Directors' Duties and Personal Liability in a Turkish Company: A Foreign Director's Guide

Yes — a director of a Turkish company can be held personally liable, from their own assets, in defined situations, including for the company's own unpaid taxes and social-security premiums. That is the part foreign directors most often miss. Being a director is not the same as owning shares, and the difference matters most when something goes wrong: a shareholder's risk is normally capped at the capital they put in, while a director's is not. For a foreign director who signs a board resolution in Türkiye (Turkey) without fully reading the machinery behind it, that exposure is an unwelcome surprise. This guide explains, in plain terms, what duties a director of a Turkish joint-stock or limited liability company actually owes, the situations in which personal liability is triggered, why unpaid public debt is the trap foreigners most often miss, and the concrete steps that keep a director on the safe side of the line. It is a general guide, not advice on a specific board seat — but it will tell you the right questions to ask before you accept one.

Are directors personally liable in a Turkish company?

The short answer is yes — in defined situations. A Turkish company is a separate legal person, and the general rule is that its debts are its own. Shareholders are not usually liable for company debts beyond their unpaid capital. Directors are different. A director manages the company, and Turkish law attaches personal responsibility to how that management is carried out. If a director breaches a legal duty and the company, its shareholders or its creditors suffer loss as a result, the director can be ordered to compensate that loss from their own pocket.

Who counts as a "director" depends on the company type, and the terminology trips up newcomers:

• In a joint-stock company (anonim şirket, or A.Ş.), the company is run by a board of directors (yönetim kurulu). Board members carry the management duties and the liability that comes with them.
• In a limited liability company (limited şirket, or Ltd. Şti.), the company is run by one or more managers (müdür). A manager carries duties and liability broadly equivalent to a board member's.

If you are still deciding which vehicle to use, the choice affects your exposure, and our comparison of company forms in Türkiye and our company formation team cover it. What follows applies to both roles; where the difference matters, it is flagged.

What duties does a director actually owe?

Turkish company law asks a director to manage the company with care and in its interest — not their own. Two duties sit at the centre of that, and most personal-liability claims trace back to a breach of one of them.

The duty of care and loyalty requires a director to act as a prudent manager would, giving the company's interests priority over their personal interests. A director who takes a reckless decision, ignores obvious warning signs, or puts a private gain ahead of the company can be said to have breached this duty. Around it sit several more specific obligations:

The last row of that table — reacting to financial distress — is the one directors under-appreciate. When a company loses a large part of its capital or slides toward insolvency, the Code imposes specific duties on the board; failing to act at the right moment is a classic route to a liability claim from creditors.

When does a director become personally liable?

Personal liability is not automatic — it is triggered by particular failures. It helps to think of a director's exposure in four distinct buckets, because the legal basis and the person who can sue are different in each.

The first bucket is the general one and the second is the one foreigners most often overlook — both are unpacked in the next two sections. The third is narrower but serious: certain acts done in the company's name can expose the responsible manager to personal criminal consequences, which we cover separately in our guide to director criminal liability in Türkiye. The fourth is a reminder that sector rules — employment, competition, KVKKKVKKPersonal Data Protection Law No. 6698Türkiye's data protection statute — the rules on collecting, storing and transferring personal data, and the authority that enforces them.Glossary → data protection — carry their own director-facing penalties on top of company law.

The biggest trap: personal liability for the company's unpaid taxes and SGK

This is the single most important thing a foreign director should understand, because it turns a company debt into a personal one. Under Turkish law, a company's legal representatives (kanuni temsilci) — typically the representation-authorised board member(s) of a joint-stock company, or the managers of a limited liability company — can be held personally responsible for the company's public debts when those debts cannot be collected from the company itself. "Public debts" here means chiefly the company's unpaid taxes and its unpaid social-security (SGK) premiums for staff.

The mechanism is blunt. If the tax office or the social-security institution cannot recover what the company owes from the company's own assets, it can pursue the legal representative and collect from their personal assets. For a limited liability company there is an additional layer: shareholders can also be pursued for public debts in proportion to their shareholding. This is why a "limited" company is not as watertight as the name suggests when the debt owed is to the State.

Two practical takeaways follow. First, a foreign director should insist on genuine visibility over whether the company is actually paying its taxes and SGK premiums — not assume it. Second, the moment a company shows signs of not paying the State, that is a red flag for every director, not just the finance one.

Civil liability under the Commercial Code, and the defences

Alongside public debt, the Commercial Code's own liability regime lets the company, a shareholder or a creditor sue a director who breached a duty and caused loss. A shareholder or creditor generally claims for the loss suffered by the company (with recovery flowing to the company), while direct losses can be claimed directly. Liability among several directors is assessed according to each one's fault and role, rather than being shared equally by default.

Crucially, the standard is fault-based, and that is where a careful director's defences live:

• No breach and no fault. A director who managed prudently, informed themselves properly and acted in the company's interest has a strong answer to a claim — a reasonable business decision that later turns out badly is not, by itself, a breach.
• Recorded dissent. A board member who disagreed with a decision and had their objection minuted is in a far better position than one who stayed silent. Silence reads as consent.
• Division of responsibility. Where management functions have been properly and lawfully delegated, liability tends to follow the person actually responsible for the failed function — which is why board roles and delegations should be documented.

Structuring these roles, delegations and protections is core corporate work; our corporate and M&A practice sets them up for foreign-owned boards, and our US Desk coordinates it for US-based directors and parent companies.

How does criminal exposure fit in?

Most director risk in Türkiye is civil or public-debt in nature, but some acts carry personal criminal consequences for the manager responsible — and these cannot be settled simply by the company paying money. The clearest everyday example is a bounced company cheque: issuing a company cheque that is not honoured for lack of funds can expose the authorised signatory to a judicial penalty, not just a civil debt. Tax offences, breaches of certain regulatory duties, and failures to comply with specific statutory obligations can likewise land on the responsible individual.

The key point for a foreign director is that criminal responsibility is personal: it follows the natural person who committed or authorised the act, and it is not extinguished by the company reimbursing the loss. Because the analysis is offence-specific, we treat it fully in a dedicated guide to director criminal liability in Türkiye. The practical instruction here is simple: know which documents you are authorised to sign, and never sign an instrument — a cheque, a tax declaration, a regulatory filing — whose accuracy you cannot stand behind.

How can a foreign director limit personal liability?

You cannot contract your way out of every duty, but you can manage your exposure sensibly. The difference between a director who is caught out and one who is not is usually preparation, records and timely action. The essentials:

Before accepting a board seat in a company you are also investing in, it is worth aligning your protections with the deal itself — vetoes, information rights and indemnities often sit in the shareholders' agreement, and the whole structure should be set up correctly from the start, as covered in our guide to setting up a company in Türkiye. Our corporate team advises foreign directors on their duties and exposure, and the US Desk handles US-based board members and parent companies end to end.

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