2]
Statutory powers as a whole cannot be transferred to a third party; authorisation for specific implementing acts is possible. Engaging an accountant or a sales consultant does not remove the non-delegable duty or the liquidator's own fault. On the other hand, the limits in TTK 553 on lawful delegation of duties and on events beyond control cannot be disregarded. [1]
Which elements must be proved for compensation?
Under TTK 553, which TTK 546 refers to, breach of duty, fault, loss and an adequate causal link are examined together. The company's inability to pay its debts does not mean that the liquidator personally assumes all company debts from personal assets. The claimant must specify which duty protecting the claimant was breached, when, and what loss it caused. General rules of proof apply, and presumptions that may be drawn from the facts are also considered. [1][3]
For example, in a company with no assets, the causal link between a lack of notice and the failure to collect the full claim is a separate question. However, the defence that "the closing balance sheet was zero" does not end the inquiry: incompletely recorded assets, uncollected receivables or payments made to related persons may exist. Expert review of the books and bank records gives concrete substance to an otherwise abstract discussion of fault.
In the decision of the Court of Cassation 11th Civil Chamber (Yargıtay 11. Hukuk Dairesi) dated March 11, 2024, E.2022/5737, K.2024/1961, in an action against a sole shareholder and the liquidator, reliance on the balance sheet balance alone was held insufficient. The judgment was quashed on the ground that the books and the real assets, liabilities and related payments had to be investigated. Because the decision has public-receivable and sole-shareholder features, its assessment of payments over five years cannot automatically be carried over to every private creditor action. [4]
Where there are several liquidators, the differentiated joint liability principle of TTK 557 applies: each person's fault, and the loss attributable to that person in the circumstances, are assessed. It cannot be said in advance that all liquidators are liable for every loss to the same extent, or that a division of work among them releases all of them from liability. [1] For the wider framework, the article Liability of the Company Manager and the Board of Directors may be read.
Who may bring the action, and to whom is compensation paid?
The most important distinction is between the loss in the company's assets and the direct loss in the personal assets of a shareholder or creditor. Selling company property below its value first harms the company; the reduction in the value of a share or of an expected collection usually reflects that loss. A claimant who merely says "I also suffered a loss" does not convert the company's loss into a personal claim. [1]
| Claim | Who can assert it? | Payment or outcome | Core review |
|---|---|---|---|
| Recovery of the company's loss | The company; each shareholder | Payment to the company | Loss in the company's assets |
| Direct personal loss | The shareholder or creditor who suffered the loss | Payment to the injured person | Violation of a personal right |
| Company loss in bankruptcy | First the bankruptcy administration; under conditions, a shareholder or creditor | Order under TTK 556 | The administration's position; the loss |
| Removal for good cause | Each shareholder | Termination of the office | Facts preventing the duties from being performed |
Under TTK 555, the company itself and each shareholder may sue for the company's loss. In an action brought by a shareholder, payment of compensation to the company is requested; the claim that an amount corresponding to the shareholder's share be transferred to the shareholder's own account is not made. When an action is brought in the company's name, the decision of the competent body, the representation structure and any conflict of interest with the defendant liquidator must be checked. The problem of a defendant liquidator alone representing the company's will to sue must also be resolved separately. [1]
A creditor may claim compensation for its own direct loss arising from breach of the liquidation duty that protects it, under the conditions of TTK 553. Distribution of assets without protecting a known claim may be a subject of review, but directness, loss and causation must still be proved. Where there is no bankruptcy, a creditor is not entitled to claim, for its own account, merely the indirect loss suffered by the company. [1][5]
In the decision of the Court of Cassation 11th Civil Chamber (Yargıtay 11. Hukuk Dairesi) dated December 2, 2024, E.2023/6783, K.2024/8545, the claims of attorney's fee creditors against the liquidator of a revived company in liquidation were examined. In a concrete case where enforcement and litigation against the company were still possible, the Chamber considered the claim against the liquidator premature, and affirmed the outcome on different grounds. This decision cannot be generalised to mean that all liability actions must await the end of the liquidation: a TTK 555 action for company loss and a personal loss that has not yet occurred are not the same thing. [5]
If the company is bankrupt, TTK 556 provides a special order. The bankruptcy administration first exercises the right to claim the company's loss. If the administration does not sue, each shareholder or creditor may bring an action under the conditions set out by law. The amount obtained is used first for the claims of the creditors who brought the action, then for the claims of the shareholder claimants according to the statutory order, and any surplus returns to the bankruptcy estate. The assignment route under Article 245 of the Enforcement and Bankruptcy Law (İİK) is reserved. Bankruptcy liquidation is carried out by the bankruptcy administration under TTK 534; the application and liability regime for members of the bankruptcy administration is not the same as the removal of an ordinary liquidator. [1] For a related topic, see Revival of the Company and the Supplementary Liquidation Action.
How is a liquidator removed?
General assembly resolution and court decision
Under TTK 537/1, the general assembly may at any time remove liquidators appointed by the articles of association or a general assembly resolution, together with the members of the management body performing that function. For this organ-based power, proof of good cause as required in court is not necessary; meeting, resolution and representation rules must be followed. The form of appointment, the type of company and the articles of association are examined separately. The removal of a liquidator appointed by the court is, as a rule, assessed through the courts. [1][6]
On the court route, TTK 537/2 gives each shareholder an individual right to apply to the court; no particular percentage of capital or majority approval is required. Withholding records from shareholders or persistently avoiding their production, unexplained transfers of assets, gross negligence, and circumstances preventing the duties from being performed may be subject to the good cause review. A mere disagreement among shareholders, or dislike of a sales method, should not be regarded as sufficient.
Removal does not require that an actual compensable loss has already occurred. Circumstances without fault, such as an illness preventing the duties from being performed, may also be considered. However, a shareholder relying on good cause must prove the concrete facts. Since doctrine takes different views on whether a removal action should be directed at the company or at the liquidator, the defendant, the appointment decision and the company's representation must be established separately; this is not the same question as identifying the liable person in a compensation action. [6]
After a change of office, the plan must avoid any gap in representation, ensure that any necessary new appointment is made, and address registry formalities and the handover of the books. Removal does not automatically compensate an earlier loss. Prior removal is not a general precondition for a compensation claim either. The same event may justify both claims, but the conditions for each must be shown separately. [1]
Can a creditor have the liquidator removed?
The general right to remove for good cause under TTK 537/2 is granted to shareholders. A creditor cannot exercise the same right merely by relying on its status as a creditor. TTK 537/3, however, gives a creditor the possibility of asking for the appointment of a liquidator meeting the statutory conditions where none of the persons authorised to represent the company is a Turkish citizen and none has a place of residence in Türkiye. This special appointment mechanism is not a general power of removal for every allegation of fault. The creditor's direct loss, its claim against the company and suitable interim protection routes are assessed separately. [1]
Court, mediation, time limits and interim protection
Competent court and preparation before the action
Disputes under the TTK on liability and removal are, as a rule, heard by the commercial court of first instance. TTK 561 permits an action against the liable persons before the court at the company's seat; this provision alone does not amount to an exclusive venue for all liability actions. Other venue rules and the nature of the claim must be examined. The simplified procedure in TTK 546 for disputes between shareholders and liquidators should not be applied to all actions without distinction. [1][3]
In a commercial compensation claim for payment of money, mediation as a condition precedent to litigation under TTK 5/A may arise. A request for removal alone is not subject to the same monetary condition. Where both claims are considered together, the assessment is made for each claim. From the application to the mediation office until the final minutes, the limitation period is suspended and the preclusive period does not run; this protection does not revive a right whose period has already expired. [1][7]
Where the amount of loss cannot be calculated before the records are accessed, the type of action must also be determined under the current procedural rules. Law No. 7589 repealed HMK 107 and added a paragraph to HMK 109 on increasing a claim in a partial action. There is a transitional provision for previously filed actions for indeterminate claims. Using the former HMK 107 arrangement unchanged in a new petition, or assuming that the conditions for increasing a claim are met merely by the sentence "all rights to the excess are reserved", would not be correct. [8]
Limitation and the effect of discharge
Under TTK 560, the right to compensation becomes time-barred two years from the date the loss and the liable person became known, and in any event five years from the act causing the loss. Where the act constitutes a crime and a longer limitation period applies under criminal law, that period is taken into account. The starting point is not automatically the date on which the company was deleted from the trade registry. Each transaction, the document establishing knowledge, and the grounds for suspension and interruption are assessed separately. These periods must not be confused with the period for a removal request. [1]
Discharge (ibra) is also important. Under TTK 558, a discharge concerning disclosed factual matters may affect the company's right of action, the rights of shareholders who voted in favour, and other persons specified by law. For the right of other shareholders to sue for the company's loss, a six-month preclusive period running from the date of the discharge is provided. An internal discharge does not by itself extinguish a creditor's independent right to claim a direct loss. [1]
Evidence preservation and interim injunctions
Where there is a risk of an imminent sale, loss of records or distribution, interim protection must be considered separately. Under HMK 389 et seq., on interim injunctions (ihtiyati tedbir), a concrete risk, the measure requested and a prima facie showing must be presented; the court may also require security. Where a monetary claim is to be secured, precautionary attachment (ihtiyati haciz) has its own conditions. It should not be assumed that all of the liquidator's assets will be frozen by injunction in every liability action. Where evidence may be lost or become substantially harder to obtain later, a request for evidence preservation (delil tespiti) may be made under HMK 400. [3] For more detail on this subject, see our article What Is Evidence Preservation?
Which documents should be prepared for a legal assessment?
Each claim in the document file should be linked to the date of the act and its consequences. The following records are useful in the first instance:
- The articles of association, current and historical registry records, and appointment and representation decisions.
- The opening inventory, annual financial statements, the final liquidation balance sheet and the supporting ledgers.
- Creditor calls, letters, service documents, and bank and notary deposit records.
- Sale contracts, valuations, offers, payment records and information on related persons.
- Information requests and replies, general assembly minutes, discharge and change-of-office decisions.
- Litigation and enforcement files, the basis of the claim, and documents showing when the loss and the liable person became known.
Documents must be obtained by lawful means; where company records are not accessible, obtaining them through the court or an appropriate evidence-preservation route is considered. Information and documents sent to the firm are processed for the purpose of the legal assessment and the engagement, in line with professional secrecy and the principles of personal data protection. Before sharing sensitive documents, ask the firm for its secure communication channel. A first contact or the sending of documents does not by itself mean that the matter has been accepted.
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The related topics are Recovering Receivables from a Company in Liquidation and Tax and Social Security Liability in Liquidation. The details of this stage are also covered in the article Return from Liquidation.
Conclusion
Before choosing a course of action against a liquidator, the purpose must first be defined: entrusting the duty to a reliable person, recovering the company's loss, or recovering a direct personal loss. These aims change the claimant's standing, the defendant, the outcome sought and the evidence. A sound assessment considers together the form of appointment, the duty breached, the actual assets, the person to whom the loss belongs, and the time limits. Not every irregularity in a liquidation creates liability, but the fact that a loss has not yet been finally established does not mean that the necessary protective and removal options should be overlooked.
Frequently Asked Questions
Is a liquidator personally liable for all of the company's debts?
No. Under TTK 553, the question is the loss caused by the liquidator's own fault in breaching a duty. The existence of a company debt is not enough on its own. Special liability rules for tax and other public receivables are assessed separately.
Can a shareholder with a small stake bring an action for removal?
Yes. TTK 537/2 does not require any particular shareholding percentage. However, shareholder status and good cause must be proven; applying to court does not by itself produce removal.
If I miss a creditor call, does my claim end?
Failing to respond to a call does not by itself extinguish a claim. Special protective provisions apply to known creditors and disputed debts. The creditor's own limitation and application periods must be monitored separately.
Can compensation be claimed without first removing the liquidator?
Yes; prior removal is not a general precondition. A compensation claim requires the right to sue, an actual loss, fault and a causal link.
Can a shareholder claim the company's loss for their own account?
In a TTK 555 action, payment is requested to the company. To request payment to their own account, a shareholder must show the legal basis of a direct personal loss, separate from the company's loss.
Is an application still possible after the liquidation has ended?
The closing of the liquidation does not by itself end an existing liability claim against the liquidator. Limitation, discharge and the conditions of a concrete loss are examined. If the company must be a party or further action is needed, the need for supplementary liquidation and revival is assessed separately.
Sources and legal bases
- Law No. 6102 on the Turkish Commercial Code, in particular Articles 4–5/A, 533–546, 553–561 and 643–644, and the note on Article 543 as amended by Article 17 of Law No. 7341. Ministry of Trade institutional edition.
- Law No. 6098 on the Turkish Code of Obligations, Articles 46–48. Ministry of Labour and Social Security edition.
- Law No. 6100 on Civil Procedure (Hukuk Muhakemeleri Kanunu); provisions on proof, venue, interim injunctions and evidence preservation. Read together with the amendment by Law No. 7589 cited below. Ministry of Justice edition.
- Court of Cassation 11th Civil Chamber (Yargıtay 11. Hukuk Dairesi), March 11, 2024, E.2022/5737, K.2024/1961. Full text of the decision republished, 6102TTK.
- Court of Cassation 11th Civil Chamber (Yargıtay 11. Hukuk Dairesi), December 2, 2024, E.2023/6783, K.2024/8545. Full text of the decision republished by Karamercan Hukuk.
- Nesibe Ünlü, The Liquidation of a Limited Partnership (Limited Ortaklığın Tasfiyesi), master's thesis, Fatih Sultan Mehmet Vakıf University, 2021; particularly pp. 51–59. University open-access full text.
- Law No. 6325 on Mediation in Civil Disputes (Hukuk Uyuşmazlıklarında Arabuluculuk Kanunu), Article 18/A. Ministry of Justice Mediation Department edition.
- Law No. 7589 Amending Certain Laws on the Efficient and Effective Functioning of the Judiciary (Yargının Etkin ve Verimli İşlemesine Yönelik Bazı Kanunlarda Değişiklik Yapılmasına Dair Kanun), Articles 19–20 and provisional Article 1/10. Text as adopted by the Grand National Assembly of Türkiye.