International groups that operate in Türkiye through a local subsidiary usually staff its board with executives from the head office, such as a regional finance director, a group legal counsel or the head of the relevant business line, while daily management is entrusted to a local general manager. These appointments are commonly treated as a governance formality. Under Turkish law, however, the personal liability of foreign directors for the debts of the subsidiary is a concrete risk. A person who represents a Turkish company, or who sits on its board, can be pursued with his or her own assets for the company’s unpaid taxes and social security premiums, and the law draws no distinction between Turkish and foreign nationals or between residents of Türkiye and persons living abroad.

This exposure rests on three statutory regimes. Article 10 of the Tax Procedure Law No. 213 and Repeated Article 35 of the Law No. 6183 on the Procedure for the Collection of Public Receivables make the legal representatives (kanuni temsilci) of a company liable for taxes and other public receivables that cannot be collected from the company. Article 35 of the same Law makes the partners of a limited liability company directly liable for such receivables in proportion to their capital shares, which places a foreign parent holding all the shares in the position of debtor for the entire amount. Article 88 of the Social Insurance and General Health Insurance Law No. 5510 goes further and makes board members and senior managers jointly and severally liable with the employer for unpaid social security premiums, without requiring that they hold signing authority.

This publication examines who qualifies as a legal representative in Turkish joint stock and limited liability companies, the conditions the tax administration must satisfy before it turns to a director, the stricter rule applicable to social security debts, the reasons why resignation, share transfer and liquidation do not close the exposure for past periods, and the measures available to foreign groups when they design the governance of their Turkish subsidiaries. The analysis reflects the legislation and case law in force as of November 2026.

The Statutory Basis of Liability for Public Debts

Under Article 10 of the Tax Procedure Law, the tax duties of legal entities are performed by their legal representatives. Where taxes and related receivables cannot be collected, in whole or in part, from the assets of the taxpayer because those duties were not fulfilled, they are collected from the assets of the persons who failed to fulfil them. The same article grants a representative who pays a right of recourse against the taxpayer and provides that the entry of the company into liquidation, or its completed liquidation, does not remove the liability of its representatives for the periods before liquidation began.

Repeated Article 35 of Law No. 6183 sets out a parallel rule for public receivables in general. Receivables that cannot be collected from the assets of a legal entity, or that are understood to be uncollectible from them, are collected from the personal assets of its legal representatives under the procedures of that Law. Article 10 is the specific basis for tax receivables and Repeated Article 35 the general basis for other public receivables, and the two provisions are frequently applied together in tax disputes.

Neither provision refers to nationality or residence, which is the starting point for assessing the personal liability of foreign directors. Both apply to whoever held the position of legal representative, and both extend expressly to persons acting in Türkiye for taxpayers and entities based abroad. Article 10 applies its rule to the representatives in Türkiye of taxpayers that are not located in Türkiye, and Repeated Article 35 applies to the representatives of foreign persons and entities in Türkiye. A foreign company that operates through a Turkish branch instead of a subsidiary therefore faces the same question, since the responsible representative of the branch can fall within the same rules.

Legal Representatives of a Turkish Joint Stock Company

In a joint stock company (anonim şirket), management and representation belong in principle to the board of directors. Under Article 370 of the Turkish Commercial Code No. 6102, unless the articles of association provide otherwise, the power of representation belongs to the board and is exercised by two signatures, and the board may transfer it to one or more managing directors or, as managers, to third parties.

The Council of State has drawn the tax consequence of this structure directly. In its decision dated 7 June 2022 (4th Chamber, Docket No. 2019/4887, Decision No. 2022/3723), the court held that board members are the legal representatives of the company and are responsible under Article 10 of the Tax Procedure Law, but that where the board transfers its power of representation to one or more of its members or to managers who are not shareholders, the status of legal representative and the liability under Article 10 pass to the persons who receive that power.

The currency of the transfer also matters. In its decision dated 10 October 2024 (9th Chamber, Docket No. 2022/4840, Decision No. 2024/5081), the Council of State noted that where representation is granted to a person for a fixed term and no new person is designated when that term expires, the board as a whole becomes authorised to represent the company. A board member who had no signing authority under the expired arrangement may thereby fall back within the circle of legal representatives without any new resolution being adopted.

For foreign groups this has an immediate practical meaning. A head office executive who sits on the board without signing authority, while daily representation has been transferred to local managers by a registered and published board resolution and a signature circular, is in principle outside the scope of tax liability. The local general manager who holds that authority is within it, even where he or she holds no shares and is not a board member. This protection depends on documents. If the transfer of authority was never registered, if a signatory’s term expired without renewal, or if head office executives sign alongside the local team, the analysis changes. The tax office begins with the trade registry and the published signature records, and an outdated record can expose a person who no longer plays any part in the company.

The Position of the Foreign Parent in a Limited Liability Company

The limited liability company (limited şirket) is a frequent choice for foreign subsidiaries, and in this form the exposure reaches the parent company itself. Article 623 of the Turkish Commercial Code requires that at least one partner hold the right to manage and represent the company. Where the sole partner is a foreign parent, the parent necessarily holds that role, and under the second paragraph of the same article a legal entity appointed as manager designates a natural person to perform the role on its behalf.

Separately from any management role, Article 35 of Law No. 6183 makes the partners of a limited liability company directly liable, in proportion to their capital shares, for public receivables that cannot be collected from the company, and subjects them to collection proceedings under that Law. The proportion applies to the unpaid debt and is not a ceiling equal to the capital contributed. A parent holding all the shares of a subsidiary with modest capital can therefore be pursued for the full amount of the subsidiary’s uncollected public debts. Shareholders of a joint stock company carry no comparable liability by reason of their shareholding alone.

Since 2008, Article 35 has also made the transferor and the transferee of a capital share jointly liable for receivables relating to the period before the transfer, and has made the persons who were partners when a receivable arose and when it fell due jointly liable where they differ. The Plenary Session of the Tax Law Chambers of the Council of State confirmed in its decision dated 2 October 2024 (Docket No. 2024/62, Decision No. 2024/832) that a share transfer, being a private law contract, does not remove the liability of a former partner for the period of its partnership. The consequences of these rules for former partners are examined in our publication in Turkish on the liability of a former partner for company debts after a share transfer, and the tax treatment of share transfers in our publication on share transfer taxation in Türkiye.

Conditions for Pursuing a Director for Tax Debts

Liability under Article 10 and Repeated Article 35 is secondary. The company remains the principal debtor, and a director may be pursued only after the receivable has been properly established against the company and has proved uncollectible from it. The Plenary Session of the Tax Law Chambers set out these conditions in its decision dated 4 December 2024 (Docket No. 2023/1271, Decision No. 2024/1124).

The receivable must be duly assessed against the company and remain unpaid at maturity. The company must then be pursued under the methods provided in Article 54 of Law No. 6183, which for unsecured receivables requires proper service of a payment order on the company. Finally, the administration must establish through an inquiry into the company’s assets that the receivable cannot be collected from it. The court described the pursuit of the legal representative as a safeguard that lifts the corporate veil and made it dependent on each of these steps having been taken and duly notified.

Liability is also tied to time. The Council of State requires that the person held the status of legal representative in the period to which the debt relates. The Constitutional Court, in its decision dated 19 March 2015 (Docket No. 2014/144, Decision No. 2015/29, Official Gazette of 3 April 2015), annulled the paragraphs added to Repeated Article 35 in 2008, including the rule that made the persons who served as legal representative when a receivable arose and when it fell due jointly liable.

In its decision dated 26 November 2025 (Docket No. 2025/55, Decision No. 2025/240, Official Gazette of 18 March 2026), the Court rejected a challenge to the first paragraph of the article, which had argued that the provision did not define with sufficient clarity the period it covers and the position where there are several representatives. The general rule therefore stands, and each case turns on the actual period of office and the authority the person held.

A director who receives a payment order (ödeme emri) may challenge it within fifteen days of service under Article 58 of Law No. 6183, and in tax matters the case is heard by the tax court. The challenge is not confined to the existence of the debt. Whether the person was in fact the legal representative in the relevant period, whether the company was properly pursued first and whether the inquiry into its assets was carried out are all matters the court examines, and the case law shows that defects at any of these stages can lead to the annulment of the payment order. A director who pays retains a statutory right of recourse against the company under both Article 10 of the Tax Procedure Law and Repeated Article 35. Disputes of this kind fall within our administrative and tax law practice.

Social Security Debts and the Stricter Rule of Article 88

Social security premiums follow a different and stricter regime. Under Article 88(20) of Law No. 5510, where the premiums and other receivables of the Social Security Institution (Sosyal Güvenlik Kurumu, SGK) are not paid within the statutory periods without a justified reason, the senior managers or authorised persons of employers that are legal entities, including the members of the board of directors, and their legal representatives are jointly and severally liable with the employer towards the Institution.

The Court of Cassation reads this provision as separating liability from signing authority. In its decision dated 22 February 2024 (10th Civil Chamber, Docket No. 2024/588, Decision No. 2024/1692), the court explained that for premium debts accrued before 1 July 2008, the date on which Article 88 entered into force, joint liability required authority to represent and bind the company, whereas Article 88 expressly makes board members liable without any requirement of representation authority, unless a justified reason prevented payment. The same chamber has accepted that the existence of a justified reason excludes this liability (decision dated 21 June 2022, Docket No. 2022/2607, Decision No. 2022/9533).

The contrast between the two regimes is the point most often overlooked by foreign groups. A head office executive who holds a board seat without signing authority may stand outside tax liability and still be jointly and severally liable for the subsidiary’s unpaid premiums for the whole period of his or her board membership. Joint and several liability allows the Institution to claim the entire debt from the director as well as from the company. For subsidiaries with a large workforce, where unpaid premiums, late payment charges and the findings of an inspection can reach substantial amounts, this is in our view the most significant aspect of the personal liability of foreign directors in Türkiye. Premium compliance is therefore a matter for the board as much as for the payroll function, and it forms part of the employment law review of any foreign owned subsidiary.

Resignation, Share Transfer and Liquidation

The personal liability of foreign directors for past periods does not end when they leave the board. Because liability is tied to the period of office, a resignation limits future exposure but leaves earlier periods open, including debts assessed years later following a tax or social security inspection of those periods. The end of a board membership takes legal effect when it occurs, and the Court of Cassation has held that its publication in the Trade Registry Gazette serves to inform third parties and does not determine when the termination takes effect (10th Civil Chamber, 30 November 2021, Docket No. 2020/4208, Decision No. 2021/15117). The registry record is nevertheless the first document the administration examines, and a resignation that is not registered promptly, together with an updated signature circular, invites disputes that a director living abroad is poorly placed to conduct.

Liquidation does not close the file either. Article 10 of the Tax Procedure Law provides that entry into liquidation does not remove the liability of legal representatives for earlier periods. Since an amendment made in 2018, it also provides that for a company liquidated and struck off the trade registry, tax assessments and penalties for the periods before liquidation are issued in the name of any of its legal representatives, who are jointly liable, and those for the liquidation period in the name of any of its liquidators, who are likewise jointly liable. The partners of a limited liability company remain liable for the periods before liquidation in proportion to their capital shares, while the liability of liquidators is limited to the amount distributed in the liquidation.

A group that closes a Turkish subsidiary therefore retains a residual exposure for the periods before liquidation, both through its former directors and, where the subsidiary was a limited liability company, as a former partner. These points form part of the planning of any exit or restructuring transaction.

Governance Measures to Limit the Personal Liability of Foreign Directors

The exposure described above cannot be excluded by contract. Under Article 8 of the Tax Procedure Law, private agreements concerning tax liability do not bind the tax administration except where the tax laws permit, and an indemnity given by the parent to the executives it appoints governs only the relationship between them. The exposure can, however, be managed through the design of the subsidiary’s governance and through the way that design is documented and kept up to date.

The first question is who sits on the board and who holds signing authority. Allocating daily representation to identified local managers by a registered board resolution and signature circular, while head office executives retain a supervisory role without signing authority, aligns tax liability with the persons who control payments. It does not remove board members from the social security regime, and the appointment of head office executives to the board of a subsidiary with a large workforce is a decision that deserves to be taken with that regime in view.

Where the subsidiary is a limited liability company wholly owned by the parent, the choice of corporate form also merits review, since the proportional liability of partners under Article 35 of Law No. 6183 has no counterpart for shareholders of a joint stock company. The features of the joint stock company for foreign investors are discussed in our guide to establishing a joint stock company in Türkiye.

The second question is visibility. A board member who carries personal liability needs reliable and timely information on whether taxes and premiums are paid. Periodic debt status certificates (borç durum belgesi) obtained from the tax office and the Social Security Institution, a standing item on the board agenda covering public payables and the outcome of any inspection, and prompt escalation when the subsidiary comes under liquidity pressure give directors the means to act within their period of office. These certificates show only receivables that have already accrued, so they are read together with a review of open inspections and disputed positions. Where premiums cannot be paid for reasons beyond the directors’ control, board minutes recording the cause and the measures taken provide the evidential basis for the justified reason defence recognised by the Court of Cassation.

The third question is protection on appointment and on departure. Directors’ and officers’ liability insurance policies differ in whether and to what extent they respond to claims by public authorities, and the policy wording is best reviewed against the Turkish regimes described here before a foreign executive accepts a board seat. An indemnity from the parent, together with the statutory right of recourse against the company, determines who ultimately bears a payment a director was compelled to make. On departure, the safest course is to complete the resignation, its registration and the revocation of signing authority together and to record the subsidiary’s tax and premium position at that date. Reviews of this kind form part of our compliance and investigations practice.

Conclusion

The personal liability of foreign directors appointed to the board of a Turkish subsidiary is a consequence that international groups often underestimate. For taxes and other public receivables, liability follows the authority to represent the company and arises only after the company has been properly pursued and has proved unable to pay. For social security premiums, liability extends to board members for the period of their membership regardless of signing authority and is joint and several with the employer. In a limited liability company, the foreign parent is itself directly liable for the subsidiary’s uncollected public debts in proportion to its shareholding. Resignation, share transfer and liquidation do not end any of these exposures for periods already passed.

These risks are manageable when they are addressed at incorporation, at each change in the board and before any exit, through a governance structure that matches legal responsibility with actual control, regular monitoring of public payables and complete documentation. The position of executives appointed to Turkish subsidiaries can be assessed within the scope of our foreign investments and commercial and company law practice.