Corporate governance and directors' duties in Turkey: overview

A Q&A guide to corporate governance law in Turkey.

The Q&A gives a high level overview of board composition, the comply or explain approach, management rules and authority, directors’ duties and liabilities, transactions with directors and conflicts, company meetings, internal controls, accounts and audit, institutional investors and reform proposals.

To compare answers across multiple jurisdictions, visit the Corporate Governance Country Q&A tool.

The Q&A is part of the global guide to corporate governance law. For a full list of jurisdictional Q&As visit

Şafak Herdem and Zuhal Uysal, Herdem Attorneys at Law

Corporate governance trends

1. What are the main recent corporate governance trends and reform proposals in your jurisdiction?

The Capital Markets Board is the regulatory authority to make legislation and enforce corporate governance principles. Due to increasing competition in the Turkish capital market corporate governance is getting significant, especially in facilitating the exercise of shareholders' statutory rights, disclosure publication, and transparency. Non-governmental organisations (NGOs) in daily business life are putting pressure on parliament to make a law on data protection and governance, however the draft law has been pending to be passed since 2011.


Corporate entities

2. What are the main forms of corporate entity used in your jurisdiction?

The main forms of corporate entity are (Article 124, Turkish Commercial Code numbered 6102):

  • Limited liability company. This must be founded by at least one individual or entity with a minimum capital requirement of TLR10,000.

  • Joint stock company. This must be founded by at least one shareholder with a minimum capital requirement of TLR100,000. The shareholders are responsible only to the extent of their shareholding in the company (Article 329, Commercial Code).

  • Collective company. In a collective company, each shareholder has the right to manage and appoint one or more partners to manage the company in accordance with the articles of association or by majority verdict (Article 218, Commercial Code). Shareholders are personally liable (including their private assets) for all company debts and liabilities.

The most common forms of corporate entity in Turkey are limited liability companies and joint stock companies. The answers below relate mainly to joint stock companies.


Legal framework

3. Outline the main corporate governance legislation and authorities that enforce it. How influential are institutional investors and other shareholder groups in monitoring and enforcing good corporate governance? List any such groups with significant influence in this area.

Corporate governance is regulated by the Turkish Commercial Code numbered 6102 which was introduced in July 2012 and binds all companies.

The Commercial Code contains all the provisions relating to the regulation of all aspects of corporate and commercial law. This includes:

  • Board composition.

  • Appointment of board of directors.

  • Duties and authority of the board.

  • Limitation and duration of the board.

  • Dismissal of the board.

  • Representation and management.

  • Delegation of authority.

  • General Assembly.

  • Resolutions.

  • Call procedure for meetings.

  • Committees.

  • Remuneration.

  • Audit.

  • Risk.

In addition the Capital Markets Board ( established by the Capital Markets Law numbered 2499, regulates publicly held joint stock companies in accordance with the corporate governance principle of "comply and explain". The Capital Markets Board is the financial regulatory and supervisory authority. It is responsible for safeguarding the stability of the financial market, consumer protection and supervising participants in the stock market.

Companies must submit all relevant documents for registration at the Turkish Trade Registry Offices ( Companies should apply to the Trade Registry Office in the province where the company is to be established. Company registrations and participations are announced to third parties via the Turkish Commercial Registration Newspaper by the Trade Registry Offices in Ankara.

An institutional investor is a large entity with access to a substantial pool of funds from a large number of contributors. It includes organisations such as:

  • Investment banks.

  • Brokerage houses.

  • Mutual funds.

  • Insurance companies.

  • College endowment funds.

  • Pension funds.

  • Hedge funds.

When the organisations invest in companies, they become shareholders of the company invested in and can have an influence on corporate governance in their capacity as shareholders, since their aim is to maximise profits for their funds and increase the value of the company's shares. It encourages a more disciplined and focused approach on the long term sustainability of the business.

4. Has your jurisdiction adopted a corporate governance code?

The Commercial Code contains all the provisions relating to the regulation of all aspects of corporate and commercial law such as board composition, committees, remuneration, auditing and risk.

The company must register the following information with the Trade Registry Office:

  • Formation.

  • Notarised company name.

  • Annual reports.

  • Board meeting reports.

  • General Assembly meeting reports.

  • Article of associations.

There are several provisions relating to non-compliance with the Commercial Code (Articles 202, 361, 375, 397,400, 427, 428, 430, 450, 479, and 1, 529). Consequences can range from simple fines to a prison sentence, for example, for deliberate failure to submit corporate records to the auditors.

There are also Corporate Governance Principles, drafted by the Capital Markets Board and amended in 2005. These apply to publicly held companies and are based on a "comply and explain" approach. Public companies must:

  • Apply both the Corporate Governance Principles and the Commercial Code.

  • Establish a corporate governance committee to monitor the company's compliance with the Commercial Code.

  • Compile a corporate compliance report.


Corporate social responsibility and reporting

5. Is it common for companies to report on social, environmental and ethical issues? Highlight, where relevant, any legal requirements or non-binding guidance/best practice on corporate social responsibility.

Corporate social responsibility (CSR) is not a specified legal requirement in Turkish law. However, several companies have self-regulation integrated into their business model and engage in CRS projects outside the interests of the company.

These projects can relate to either their field of business or a completely different area. Companies generally use these social projects as an opportunity to strengthen their brand, profile and customer support. For example, projects relating to the environment and education have been run by:

  • Yapı kredi Bank.

  • Total Oil.

  • Opet Oil.

  • Turkcell.

  • Eti.


Board composition and restrictions

6. What is the management/board structure of a company?

A Turkish company (except for a joint stock company) is managed by directors. Joint stock companies are managed by a board of directors. Under Turkish law it is not specified whether it is a unitary or two-tiered board structure. Certain rights are reserved to the General Assembly of shareholders.

The board of directors can be composed of one individual or entity. Minority shareholders can be represented on the board but it is not mandatory to appoint board members from among shareholders. Where an entity is appointed as a board member, it must be represented by an individual. Limited liability companies can be established with up to 50 shareholders.


Generally, the board of directors manages a company (Article 365, Commercial Code).

Board members

The board is made up of a chairman and, where applicable, one or more other board members to be elected every year (Article 366, Commercial Code).

Employees' representation

Company employees do not have a right to board representation.

Number of directors or members

The board must consist of at least one member. There is no limit on the maximum number.

7. Are there any general restrictions or requirements on the identity of directors?


The chairman of the board and board members must have full capacity and be older than 18 years old (Article 359/3, Commercial Code).


There are no restrictions under Turkish law regarding the nationality of a director.


There are no requirements under Turkish law relating to the gender of directors or gender quotas.

8. Are non-executive, supervisory or independent directors recognised or required?


Non-executive or independent directors are recognised. The board has power in accordance with the company's bye-laws to authorise the appointment of one or more members of the board or a third party as an authorised manager of the company (Article 367, Commercial Code).

The authorised manager is not an independent director. Board members who have not been authorised to manage the company are considered non-executive directors of the company. By contrast, an authorised manager is fully liable for his actions as if he were a member of the board.

Board composition

There is no requirement to appoint independent directors unless it is a public company.


There is no legal requirement that non-executive or supervisory directors must be independent of the company.

The board of directors in joint stock companies and the directors in other types of company are fully responsible for managing and representing the company. Non-executive directors are only responsible for the specific tasks of their appointment.

9. Are the roles of individual board members restricted?

Under Turkish law, there is no restriction on the roles of an individual board member, for example, the chairman of the board can also be chief executive.

10. How are directors appointed and removed? Is shareholder approval required?

Appointment of directors

Directors can either be (Article 359/1, Commercial Code):

  • Elected by the General Assembly.

  • Appointed under the articles of association (for example, by the other shareholders).

Dismissal of directors

Directors can be dismissed by the General Assembly even if they were originally appointed under the articles of association (Article 364, Commercial Code). If there is a valid reason, a director can be dismissed at any time even if the dismissal is not on the agenda of the general meeting.

11. Are there any restrictions on a director's term of appointment?

Joint stock company directors can be appointed for a maximum of three years (Article 362, Commercial Code). If it is not otherwise agreed by the articles of association, directors can be re-appointed for successive terms.

There are no restrictions on the term of appointment for directors of limited liability companies.


Directors' remuneration

12. Do directors have to be employees of the company? Can shareholders inspect directors' service contracts?

Directors employed by the company

Directors can be employees, self-employed or shareholders of the company.

Shareholders' inspection

All shareholders have the right, in respect of the board of directors, to (Article 225, Commercial Code):

  • Inspect directors' service contracts.

  • Be informed about the company's business condition.

  • Examine the company's booking records or documents.

  • Be provided with an account statement that indicates the financial position of the company.

If there is a concern about the mismanagement of the company, a shareholder has the right to ask the General Assembly to appoint a private auditor to investigate the concerns.

13. Are directors allowed or required to own shares in the company?

The Commercial Code allows but does not require directors to own shares in the company.

14. How is directors' remuneration determined? Is its disclosure necessary? Is shareholder approval required?

Determination of directors' remuneration

Directors' remuneration must be determined under the articles of association or by the General Assembly (Article 394, Commercial Code).


All remuneration which is paid to board members, directors, managers and senior managers must be disclosed in an annual activity report (Article 516/c, Commercial Code). The details contained in the annual activity report are binding on the board although there is no requirement to register the report at the trade registry or disclose it in the Trade Registry Gazette.

Shareholder approval

The annual report must be presented by the board of directors to the General Assembly. The General Assembly consists of shareholders and decides whether to accept or reject the annual activity report (Article 408/d, Commercial Code).

General issues and trends

The structure and terms of directors' remuneration, including equity incentives are freely determined. There are no formal guidelines, however, in several recent cases, the courts have asked the Chamber of Commerce to provide details of the average, sector and company levels of remuneration. The remuneration of directors of public companies is subject to independent audit.


Management rules and authority

15. How is a company's internal management regulated? For example, what is the length of notice and quorum for board meetings, and the voting requirements to pass resolutions at them?

The Commercial Code does not provide any rules relating to the length and form of notice for board meetings although rules can be set out in the articles of association. In practice, if there are no specific rules, it is assumed notice will be given as soon as possible to facilitate the attendance of all board members at the meeting. In addition, the board is entitled to make bye-laws to regulate the company's internal management (Article 367, Commercial Code).

The quorum for board meetings of a joint stock company is the majority of the total number of members of the board (Article 390, Commercial Code).

Resolutions are passed by a majority of board members in attendance. For example, the quorum for a board of directors consisting of three members is two. Online board meetings and written resolutions are also possible. Online meetings must be permitted in the articles of association to be valid.

16. Can directors exercise all the powers of the company or are some powers reserved to the supervisory board (if any) or a general meeting? Can the powers of directors be restricted and are such restrictions enforceable against third parties?

Directors' powers

Directors can exercise power in respect of all matters which concern the business of the company and act in the name of the company (Article 371 and 623/3, Commercial Code). However, some powers are reserved to the General Assembly, such as:

  • Amendment of the articles of association.

  • Appointment and recall of board members.

  • Termination of the company.

  • Resolutions concerning financial statements.

  • Determination of profit shares.

  • Wholesale of company assets.


The powers of directors can be restricted by the General Assembly (for example, authority to conclude contracts on the company's behalf) or by the general meeting depending on the articles of association. As long as they are informed about the restrictions, these are enforceable against third parties.

17. Can the board delegate responsibility for specific issues to individual directors or a committee of directors? Is the board required to delegate some responsibilities, for example for audit, appointment or directors' remuneration?

The board can delegate responsibility for all or some management issues to individual directors or to a committee of directors (Article 367, Commercial Code).

The board of directors cannot delegate (Article 375, Commercial Code):

  • Corporate decisions.

  • Determination of management structure.

  • Arrangement of auditing.

  • Declaration of insolvency.

  • Execution of General Assembly resolutions.


Directors' duties and liabilities

18. What is the scope of a director's general duties and liability to the company, shareholders and third parties?

The general duties and liabilities of directors are set out in Article 375 of the Commercial Code.

The company is principally liable for infringements by board members, including tortious acts of board members or directors committed in the exercise of their duties. The company can seek an indemnity from negligent parties for any damages incurred.

Directors are liable to the company, to its shareholders and its creditors for breach of their legal and contractual responsibilities, unless they can prove an absence of fault. Where more than one board member is at fault, they are jointly and personally liable for any damage caused.

Where a director's powers are assigned to a new director, the assignee director is not liable for the previous personal acts of the assignor in terms of indemnification. Criminal liability is regulated by Article 562 of the Commercial Code. Suspects are prosecuted ex officio without a complaint having to be made.

19. Briefly outline the regulatory framework for theft, fraud, and bribery that can apply to directors.

Anyone who creates or contributes to the creation of any fraudulent or fictitious documents relating to the establishment of the company, capital increases or mergers and acquisitions, is liable (Article 549, Commercial Code) and can be sentenced to imprisonment from one to three years (Article 562, Commercial Code).

The Criminal Code also sets out the following offences.

Any person who illegally holds possession of property entrusted to him to be used for a certain purpose, or converts this property to his own or others' use beyond the object of seeking transfer of possession, or denies this transfer, can be punished with imprisonment from six months to two years and a fine, upon a complaint being made (Article 155, Criminal Code).

Embezzlement of property entrusted to a person under his control or responsibility, due to his office based on a professional, artisanship, trading or service relationship, can result in the offender being punished with imprisonment from one year to seven years, and a punitive fine up to 3,000 days. Article 247 of the Criminal Code defines embezzlement and fraud, stating that any public officer who embezzles or converts property entrusted to him or under his custody or control, to his own or another's use due to his office, can be punished with imprisonment from five years to 12 years. In case of:

  • Involvement in fraudulent acts with the intention of concealing the offence of embezzlement, the punishment is increased by one half.

  • Committing embezzlement with the intention to return the property after being used, the punishment can be reduced up to one half of the principal punishment.

Under Article 248 of the Criminal Code:

  • Two thirds of the punishment is reduced if the embezzled property is returned exactly as it is, or the damage is fully compensated before commencement of the investigation.

  • The punishment is reduced by one third if the embezzled property is returned exactly as it is, or the damage is fully compensated before commencement of prosecution.

  • One third of the punishment is cancelled if the offender shows sincere repentance before declaration of the final judgment.

Since the Criminal Code defines a bribe as a benefit illegally secured by a public officer in negotiation with a person to perform or not to perform a task beyond his responsibility, the sanctions for bribery in the Criminal Code do not apply to any persons other than public officers, which is a gap in the law.

20. Briefly outline the potential liability for directors under securities laws.

The Commercial Code regulates the board's criminal and civil liability for (Article 549/1, Commercial Code):

  • Forged, fraudulent and inaccurate documents regarding securities issues.

  • Declarations regarding securities issues.

  • Guarantees regarding securities issues.

Anyone who acts contrary to this rule can be sentenced to imprisonment from one to three years (Article 562, Commercial Code).

21. What is the scope of a director's duties and liability under insolvency laws?

If the company declares bankruptcy as a result of the board members' negligent or deliberate conduct, the company's creditors and shareholders can demand that the company is indemnified by the board members. If the bankruptcy administration (which is a public body) does not prosecute the case, the creditors and shareholders can proceed independently. In cases where reckless management has led to bankruptcy, board members can be sentenced to imprisonment from two months to one year (Article 162, Criminal Code).

22. Briefly outline the potential liability for directors under environment and health and safety laws.

The liability of board members for environmental offences such as pollution and waste disposal damage is governed by general liability principles. Board members are liable for the board's negligent acts. Regarding criminal liability, board members can be prosecuted for cases of pollution caused deliberately or through negligence.

In case of an industrial accident causing injury, the board of directors is responsible for damages. In respect of criminal liability and injury arising from an industrial accident caused by recklessness, board members can be prosecuted.

23. Briefly outline the potential liability for directors under anti-trust laws.

The board must consider the prohibition on anti-competitive acts such as price fixing, limiting production and supply, market sharing and bid-rigging. The prohibition on anti-competitive acts is set out in Article 54 of the Commercial Code. Members of a corporate body who act or fail to act in the name of the company can be fined or sentenced to imprisonment for two years (Article 63, Commercial Code).

24. Briefly outline any other liability that directors can incur under other specific laws.

The board's and directors' liability for cyber-crimes is not specifically regulated by the law. General liability principles apply.

Principally, the company is liable for its debts. Board members (but not shareholders) are jointly liable for failing to pay tax and social security premiums of a joint stock company.

In limited companies, directors are jointly and personally liable even if they are shareholders. A shareholder who is not also a director is liable, in proportion to his shareholding in the company.

25. Can a director's liability be restricted or limited? Is it possible for the company to indemnify a director against liabilities?

The liability of directors is limited to their negligent acts. A director cannot be held responsible if he does not act on behalf of the company and is not at fault.

It is possible for a company to obtain insurance against the board and directors' negligence. A director's powers can be transferred or limited, including the ability to bind the company.

26. Can a director obtain insurance against personal liability? If so, can the company pay the insurance premium?

A director can obtain insurance against personal civil liability. The company can pay the insurance premium. Where the potential damage insured against exceeds 25% of the company's capital, the company must announce the fact in a bulletin published by the:

  • Capital Markets Board for public companies.

  • Stock Market Exchange of Istanbul for listed companies whose common shares are traded on the exchange.

The corporate governance compliance report must consider this (Article 361, Commercial Code). The board of directors is responsible for the corporate governance report.

27. Can a third party (such as a parent company or controlling shareholder) be liable as a de facto director (even though such person has not been formally appointed as a director)?

Where a controlling shareholder or a parent company is a de facto director, he/it can be subject to criminal liability. He/it can also be liable for the company's public debts such as tax and social security premiums without formal appointment as a director.


Transactions with directors and conflicts

28. Are there general rules relating to conflicts of interest between a director and the company?

The general rules relating to conflicts of interest between a director and the company (Commercial Code):

  • Prohibit directors participating in the discussion of matters concerning their own interests (or the interests of their relatives) that conflict with the interests of the company (Article 393, Commercial Code).

  • Prohibit directors competing or dealing with the company for their own benefit (Articles 395 and 396, Commercial Code).

  • Require board members and third persons authorised to manage the company to maintain duties of care and loyalty (Article 369, Commercial Code).

29. Are there restrictions on particular transactions between a company and its directors?

A board member cannot engage in transactions with the company without the permission of the General Assembly. In addition, there are restrictions on particular transactions between a company and its directors (Article 395, Commercial Code). The company must not provide guarantees, loans, other forms of security, assume responsibility or take on the debts of any of these individuals or entities:

  • Board members.

  • Relatives of board members, as set out in Article 393 of the Commercial Code.

  • Partnerships of which a board member and/or his relatives are shareholders.

  • Equity companies in which a board member and/or his relatives hold a 20% shareholding.

30. Are there restrictions on the purchase or sale by a director of the shares and other securities of the company he is a director of?

There are no restrictions on the purchase or sale by a director of the shares and other securities of the company he is a director of.


Disclosure of information

31. Do directors have to disclose information about the company to shareholders, the public or regulatory bodies?

Board members and directors have a duty to keep corporate information confidential from third parties. However, they must disclose information about the company to public or regulatory bodies, or to shareholders at their request.


Shareholder rights

Company meetings

32. Does a company have to hold an annual shareholders' meeting? If so, when? What issues must be discussed and approved?

A company holds ordinary or, if necessary, extraordinary general meetings where shareholders exercise their voting rights on corporate matters. An ordinary general meeting is held within three months of the end of the company's accounting period. However, the Commercial Code does not impose any sanctions for failure to comply with this timetable.

The issues which must be discussed and approved in an ordinary general meeting include:

  • Appointment of the executive bodies.

  • Financial statements.

  • Annual reports of board of directors.

  • Use of profits.

  • Determination of dividends.

  • Release of board of directors.

  • Any other matter concerning the financial period.

33. What are the notice, quorum and voting requirements for holding meetings and passing resolutions?

An ordinary general meeting (shareholders' meeting) can be held within three months of the end of the financial period (Article 409, Commercial Code). The board of directors or liquidators (acting within the scope of their duties) can convene the shareholders for a general meeting. Shareholders with a minimum holding of 10% of the company's capital (or, in the case of public companies, 20%) can demand that the board of directors convene a general meeting.

Notice of the general meeting must be announced on the company website and in the Trade Registry Gazette at least two weeks beforehand. Notice must also be provided by registered letter to the shareholders listed in the share registry with a return receipt (Article 414, Commercial Code).

Quorum requirements are regulated by Article 418 and 421 of the Commercial Code. General meetings must be attended by shareholders with a minimum holding of 25% of the company's capital. Resolutions can generally be passed by a simple majority. Specific voting majorities are regulated by Article 421 of the Commercial Code.

34. Are specific voting majorities required by statute for certain corporate actions?

A simple majority is usually required for passing resolutions at general and board meetings. A specific voting majority is required for certain corporate actions. Resolutions to do the following must be unanimously approved in a general meeting (Article 421/2, Commercial Code):

  • To transfer the registered office to another jurisdiction.

  • To settle balance sheet losses that impose an obligation on the company.

For the following corporate actions, the consent of shareholders who hold at least 75% of the capital of the company is required (Article 421/3, Commercial Code):

  • Amendments to the area of operation.

  • The issue of preference shares.

  • Restrictions of assignment of registered shares.

The following resolutions can be passed at a general meeting of a publicly held company by simple majority (Article 421/5, Commercial Code):

  • Increases and decreases of share capital.

  • Mergers and acquisitions.

35. Can shareholders call a meeting or propose a specific resolution for a meeting? If so, what level of shareholding is required to do this?

Under Turkish law, shareholders cannot call for a meeting directly. However, they can demand that the board of directors call a general meeting.

A shareholder of a non-public company holding at least 10% of the shares, or of a public company holding at least 5% of the shares, can require the board of directors to call a general meeting. They must provide the reason for the request and the agenda.

If a general meeting has already been scheduled, shareholders can also propose a specific agenda for the meeting.

The articles of association can prescribe what level of shareholders has the right to call for a meeting (Article 411, Commercial Code).

Minority shareholder action

36. What action, if any, can a minority shareholder take if it believes the company is being mismanaged and what level of shareholding is required to do this?

In general, all shareholders of a company have the right to (Article 225, Commercial Code):

  • Be informed about the company's business condition.

  • Examine the company's booking records or documents.

  • Be provided with an account statement that indicates the financial position of the company.

If there is a growing concern about mismanagement of the company, a shareholder has the right to ask the General Assembly for a private auditor to investigate the concerns. If the General Assembly approves the request, the company or shareholder can apply to court for the appointment of an independent auditor. The independent auditor's report is essential evidence to determine responsibility for the condition of the company. Directors are appointed and dismissed by the General Assembly. If mismanagement is found, the responsible director can be dismissed by the General Assembly on the basis of the independent auditor's report (Article 207/438, Commercial Code).


Internal controls, accounts and audit

37. Are there any formal requirements or guidelines relating to the internal control of business risks?

There are formal legal requirements relating to the internal control of business risks. For companies whose shares are listed on the stock exchange, the board must set up an expert committee to run and develop a system:

  • For the early identification of matters which threaten the company's existence, development and continuity.

  • To apply the necessary measures and remedies.

  • To manage risks.

A similar committee must be set up for other types of company, if deemed necessary and if the board is notified in writing by the auditor. It must submit its first report at the end of the month following its constitution. In bi-monthly reports to the board, the committee must (Article 378, Commercial Code):

  • Evaluate the situation.

  • Indicate the dangers, if any.

  • Suggest remedies.

The report must also be sent to the auditor.

38. What are the responsibilities and potential liabilities of directors in relation to the company's accounts?

Under the Commercial Code, directors are generally liable for actions taken in respect of corporate governance (see Question 16). However, there is an internal legal mechanism available to release directors from this liability (Article 424, Commercial Code):

  • Financial statements, business transactions and the directors' report for the fiscal year must be voted on and either approved or disapproved by the general assembly. In the event of an approval, directors are released from liability. The company or its shareholders cannot bring a claim against directors in respect of approved matters.

  • If the general assembly does not provide its approval (Article 364, Commercial Code):

    • directors can be dismissed at the same general meeting;

    • the company or its shareholders can bring a claim against directors for compensation;

    • directors can bring a claim against the company to obtain clearance of the financial statements and so on, or to cancel the general meeting resolution;

    • the General Assembly can decide to keep the directors in charge even after its disapproval.

39. Do a company's accounts have to be audited?

The financial statements of a joint stock company and group of companies must be audited in accordance with Turkish auditing standards, which comply with international auditing standards. The audit must include a review of whether the financial information included in the annual report prepared by the board is consistent with the audited financial statements and represents a true and fair view (Article 397, Commercial Code).

40. How are the company's auditors appointed? Is there a limit on the length of their appointment?

The auditor must be appointed by the company's General Assembly. The auditor of a group of companies must be appointed by the parent company's General Assembly. An auditor must be appointed for each fiscal year and before the end of the fiscal year in which he will perform his duty. The board must register the appointment with the Trade Registry and announce it in the Trade Registry Gazette and on its website. If no other auditor is appointed, the auditor of the parent company is considered to be the auditor of the group.

If questions arise about whether the auditor is acting improperly and fair cause to remove the auditor can be established, the commercial court of first instance at the location of the company's headquarters can appoint another auditor after hearing the concerned parties and the auditor at the request of either (Article 399, Commercial Code):

  • The board.

  • Shareholders representing 10% of the capital or in the case of public companies, 5% of the basic or issued capital.

41. Are there restrictions on who can be the company's auditors?

The auditor must be an independent auditing firm whose shareholders hold the title of either:

  • Sworn financial adviser (Yeminli Mali Müşavir) (YMM).

  • Certified public accountant (Serbest Muhasebeci Mali Müşavir) (SMMM).

Small and medium-sized joint stock companies can elect one or more YMMs or SMMMs as auditor. The incorporation and performance of independent auditing firms and the qualifications of auditing personnel are regulated by rules set out by the Ministry of Industry and Trade and put into effect by the Council of Ministers.

A YMM, SMMM, the independent auditing firm or one of its shareholders, or any individual working with any of the former, cannot act in the role of an auditor if they fall into any of the following categories:

  • Shareholder in the company to be audited.

  • Managing director or employee of the company to be audited, or anyone who has held this title within the last three years before being appointed auditor.

  • A statutory representative or representative, board member, managing director, owner or shareholder who owns:

    • more than 20% of the shares of a legal entity, commercial company or commercial enterprise with a connection with the company to be audited;

    • the spouse or relative (by blood or in law) up to and including third degree of a board member or a managing director of the company to be audited.

  • An employee of an enterprise which is connected with the company to be audited or which owns more than 20% of the shares in the company, or is working for an individual holding more than 20% of the shares in the company of which he is to be the auditor.

  • An individual who is active in or has contributed to the bookkeeping or organisation of the company's financial statements without carrying out an audit, including:

    • a statutory representative, representative, employee, board member, partner, owner of the legal entity or real person, or of one of its shareholders;

    • an individual who works for an auditor who cannot be an auditor because of meeting one of the above conditions.

  • An individual who has earned more than 30% of his total income from auditing activities for the company to be audited (or companies with a shareholding greater than 20%) within the last five years, if they expect to earn the same in the current year.

  • An auditor appointed by an independent auditing firm to audit a company who has prepared auditing reports for that company for seven consecutive years. In this case, the auditor must have not prepared auditing reports for that company for at least two years. The Union of Chambers of Independent Financial Advisers and Certified Public Accountants of Turkey (TÜRMOB) can repeal this prohibition for a specific and limited time.

42. Are there restrictions on non-audit work that auditors can do for the company that they audit accounts for?

An auditor can only provide tax consultancy and tax auditing services. It must not provide other types of services either directly or through a subsidiary (Article 400/3, Commercial Code). The scope of the audit includes (Article 398.1, New Law):

  • The issue of financial statements on behalf of the company or group of companies.

  • Determination of whether the financial data held by the company's accounting department is consistent with the audited financial statements and reflects a true and fair view.

  • The board's annual report, disclosures, discussions and analysis relating to financial statements.

  • Determination of whether a proper early risk-detection mechanism exists and functions to identify any threat or possible risks to the company in a timely fashion.

43. What is the potential liability of auditors to the company, its shareholders and third parties if the audited accounts are inaccurate? Can their liability be limited or excluded?

Auditors, including transaction and special auditors must comply with statutory duties (Article 554, Commercial Code). If at fault, they are liable to pay compensation for a failure to fulfil their statutory duties to the company, shareholders and creditors. In the event of a legal dispute, the burden of proof is on the claimant.

Liability arising from breach of confidentiality is regulated by Article 404 of the Commercial Code. All three types of auditors, their assistants and representatives of the independent audit companies must conduct audits in an honest and objective manner. They must not use trade and company secrets obtained in the performance of their auditing activities without permission. Liability lies for breach of this obligation, whether intentionally or through negligence.

44. What is the role of the company secretary (or equivalent) in corporate governance?

The role of the company secretary is not specified by law. In practice, the role of the company secretary is performed by a company's in-house legal department which deals with legal issues and ensures company business complies with the law.


Online resources

General Directorate of Legislation Development and Publication


Description. This website allows access to all official, up-to-date legislation currently in force. Legislation is only provided in Turkish. Currently, there is no website that provides English-language translations (or other translations) of Turkish legislation

Contributor profiles

Şafak Herdem, Partner

Herdem Attorneys at Law

T +902 16 290 1277
F +902 16 290 1278

Professional qualifications. Turkey, Lawyer

Areas of practice. Corporate; M&A; aviation; banking and finance; commercial; foreign investment; project finance arbitration.

Recent transactions. M&A of an aviation company.

Languages. Turkish, English, German

Professional associations/memberships. Istanbul Bar Association; International Bar Association (IBA); IPFA; EBAN.

Publications. Numerous

Zuhal Uysal, Associate

Herdem Attorneys at Law

T +90 216 290 1277
F +90 216 290 1278

Professional qualifications. Turkey, Lawyer (LL.M)

Areas of practice. Corporate; M&A; litigation

Recent transactions. M&A of an aviation company.

Languages. Turkish, English, German

Professional associations/memberships. Istanbul Bar Association; International Bar Association (IBA); IPFA.

Publications. Free Trade Zones in Turkey

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