Can a foreign-owned company continue operating while its assets are frozen in Turkey? Learn how asset seizures affect bank accounts, payroll, suppliers, contracts, management, new revenue and requests for partial release.

Yes, in some cases. A foreign-owned company in Turkey may be able to continue business operations even while certain company assets are frozen or seized.

An asset freeze does not automatically mean that the company has been closed, dissolved or prohibited from conducting all commercial activity.

However, the practical answer depends heavily on what has been frozen, which authority imposed the measure, whether company management remains under the existing directors, and whether a trustee has been appointed.

This distinction is crucial for foreign investors.

A restriction affecting one bank account can have very different consequences from a seizure covering substantially all company assets or the appointment of a trustee to manage the company.

Does an Asset Freeze Automatically Shut Down the Company?

No.

An asset restriction and closure of a company are not the same legal event.

Depending on the scope of the measure, the company may potentially continue:

• Manufacturing;
• Selling goods;
• Providing services;
• Employing personnel;
• Performing existing contracts;
• Issuing invoices;
• Receiving customer orders;
• Conducting permitted banking activities;
• Paying expenses from unrestricted funds;
• Carrying out ordinary corporate administration.

The actual decision imposing the restriction must nevertheless be examined before management assumes that a particular transaction remains permitted.

The First Question: What Exactly Has Been Frozen?

Foreign investors should immediately identify the assets affected.

These may include:

• One bank account;
• Multiple bank accounts;
• A specified amount of money;
• Company receivables;
• Real estate;
• Vehicles;
• Securities;
• Company shares;
• Other movable assets;
• Substantially all corporate assets.

The operational consequences will differ dramatically.

1. Identify the Legal Basis of the Restriction

The company should determine whether it is dealing with:

• A bank compliance restriction;
• A temporary transaction postponement;
• A MASAK-related process;
• Criminal seizure;
• A prosecutor- or court-related measure;
• Tax enforcement;
• Civil enforcement;
• Another statutory restriction.

Different measures require different responses.

2. Do Not Confuse a Temporary Transaction Postponement With a Long-Term Asset Seizure

Under Article 19/A of Law No. 5549, transactions involving assets suspected of being connected with money laundering or terrorist financing may, under the statutory mechanism, be suspended or prevented for up to seven working days so that the suspicion can be analyzed and, where necessary, transmitted to competent authorities.

That seven-working-day mechanism should not be confused with a separate seizure or judicial protective measure.

A company whose assets remain restricted should therefore determine whether another legal measure has subsequently been imposed.

3. Can the Company Continue Receiving Revenue?

Potentially.

A restriction on outgoing transactions does not necessarily mean that incoming customer payments are prohibited.

The company should determine:

• Whether incoming payments remain possible;
• Whether new funds immediately become restricted;
• Whether only an identified amount is affected;
• Whether the restriction extends to the entire account balance.

This is particularly important for businesses with continuing daily revenue.

4. Can the Company Use New Revenue?

This depends on the scope of the restriction.

Suppose a company’s account contained TRY 20 million when a disputed TRY 3 million transaction was identified.

The company subsequently receives TRY 5 million from legitimate customers.

An important question becomes whether the later revenue is independently usable or falls within the existing restriction.

The company should not assume either answer without examining the underlying measure.

5. Separate Frozen Funds From Unrelated Funds

A detailed fund-tracing analysis can be extremely important.

The company should identify:

Opening balance

Questioned transaction

Legitimate historical funds

Subsequent customer revenue

Payments already made

Remaining balance

This can support an argument that demonstrably unrelated corporate funds should not remain restricted.

6. Can Employee Salaries Still Be Paid?

Potentially, depending on the measure and available unrestricted funds.

Payroll should become an immediate priority.

Prepare:

• Employee list;
• Salary amounts;
• Payroll records;
• Previous salary payments;
• Payment deadline;
• Social security records.

Where appropriate under the applicable procedure, these documents may support a request for limited access to funds necessary for employee salaries.

7. Can Taxes and Social Security Contributions Be Paid?

The same problem arises with mandatory public obligations.

A company should document:

• Tax payment dates;
• Social security liabilities;
• Amounts due;
• Potential penalties;
• Relevant declarations.

If the restriction prevents payment, the company should preserve evidence showing that the non-payment resulted from the asset measure.

8. Can Suppliers Still Be Paid?

Potentially, where unrestricted funds are available or limited payment is legally permitted.

Critical suppliers should be identified immediately.

Prioritize suppliers whose non-payment could cause:

• Factory shutdown;
• Loss of raw materials;
• Cancellation of essential services;
• Termination of distribution;
• Loss of inventory;
• Major contractual penalties.

9. Can the Company Continue Manufacturing?

Possibly.

If machinery, inventory, premises and operating funds remain available, an asset restriction does not necessarily prevent manufacturing activity.

However, the company must examine whether any seized physical assets can legally continue to be used.

Possession, management, use and disposal are separate questions.

10. Can Frozen Property Be Sold?

Generally, management should not attempt to dispose of property contrary to an existing seizure or restriction.

A company should never try to circumvent the measure through:

• Related-party sales;
• Artificial transfers;
• Nominee ownership;
• Backdated contracts;
• Below-market transfers.

Such conduct can create significantly greater legal exposure.

11. Can the Company Enter New Contracts?

Potentially.

A company that continues to have legal personality and management authority may generally continue commercial activities unless the relevant measure prevents them.

But management should consider whether the company can realistically perform the new obligation.

Entering contracts while knowing that payment or delivery cannot be completed can create separate commercial disputes.

12. Can Existing Customer Contracts Continue?

Often, yes, subject to the practical consequences of the asset restriction.

Management should review:

• Delivery obligations;
• Payment mechanisms;
• Termination provisions;
• Force majeure clauses;
• Material adverse change provisions;
• Insolvency-related provisions;
• Notice requirements.

A criminal asset measure does not automatically suspend private contractual obligations.

13. Can the Company Open a New Bank Account?

This requires considerable caution.

Opening another account for legitimate continuing business activity is legally different from opening an account specifically to evade an existing asset restriction.

Management should first determine:

• Scope of the existing order;
• Whether other accounts are covered;
• Whether newly received funds are affected;
• Whether opening or using another account could constitute circumvention.

Do not move business activity to another bank merely to defeat an official measure.

14. Can Shareholders Pay Company Expenses Personally?

This should not be improvised.

A shareholder may potentially provide legitimate financing to the company, but the arrangement should be documented correctly.

It may constitute:

• Shareholder loan;
• Capital contribution;
• Expense reimbursement arrangement;
• Another legitimate financing transaction.

The company should also determine whether new funds would become subject to the existing restriction.

15. Should Foreign Shareholders Send Additional Capital?

Not before understanding the freeze.

Sending another USD 1 million into an account subject to a broad restriction may simply cause the new money to become inaccessible.

Before transferring additional capital, establish:

• Scope of restriction;
• Status of incoming funds;
• Purpose of financing;
• Source of funds;
• Correct corporate documentation.

16. Can Another Group Company Pay Suppliers?

Potentially, but intercompany payments should have a genuine legal and commercial basis.

Foreign investors should avoid creating artificial group-company transactions designed merely to circumvent the restriction.

If another group entity legitimately pays an expense, preserve:

• Intercompany agreement;
• Invoice;
• Payment record;
• Accounting treatment;
• Reimbursement terms.

17. What If Only One Company in a Group Is Affected?

Do not automatically mix the finances of separate legal entities.

Each company should maintain its own:

• Accounts;
• Contracts;
• Revenue;
• Expenses;
• Corporate records.

Using another subsidiary as an informal substitute bank account can create further questions concerning beneficial ownership and fund movements.

18. Can the Foreign Parent Company Continue Doing Business With the Turkish Subsidiary?

Potentially.

But related-party transactions may receive additional scrutiny during a financial investigation.

Document:

• Goods or services;
• Pricing;
• Contractual basis;
• Invoices;
• Transfer purpose;
• Accounting treatment.

Commercial reality should match the paperwork.

19. Does an Asset Freeze Remove the Existing Directors?

Not automatically.

This is an important distinction.

An asset seizure and appointment of a trustee to manage a company are different measures.

The Constitutional Court has explained that trustee appointment under Article 133 of the Criminal Procedure Code may be ordered where there are strong grounds for suspicion that an offence is being committed within company activities, where the measure is necessary to reveal the material truth, and for the offences covered by the provision.

Therefore:

Asset freeze ≠ automatic removal of management.

20. What Changes If a Trustee Is Appointed?

The position can change dramatically.

The Constitutional Court has described trustee appointment to company management as an extremely severe interference because it can entirely terminate the existing management authority.

If a trustee has been appointed, foreign shareholders and existing directors should not assume they retain ordinary management powers.

The trustee decision must be examined carefully.

21. Can a Company Operate Under a Trustee?

Potentially, yes.

Trustee appointment does not necessarily mean commercial activity stops.

Instead, management and representation may be exercised under the trustee structure established by the decision.

The company may continue operating while control over corporate decisions changes.

22. Can Shareholders Give Instructions After a Trustee Is Appointed?

Not necessarily.

The scope of the trustee’s authority is critical.

Foreign shareholders should not attempt to bypass trustee management through informal instructions to:

• Employees;
• Banks;
• Accountants;
• Suppliers;
• Customers.

The governing decision must be respected while any challenge is pursued through lawful procedures.

23. Can Company Shares Be Frozen Without Freezing Every Company Asset?

Potentially.

A restriction affecting a shareholder’s ownership interest is conceptually different from seizure of corporate assets.

Foreign investors should therefore distinguish:

Shareholder assets

from

Company assets.

This distinction can materially affect whether the company continues operating normally.

24. Can a Company Request Release of Operating Funds?

Depending on the measure, it may be possible to seek narrowing, modification or partial release.

A company may present evidence concerning:

• Payroll;
• Taxes;
• Social security;
• Utilities;
• Critical suppliers;
• Customs duties;
• Rent;
• Insurance;
• Essential production expenses.

The objective is to demonstrate why continued total restriction imposes consequences beyond what is necessary to preserve the relevant assets.

25. Can the Company Request a Specific Monthly Operating Budget?

Depending on the procedural mechanism, a narrowly structured request may be considered.

For example, the company could document:

Monthly payroll: TRY 5 million

Taxes and social security: TRY 2 million

Essential suppliers: TRY 4 million

Utilities: TRY 1 million

Rather than seeking unrestricted access to all funds, the company may examine whether a controlled operational release is legally available.

26. Can Payments Be Made Directly to Employees or Public Authorities?

This may be worth exploring depending on the particular measure.

A controlled-payment structure can sometimes address concerns that unrestricted funds might be transferred elsewhere.

Any such mechanism requires authorization where the assets remain legally restricted.

27. Can the Company Ask for the Freeze to Be Limited to the Questioned Amount?

Potentially.

Consider:

Allegedly suspicious funds: TRY 10 million

Total company assets affected: TRY 150 million

The company may examine whether continuing to restrict the entire amount remains necessary and proportionate.

The Constitutional Court treats asset seizures and trustee measures as interferences with property rights and examines their suitability, necessity and proportionality in the circumstances.

28. Does the Company Need to Prove the Source of Funds?

This can become one of the most important parts of the case.

Evidence may include:

• Customer contracts;
• Invoices;
• Bank statements;
• SWIFT records;
• Export documents;
• Customs records;
• Shareholder loan agreements;
• Capital documents;
• Financial statements;
• Tax records.

The company should connect each questioned payment with an identifiable legitimate transaction.

29. What If the Company Has Both Legitimate and Questioned Funds?

Prepare separate tracing.

For example:

TRY 50 million: Historical legitimate trading revenue

TRY 5 million: Transaction under investigation

TRY 10 million: New customer revenue received afterward

A detailed financial analysis can help distinguish funds rather than treating the entire account as economically identical.

30. What If the Company’s Assets Were Acquired Years Before the Investigation?

Acquisition history can be highly relevant.

For example:

Factory purchased: 2017

Machinery purchased: 2019

Alleged financial offence: 2025

Historical contracts, bank records and financial statements can help establish that particular assets were acquired independently of the conduct under investigation.

31. Can the Company Challenge the Asset Freeze?

Potentially.

The appropriate procedure depends on the legal basis and issuing authority.

Possible issues can include:

• Absence of statutory conditions;
• Lack of connection between assets and alleged criminal proceeds;
• Legitimate source of funds;
• Excessive scope;
• Disproportionate operational impact;
• Changed circumstances;
• Continued necessity.

The actual decision should be challenged rather than merely asking the bank to “unfreeze the account.”

32. Does the Challenge Automatically Suspend the Freeze?

Not necessarily.

Foreign investors should plan business continuity on the assumption that the restriction may remain effective while a challenge is considered unless a competent authority modifies or removes it.

33. Can the Company Continue Paying Foreign Suppliers?

Potentially, but only if the funds and transactions are legally available.

International transfers may receive particular scrutiny where the underlying investigation already concerns cross-border financial movements.

Preserve:

• Supply agreement;
• Invoice;
• Customs documents;
• Shipping records;
• Payment history;
• Commercial rationale.

34. Can Import and Export Operations Continue?

Potentially.

But inability to make payments can quickly create:

• Customs delays;
• Storage charges;
• Demurrage;
• Cargo detention;
• Supplier defaults;
• Production interruption.

Import-export businesses should quantify these losses immediately.

35. What About Rent and Utilities?

These can be essential business-continuity expenses.

Prepare:

• Lease agreement;
• Rent schedule;
• Electricity invoices;
• Gas invoices;
• Internet and telecommunications bills;
• Production utility expenses.

These documents may support a narrowly tailored request for operating payments where legally available.

36. Should Employees Be Dismissed Immediately?

Not automatically.

Management should first determine:

• Expected duration of the restriction;
• Availability of unrestricted funds;
• Possibility of operational release;
• Alternative legitimate financing;
• Employment-law consequences.

A temporary financial restriction should not automatically trigger irreversible workforce decisions.

37. Can the Company Borrow Money While Assets Are Frozen?

Potentially, but practical and legal problems may arise.

Lenders may require:

• Security;
• Financial disclosures;
• Representations concerning investigations;
• Access to bank accounts.

New financing should also not be structured to circumvent an existing legal restriction.

38. Can Existing Lenders Declare Default?

Potentially.

Review:

• Asset seizure clauses;
• Material adverse effect provisions;
• Cross-default clauses;
• Banking covenants;
• Notice requirements.

Early communication may be important.

39. Can the Company Sell Inventory?

Potentially, if inventory itself is not subject to a restriction and the transaction is part of legitimate ordinary business.

However, management should verify whether proceeds from the sale would themselves become restricted.

40. Can the Company Dispose of Seized Machinery or Real Estate?

Not contrary to a valid restriction.

Management should never sell, pledge or transfer an asset in an attempt to defeat the measure.

41. What Happens to Customer Payments?

Customers should receive accurate payment instructions.

Do not suddenly redirect payments to:

• Director’s personal account;
• Shareholder’s foreign account;
• Related company’s account;

without a genuine legal basis.

Such arrangements can complicate the investigation significantly.

42. Can Foreign Shareholders Take Dividends?

This may be restricted or commercially inappropriate while company assets are subject to protective measures.

Before distributing profits, examine:

• Scope of asset restriction;
• Corporate-law requirements;
• Company’s solvency;
• Existing financing obligations;
• Whether dividend rights themselves are affected.

43. Can the Company Continue Board and Shareholder Meetings?

Generally, an asset freeze alone does not necessarily eliminate corporate governance.

However, trustee appointment or another management-related measure may change who can exercise particular powers.

The relevant decision controls.

44. Document Business Damage From Day One

Foreign investors should maintain a loss file.

Record:

• Missed sales;
• Cancelled contracts;
• Default interest;
• Supplier penalties;
• Storage charges;
• Demurrage;
• Emergency financing costs;
• Production losses;
• Employee-related costs;
• Lost customers.

This information may later become important depending on the outcome and available remedies.

45. Prepare a Business-Continuity File

The company should produce a concise operational report showing:

Employees: Number and monthly payroll

Taxes: Amount and next due date

Suppliers: Essential payments

Customers: Expected revenue

Production: Minimum operating expenses

Loans: Next payment dates

Utilities: Essential monthly costs

Customs: Pending imports and exports

This can make a request for limited operational access significantly more concrete.

46. What Should Foreign Investors Never Do?

Never attempt to defeat the freeze through artificial transactions.

Avoid:

• Hidden bank accounts;
• Personal-account routing;
• Backdated contracts;
• Fake invoices;
• Fictitious shareholder loans;
• Undisclosed related-party transfers;
• Nominee ownership;
• Secret asset sales;
• Altering accounting records;
• Deleting correspondence.

These actions can transform an asset-management problem into a significantly more serious criminal issue.

47. First 48-Hour Business Continuity Plan

Foreign investors should immediately:

1. Obtain the restriction decision where available.
2. Identify every affected asset.
3. Determine whether existing management remains authorized.
4. Check whether a trustee has been appointed.
5. Calculate payroll and mandatory public payments.
6. Identify critical supplier obligations.
7. Preserve bank and accounting records.
8. Reconstruct questioned transactions.
9. Separate legitimate funds from disputed funds.
10. Examine full or partial release options.
11. Review financing agreements.
12. Document operational losses.

Frequently Asked Questions

1. Can a foreign-owned company continue operating while its bank accounts are frozen?

Potentially. The answer depends on the scope of the restriction, availability of other legitimate resources and whether company management remains authorized.

2. Does freezing company assets automatically close the company?

No. Asset seizure, company closure and trustee appointment are legally different matters.

3. Can employees still be paid?

Potentially, depending on available unrestricted funds and whether the applicable procedure permits limited access or authorized payments.

4. Can the company continue receiving customer payments?

Possibly. The company must determine whether incoming funds are permitted and whether they become subject to the existing restriction.

5. Can shareholders transfer new money to keep the company alive?

Potentially, but the legal scope of the freeze should be examined before additional capital or shareholder loans are transferred.

6. Can another group company pay the Turkish company’s expenses?

Potentially where there is a genuine documented commercial basis. It should not be used artificially to circumvent the asset restriction.

7. Can the company request partial release of frozen assets?

Potentially. Depending on the measure, it may seek release of unrelated funds or controlled access for essential operating expenses.

8. Does appointment of a trustee mean the company must stop operating?

Not necessarily. The company may continue operating under the management structure established by the trustee decision. Trustee appointment can, however, remove the existing management’s authority. The Constitutional Court has characterized such intervention as particularly severe.

9. Can foreign shareholders simply move operations to another bank account?

They should not use another account to circumvent an existing legal restriction. Any alternative banking arrangement must respect the scope of the measure.

10. What is the most important immediate objective?

The company should simultaneously protect business continuity and challenge or narrow the asset restriction where legally justified.

Client-Focused Legal Support for Foreign-Owned Companies With Frozen Assets

Freezing company assets does not necessarily mean the end of the business.

The immediate objective should be to determine exactly which assets are restricted, whether existing management remains authorized, how much money is genuinely connected with the investigation and what resources are necessary to keep legitimate operations functioning.

Where appropriate, a company may need to pursue a strategy combining challenge of the underlying measure, source-of-funds evidence, fund tracing, partial-release requests and a documented business-continuity plan.

The distinction between ordinary asset seizure and trustee appointment is particularly important. Turkish Constitutional Court decisions demonstrate that seizure and trustee measures can substantially interfere with property and management rights, while their legality and proportionality depend on the concrete circumstances and continuing justification.

Fırat Fesih Kaya Law Office assists foreign investors, foreign-owned companies, shareholders and directors with frozen corporate assets, blocked bank accounts, financial investigations, source-of-funds disputes, seizure measures and business-continuity issues in Turkey.

Lawyer Fırat Fesih Kaya provides legal assistance in examining the scope of asset restrictions, reconstructing corporate transactions, preparing applications for release or limitation of measures and protecting continuing legitimate business operations during financial investigations.

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

This article is intended for general information and does not constitute legal advice. Whether a company can continue operating depends on the precise legal basis and scope of the restriction, the assets affected, the company’s management structure and the circumstances of the investigation.