Company Purchases Goods From a Partner at Inflated Prices in Turkey: Director Liability and Compensation 2026 Updated Guide

What happens when a Turkish company purchases goods from a shareholder or related party at inflated prices? Learn about director liability, related-party transactions, company losses, evidence, compensation claims and shareholder remedies in 2026.

A company purchasing goods or services from one of its shareholders, directors or another related party is not automatically unlawful in Turkey. The legal risk arises when the transaction is concluded at an artificially inflated price, lacks a genuine commercial justification, transfers company assets to an interested person or causes measurable loss to the company. In such cases, the transaction may create liability for directors and managers and may also lead to disputes concerning shareholder rights, repayment, compensation, taxation and, depending on the facts, criminal responsibility.

For companies with minority shareholders or foreign investors, inflated related-party purchases are particularly important because they can operate as a method of transferring corporate value away from the company without formally distributing dividends.

Is It Legal for a Company to Purchase Goods From Its Shareholder?

Yes. A shareholder can conduct commercial transactions with the company. The existence of the relationship alone does not make the purchase invalid.

The key questions are whether the transaction serves a legitimate corporate purpose, whether the price and contractual conditions can be commercially justified, whether corporate decision-making requirements were respected and whether the company suffered loss.

When Does the Purchase Price Become Legally Problematic?

The fact that another supplier offered a slightly lower price will not necessarily establish liability. Commercial prices can differ because of quality, delivery terms, payment periods, warranties, availability, logistics and other factors.

The concern becomes substantially stronger where the company pays a price that cannot reasonably be explained by these commercial considerations.

Example of an Inflated Related-Party Purchase

Suppose a shareholder owns a separate supplier company. Comparable goods are available for TRY 10 million, but the company purchases identical goods from the shareholder’s business for TRY 18 million without a legitimate commercial explanation.

The TRY 8 million difference may require investigation as a potential corporate loss rather than merely an unfavorable business decision.

Director Liability Under Turkish Company Law

Directors and managers are expected to perform their statutory and contractual duties with the required standard of care and loyalty.

Where directors knowingly approve a related-party transaction that causes loss to the company, questions of personal liability may arise under the Turkish Commercial Code.

The precise liability analysis depends on the company’s legal form, the responsible decision-makers, their conduct, the corporate decision-making process and causation of the loss.

Business Judgment and Commercial Loss Must Be Distinguished

Not every unsuccessful purchase creates director liability.

Management must be able to make commercial decisions involving risk. A transaction becoming unprofitable afterward does not automatically prove wrongdoing.

The important distinction is between a genuine business decision made on an informed and defensible basis and a transaction structured to benefit an interested party at the company’s expense.

Conflict of Interest Is a Major Warning Sign

Where the supplier is also a shareholder, director, manager or a person closely connected with management, the transaction deserves enhanced scrutiny.

The company should investigate who proposed the transaction, who negotiated the price, who approved payment and whether the relationship was disclosed to the appropriate corporate bodies.

Related Companies Should Also Be Examined

Value can be transferred indirectly.

For example, the supplier may technically be a separate company but may be controlled by a director, shareholder, family member or another related person. Corporate ownership and control should therefore be examined rather than relying only on the supplier’s registered name.

How Can an Inflated Price Be Proven?

The strongest cases normally rely on objective comparison evidence.

Relevant evidence may include competing supplier quotations, market prices, previous purchases, subsequent purchases, industry price lists, expert valuations, supplier invoices, product specifications and correspondence concerning price negotiations.

Comparable Goods Must Actually Be Comparable

A price comparison can be misleading if products differ materially.

The analysis should consider quality, quantity, delivery location, payment maturity, warranty, installation, maintenance, freight, insurance and other contractual conditions.

An expert report may be necessary for specialized goods.

Internal Emails and Messages Can Be Important

Internal correspondence may reveal why a particular supplier was selected.

Emails, corporate messaging records and other lawfully obtained evidence may show whether management knew that cheaper alternatives existed or deliberately excluded competing suppliers.

Board Minutes Should Be Reviewed

Examine the decision approving the transaction.

Important questions include whether the relationship with the supplier was disclosed, whether alternative quotations were considered, whether directors discussed pricing and whether potentially conflicted persons participated in the decision.

Procurement Procedures Can Provide Evidence

A company with an established procurement policy may require several quotations or competitive bidding above a certain value.

Departing from those procedures without explanation can become significant evidence, particularly when the selected supplier is related to management.

Fake Competitive Offers Create Greater Risk

A particularly serious scenario arises where management attempts to make an inflated purchase appear competitive by obtaining artificial or coordinated quotations.

The authenticity of competing bids may therefore need to be investigated.

Who Actually Received the Economic Benefit?

Follow the money.

Review the supplier’s ownership, payments, subsequent transfers and other legally obtainable financial information. The economic beneficiary may be different from the nominal contracting party.

Can Minority Shareholders Demand Information?

Depending on the company’s legal form and circumstances, shareholders have statutory information and examination rights.

These mechanisms can be particularly valuable where a minority shareholder suspects that company resources are being transferred through related-party purchases.

Access to Accounting Records May Become Critical

The investigation may require examination of purchase invoices, contracts, bank payments, inventory entries, accounting ledgers and procurement records.

The objective is to reconstruct the complete transaction rather than relying on the board’s description of it.

What If Management Refuses to Provide Information?

The shareholder should document the request and refusal carefully and evaluate the corporate remedies available under the applicable company structure.

A refusal to provide information does not itself prove that the transaction was improper, but it may make formal corporate or judicial remedies necessary.

General Assembly Records Should Be Examined

Shareholders should review whether the relevant transactions, management conduct or financial consequences were disclosed during general assembly proceedings.

Discharge decisions and their legal consequences may also require separate examination when director liability is contemplated.

Can the Company Claim Compensation From Directors?

Potentially. Where the legal requirements for liability are established, the company may seek compensation for losses caused by directors’ breach of their duties.

The claimant must generally establish the relevant breach, damage and causal connection according to the applicable liability framework.

How Is the Company’s Loss Calculated?

A simplified starting point may be the difference between the amount actually paid and the commercially reasonable amount the company would otherwise have paid.

But damages can be more complex.

Additional financing expenses, storage costs, unusable inventory and other direct consequences may potentially become relevant if adequately established and causally connected.

Can the Excess Payment Be Recovered From the Shareholder?

Potentially, depending on the contractual and factual structure.

If the shareholder or related supplier received money without a legally sustainable basis, different private-law remedies may need to be examined alongside director-liability claims.

The correct defendant should be determined carefully.

Multiple Defendants May Be Involved

A dispute may involve the director approving the transaction, the shareholder benefiting from it, the related supplier company or other persons participating in the arrangement.

Their legal positions and potential liabilities should be analyzed separately.

Limited Liability Companies Require Manager Analysis

Where the company is a limited liability company, attention should focus on the conduct and responsibilities of its managers as well as the shareholder relationship underlying the transaction.

A shareholder should not automatically be treated as personally liable merely because they own shares.

Joint Stock Companies Require Board-Level Analysis

In a joint stock company, the investigation should identify which board members participated in the relevant decision and whether responsibilities had been validly allocated or delegated.

Liability should be assessed individually rather than automatically imposed on every board member.

Dissenting Directors Should Preserve Their Position

A director who opposes a questionable related-party transaction should ensure that their objection is properly reflected in corporate records where appropriate.

Remaining silent despite knowledge of an obviously damaging transaction may create unnecessary legal exposure.

What If the Transaction Was Approved by Shareholders?

Shareholder approval does not necessarily resolve every legal issue.

The validity and consequences of the approval depend on the nature of the transaction, disclosure, voting circumstances, mandatory legal rules and the rights of the company and affected shareholders.

Expert Examination Can Be Essential

In significant disputes, courts may require expert analysis of whether the purchase price was commercially reasonable.

The expert may examine comparable transactions, market conditions, product specifications and accounting records.

Preserve Market Evidence Immediately

Historical price evidence can disappear.

Web quotations change, suppliers delete old price lists and employees leave companies. Obtain contemporaneous quotations, invoices and procurement records as soon as the dispute becomes apparent.

Accounting Evidence Should Be Preserved

Keep general ledger records, supplier accounts, bank transfers, purchase invoices, inventory records and payment approvals.

The accounting trail may demonstrate both the amount paid and the financial effect on the company.

Interim Measures May Be Necessary

If there is evidence that similar transactions are continuing or company assets may be dissipated, urgent protective measures may need to be evaluated.

The precise remedy depends on the claim and factual circumstances.

Can the Director Be Removed?

Depending on the company type, corporate structure and applicable conditions, removal of directors or managers may become part of the wider shareholder dispute.

The company should distinguish the question of removing management from the separate question of recovering past losses.

A Compensation Claim Does Not Automatically Remove the Director

Corporate governance remedies and damages proceedings are different mechanisms.

Where immediate control of the company is a concern, both issues should be considered separately.

Tax Consequences Should Also Be Reviewed

Inflated transactions between related parties can raise tax questions in addition to company-law liability.

The commercial and tax analyses should therefore be coordinated, particularly where pricing cannot be supported by ordinary market conditions.

Criminal Liability May Arise in Serious Cases

Not every excessive purchase price constitutes a crime.

However, if evidence suggests deliberate diversion of company funds, falsified invoices, fabricated procurement documents or another intentional scheme, potential criminal-law consequences may need to be examined separately.

A commercial disagreement should not automatically be converted into a criminal allegation without supporting evidence.

Foreign Investors Should Conduct an Independent Review

A foreign shareholder discovering suspicious related-party purchases should avoid relying solely on explanations provided by the management involved.

An independent review may examine corporate records, supplier relationships, market prices, payments and decision-making procedures.

Review Historical Transactions

One suspicious purchase may indicate a wider pattern.

Examine previous transactions with the same shareholder or related supplier, including price changes, volumes and payment conditions.

Create a Related-Party Transaction Matrix

For repeated transactions, record:

Date of purchase; supplier; relationship with the company; goods or services purchased; quantity; price; comparable market price; approving director or manager; payment date; and supporting corporate decision.

This can make a recurring value-transfer pattern substantially easier to identify.

Limitation Periods Must Be Checked

Director-liability and related recovery claims are subject to limitation rules.

The applicable period depends on the legal basis and circumstances, so potential claims should be reviewed promptly rather than postponed until the shareholder dispute becomes irreversible.

Evidence Should Be Obtained Lawfully

Shareholders should avoid unlawfully accessing private accounts, confidential communications or protected systems.

Evidence obtained through legitimate corporate rights, court procedures and other lawful mechanisms creates a much stronger litigation position.

2026 Strategy for Minority and Foreign Shareholders

When a company repeatedly purchases goods from a shareholder or related business at suspiciously high prices, the dispute should be approached as a combination of corporate governance, director liability, accounting evidence, related-party transactions and asset recovery.

The strongest strategy is usually to reconstruct the commercial decision objectively: what was purchased, what the market price was, what alternatives existed, who approved the transaction, what relationship existed with the supplier and how much measurable loss the company suffered.

Frequently Asked Questions

Is purchasing goods from a shareholder illegal in Turkey?

No. Related-party transactions are not automatically unlawful. The terms, corporate purpose, decision-making process and effect on the company must be examined.

Does paying above market price automatically make directors liable?

No. Commercial justification and the circumstances of the decision matter. Liability requires examination of the applicable legal duties, breach, damage and causation.

How can shareholders prove that the price was inflated?

Comparable supplier quotations, historical purchases, market data, expert analysis, invoices and internal procurement records can be important.

Can minority shareholders investigate the transaction?

Depending on the company’s legal form and circumstances, statutory information, examination and other shareholder remedies may be available.

Can the company recover the price difference?

Potentially. Claims may exist against responsible directors, managers, the recipient of the payment or other parties depending on the facts and legal basis.

Can directors be personally liable?

Potentially. Personal liability may arise where the statutory requirements concerning breach of duties and resulting company loss are established.

What if the supplier belongs to the director’s family member?

The actual relationship and economic interest should be examined. Using another person’s company does not automatically eliminate a potential conflict-of-interest issue.

Can the director argue that the purchase was a business decision?

Commercial discretion is relevant, but the factual basis of the decision matters. Market comparisons, procurement records and conflict-of-interest evidence can help distinguish an ordinary business decision from a transaction causing unjustified company loss.

Can criminal proceedings also arise?

Potentially in sufficiently serious circumstances involving evidence of criminal conduct. An unfavorable related-party transaction alone does not automatically establish a criminal offence.

What should a foreign investor do first?

Secure the corporate and accounting evidence before confronting the responsible parties. Compare the transaction with genuine market alternatives, identify the decision-makers and related parties, calculate the company’s potential loss and then determine the appropriate corporate, compensation and, where supported by the evidence, criminal remedies.

Client-Focused Legal Support for Related-Party and Director Liability Disputes

Fırat Fesih Kaya Law Office assists foreign investors, shareholders and companies in Turkey with disputes involving inflated related-party transactions, misuse of corporate assets, director and manager liability, minority shareholder rights and compensation claims. Lawyer Fırat Fesih Kaya provides legal assistance in examining corporate records, tracing disputed transactions, evaluating director liability, seeking protective measures and pursuing compensation and asset-recovery claims.

Phone: +90 312 434 22 22
Mobile: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Address: Mevlana Boulevard No:221, Yıldırım Tower, Office No:148, 06520 Balgat, Çankaya, Ankara, Turkey