LEGAL RESPONSIBILITY OF COMPANY MANAGERS AT LIMITED LIABILITY COMPANIES (APRIL 2016)

Legal responsibility of the company managers of limited liability companies is not distinctively regulated under Turkish Commercial Code ("TCC") numbered 6102. With reference of Article 644/1 of TCC to Article 544 of TCC, provisions regulating the responsibilities of board of directors of joint stock companies shall also be applicable to limited liability companies.  

Pursuant to the above mentioned reference, in case manager(s) of limited liability companies breach their liabilities arising from Law and articles of association of company by their fault, they shall be responsible to the company, shareholders and creditors due to the loss arisen from the breach.  

The company itself, shareholders and creditors of the company have right to file a law suit due to the responsibility of company manager(s). General assemblies were obliged to discus and/or decide regarding initiation a law suit against the manager(s) pursuant to the related provisions of annulled Turkish Commercial Code ("annulled TCC"). However, the mentioned statutory obligation has been annulled with new TCC numbered 6102. The company, shareholders and creditors of the company are allowed to file a law suit directly due to the responsibility of the manager(s). However, in case of release of company manager, proof of faultlessness and lapse of time, the responsibility of the manager ceases.  

The company manager shall be responsible in case any loss occurs due to his/her fault. In such a case the company manager shall be obliged to indemnify the loss.  

The new TCC numbered 6102 foresees differentiated solidarity principle differently from certain solidarity principle regulated under the annulled TCC. Thus, the differentiated solidarity principle is applicable for indemnification procedure in case of joint responsibility of company managers. Hence, the indemnification responsibility of each manager shall be determined as per the degree of fault and other facts in case of joint responsibility.   

In case there are more than one company managers and the loss is originated from the fault of one of these company managers, only the related manager shall be responsible.  

The court shall determine in a law suit initiated due to the responsibility of company manager(s);  

  • whether any loss has occurred or not,
  • the loss is originated from joint responsibility or sole responsibility of company manager(s)  

The court shall reject the claims regarding the manager(s) who have not any responsibility for the loss of the company. In case there is one company manager, then this manager shall be directly responsible from the loss. 

The company and each shareholder may claim compensation for the loss of the company. Shareholders and the company are only allowed to demand payment of compensation to company. The law suit regarding responsibility of manager(s) can be initiated against the responsible manager(s) before the Commercial Court of First Instance where the head quarter of the company is located in. Simple trial procedure shall be applied. 

With regard to Article 560 of TCC, the claimant is entitled to claim for compensation within 2 (two) years’ period starting from learning of the loss and the responsible manager(s). Under any circumstances the lapse of time expires after 5 years’ period starting from the action which caused the loss.