Foreign Shareholder Discovers Contracts Signed in Their Name Without Authorization in Turkey: Are They Binding? 2026 Updated Guide

A foreign shareholder discovers contracts signed in their name without authorization in Turkey. Learn when unauthorized contracts are binding, how ratification works, what evidence should be preserved and which civil, corporate and criminal remedies may be available.

A foreign shareholder may discover that another shareholder, company manager, employee, accountant, consultant or business partner has signed a contract, undertaking, settlement, guarantee or other document in the shareholder’s name without permission. The first question is usually whether the document automatically creates liability for the foreign shareholder. Under Turkish law, the answer depends on who signed the document, whether that person had actual or apparent authority, the scope of any power of attorney, whether the shareholder later approved the transaction, what the counterparty knew and whether the signature itself is genuine. Turkish Code of Obligations Article 46 provides that where a person acts as a representative without authority, the transaction binds the represented person only if that person ratifies it.

Being a Shareholder Does Not Automatically Authorize Others to Sign Personally for You

A company and its shareholder are legally distinct. A person who is authorized to represent a Turkish company does not automatically have authority to enter into personal contracts in the name of a foreign shareholder.

The first distinction should therefore be whether the disputed agreement was supposedly signed on behalf of the company or personally on behalf of the shareholder.

Check Whether the Signature Is Actually the Shareholder’s Signature

There is an important difference between unauthorized representation and a forged signature.

In an unauthorized-representation case, someone may openly sign as a representative despite lacking sufficient authority. In a forgery case, someone may imitate or reproduce the shareholder’s signature and make the document appear as though the shareholder personally signed it.

These scenarios can require different civil, commercial, evidentiary and potentially criminal responses.

Check Every Power of Attorney

Foreign investors frequently issue powers of attorney in Turkey for company incorporation, banking, tax, real-estate or administrative transactions. The exact wording of those documents should be reviewed immediately.

A power to establish a company does not necessarily authorize every subsequent commercial transaction. Likewise, authority to represent a shareholder at a shareholders’ meeting does not automatically authorize the representative to borrow money personally in the shareholder’s name.

Scope of Representation Matters

Under Article 41 of the Turkish Code of Obligations, where representation authority arises from a legal transaction, its content and extent are determined according to that authorization. If the authority has been communicated to third parties, its extent can also be evaluated according to that communication.

The actual power of attorney, corporate resolutions and communications with the counterparty therefore become essential evidence.

What Happens If There Was No Authority?

The general rule under Article 46 is significant: a legal transaction entered into by an unauthorized representative binds the represented person only if that person ratifies it.

Accordingly, discovering an unauthorized contract does not necessarily mean that the foreign shareholder must perform it.

However, the factual history should be examined carefully before taking that position.

Ratification Can Change the Result

If the foreign shareholder subsequently approves the transaction, the absence of original authority may no longer prevent the transaction from binding them.

The shareholder should therefore avoid conduct that could create unnecessary arguments concerning subsequent approval before the documents have been reviewed.

Ratification Can Become an Evidentiary Dispute

The counterparty may claim that the shareholder knew about the agreement, accepted its benefits, instructed performance, made payments or otherwise treated the transaction as valid.

Bank records, emails, messages, board correspondence and accounting entries can therefore become highly important.

The Counterparty Can Ask for a Decision on Ratification

Under Article 46, the counterparty dealing with the unauthorized representative can request that the represented person state within an appropriate period whether the transaction will be ratified. If it is not ratified within that period, the counterparty can cease to be bound by the transaction.

A formal request of this kind should not be ignored.

Liability of the Unauthorized Representative

If the represented person does not ratify the transaction, Article 47 provides a potential basis for claiming damages from the unauthorized representative, subject to the statutory conditions. The provision also addresses the position where the counterparty knew or should have known that authority was absent.

This can become important where the foreign shareholder, company and contractual counterparty have competing claims.

Good Faith of the Counterparty Can Matter

A third party that genuinely believed it was dealing with an authorized representative may be in a different position from someone who knew that the signer lacked authority.

The counterparty’s due diligence should therefore be investigated.

Did it request a power of attorney? Did it check the trade registry? Did it receive a signature circular? Was the alleged authority obviously inconsistent with the transaction?

Company Representation Requires Separate Analysis

If the disputed agreement was executed in the name of the Turkish company rather than personally in the shareholder’s name, Turkish company-law representation rules become central.

For joint-stock companies, representation generally belongs to the board of directors and may be delegated according to the applicable corporate and registration framework. Registered joint-signature requirements can also be legally significant.

Trade Registry Records Should Be Checked Immediately

Obtain the company’s current and historical trade-registry records covering the date on which the disputed agreement was executed.

Determine who was authorized to represent the company, whether signatures had to be individual or joint, whether representation authority had been revoked and whether relevant changes were registered and announced.

Internal Restrictions and External Representation Are Not Always the Same

A manager may breach an internal corporate restriction without necessarily making every transaction ineffective against a good-faith third party.

Under the Turkish Commercial Code framework, certain internal limitations on representation cannot simply be asserted against good-faith third parties, while registered restrictions involving branch-only authority or joint representation can have external effect.

This distinction is particularly important in shareholder disputes.

Joint Signature Requirements Can Be Decisive

Suppose a company is registered as requiring two authorized signatures but a disputed contract bears only one.

The trade-registry records, articles, board resolutions and nature of the registered representation rule should be examined immediately.

Limited Companies Require Their Own Representation Review

In a Turkish limited company, management and representation are ordinarily connected with managers rather than merely with shareholder status. Current trade-registry guidance also reflects the requirement that at least one shareholder be appointed as a manager with management and representation authority.

A shareholder therefore should not assume that another shareholder had authority merely because both owned shares.

A Majority Shareholder Does Not Automatically Have Unlimited Signing Authority

Owning 51%, 70% or even a larger percentage of shares does not itself answer who can legally sign for another shareholder personally or who can bind the company.

Ownership, management and representation must be distinguished.

Review the Contract Itself

Examine the signature block carefully.

Does it state that the person signed as attorney, company director, manager or representative? Does it contain the foreign shareholder’s name as though they personally signed? Does it contain a company stamp? Is a power of attorney referenced?

These details can materially change the legal analysis.

Obtain the Original Document

Where signature authenticity is disputed, an original document may become substantially more useful than a photograph, scan or forwarded PDF.

Preserve the electronic version as well, including available metadata and transmission records.

Preserve Emails and Messaging Records

Do not delete WhatsApp messages, emails or other communications concerning the agreement.

They may establish who negotiated the transaction, who sent the contract, whether authority was questioned and whether the foreign shareholder knew about the transaction.

Check Bank Movements

Follow the money.

Determine whether funds under the disputed agreement entered the shareholder’s personal account, the Turkish company’s account, another shareholder’s account or a third party’s account.

Financial flows can provide powerful evidence concerning the true transaction.

Check Whether Company Assets Were Transferred

Unauthorized contracts sometimes accompany transfers of company money, vehicles, real estate, inventory or receivables.

If assets have already moved, the case may require urgent protective measures in addition to a contractual defense.

Guarantees Require Particular Attention

A document purportedly making a foreign shareholder personally responsible for company debt should be examined especially carefully.

The existence and validity of personal liability should never be assumed merely because the person owns shares in the debtor company.

Promissory Notes and Other Negotiable Instruments Require Separate Analysis

If the unauthorized transaction involves a promissory note, cheque or another negotiable instrument, specialized rules may apply.

Immediate action can be necessary because enforcement proceedings may begin before the underlying representation dispute is resolved.

What If Enforcement Proceedings Have Already Started?

Do not limit the response to sending a letter stating that the contract is unauthorized.

The shareholder should identify the type of enforcement proceeding, service date, document relied upon and applicable objection or litigation period immediately.

Missing an enforcement deadline can substantially complicate the dispute.

What If the Counterparty Threatens Litigation?

Prepare the representation file before litigation begins.

Collect the power of attorney, registry records, corporate resolutions, original agreement, signature documents, correspondence, payment records and evidence showing when the shareholder first discovered the transaction.

Signature Examination May Be Necessary

If the shareholder says, “That is not my signature,” forensic examination may become relevant.

Authenticity should be distinguished clearly from lack of authority: the first challenges whether the shareholder signed at all; the second concerns whether another person had legal power to act for the shareholder.

Criminal Issues May Also Arise

Depending on the facts, falsified signatures, fabricated powers of attorney, deceptive use of documents or diversion of assets may raise criminal-law questions in addition to civil and corporate disputes.

Criminal allegations should be based on evidence rather than used merely as pressure in an ordinary contractual disagreement.

Notify Relevant Parties Promptly

Once unauthorized activity is discovered, the shareholder should consider formal notice to relevant counterparties explaining the disputed authority and preserving legal rights.

The wording should be carefully prepared because an imprecise communication could later be argued to constitute approval or acknowledgment.

Review Whether Authority Should Be Revoked

The Turkish Code of Obligations permits representation authority arising from a legal transaction to be limited or revoked, subject to rights arising from underlying contractual relationships. It also contains protections concerning third parties where previously communicated authority has been withdrawn without notification.

Existing powers of attorney should therefore be reviewed immediately.

Recover Old Authority Documents

Where representation authority has ended, Article 44 addresses the return or deposit of authority documents. Failure to deal properly with outstanding authority documents can create additional risks involving good-faith third parties.

Foreign investors should identify every original power of attorney still held by former managers, consultants or business partners.

Update Corporate Signing Authorities

If the problem concerns company representation, consider whether trade-registry changes, new board or shareholder resolutions, internal directives, banking mandates or signature arrangements require updating.

A purely private instruction may be insufficient where registered corporate representation remains unchanged.

Notify Banks Where Necessary

If unauthorized contracts are connected with company banking authority, guarantees or payment instructions, the relevant bank mandates should be reviewed promptly.

Future unauthorized transactions may be preventable even while the historical dispute remains unresolved.

Consider Interim Protective Measures

Where there is a concrete risk of asset transfers, enforcement or further use of disputed documents, urgent civil or commercial protective measures may need to be evaluated.

The appropriate measure depends on the asset, claim and evidence available.

Foreign Shareholders Should Review Their Entire Corporate File

An unauthorized contract may be a symptom of a broader corporate-governance problem.

Review share transfers, board or shareholders’ resolutions, banking authority, accounting access, powers of attorney, related-party transactions, asset transfers and significant contracts.

Immediate Action Plan

A foreign shareholder discovering contracts apparently signed in their name without authorization should immediately obtain the original contracts, avoid conduct that could be characterized as ratification, review every power of attorney, verify current and historical trade-registry records, identify who negotiated and benefited from the transaction, preserve correspondence and bank evidence, determine whether the signature is forged or merely unauthorized, review company representation rules, revoke unnecessary authority, notify relevant parties where appropriate and assess urgent civil, commercial, enforcement and criminal remedies.

Frequently Asked Questions

Is a contract signed without my authorization automatically binding on me in Turkey?

Not necessarily. Under Article 46 of the Turkish Code of Obligations, an unauthorized representative’s transaction binds the represented person if that person ratifies it.

What if I later accepted the contract?

Subsequent approval can materially change the legal position. Conduct after learning of the transaction should therefore be examined carefully.

Is another shareholder automatically authorized to sign for me?

No. Share ownership by itself does not automatically create personal representation authority.

Can a company manager sign a personal guarantee for a foreign shareholder?

Company representation authority should not automatically be treated as authority to create personal obligations for a shareholder. The specific authority must be examined.

What if my signature was forged?

Forgery raises a different evidentiary issue from unauthorized representation. Preserve the original document and comparison signatures and evaluate forensic and legal remedies promptly.

What if the person had an old power of attorney?

The document’s wording, duration, revocation history and communications to third parties should be reviewed. Turkish law contains specific rules concerning withdrawal of representation authority and good-faith third parties.

Can I revoke an existing power of attorney?

Representation authority arising from a legal transaction can generally be limited or revoked, subject to the consequences provided by law and any underlying contractual relationship.

What if the contract was signed for the Turkish company rather than personally for me?

Company-law representation rules apply. Trade-registry records, registered signatory arrangements and corporate resolutions should be examined.

Can the unauthorized signer be personally liable?

Potentially. Article 47 of the Turkish Code of Obligations contains rules concerning liability arising when an unauthorized transaction is not ratified.

What should a foreign shareholder do first?

Secure the disputed documents and determine whether the problem is forged signature, unauthorized personal representation or unauthorized corporate representation. These are legally different scenarios and should not be treated as the same dispute.

Client-Focused Legal Support for Unauthorized Contracts and Shareholder Disputes in Turkey

Unauthorized contracts involving foreign shareholders can develop into corporate-control disputes, debt claims, enforcement proceedings, forged-signature cases, asset transfers, director liability and criminal investigations. Fırat Fesih Kaya Law Office assists foreign shareholders, investors and international companies in disputes concerning unauthorized representation and contracts in Turkey. Lawyer Fırat Fesih Kaya provides legal assistance in reviewing disputed contracts and powers of attorney, investigating company representation authority, challenging unauthorized transactions, seeking urgent protective measures and coordinating civil, commercial, enforcement and criminal proceedings where necessary.

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