Financial Liability of a Partner After Share Transfer in a Limited Liability Company in Türkiye

Under Turkish law, partners in a limited liability company (Ltd. Şti.) remain jointly liable for public debts such as taxes and social security contributions that have arisen before the share transfer date. However, they are only responsible for private debts, such as bank loans or commercial liabilities, in proportion to their shares. For official information on Turkish company law, you may consult the Turkish Legislation Portal and the Ministry of Trade websites.

Framework of Financial Liability After Share Transfer

Liability for Public Debts

The key principle under the Turkish Law No. 6183 on the Collection Procedure of Public Receivables is that shareholders are personally responsible for unpaid or uncollectible public debts of the company in proportion to their shares.

Once a share transfer is completed, Article 35 of the same law leads to a significant shift in liability:

– the transferring partner remains liable for public debts accrued before the transfer date
– the acquiring partner becomes liable for public debts arising after the transfer date
– both parties bear joint and several liability for debts accumulated up to the transfer date

This responsibility begins on the date of notarization of the transfer agreement, even before registration and announcement at the trade registry.

Liability for Private Debts

The transferring partner bears no personal financial responsibility for private debts of the company, including bank loans or supplier obligations. The partner’s liability is limited to the capital share contributed to the company.

However, surety commitments represent a separate legal obligation. Since a surety agreement is independent of share ownership, transferring shares does not automatically terminate the surety unless explicitly renegotiated.

Special Position of Managing Partners

If a partner also serves as a company director (müdür), their level of liability significantly increases:

– managing partners are jointly and severally liable for all public debts, regardless of their share percentage
– they assume unlimited personal liability compared with non-managing partners
– resignation from the manager position must be formally announced and registered, ideally in conjunction with the share transfer transaction

For comprehensive guidance, you can refer to the Central Trade Registry Gazette, where all managerial changes must be recorded.

Conditions and Procedure for Share Transfer

To ensure a legally valid share transfer in a Turkish limited liability company, the following steps must be completed:

1. notarized share transfer agreement
2. approval by the general assembly (unless the articles of association state otherwise)
3. registration and publication in the trade registry (for publicity purposes; liability begins as of the transfer date)
4. if the general assembly does not refuse within three months of application, approval is deemed granted

These conditions make the transfer legally binding under the Turkish Commercial Code.

Strategic Considerations for International Entrepreneurs

Risk Assessment Factors

Right of Recourse

If a partner personally pays company debts from private assets, they may seek compensation only from the company’s legal entity itself, not from other shareholders. This right remains valid even during liquidation or bankruptcy processes.

Key Takeaways for International Investors

For foreign investors considering participation in Turkish limited companies, careful timing of the share transfer, a prior assessment of outstanding public debts, and clear determination of managerial responsibilities are vital to a smooth and predictable process.

Before signing a transfer agreement, standard practice in Türkiye involves due diligence and debt analysis by a tax advisor and legal consultant. This proactive approach minimizes financial risks and ensures compliance with local corporate regulations.

For additional resources, the Investment Office of the Presidency of the Republic of Türkiye offers practical insights for foreign entrepreneurs entering the Turkish market.