In the Turkish legal system, the dissolution of joint stock companies may occur for various reasons. These reasons are regulated under both general and special provisions in the Turkish Commercial Code No. 6102. Upon dissolution, the liquidation process begins, ultimately resulting in the complete termination of the company’s legal personality. However, in certain circumstances, it may be necessary to undertake an additional liquidation to finalize specific transactions after the company has already been dissolved. This situation is explicitly addressed under Article 547 of the Turkish Commercial Code.
Causes for the Dissolution of Joint Stock Companies
Article 529 of the Turkish Commercial Code lists the general causes for the dissolution of joint stock companies, which include:
Expiration of the company’s term (and not being converted into an indefinite term),
Fulfillment or impossibility of the company’s business purpose,
Occurrence of dissolution causes stipulated in the articles of association,
Dissolution by a resolution of the general assembly,
Bankruptcy,
Other cases provided by law.
In addition to these, special causes such as the absence of corporate bodies or the existence of a just cause may also lead to the dissolution of a joint stock company.
What is the Liquidation Process?
Pursuant to Article 533 of the Turkish Commercial Code, unless otherwise provided by law, a dissolved company enters into liquidation. During this period, the company’s legal personality is preserved, but its operations are restricted to liquidation purposes. The phrase “in liquidation” is added to the company’s trade name. The primary objectives during the liquidation process are to convert the company’s assets into cash, settle its relations with third parties, and distribute any remaining assets to the shareholders.
According to Article 533, once this process is completed, the liquidators are obliged to have the company’s registration deleted from the trade registry. Upon deletion, the company’s legal personality ends, and its legal existence ceases.
What is Additional Liquidation and When is it Required?
In some cases, after liquidation has been completed, new matters may arise. In such circumstances, an additional liquidation is required. As understood from the rationale of Article 547 of the Turkish Commercial Code, additional liquidation is a supplementary measure applied temporarily. It occurs when it is later discovered that the completed liquidation process was inadequate or defective. Examples include:
Discovery of overlooked assets during the liquidation process,
Initiation of a lawsuit or enforcement proceedings against the company,
Liquidation carried out incompletely or contrary to law,
Filing of a liability lawsuit against the company’s organs.
Under Article 547, when the need for additional liquidation arises, the last liquidators, members of the board of directors, shareholders, or creditors may apply to the commercial court of first instance where the company’s headquarters is located and request the company’s re-registration. If the court finds the request justified, the company’s legal personality is temporarily restored and re-registered until the liquidation is duly completed.
Can Commercial Activities Resume?
The additional liquidation process does not mean that the company resumes its commercial activities on a permanent basis. It merely allows the legal personality to be temporarily reinstated so that incomplete transactions can be lawfully finalized and necessary measures that were previously overlooked can be taken.
General Assessment
The liquidation process is an important legal mechanism that ensures the orderly dissolution of joint stock companies and must be carried out in accordance with specific rules. Otherwise, additional liquidation comes into play to remedy deficiencies and achieve a fair outcome. In this respect, additional liquidation serves as an important legal safeguard protecting the rights of both shareholders and creditors
