Company Partnership and Manager Liability in 8 Questions — Atty. Gizem Gonce

Management and representation powers of company partners are determined according to the type of the company and its articles of association. In limited liability companies, the power of management and representation belongs to managers within the framework of the provisions of the Turkish Commercial Code.

Merely having the status of a partner does not automatically give a partner the authority to manage the company. However, if the company management acts contrary to the law, the articles of association, or the rights of the partners, various legal application paths can be found. The rights of partners to obtain information and examine must also be evaluated according to the company type.

In limited companies, the liability of partners and the liability of company managers are different from each other. As a rule, a limited company is responsible for its own debts with its own assets.

However, regarding public debts, there are special regulations in Law No. 6183 and the Turkish Commercial Code. Limited company partners can be held responsible for public debts that cannot be collected from the company in proportion to their capital shares. The responsibilities of company managers stemming from their legal representative status can also come into question. Therefore, company partnership and manager statuses must be evaluated separately.

Details of the topic: Are partners personally responsible for company debts?.

Company managers must act in compliance with the law and the company agreement while fulfilling their duties. If they violate their duties, act faultfully, and the company, partners, or third parties suffer damage due to this behavior, legal liability may come into question.

Article 553 of the Turkish Commercial Code and special provisions regarding limited companies are important in this regard. In addition, the responsibility of the legal representative regarding public debts must be evaluated separately. It is not correct to say that the manager is personally responsible for every company debt.

Agreements signed between company partners determine the rights and obligations of the parties against each other. If this agreement is violated, legal claims arising from breach of contract may come into question.

Depending on the nature of the violation, specific performance, termination of the contract, withdrawal, or compensation claims can be evaluated. However, the relationship of the agreement between the partners with the articles of association of the company and mandatory commercial law provisions must also be examined. In particular, regulations regarding share transfers, non-compete clauses, and management authorities must be prepared carefully.

The transfer of company shares is subject to different procedures according to the type of company. In limited companies, share transfer is made with a written and notary-approved agreement pursuant to Article 595 of the Turkish Commercial Code. As a rule, general assembly approval is also required; however, special regulations in the law and the company agreement must also be examined.

In joint-stock companies, the transfer of shares can be subject to different formal requirements depending on the type of share and the provisions of the articles of association. Tax obligations and trade registry transactions must also be taken into account. Examining the debts and obligations of the company before the transfer is important.

Unfair competition refers to commercial behaviors contrary to the rule of honesty that affect relations between competitors or between suppliers and customers. Unfair competition cases are regulated in Article 54 and following articles of the Turkish Commercial Code.

Imitating a competitor's products, making misleading advertisements, unfairly benefiting from someone else's commercial reputation, or unlawfully using employees for one's own benefit can constitute unfair competition depending on concrete conditions. In the case of unfair competition, requests for determination, prevention, elimination of consequences, and compensation can come into question.

Companies' trade secrets, customer information, production methods, and commercial strategies are under legal protection. The employee sharing confidential information learned during the employment relationship with third parties unlawfully can create liability in terms of labor law and commercial law.

Depending on the characteristics of the concrete case, termination of the employment contract, material and moral compensation, or claims based on unfair competition provisions can come into question. The nature of trade secrets, confidentiality obligation, and the scope of damage are important. Companies must clearly regulate their privacy policies and contracts.

Concordat is a legal institution aiming to restructure debtors who cannot pay their debts on maturity or are under the danger of payment difficulty with their creditors under court supervision.

During the concordat process, it is important for creditors to report their receivables to the court-appointed concordat administrator and follow the announced periods. The effects of temporary and final respite decisions on creditors can be different. The same collection path cannot be applied for every receivable. Whether the receivable is secured, the pledge right, and the content of the concordat project must be examined together.