How can a company be liquidated in Turkey?
The act of company liquidation in Turkey is regulated by the Commercial Code. There are many reasons for which a company may request to register for liquidation and the decision can be taken by the general assembly of the company or by an appropriate Turkish court.
The reasons to liquidate a company
can refer to the accomplishment of the specific goals stipulated in the articles of association, the expiration of the availability term posted in the articles, the decision of the members who consider the company no longer meets their requests, a claim made by creditors to a Court or the beginning of the bankruptcy process
; our Turkish lawyers
can provide you with further details on this matter.
The liquidation process can be:
• voluntary (as a result as the company’s general assembly decision);
• compulsory (as a result of a Court request).
What are the steps for company liquidation in Turkey?
If the decision of company liquidation
is taken by the management of the company during a general meeting, a liquidator
must be appointed to represent the company during the process. The name and its details, along with the decision of liquidation
must be registered at the Turkish Trade Registry
. The general meeting has the powers to dismiss the liquidator
and can decide the level of power he has in this process.
In the situation of a compulsory liquidation, the Court must appoint the liquidator and has the power to dismiss it if necessary.
The liquidator should elaborate a balance sheet and an inventory statement and show it in a general meeting where it must be approved. If it receives the approval, the liquidator can begin the process.
The liquidator checks the documents and notifies the creditors regarding the liquidation process. He then decides the specific terms if depositing the claims.
The creditors are then submitting their claims and if it is not completed in due time, the amount necessary to cover their claims is deposited to an administrative authority appointed by the liquidator.
An intermediary balance sheet and reports regarding the liquidation status must be elaborated and presented at the annual general meetings.
The remaining assets resulted after covering all the claims can be divided among the shareholders, up to their contribution to the company’s capital.
After that, a last general meeting is convened and the last balance sheet, alongside with a report regarding the termination of liquidation and its results are presented by the liquidator.
The decision is then registered at the Trade Register
and the name of the company is permanently deleted from it; our lawyers
can offer you assitance in this sense.
The liquidator must also appoint a person where all the company’s documents will be kept for a period of minimum 10 years. The name and the address of that person must be mentioned in the application sent to the Turkish Trade Registry.
Liquidation of branches in Turkey
Foreign investors who have opened a branch office in Turkey
should know that this type of company can be liquidated
following the standard liquidation procedures
; the liquidation process
for this entity lasts at least one year.
Taxation during the dissolution process
It is very important to know that companies in dissolution
are still liable to local taxation
. Since the company is in the process of liquidation
, it will no longer have a financial year; this will be replaced by a liquidation period
The liquidation period covers the time starting with the first day when the company is entering in the dissolution process and the day when the liquidation procedures have been completed.
After the dissolution process ends, the local authorities will have to refund taxes in the situation in which the company overpaid in this sense.
During this process, the company will be subjected to the standard taxation system
applicable to all companies in Turkey
; furthermore, the company will also be obligated to file the documents which are prescribed to a regular company.
According to the Turkish legislation, shareholders of a company in a liquidation process will be repaid for their capital, for which no taxes will be applied.
How long does the liquidation process last in Turkey?
It may take several years to liquidate a company in Turkey, depending on its size and the complexity of its debts, but usually a liquidation process can be completed in a period of 12-18 months.