Unauthorized Transactions and Signatures on Behalf of a Company: Authority to Represent, the Registry and Company Liability

That the person who signs on behalf of a company is a shareholder, employee or manager does not make every transaction binding on the company. First, the capacity in which the person acted, their authority to represent the company on the date of the transaction, whether the signatures had to be used jointly and the counterparty's knowledge are determined. A transaction made without real authority generally depends on the company's later ratification. By contrast, where an authorized representative merely exceeds an amount limit that applies inside the company, the company may still not be released from the debt toward a good-faith third party. The effect of the trade registry, the regime for representatives with limited authority and company conduct that adopts the transaction can change this assessment. [1, 2]

For this reason, conclusions that rest on a single document, such as "the person is not on the signature circular, so the contract is invalid" or "the company stamp is there, so the company is certainly liable," are not sufficient. The same signature may produce a transaction that binds the company, a personal liability of the signatory on a negotiable instrument, or a contract awaiting ratification. This distinction determines against whom the claim should be directed and what defense the company can raise.

Who Can Represent the Company?

The board of directors in a joint-stock company, the managers in a limited company

In a joint-stock company, unless the articles of association provide otherwise and unless the board consists of a single person, the authority to represent belongs to the board of directors, to be exercised by two signatures jointly. Article 370/2 of the Turkish Commercial Code No. 6102 (TTK) permits the delegation of representation to one or more managing directors or, as managers, to third persons; at least one board member must have authority to represent. The delegation of management and the delegation of authority to represent externally are governed by different provisions. The internal directive on management under TTK Article 367 does not in every case create external authority to represent by itself. [1]

In a limited company, the articles of association, the general assembly resolutions and the management arrangement are reviewed together. Under TTK Article 623, at least one shareholder must hold the right of management and the authority to represent. Shareholders who are not managers cannot sign contracts on behalf of the company merely because they hold shares. The fact that all shares belong to one person does not change the fact that the company and its shareholder are separate legal persons. [1]

Company body, commercial representative, commercial proxy and special attorney

A similar title does not mean the same scope of authority. An employment contract that says "general manager" or an email that says "finance director" is different from holding authority to represent in the sense of commercial law. Article 48 of the Turkish Code of Obligations No. 6098 (TBK) reserves the special provisions on company bodies and commercial proxies. [2]

Registration of the appointment of a commercial representative is mandatory; however, the business owner's liability for that person's transactions does not depend on registration alone. The general authority of a commercial proxy, in turn, is limited to the customary affairs of the business. In addition, TBK Article 552 contains special authority for certain transactions in the case of personnel and employees of retail businesses. For this reason, it is also not correct to treat every employee who is not named in the registry as unauthorized for all transactions. [2]

Which Limit on Authority Can Be Asserted Against a Third Party?

Joint signature and restriction to head office or branch affairs

Under TTK Article 371/3, restrictions that have been registered and announced — requiring that the authority to represent be exercised jointly, or confining it to the affairs of the head office or of a specific branch — have effect toward third parties. A joint representation requirement may call not only for two signatures but for signatures by persons from the correct authority groups. Two Group B signatures may not satisfy a requirement of a joint Group A and Group B signature. [1]

Restriction to a branch is also not simply a question of the city in which the contract was signed. What is decisive is which head office or branch's affairs the transaction concerns. An undertaking given by a person authorized for a branch regarding another matter at the company's head office is examined separately. Where a joint signature is incomplete, later completion or ratification may be considered; it cannot be said that a missing signature can never be cured under any circumstances.

Internal amount or transaction-type limit

An instruction within the company that a manager with general authority to represent must not enter into "transactions above a certain amount" is different from a joint representation rule capable of registration. Under TTK Article 371/3, an internal restriction generally cannot be asserted against a good-faith third party. The fact that a restriction to which the law gives no external effect has been entered in the registry does not, by itself, make it valid against a third party. The company's rights of recourse and liability claims against the representative are assessed separately. [1]

That said, an express restriction communicated to the counterparty in advance, the nature of the transaction and the correspondence between the parties matter in the good-faith review. The claim that "the internal limit was exceeded" does not release the company from the debt unless what the counterparty knew is shown. On the other hand, this general explanation cannot be applied as it stands to the special regime of limited-authority representatives discussed below.

What Changes When a Limited-Authority Representative Is Appointed Under an Internal Directive?

TTK Articles 371/7 and 629/3 establish a separate representation regime

TTK Article 371/7 allows board members without authority to represent, or persons bound to the company by an employment contract, to be appointed as commercial proxies with limited authority or as other commercial auxiliaries. Duties and powers are defined expressly in the internal directive; the persons authorized under the internal directive are registered and announced. The internal directive determines the classes of authority; the appointment of the person concerned is decided separately. In a limited company, Article 629/3 refers to this regime for the appointment of persons bound by an employment contract. [1]

Under this system, the type of transaction and amount limits can become significant externally. However, whether the person was actually appointed within this special regime, the consistency between the internal directive and the appointment decision, and the registration and announcement status of the restriction must be investigated. It is not possible to reach the same result by presenting the authority of a manager with general authority to represent as that of a limited commercial proxy. The announcement of the Istanbul Chamber of Commerce (İTO) of March 31, 2023 on its practice likewise states that conflicting unlimited and limited powers of representation should not be given to the same person. [3]

In a limited company, the body authorized to appoint must be checked separately

Unless the articles of association provide otherwise, TTK Article 631 leaves the appointment of commercial representatives and commercial proxies to the general assembly. The relationship between this provision and Article 629/3 is debated in the literature. İTO's current transaction guide looks for a provision in the articles of association to this effect before limited-authority persons can be appointed by the managers, and it also allows for appointment by a general assembly resolution. An appointment document signed by the managers alone should therefore not be treated as sufficient. [1, 4]

Nevin Meral's 2026 study treats the scope of persons who may be appointed in a limited company and the question of the competent body as separate issues. Expansive views on including a shareholder with no service relationship, or a manager without authority to represent, in this regime should not be presented as an express statutory provision or as undisputed practice. In practice, the articles of association, the person's legal capacity and the registry requirements must be resolved together. [5]

Relying on old provisions in appointment and transfer transactions is also risky. TTK Article 375/1-d was amended by Law No. 7511. For branch managers and other signatories, generalizations removed from the pre-2024 text cannot be applied without examining the current provision and the special rules of representation. [1, 6]

How Are the Trade Registry and the Signature Circular Assessed?

Authority on the date of the transaction must be distinguished from today's entry

The authority review does not end with obtaining the current registry entry. The records as of the date on which the contract, check, promissory note or payment instruction was made are also needed. An authority granted later does not by itself prove that authority existed in the past; nor does an authority revoked later retroactively invalidate earlier transactions.

Under TTK Article 36, the general rule is that registry entries take effect toward third parties from the business day following their announcement; special provisions are reserved. Whether a matter whose registration or announcement is mandatory but was not completed can be asserted against a third party depends on proving that the third party knew or should have known of it. Where there is a contradiction between the registry entry and the announcement, the protection of reliance on appearances under Article 37 is assessed separately. [1]

The signature circular is important as a specimen of the signature and of the representation arrangement it rests on; it does not replace the body resolution that creates the authority or the registry status on the date of the transaction. Presenting an old circular does not undo a later dismissal or change. The special provision of TTK Article 373/3, which takes registry entries as the basis for public bodies and institutions and limits requests for additional documents, should also be considered. [1]

A defect in the appointment decision does not always save the company

TTK Article 373/2 makes asserting against a third party a legal defect in the election or appointment of a representative, after registration of the authority to represent, subject to proof that the third party knew of the defect. Here the law looks in particular for the element of knowledge. The existence of a dispute over the election inside the company does not mean that every contract outside it is automatically invalid. [1]

This protection is not an unlimited principle of reliance on the registry that validates every authority that never existed or every restriction to which the law gives no external effect. It must be established separately whether the dispute arises from a defect in the appointment, from the scope of authority or from a breach of the form of representation.

Does a Transaction Outside the Company's Business Purpose Bind the Company?

TTK No. 6102 abolished the old approach that limited a company's legal capacity to its business purpose. Under TTK Article 371/2, a transaction by an authorized representative that falls outside the business purpose also generally binds the company. For the company to escape this result, it must prove that the counterparty knew the transaction was outside the business purpose or, given the circumstances, should have known. The announcement of the articles of association is not sufficient evidence by itself. [1]

A breach of the articles of association or of a general assembly resolution also does not automatically bar a good-faith third party from claiming against the company under Article 371/4. However, this provision does not remove the situation in which the law leaves a particular transaction to the non-transferable power of another body. For example, in a joint-stock company, Article 408/2-f is examined separately for the sale of a significant amount of company assets as a whole. General authority to represent does not make a body decision required by law unnecessary in every transaction.

Can an Unauthorized Transaction Be Ratified Later?

Express ratification, implied ratification and a reasonable period

Under TBK Article 46, if the company ratifies a transaction made without authority, the transaction binds the company. Ratification must be given by the person or body authorized to decide on the transaction and to declare the company's will. It is not sufficient for the person who signed without authority to write in their own hand that "the company ratified." A mandatory body resolution and any special form requirements of the transaction remain protected. [2]

Ratification may occur through an express written acceptance, and it may also be inferred from the knowing performance of the contract. However, a single accounting entry, an unexplained money transfer or an unanswered email is not in every case treated as ratification. It must be shown that the company knew of the transaction and by what conduct it adopted it.

The counterparty may give the company a reasonable period and ask it to state whether it ratifies the transaction. The law has no fixed seven-, fifteen- or thirty-day ratification period applicable to all company transactions. If ratification does not occur within the period, the counterparty is released from being bound by the transaction. The notice should specify the date and subject of the contract and the obligations for which ratification is requested; it should be possible to prove that the notice reached the company. [2]

The effect of rent payments and an established course of dealing

In its decision of November 30, 2021, E. 2017/1541, K. 2021/1516, the Civil General Assembly of the Court of Cassation (Yargıtay Hukuk Genel Kurulu) assessed the company's adoption of a lease signed by an unauthorized shareholder. The company's paying rent for years in line with the payment scheme and increase clause of the contract was accepted as ratification, and the persistence decision rejecting the eviction request was reversed. The decision rests not merely on the use of the property but on performance in line with the concrete terms of the written contract. The former Code of Obligations applied to the underlying events; the reasoning also cites the corresponding provisions of the current TBK Articles 46–47. [7]

In the decision of the 11th Civil Chamber of the Court of Cassation (Yargıtay 11. Hukuk Dairesi) of October 11, 2021, E. 2020/4390, K. 2021/5962, what mattered was that, although the registry provided for double signatures, checks with a single signature had been issued and paid in earlier transactions and the company had maintained that appearance. The decision, which found it contrary to the rule of good faith to rely afterwards solely on the absence of a double signature, was affirmed. This result does not mean that a registered joint representation requirement is always ineffective; the earlier transactions and the company's conduct of acceptance must be proved concretely. [8]

In the withdrawal of authority too, earlier notices of authorization matter. Under TBK Articles 42/3 and 45, the knowledge of the third party and that of the representative serve different functions. As Koçak Diker's study shows, the authority notified externally and the notice of withdrawal must be assessed separately. In applying the special provisions on the trade registry to representation by company bodies, the scope of these general rules should not be overlooked either. [2, 9]

A Company Stamp, a Forged Signature and a Negotiable Instrument Do Not Produce the Same Result

The position of the stamp alone does not determine liability

TTK Article 372 governs signing under the company name. However, particularly on a promissory note, whether the signature physically falls exactly on the stamp is not decisive by itself. In its decision of September 17, 2025, E. 2024/791, K. 2025/539, the Civil General Assembly determined that the signature covering the text of the instrument belonged to an authorized representative and that the issuer was the company, and accepted that the signature need not necessarily lie on the stamp for the company to be liable. The persistence decision was reversed. [10]

This decision does not give authority to represent to an unauthorized person. First, the authority on the date of issue and the attribution of the signature are determined. That a signature was actually made and that the person who made it could act on behalf of the company are different matters.

An unauthorized representative may be personally liable on the instrument

TTK Article 678 governs the personal liability on the instrument of a person who signs a bill of exchange without authority to represent or beyond that authority. Through the references in Articles 778 and 818, this provision also applies to promissory notes and checks. An unauthorized signature may therefore create direct liability on the negotiable instrument for the signatory even if the company does not become indebted. This special result must not be confused with the damages liability under TBK Article 47 in general contracts. [1, 2]

The allegation that a signature was imitated is separate from lack of authority. The original document, comparable signatures and, where necessary, expert examination matter. Lack of authority to represent does not by itself lead to the conclusion that the offense of forgery was committed; criminal liability is assessed separately. Filing a complaint does not automatically suspend the application periods in enforcement proceedings.

If the Transaction Is Not Ratified, Who Can Be Asked for What?

TBK Article 47 allows the counterparty to claim from the unauthorized representative the damage of invalidity it suffered because the transaction was not ratified. The representative may be released from liability under this provision if they prove that the counterparty knew or should have known of the lack of authority. From a representative at fault, other damages may also be claimed if fairness so requires. In no case can it be concluded that the entire contract price or all expected profit will be paid. [2]

In the refund of a payment made, it is determined whose assets the money entered; the provisions on unjust enrichment are reserved. A payment made to the company, money sent to a personal account and expenses incurred in reliance on validity are separate items. The same damage cannot be collected twice, once as a refund and once as compensation.

A claim by the company against a manager or employee who abused authority differs from the counterparty's claim under TBK Article 47. The contract in the internal relationship, the manager's liability and the conditions of damage and fault are assessed. TTK Article 371/7 also contains a special provision on the joint and several liability of the board of directors for the damage caused by persons with limited authority. Even where the external transaction binds the company, this does not remove the internal liability of the manager concerned. [1]

How Are the Lawsuit, Enforcement Proceedings and Evidence Planned?

The right claim and the right court

A claim for performance or a monetary claim against the company, a declaration of non-indebtedness, damages against the unauthorized representative and refund of the price are different claims. In a declaratory action, a current legal interest is required under Article 106 of the Code of Civil Procedure No. 6100 (HMK). A shareholder's complaint about a transaction that harmed the company also does not mean that the shareholder can exercise the company's contractual rights in their own name. [11]

The commercial court of first instance (asliye ticaret mahkemesi) has jurisdiction over commercial cases under TTK Articles 4–5. However, the fact that a party is a company does not bring every dispute before the commercial court: disputes arising from lease relationships generally belong to the civil court of peace (sulh hukuk mahkemesi), and the special jurisdiction provisions for employment and consumer relationships are also reserved. As to venue, HMK Articles 6 and 10, any valid jurisdiction agreement and special jurisdiction rules are assessed. [1, 11]

Mediation as a condition precedent to litigation applies under TTK Article 5/A in actions concerning commercial receivables whose subject is money, compensation, annulment of objection, negative declaratory actions and recovery of payment. Lease disputes are subject to the separate regulation in Article 18/B of Law No. 6325. An objection or complaint to the enforcement court should not be confused with an action brought in a general court. [1, 12]

A review that shows the documents and dates together

In addition to the general rule of proof in HMK Article 190, the special rules of proof in TTK Articles 371/2 and 373/2 and TBK Article 47 are taken into account. In particular, where the company raises the knowledge of the third party as a defense, the existence of an internal company resolution alone is not enough. The integrity, sender, date and connection of electronic correspondence with the transaction concerned are preserved. [1, 2, 11]

Time limits and interim protection

There is no single limitation period applicable to all lawsuits and applications concerning an "unauthorized transaction." A contractual claim, a tort, unjust enrichment and a claim on a negotiable instrument are each subject to their own provisions. For example, TBK Article 82 provides a two-year period from the time the right to demand a refund becomes known and a ten-year period from the enrichment; these periods cannot be used as the period for objecting to enforcement on a negotiable instrument. [2]

In enforcement specific to negotiable instruments, the five-day period running from service of the payment order is critical for objecting to the debt and to the signature. Whether the allegation concerns authority to represent or the attribution of the signature should be separated in the content of the application. The review and stay conditions particular to the enforcement route cannot be eliminated automatically by filing a general lawsuit. [10, 13]

To protect the right in dispute, an interim injunction may be requested under the conditions of HMK Articles 389–390; the special enforcement provisions for monetary claims and for proceedings already begun are also taken into account. Enforcement of the injunction must be requested within one week from the pronouncement or service of the decision on the requesting party. In a pre-suit injunction, the main action must be filed within two weeks from the request for enforcement, and the document showing that the action was filed must be submitted to the officer enforcing the decision to be placed in the file. The effect of mediation as a condition precedent to litigation on this period is calculated separately under Article 18/A of Law No. 6325. [11, 12]

Conclusion

The legal consequence of a document signed on behalf of a company is determined by the representative's capacity, their authority on the date of the transaction, the external effect of the restriction, the third party's knowledge and the company's later conduct. An assessment made without distinguishing between an internal instruction given to a representative with general authority and the registered regime of limited representation may lead to a lawsuit against the wrong person or to the denial of a valid debt.

When a contract is being made, the resolutions and registry records showing authority should be reviewed; once a dispute has arisen, the documents of ratification, payment and notice should be assessed in relation to the same transaction. The company's liability toward outsiders and the representative's personal liability and liability arising from the internal relationship should be framed as separate claims.

Related articles: Non-Compete Prohibition in Companies: Distinguishing Shareholders and Managers; Liability and Compensation of the Company Manager and Board of Directors; Removal of a Limited Company Manager and Restriction of Authority; Irregular Transfer of Company Property and Land Registry Cancellation.

Frequently Asked Questions

Does every contract signed by a company shareholder bind the company?

No. Shareholder status alone does not confer authority to represent. Separate authorization, the applicable special provisions and the company's later ratification are assessed.

Is a transaction made by a person whose name is not on the signature circular definitely invalid?

No definite conclusion can be drawn. Special power of attorney, authority as a commercial representative or commercial proxy, status as a statutory commercial auxiliary and the possibility of later ratification are investigated. The circular is not the only source of authority.

What consequence follows if a single signature is used where a double signature is required?

A breach of a registered and announced joint representation requirement generally prevents the company from being bound. Later ratification and the course of dealing created by the company are examined separately; the registry entry cannot be disregarded on its own.

Does a manager's exceeding a monetary limit inside the company release the company from the debt?

A manager with general authority to represent who exceeds an internal limit generally cannot be relied on against a good-faith third party. Limited authority to represent properly established under TTK Article 371/7 or 629/3 is assessed differently.

Is the company's silence treated as ratification?

Not every silence is ratification. Conduct showing that the company knowingly performed the transaction is required. If ratification does not occur within the reasonable period given under TBK Article 46, the counterparty is released from being bound by the transaction.

Is the person who signed without authority personally liable for the debt?

In general contracts, the damage and exception conditions of TBK Article 47 are examined. On bills of exchange, promissory notes and checks, TTK Article 678 and the related references may create direct personal liability on the instrument.

Does a signature not placed on the stamp fail to bind the company?

There is no such general rule. On a promissory note, the signature's covering the text of the instrument, the issuer's being the company and the signatory's authority are assessed together. The position of the stamp does not replace the review of authority and signature.

Sources and legal bases

1. Turkish Commercial Code No. 6102 (Türk Ticaret Kanunu), in particular Arts. 4–5/A, 18, 35–37, 125, 367–375, 408, 623, 629, 631, 678, 778 and 818. Ministry of Justice UYAP Legislation.
2. Turkish Code of Obligations No. 6098 (Türk Borçlar Kanunu), in particular Arts. 40–48, 72, 77–82, 146, 504 and 547–552. Legislation Information System.
3. Istanbul Chamber of Commerce (İstanbul Ticaret Odası), On the Internal Directive on Representation (Temsil İç Yönergesi Hakkında), March 31, 2023, pp. 1–2. Practice announcement.
4. Istanbul Chamber of Commerce (İstanbul Ticaret Odası), Limited Companies (Limited Şirketler), the sections "Internal Directive on Representation Transaction" and "Transaction of Appointing a Limited-Authority Representative under the Internal Directive on Representation." Transaction guide.
5. Nevin Meral, "An Evaluation of TTK Art. 629/3 in the Context of Who May Be Appointed as a Limited-Authority Representative in a Limited Company" (“Limited Şirkette Sınırlı Yetkili Temsilci Olarak Atanabilecekler Bağlamında TTK m. 629/3 Üzerine Bir Değerlendirme”), Türkiye Adalet Akademisi Dergisi, Year 17, No. 67, July 2026, pp. 627–656; in particular pp. 647–652. DOI: 10.54049/taad.1927478. Article.
6. Law No. 7511, Art. 14; amendment to TTK Art. 375/1-d. Text of the law published by the Ministry of Trade.
7. Civil General Assembly of the Court of Cassation (Yargıtay Hukuk Genel Kurulu), November 30, 2021, E. 2017/1541, K. 2021/1516, in particular paras. 23–33. UYAP Case Law.
8. 11th Civil Chamber of the Court of Cassation (Yargıtay 11. Hukuk Dairesi), October 11, 2021, E. 2020/4390, K. 2021/5962. De Jure full decision record — an account may be required for access.
9. Duygu Koçak Diker, "An Evaluation of the Provisions of TBK Arts. 41/II, 42/III and 45 on the Protection of a Third Party Who Enters into a Legal Transaction with an Unauthorized Representative" (“Yetkisiz Temsilci ile Hukuki İşlem Yapan Üçüncü Kişinin Korunmasına İlişkin TBK m. 41/II, 42/III ve 45 Hükümlerinin Değerlendirilmesi”), Süleyman Demirel Üniversitesi Hukuk Fakültesi Dergisi, 2024, Vol. 14, No. 1, pp. 807–860; in particular pp. 851–855. Article.
10. Civil General Assembly of the Court of Cassation (Yargıtay Hukuk Genel Kurulu), September 17, 2025, E. 2024/791, K. 2025/539, section VI/D (evaluation). De Jure full decision record — an account may be required for access.
11. Code of Civil Procedure No. 6100 (Hukuk Muhakemeleri Kanunu), Arts. 4, 6, 10, 17–18, 106, 190, 199 and 389–397. Legislation Information System.
12. Law No. 6325 on Mediation in Civil Disputes (Hukuk Uyuşmazlıklarında Arabuluculuk Kanunu), Arts. 18/A and 18/B. Legislation Information System.
13. Enforcement and Bankruptcy Law No. 2004 (İcra ve İflas Kanunu), in particular Arts. 72, 168–170/a and 257. Ministry of Justice UYAP Legislation.