A limited liability company is a type of company based on legal personality and capital, in which the shareholders are, as a general rule, not personally liable for the company’s debts. However, particularly with regard to public receivables, the Law No. 6183 on the Procedure for the Collection of Public Receivables introduces a special liability regime that departs from the general liability framework established under the Turkish Commercial Code.

Therefore, when examining the liability of shareholders of a limited liability company for the company’s debts, it is necessary to consider not only the provisions of the Turkish Commercial Code No. 6102 concerning limited liability companies, but also, together, the provisions of Law No. 6183 governing shareholders’ liability for public receivables. This study examines the distinction between private-law debts and public receivables; the conditions required for shareholders’ liability to arise under Article 35 of Law No. 6183; the scope of such liability; liability in the event of a transfer of shares; cases where the shareholder and the legal representative are the same person; liability in companies whose legal personality has been terminated; and the shareholders’ right of recourse.

1. The Concept of Public Receivables

One of the significant exceptions to the general rule that shareholders of a limited liability company are not personally liable for the company’s debts concerns public receivables. Article 3 of Law No. 6183 defines the concepts of “public receivable” and “public debtor.”

Accordingly, a public receivable includes primary and ancillary receivables such as taxes, duties, fees, tax and administrative fines, late payment surcharges, and interest owed to the State, special provincial administrations, and municipalities, as well as other receivables that are stipulated by law to be collected pursuant to the provisions of Law No. 6183. The term “public debtor,” on the other hand, refers to natural and legal persons who are obliged to pay the public receivable, as well as legal representatives, heirs, taxpayers, tax liable persons, guarantors, and representatives of foreign persons and entities.

2. Liability for Public Debts

The primary legal basis for the personal liability of shareholders of a limited liability company for the company’s public debts is Article 35 of Law No. 6183. Pursuant to this provision, the shareholders of a limited liability company are directly liable, in proportion to their respective capital shares, for public receivables that cannot be collected, in whole or in part, from the company or that are deemed unlikely to be collected from the company.

This liability does not arise automatically and unconditionally at the time the company’s public debt is incurred. First, it must be established whether the public receivable can be collected from the company as a legal entity. The shareholder may then be held liable for the portion of the public receivable that cannot be collected from the company or that is determined to be uncollectible.

As a general rule, a shareholder is not liable for the entirety of the public debt that cannot be collected from the company, but only for the portion corresponding to the shareholder’s capital share. However, joint and several liability may arise in cases specifically regulated under the Law, such as the transfer of shares or situations where different persons were shareholders at the time the public receivable arose and became due.

The liability arising from the status of a shareholder must be distinguished from the liability of a legal representative. The shareholder’s liability is based on Article 35 of Law No. 6183, whereas the liability of a legal representative is, as a general rule, based on duplicate Article 35 of the same Law and, in respect of tax receivables, Article 10 of the Tax Procedure Law. Therefore, determining whether a person is solely a shareholder, solely a legal representative, or holds both statuses simultaneously is important in terms of determining the applicable liability regime.

3. Collection of Public Receivables and Recourse Against the Shareholder

For a public debt of a limited liability company to be collected from a shareholder, it is not necessary to separately establish the shareholder’s liability by means of a notice of assessment. Provided that the statutory conditions are met, a payment order may be issued directly in the shareholder’s name and duly served. However, this requires, first and foremost, that the enforcement proceedings against the company be properly conducted and that it be established that collection from the company is not possible.

Therefore, it is essential that the notices and payment orders issued in the company’s name be duly served, that the public receivable become final and enforceable against the company, and that it subsequently be established that the receivable cannot be collected from the company’s assets or that collection is unlikely to be possible.

With regard to shareholders’ liability, whether the shareholder has fully or partially paid the capital contribution does not, in itself, constitute a sufficient basis for excluding liability. The decisive factor in determining liability is the fulfillment of the conditions stipulated under Article 35 of Law No. 6183.

4. Conditions for Liability

4.1. The Public Receivable Must Not Be Time-Barred

The limitation periods applicable to the assessment and collection of public receivables are also relevant to the possibility of pursuing the shareholder’s liability. The public receivable must be duly finalized and collected within the applicable statutory limitation periods.

If the public receivable owed by the company has become time-barred and there is no lawful act or proceeding that suspends or interrupts the limitation period, pursuing the shareholders for the collection of such debt may likewise become unlawful.

The Council of State has also held in various decisions that, when examining a shareholder’s liability, the period in which the public receivable arose, the shareholder’s capital share during that period, the possibility of collecting the receivable from the company, and the issue of limitation must be assessed together.

4.2. The Public Receivable Must Have Been Duly Finalized in the Name of the Company

In order to pursue the shareholder’s liability, the public receivable must first be duly finalized against the company. Compliance with the statutory procedures at the stages of assessment, service of notice, accrual, and collection is of fundamental importance in this regard.

If it is established that the notice of assessment or payment order issued in the name of the company was not duly served, this may lead to the conclusion that the enforcement proceedings against the company were not legally completed. In such a case, the lawfulness of the payment order issued in the shareholder’s name would likewise become subject to challenge.

In its decisions, the Council of State has held that, where it cannot be concretely established that the payment orders issued in the name of the principal debtor company were duly served and became final, the payment orders issued in the shareholder’s name may be deemed unlawful.

4.3. The Receivable Cannot Be Collected, in Whole or in Part, from the Company, or It Is Evident That It Cannot Be Collected

One of the fundamental conditions for a shareholder’s liability to arise under Article 35 of Law No. 6183 is that the finalized public receivable cannot be collected, in whole or in part, from the company, or that it becomes apparent that such receivable cannot be collected from the company.

Article 3 of Law No. 6183 defines the concepts of “public receivable that cannot be collected” and “public receivable that is deemed uncollectible.” A public receivable that cannot be collected refers to a receivable that remains uncollected due to reasons such as the absence of any attachable assets as a result of an asset investigation, or the proceeds from the sale of attached assets being insufficient to cover the public receivable. A public receivable that is deemed uncollectible, on the other hand, refers to a receivable that is determined to be uncollectible at any stage of the enforcement proceedings.

There is an important distinction between these two situations. In order to establish that a receivable cannot be collected, in whole or in part, it must be demonstrated that the compulsory enforcement proceedings have been unsuccessful. By contrast, it is not necessary in every case to exhaust all available enforcement remedies in order to establish that the receivable is unlikely to be collected. However, the administration must demonstrate, through concrete and legally valid evidence, that collection from the company is not possible.

Therefore, the mere fact that the company has failed to pay its debt is not, in every case, sufficient to establish the shareholder’s liability. The company’s assets, the enforcement proceedings undertaken, and the possibility of collection must be assessed in light of the circumstances of the specific case.

4.4. Liability in Proportion to the Shareholder’s Capital Interest

The fundamental criterion governing the liability of a shareholder of a limited liability company under Article 35 of Law No. 6183 is the shareholder’s capital interest. The shareholder is personally liable for the portion of the public receivable that cannot be collected from the company and corresponds to the shareholder’s capital interest.

Here, a distinction must be made between “liability in proportion to the capital interest” and “liability with personal assets.” The amount of the shareholder’s liability is limited to the proportion corresponding to the shareholder’s capital interest; however, liability for this amount may have consequences for the shareholder’s personal assets. Accordingly, the liability is limited in terms of amount, but personal in terms of enforcement.

Where the shareholder also acts as the company’s legal representative, the basis and scope of liability must be assessed separately. Particularly with regard to tax receivables, it is important to determine in which capacity Article 10 of the Tax Procedure Law and Articles 35 and duplicate Article 35 of Law No. 6183 are applicable.

4.5. Strict Liability

Article 35 of Law No. 6183 does not impose any additional requirement of fault for shareholders’ liability, apart from the public receivable being uncollectible, in whole or in part, from the company or being deemed uncollectible, and the person holding the status of a shareholder.

Therefore, the liability of shareholders under Article 35 is in the nature of strict liability. As a general rule, whether the shareholder was at fault, acted intentionally, or was negligent in the incurrence of the company’s debt or in the failure to collect such debt is not determinative of the shareholder’s liability. The underlying reason is that shareholder status, in itself, does not entail the authority or obligation to fulfill the company’s tax and administrative duties.

4.6. Personal Liability

The phrase “shall be directly liable” used in Article 35 of Law No. 6183 indicates that shareholders may be pursued against with their personal assets.

In the case of a shareholder who is a natural person, the liability may extend to the shareholder’s entire personal assets, subject to the limitation of the amount corresponding to the shareholder’s capital interest. Where the shareholder is a legal entity, the liability applies to the assets of the legal entity holding the status of shareholder.

However, where a limited liability company is a shareholder of another limited liability company, the shareholders of the shareholder company cannot, merely by virtue of an indirect shareholding relationship, be held directly liable for the public debt of the principal debtor company. As a general rule, liability is attached to the status of being a direct shareholder.

5. Liability in the Event of a Transfer of Shares

Article 35 of Law No. 6183 contains a specific liability provision concerning the transfer of shares. Accordingly, the transferor and transferee shareholders are jointly and severally liable for the payment of public receivables pertaining to periods preceding the transfer.

The purpose of this provision is to prevent changes in the shareholding structure from making it more difficult to collect public receivables. Accordingly, the transfer of a share does not, by itself, automatically extinguish the transferor shareholder’s liability for public debts pertaining to periods preceding the transfer.

As to the date on which the transfer of a share takes legal effect, the provisions of the Turkish Commercial Code concerning the transfer of shares must be considered together with the relevant provisions of tax legislation. Under the applicable tax legislation, where the articles of association require the approval of the general assembly, the date of such approval is taken as the relevant date; where no such approval is required, the date of the notarized share transfer agreement is taken as the relevant date.

5.1. Different Persons Being Shareholders on the Date the Public Receivable Arose and on the Date It Became Due

Article 35 of Law No. 6183 also specifically regulates situations where the shareholders of the company are different persons on the dates when the public receivable arose and became due. In such cases, the persons who were shareholders during the relevant periods may be held jointly and severally liable for the payment of the public receivable, subject to the conditions prescribed by law.

This provision requires shareholder status to be assessed separately with regard to the dates on which the public receivable arose and became due. Accordingly, liability should not be determined solely on the basis of the shareholding structure existing on the date of enforcement.

5.2. Where the Shareholder Is Also the Legal Representative

Where a shareholder of a limited liability company is also a company manager or legal representative, the liability regimes arising from the shareholder and legal representative capacities must be distinguished from one another.

Liability arising from shareholder status under Article 35 of Law No. 6183 is limited to the proportion corresponding to the shareholder’s capital interest, whereas, with regard to the liability of a legal representative, duplicate Article 35 of Law No. 6183 and, in respect of tax receivables, Article 10 of the Tax Procedure Law become applicable. Therefore, where the same person holds both statuses, it is necessary to separately determine the applicable legal provision and the scope of liability.

Vergi alacakları bakımından, kanuni temsilcilik sıfatının ayrıca değerlendirilmesi ve VUK’un 10. maddesinin özel düzenleme niteliğinin dikkate alınması gerekir. Dolayısıyla “ortak” sıfatı ile “kanuni temsilci” sıfatının aynı kişide birleşmesi, her iki sorumluluğun otomatik olarak aynı kapsamda uygulanacağı anlamına gelmez.

5.3. Liability in Respect of Companies Whose Legal Personality Has Terminated

The liquidation and deletion of a limited liability company from the trade registry, resulting in the termination of its legal personality, gives rise to significant issues concerning the possibility of initiating or continuing compulsory enforcement proceedings against the company.

Particularly with regard to the collection from shareholders or legal representatives of public receivables that arise after the company’s legal personality has terminated or that had not been duly finalized before the termination of its legal personality, it is important to determine how the requirements for initiating enforcement proceedings against the company and duly finalizing the debt should be applied.

The absence of an explicit provision in the Law on the Procedure for the Collection of Public Receivables concerning liquidated limited liability companies that have been deleted from the trade registry has led to differing approaches in practice and judicial decisions. While some decisions have held that the shareholders’ liability arising under Article 35 continues even after the company’s legal personality has terminated, other decisions have considered factors such as whether a notice of assessment was issued and duly served before the company’s legal personality terminated to be significant.

Therefore, in each specific case, it is necessary to assess together when the company was liquidated and deleted from the trade registry, when the public receivable arose, which actions were taken in the name of the company before the termination of its legal personality, and whether the debt was duly finalized. Where necessary, the restoration and re-registration of the company may also be considered.

6. Shareholders’ Right of Recourse

Law No. 6183 does not contain an express provision specifically regulating the right of recourse of shareholders who have paid the company’s public debt, unlike the provisions applicable to legal representatives. Nevertheless, where a shareholder makes a payment exceeding the amount corresponding to their own capital interest, whether the shareholder may seek recourse, with respect to the excess amount paid, against other liable persons or, depending on the circumstances of the specific case, against the company must be assessed within the framework of private-law provisions.

At this point, a distinction must be made between the collection of the public receivable by the administration and the internal relationship among the shareholders. While the enforcement action pursued by the public administration against the shareholder arises from Law No. 6183, any recourse claim that the shareholder may assert against the company or other shareholders as a result of the payment made may be based on the provisions of private law.

Furthermore, where shareholders suffer losses as a result of the wrongful conduct of the company manager, the provisions of the Turkish Commercial Code concerning the liability of managers may also become applicable.

7. Differences Between the Liability of Shareholders and the Liability of Legal Representatives

The liability of a limited liability company shareholder and that of a legal representative for public debts are not based on the same legal grounds and do not have the same scope.

The liability of a shareholder under Article 35 of Law No. 6183 is, as a general rule, proportionate to the shareholder’s capital interest and is in the nature of strict liability. The liability of a legal representative, on the other hand, is connected to the performance of the legal representative’s duties and is determined in accordance with the specific provisions applicable to the relevant receivable. In particular, the element of fault is significant with respect to liability arising from the failure to duly perform the duties of legal representation.

Therefore, while the entire amount of a public receivable that cannot be collected from the company may, in principle, be sought from the legal representative, in the case of a shareholder, the liability is generally limited to the amount corresponding to the shareholder’s capital interest. However, where a person is both a shareholder and a legal representative, it must be clearly established in which capacity and pursuant to which statutory provision that person is being pursued.

8. Conclusion

The principle that shareholders of a limited liability company are not personally liable for the company’s debts is one of the fundamental characteristics of the limited liability company structure. However, this principle is not absolute with regard to public receivables. Article 35 of Law No. 6183 allows shareholders of a limited liability company to be held personally liable, provided that certain conditions are met, for public receivables that cannot be collected from the company or that are deemed unlikely to be collected from the company.

For this liability to arise, the public receivable must first have been duly finalized against the company, and it must be established that the receivable cannot be collected, in whole or in part, from the company or that it is unlikely to be collected from the company. Accordingly, the mere fact that the company has failed to pay its debt is not, in every case, sufficient to directly pursue the shareholder. The enforcement proceedings conducted against the company and the possibility of collection must be established in light of the circumstances of the specific case.

As a general rule, the amount of a shareholder’s liability is limited to the proportion corresponding to the shareholder’s capital interest; however, liability for that amount may be enforced against the shareholder’s personal assets. Furthermore, since Law No. 6183 contains specific provisions concerning the transfer of shares and changes in the shareholding structure, the determination of liability requires consideration not only of the shareholding structure existing on the date of enforcement, but also of the shareholding status on the dates when the public receivable arose and became due.

Furthermore, where the shareholder and the legal representative are the same person, the applicable liability regime must be determined separately. Article 35 and duplicate Article 35 of Law No. 6183, as well as Article 10 of the Tax Procedure Law with regard to tax receivables, establish liability regimes based on different legal capacities. Therefore, the fact that a person is both a shareholder and a legal representative does not, in itself, determine which provision applies; rather, the nature of the public receivable, the capacity held by the person during the relevant period, and the applicable specific legal provisions must be assessed together.

With regard to limited liability companies whose legal personality has terminated, particular importance must be attached to how the requirements for finalizing the debt in the name of the company and pursuing enforcement proceedings against the company are to be applied. The fact that the provisions of the Law on the Procedure for the Collection of Public Receivables do not expressly address every specific situation in this regard may lead to differing judicial approaches. Therefore, the dates of the company’s liquidation and deletion from the trade registry must be assessed together with the dates on which the public receivable arose, was finalized, and became subject to enforcement.

In conclusion, the liability of shareholders of limited liability companies for public debts constitutes a specific exception, under public law, to the principle of limited liability established under the Turkish Commercial Code. Therefore, when assessing the liability of a shareholder of a limited liability company, it is not sufficient to rely solely on the general principle that “a shareholder of a limited liability company is not liable for the company’s debts.” It is necessary to examine, collectively, whether the debt qualifies as a public receivable, whether it has been duly finalized against the company, whether collection from the company is possible, the shareholder’s capital interest and legal capacity on the relevant dates, whether there has been a transfer of shares or a change in the shareholding structure, and whether the person also acts as the company’s legal representative.

In this respect, Article 35 of Law No. 6183 constitutes not merely a provision governing liability for shareholders of limited liability companies, but rather a specific legal regime determining the legal consequences of shareholder status in relation to public receivables. In particular, where there is a change in the shareholding structure, a transfer of shares, the liquidation of the company, or a situation in which the shareholder also acts as the legal representative, it is of great importance to determine the scope of liability by taking into account all the circumstances of the specific case.

Author / Attorney-at-Law Simge KÜÇÜK