As it is known, the concept of entity/person is categorized under the terms “real person” and “legal entity/person” in the Turkish legal system. The legal entity is defined as the entity which “legally binds together the property of many people and is legally treated as one person. The legal entity is able to become indebted. The stock corporations form legal entities aside from their owners and managers. Even though these legal entities are liable for the consequences of their own actions, the legal liability of their legal representatives must be considered for their unpaid debts to the public/state.
The liability of the legal representatives for the debts to the public are referred to in the article No. 35 of the Law on the Procedure for the Collection of Public Receivables No. 6183 which is a collection law, clause No. 2 of the article No. 10 of the Tax Procedure Law No. 213 which regulates taxation processes and clause No. 20 of the article No. 88 of the Social Security and General Health Insurance Law no. 5510 which regulates the social security system.
A. The Concept of Legal Representatives in Limited Companies
The partners of a limited company are liable for the public debts of the company based on the amount of of their shares. The article No. 35 of the Law on the Procedure for the Collection of Public Receivables No. 6183 dictates that the manager and the partners of the company are collectively and consequently liable for the public debts of the company. According to the Turkish Trade Act, the principles of the management and the representation of the company must be established with the company contract. One or more of the partners can be responsible for the management and the representation of the company. In any case, at least one of the partners must have the authority to manage and represent the company. Unless there is a condition which regulates which partner is responsible for the management and representation of the company, it will be accepted that all partners are responsible.
In limited companies managers are charged with the management and the representation of the company and, therefore, they are the legal representatives of their companies. Article no.35 of the law no. 6183 is in effect for partners who are not managers.
B. Public Debts and Limited Companies
The limited company is responsible for the public debts as a legal entity. The manager(s) and the partners are responsible in accordance with the Law on the Procedure for the Collection of Public Receivables No. 6183, Tax Procedure Law No. 213 and Social Security and General Health Insurance Law no. 5510.
C. The Responsibilities of Manager or Managers Concerning the Public Debts of the Company
The article no. 35 of Law on the Procedure for the Collection of Public Receivables No. 6183 regulates the responsibilities/liabilities of the manager(s) who are legal representatives of the company concerning public debts. In accordance with this, the manager(s) are responsible with their own properties for the debts which could not be collected from the legal entity of the company. Yet, it must be stated that the managers of the period during which the debts occurred are responsible for the debts. The last clause of the article no.35 of the same law dictates that “the responsibilities defined in the Tax Procedure Law no. 213 about the responsibilities of the legal representatives do not replace the responsibility/liability which has been defined through this law.” Yet, this ruling was removed by the Court of Constitution.
In accordance with the article no. 10/2 of the Tax Procedure Law, the manager(s) who are legal representatives are responsible/liable for the uncollected taxes and the consequent public debts with their own properties.
D. The Responsibilities of Partners Concerning the Public Debts of the Company
The article no. 35 of Law on the Procedure for the Collection of Public Receivables No. 6183 regulates the responsibilities/liabilities of the partners. In accordance with this article, the partners of the company are directly responsible for the uncollected public debts of the company. If one of the partners transfers his/her shares to another partner, both partners will be responsible for the debt which has occurred before the transfer. If the people who hold the shares at the time of the first occurrence of the debt and the debt’s due date are different, they will be responsible for the debt all the same. The ruling no. 2011/9722E.-2013/12168, dated 11.06.2013 of the Legal Chamber of the Supreme Court is as follows:
The defendant has transferred a big part of the partnership of the company, which is out of the reach of the extent of the lawsuit, to the claimant and the rest of the partnership to the person who is out of the reach of the extents of the lawsuit. Yet, no liabilities related to the article no. 35 of Law on the Procedure for the Collection of Public Receivables were presented and the defendant has made the transfer with all the rights and debts entitled to the partnership. In other words, concerning the transfer contract, the defendant did not make himself/herself subject to any liabilities for the private and/or public debts which may occur until the date of the transfer…Even though the defendant still needs to answer for the debts of the limited company to the administration, there were no conditions on the contract which would make him/her liable for the debts of the company in presence of the claimant and, because of all this, it was not seen fit to issue a written ruling and the verdict needed to be cancelled”
According to the verdict of the Supreme Court, the transfer was made with all the rights and debts/obligations which were entitled to the transferred share. The contract did not include any specifically defined conditions about the public debts which have occurred until the date of the transfer. Such conditions must be carefully defined when contracts about the transfer of the shares of limited companies are being established. Yet, the article no.35/2 of the Law on the Procedure for the Collection of Public Receivables dictates that the partner who has made the transfer is still liable for the public debts in terms of administration.
The partners of limited companies who are not managers or who do not have the authority of legal representation are liable for the Social Security Institution debts in accordance with the amount of their shares.
Likewise, they are responsible for the taxes proportionately with the amount of their shares, as dictated by the Tax Procedure Law.
It must be stated that there are no defined procedures concerning the order of inquiries to be made for the uncollected debts. The verdict of the State Council, published on the official gazette on 20 June 2019, no. 013/1 E.- 2018/1 K. dictates that “there is no need to start the inquiries about the uncollected debts with the legal representatives.” (there is no defined numerical order which defines where the inquiries should start, as long as they are carried out properly)
E. The Liability of the Branch Manager
The ruling of the supreme court dictates that the branch manager who has the authority to represent, give orders and appoint and who is liable for taking care of the administrative and financial dealings , including the authority to carry out the payment of the insurance premiums, of the company is responsible for the premium debts which have occurred during his/her own term. The article no. 371/1 of the Turkish Trade Act dictates that “those who have the authority to represent the company are able to carry out all the processes related to the company the name of the company,” and the clause no. 3 of the same article dictates that “the authority to represent can be limited to a centre or a branch.” According to the precedents of the supreme court, for the branch manager to be liable for the debt, the branch manager has to have the authority to make payments and represent the company in administrative and financial dealings and the debt has to belong to the branch which is under the control of the branch manager. Likewise, according to the verdicts, it is possible for the employer to give the above-mentioned authority to the branch manager through a deed of trust without a registry to the commercial registries. It is crucial for the determination of the extent of the liability to determine the source of the debt, the existence of the authority and the reach of the authority. It must be known that the branch manager is connected to the employer through a labour contract and the expiry of this contract does not affect the title of the branch manager. There must be records and a letter of resignment belonging to the branch manager for the duties of the branch manager to end. The announcement of the end of this authority, which leads to liability, should not yield any adverse results for the branch manager. The assembly of civil chambers of the supreme court has stated through one of its verdicts that “The announcement of the expiry/end of the authority to represent in the registration gazette is an act which aims to inform the third parties and does not have the goal of attributing a legal validity to the matter. Thus, it is an informative process, not a constitutive one.
1. SEZGİN, Bülent, Limited Şirket Müdür Ve Ortaklarının Şirket Amme Borçlarının Ödenmesine İlişkin Sorumlulukları, Mali Çözüm ,Sayı: 99 – 2010 (The Liabilities of the Managers and the Partners of the Limited Companies for the Payment of the Public Receivables/Debts)
2. Anayasa Mahkemesi 19.03.2015 tarih, 2014/144 E. 2015/29 K. sayılı kararı (Verdict No 2014/144 E.2015/29 K of the Constitutional COurt on 19.03.2015)
3. BİLİCİ, Abdullah, Kanuni Temsilcilerin Amme Borçlarından Sorumluluğu, Nisan, 2019 (The Liability of Legal Representatives for The Public Receivables/Debts)
4. SİLAHŞÖR, Mert, Anonim Şirket Yönetim Kurulu Üyelerinin Kamu Alacağı Sorumluluğu, TFM, 2016/1 (The Liability of the Members of the Board of Management for the Payment of Debts to the Public)
5. PULAŞLI, Hasan, 2011, 6102 sayılı Türk Ticaret Kanununa Göre Şirketler Hukuku Şerhi, Ankara, Adalet Kitapçılık. (Annotation for the Company Law in Accordance with the Turkish Trade Act no. 6102)
7. https://www.ozdogrular.com/ Şirket Müdürlerinin SGK Borçlarından Sorumluluk Sınırları, DEMİR, Vakkas, Yaklaşım / Ocak 2016 / Sayı: 277
8. https://gun.av.tr/tr/goruslerimiz/makaleler/temsil-yetkisi-olmayan-yonetim-kurulu-uyelerinin -sgk-borclarindan-sorumlulugu
9. https://tokkder.org/tokkder-dergi/3810/Anonim Şirketlerde Yönetim Kurulu Üyelerinin Sorumluluğu/Av. Duygu Turgut
12. Özkan Uzel, İflas Ertelemenin Yürürlükten Kaldırılması Ve Konkordato Süreci.
( The Removal of the Postponement of Bankruptcy and the Process of Concordatum )