Company liquidation and closure: the process step by step
Liquidation of limited and joint stock companies: liquidation resolution, liquidator, invitation to creditors, liquidation period returns, distribution and taxation of remaining assets, deregistration from the trade registry and retention of books; a timeline.
A company that wants to end its activity is not closed simply by stopping business at the tax office. Ending the legal personality requires the liquidation process set out in the Turkish Commercial Code. At its shortest, the process takes more than a year; so it should be planned in advance.
Timeline
| Stage | What is done? | Approximate timing |
|---|---|---|
| 1. Liquidation resolution | The general assembly resolves to enter liquidation and appoints the liquidator | Start |
| 2. Registration and publication | The resolution is registered in the trade registry and published in the TTSG | The days after the resolution |
| 3. Tax notification | Entry into liquidation is notified to the tax office; an opening liquidation balance sheet is drawn up | Within the statutory period |
| 4. Invitation to creditors | Creditors are invited three times, at set intervals, by notices in the TTSG and on the company's website | First months |
| 5. Liquidation transactions | Receivables are collected, assets are sold, debts are paid | Throughout liquidation |
| 6. Waiting | As a rule, remaining assets cannot be distributed before one year from the last notice | At least one year |
| 7. Closing | Final liquidation balance sheet, final general assembly, distribution of remaining assets | After the waiting period |
| 8. Deregistration | The company is deleted from the trade registry; the tax registration is closed | End |
Liquidator
The liquidator represents the company during liquidation. It can be a partner, a manager or an outsider; at least one must be resident in Türkiye. The liquidator draws up the opening liquidation inventory and balance sheet, collects receivables, converts assets into cash, pays debts and makes the necessary notices. The liquidator is personally liable for faults in the liquidation transactions.
Tax aspects
- Liquidation periods: from the date liquidation begins, each calendar year is a separate liquidation period. The income of each period is declared separately; at the end of liquidation a final liquidation return is filed.
- Pre-liquidation period: a separate return is filed for the period from the start of the accounting period to the date liquidation begins.
- VAT and withholding: monthly returns continue to be filed as long as activity continues.
- Distribution of remaining assets: the part of the amount distributed to partners that exceeds capital is in the nature of a dividend and may be subject to withholding: Dividend distribution
- Giving assets to partners: transferring assets such as real estate and vehicles to partners is treated like a sale at arm's length value; VAT and corporate tax consequences must be calculated separately.
- Carried-forward VAT: carried-forward VAT that cannot be used by the end of liquidation is, as a rule, not refunded; so planning before liquidation is important.
SGK and employees
Employees' employment contracts are terminated and the closure of the workplace is notified to SGK. Severance and notice pay and other claims are paid among the liquidation debts. The correct exit code must be selected for employees leaving because the workplace is closing: SGK exit codes
Books and documents
After liquidation ends, the company's books and documents are kept for ten years by a person designated by the liquidators and notified to the trade registry: Commercial books
Alternatives to liquidation
- Companies inactive for a long time: for companies meeting the conditions in the Law, the trade registry's ex officio liquidation and deregistration process may apply. However, this route does not remove the liability of partners and managers.
- Merger or share transfer: if the activity will continue, merging with another company or transferring the shares may be more economical than closing the company: Share transfer in a limited company
Common mistakes
- Stopping business at the tax office without carrying out liquidation in the trade registry: the company continues to exist legally; obligations and penalties continue.
- Distributing remaining assets to partners before the waiting period has ended.
- Trying to finish liquidation without closing partners' debts (the shareholders' current account).
- Requesting deregistration without paying public debts: partners and liquidators may be held personally liable.
Our related service: Liquidation and company closure
Legal basis: Turkish Commercial Code No. 6102 arts. 529–548 and 643; Corporate Tax Law No. 5520 art. 17; Law No. 6183 arts. 35 and repeated 35.