SHAREHOLDER’S LIABILITY DUE TO JOINT STOCK COMPANY’S DEBTS
As a general rule, shareholders of joint stock companies are not personally liable for company debts under Turkish Commercial Code. Shareholders’ liability to company is limited to remittance of committed share capital.
However, shareholders occasionally, may be responsible for company debts with their personal assets in case of following situations.
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Unpaid Capital,
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Borrowing loan from company,
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Purchasing goods or services from company,
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Collection of company receivables by shareholder,
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Remittance of personal debts of the shareholder by company
In cases where a valid enforcement proceeding has been initiated against joint stock company due to the joint stock company’s debt and at the same time where the legal personality of the joint stock company is also a creditor from its shareholder (but not limited to the cases listed above), creditor shall be entitled to apply personal assets of shareholder under such execution proceeding.
As a matter of fact, Supreme Court Assembly of Civil Chambers stated that if the legal personality of company has property, rights, capital receivables and other receivables from shareholder, such receivables can be seized by the creditors of company pursuant to Article 89 of the Bankruptcy and Enforcement Law by means of service of attachment notice to such shareholders of the joint stock company.
Again, we must underline that; a joint stock company has an independent legal personality which is separate from its shareholders’ personal assets and company itself is primarily responsible with his assets against the creditors of company. However, exceptionally, the debtor’s property, rights and receivables from third parties are also considered within the scope of the debtor’s assets. In accordance with the Article 89 of the Bankruptcy and Enforcement Law, the creditor has right to demand seizure of the debtor’s credits before third parties.
Therefore, in cases where a joint stock company shareholder has unpaid capital commitments or the joint stock company has receivables such as goods and rights from shareholder, shareholders can be held liable with their personal assets within the scope of the enforcement proceedings initiated by the creditors against the company.