What Is the Liquidation of a Limited Liability Company?
The liquidation of a limited liability company involves closing the accounts, separating the company’s assets and liabilities, and paying debts to creditors upon the company’s termination. Accordingly, once the notice of the company’s termination is filed with the trade registry, the company enters the liquidation process.
Termination of a Limited Liability Company
A limited liability company is terminated when one of the termination reasons specified in its articles of association occurs, by a resolution of the general assembly, upon the declaration of bankruptcy, or in other cases of termination regulated by law.
Accordingly, the details regarding the termination of a limited liability company are regulated as follows in Article 636 of the Turkish Commercial Code:
“(1) A limited liability company is terminated under the following circumstances:
a) When one of the termination reasons specified in the company’s articles of association occurs.
b) By a resolution of the general assembly.
c) Upon the declaration of bankruptcy.
d) In other cases of termination provided by law.
(2) If one of the company’s legally required organs has been absent for a long time or the general assembly cannot be convened, upon the request of one of the partners or a creditor, the commercial court of first instance at the company’s headquarters shall set a period for the company to regularize its situation in accordance with the law. If the situation is not remedied within that period, the court shall decide to dissolve the company.
(3) In the presence of justifiable reasons, any partner may request the dissolution of the company from the court. Instead of granting the request, the court may order that the plaintiff partner be paid the fair value of their share and be removed from the company, or issue another solution appropriate and acceptable under the circumstances.
(4) When a dissolution case is filed, the court may take necessary measures at the request of one of the parties.
(5) The provisions applicable to joint-stock companies shall apply to the consequences of termination.”
The Liquidation Process of a Limited Liability Company
a. Preparation for the Liquidation Process
The preparations required for the liquidation process of a limited liability company generally vary depending on the nature of the case and the company’s legal affairs. Therefore, consulting a lawyer, such as an Antalya-based attorney, can be beneficial in this regard.
b. The Liquidation Process
The liquidation process of a limited liability company begins with the notification of the company’s termination to the trade registry. In this context, a liquidation decision is made based on a general assembly resolution taken by the shareholders, thereby initiating the company’s entry into the liquidation process.
Additionally, it is known that liquidators hold significant authority and responsibilities during the liquidation process. In this regard, the legal provisions concerning liquidators of joint-stock companies (Articles 539–542 of the Turkish Commercial Code) are applied by analogy to limited liability companies.
c. Completion of Liquidation
Once the assets of a limited liability company are converted into cash, debts are paid, and creditors are settled, the remaining assets at the end of the process are distributed among the shareholders in proportion to their capital and privilege rights. However, it should be noted that the company’s articles of association may contain different provisions regarding this matter. Therefore, in such cases, the distribution should be carried out in accordance with the provisions of the articles of association.
Required Documents for the Liquidation of a Limited Liability Company
1.In the Event of the Termination of a Limited Liability Company
- Notarized copy of the resolution if the company was terminated by a general assembly decision
- Document related to the reason if the company was terminated for another cause
- Signature declarations of the liquidators
- Document confirming acceptance of duty if the liquidators are not members of the board of directors or the general assembly
- Ministry approval document for certain companies
2.In the Event of the Completion of a Limited Liability Company’s Liquidation
- The final balance sheet approved by the general assembly
- Notarized copy of the general assembly resolution
- Trade registry gazettes showing that creditors were invited by three consecutive calls, each one week apart
Frequently Asked Questions
1.Does a Limited Liability Company Undergo Liquidation in the Event of Bankruptcy?
The liquidation of a limited liability company in bankruptcy is carried out by the established bankruptcy administration. Therefore, this liquidation is conducted in accordance with the provisions of the Execution and Bankruptcy Law and, consequently, proceeds differently from the process described above.
2.Can a Liquidation Decision Be Reversed?
Reversing a liquidation decision is possible under certain conditions. Accordingly, if the company has been terminated due to the expiration of its term or by a general assembly resolution, but the remaining assets have not yet been distributed among the shareholders, the general assembly may decide to continue the company.
3.What Do Liquidators Do?
Liquidators are individuals authorized to manage the liquidation process and act as representatives of the company in courts and in external relations concerning liquidation matters. In this capacity, liquidators are responsible for any damages caused by their faults to the company, its creditors, and its shareholders.
4.What Is Additional Liquidation?
Additional liquidation is a temporary measure applied when, after the closure of the initial liquidation process and the completion of its procedures, it becomes clear that further liquidation actions are necessary.
5.How Long Does the Liquidation of a Limited Liability Company Take?
The liquidation of a limited liability company typically takes between 6 months and 1 year. During this period, the company’s assets are converted into cash, debts are paid, creditors are settled, and the remaining assets are distributed among the shareholders in proportion to their capital and privilege rights.
Some Supreme Court (Yargıtay) Decisions Regarding the Liquidation of Limited Liability Companies
- “The power of attorney issued by the liquidator … on behalf of the defendant, Limited Liability Company … Import, Export and Trade Co., for the relevant attorney was examined, and it was determined that … had issued a power of attorney in their own name and not on behalf of the company. Therefore, it was concluded that this deficiency needed to be rectified. Accordingly, after the mentioned deficiency is corrected, the file should be sent to the Chamber for appellate review.” (Supreme Court of Turkey, 10th Civil Chamber, Decision dated 14.05.2025, Case No. 2025/7148, Decision No. 2025/8155)
- “…Capital companies are not required to submit a statement of assets as specified in Article 44 of the Execution and Bankruptcy Law. As noted in the rationale of the article, abandoning trade means that the company’s trade name is removed from the trade registry records. Before the removal of the registration, the liquidation process must begin, during which the company’s assets and liabilities are determined, the value of any assets is assessed, active assets are sold to pay debts, and any remaining funds are distributed to the shareholders in proportion to their shares. The prepared balance sheet is submitted to the trade registry office to facilitate the company’s removal from the records (deregistration). A capital company whose trade name has been removed from the trade registry has completed its liquidation process under Law No. 6102; therefore, it is no longer practically possible for it to submit a statement of assets and liabilities. Consequently, convicting the company for failing to submit a statement of assets would be contrary to the law.” (Supreme Court of Turkey, 12th Civil Chamber, Decision dated 29.04.2025, Case No. 2025/1822, Decision No. 2025/3400)
- I. CASE In the main and joined petitions, the plaintiff’s attorney requested a decision to revive the legal personality of Kaynak Suları San. ve Tic. Ltd. Şti. in order to continue the proceedings in the labor case. V. APPEAL REVIEW A. Case and Legal Characterization The case relates to the request for the revival of the company. B. Evaluation and Justification Considering the trial conducted and the applicable legal rules for the concrete dispute determined, it was understood that there was no error in the decision of the Court of First Instance. Accordingly, the appellate application was substantively rejected by the Regional Court of Justice in accordance with Article 353/1-b(1) of the Code of Civil Procedure No. 6100. It was concluded that this decision complies with procedural and legal requirements, and therefore, the decision of the Regional Court of Justice should be upheld. (Supreme Court of Turkey, Civil Chamber, Decision dated 15.04.2025, Case No. 2025/1724, Decision No. 2025/2467)
- I. CASE In the petition, the plaintiff’s attorney stated that during the debt lawsuit filed against the company “… Foreign Trade … Ltd. Co. in liquidation,” which the client company requested to be revived, it was understood that the company had been removed from the registry. The plaintiff requested a decision to revive the company. II. RESPONSE In its response, the defendant … Registry Office’s attorney argued that the case should be dismissed, and if accepted, no attorney fees or litigation costs should be imposed against them. In its response, the defendant liquidator’s attorney argued that the company’s general assembly had decided on liquidation, the liquidation had been properly completed, the plaintiff had no legal interest in filing this lawsuit, any disputes between the parties should be referred to arbitration according to their agreement, and the claim had become time-barred. Therefore, the plaintiff would derive no benefit from the revival, and the lawsuit should be dismissed. V. APPEAL A. Case and Legal Characterization The case concerns a request for the revival of a company. B. Evaluation and Justification Considering the trial conducted and the legal rules applicable to the specific dispute, it was determined that there was no error in the decision of the Court of First Instance. Accordingly, the appellate application was substantively rejected by the Regional Court of Justice pursuant to Article 353/1-b(1) of the Code of Civil Procedure No. 6100. It was concluded that this decision complies with procedural and legal requirements, and therefore, the decision of the Regional Court of Justice should be upheld. (Supreme Court of Turkey, Civil Chamber, Decision dated 16.04.2025, Case No. 2025/1721, Decision No. 2025/2538)
