Company Director Transfers Profitable Contracts to a Related Company in Turkey: Legal Remedies – 2026 Updated Guide

Related-Party Contract Transfers in Turkey: Director Liability

What can a company do when a director transfers profitable contracts to a related company in Turkey? Learn about injunctions, damages, evidence, and legal remedies.

When a company director transfers profitable contracts to a related company, the conduct may create serious financial, corporate, and legal consequences. The issue is particularly important where the director uses the company’s confidential information, negotiating power, employees, customer relationships, or commercial opportunities for the benefit of another business.

Not every transaction with a related company is illegal. However, undisclosed conflicts of interest, below-market transfers, misuse of company opportunities, and intentional damage to the company may lead to unfair competition claims, director liability, compensation proceedings, and corporate actions.

This article explains the main legal remedies available under the 2026 Turkish legal framework.

When Is a Contract Transfer Unlawful?

A director may sometimes be authorized to negotiate or assign contracts to another group company. The transaction becomes legally problematic when it is performed without proper approval, without a legitimate business reason, or for the personal benefit of the director or an affiliated company.

The following circumstances may indicate unlawful conduct:

The contract was transferred below its commercial value; the director concealed the relationship between the companies; the company was prevented from completing a profitable project; the director used confidential pricing or customer information; company employees or resources were used for the related company; payments were redirected; or the director signed documents without proper authority.

The company should examine whether the transfer caused an actual loss, whether the director obtained a personal benefit, and whether the transaction violated the articles of association, a shareholders’ agreement, a management contract, or internal approval procedures.

Related-Party Transactions and Conflict of Interest

Transactions between affiliated companies are not automatically prohibited. They may be commercially reasonable if properly documented, approved, and carried out on fair terms.

The main legal concern is whether the director acted in the company’s best interests or placed a related company before the company he or she was appointed to manage. A director who controls both businesses may have a conflict of interest, especially when deciding which company will receive a profitable contract.

Important questions include:

Was the transaction disclosed to the board or shareholders? Was an independent valuation obtained? Did the company receive fair consideration? Were alternative offers considered? Was the contract transferred before the company could benefit from it? Did the director participate in the approval process despite having a personal interest?

A lack of transparency may strengthen claims for damages and corporate liability.

Can the Conduct Be Considered Unfair Competition?

The Turkish Commercial Code protects honest commercial competition and prohibits conduct that deceives customers, misuses confidential information, exploits another company’s reputation, or unlawfully interferes with commercial relationships.

A contract transfer may support an unfair competition claim where the director:

• Misrepresents the company’s ability to perform;
• Tells customers that the original company no longer operates;
• Uses confidential bids, pricing, or customer data;
• Diverts contracts through misleading communications;
• Copies company documents, branding, or proposals;
• Uses the company’s workforce or equipment for a related business;
• Redirects payments or contract opportunities without authorization.

The legal assessment depends on the evidence. A company should demonstrate the connection between the director’s conduct and the lost contract, reduced revenue, or damage to its commercial reputation.

Director Liability for Diverting Corporate Opportunities

Directors are expected to act carefully, loyally, and within the limits of their authority. A director may face personal responsibility if he or she deliberately diverts a business opportunity that properly belonged to the company.

Corporate opportunities may include a tender, customer order, distribution agreement, supply contract, construction project, service agreement, or investment opportunity discovered through the director’s position.

The director’s personal liability may become stronger where the opportunity was obtained through company negotiations, company contacts, company resources, or confidential information. The existence of shareholder approval, a general assembly resolution, or a legitimate group-company restructuring may affect the outcome.

Lawyer Fırat Fesih Kaya can assess whether the facts indicate a breach of management duties, unfair competition, unauthorized representation, or a separate contractual violation.

What Legal Remedies Are Available?

The company may consider several remedies at the same time. Depending on the facts, it may request the court to stop the unlawful conduct, prevent its continuation, correct misleading effects, and protect confidential information.

A compensation claim may be filed for actual financial loss, lost profits, additional expenses, damage to goodwill, and other recoverable harm. The company may also seek remedies relating to contracts that were transferred without authority or in violation of corporate duties.

Where the director obtained a benefit through the company’s business opportunity, the legal strategy may also examine whether restitution, recovery of profits, or another financial remedy is available under the relevant legal basis.

Urgent interim protection may be requested where there is a risk that the related company will continue using confidential information, collect company payments, dispose of assets, or destroy electronic evidence.

What Evidence Should Be Preserved?

Evidence preservation should begin immediately. The company should collect the original contracts, amendments, board minutes, approval documents, e-mails, messaging records, invoices, bank statements, customer communications, and accounting entries relating to the transferred business.

Digital evidence may include CRM access records, document download histories, corporate email forwarding rules, cloud-storage activity, electronic signatures, calendar records, and company-device data.

The company should also preserve evidence showing the value of the transferred contract. This may include customer offers, tender documents, previous invoices, profit projections, comparable transactions, employee statements, and records of negotiations conducted before the transfer.

Screenshots alone may not be sufficient. Electronic evidence should be preserved lawfully and, where appropriate, reviewed by a forensic specialist. The company should not access private accounts, alter records, or delete information in an attempt to protect its position.

How Is Compensation Calculated?

The value of a compensation claim depends on the loss that can be proven. The analysis may include the contract’s expected revenue, profit margin, duration, renewal potential, expenses incurred, and the value of work already completed.

A financial expert may compare the company’s financial position before and after the transfer. The calculation should also consider whether the company could realistically have performed the contract and whether the loss was caused by the director’s conduct rather than market conditions or customer dissatisfaction.

The company must distinguish between gross revenue and recoverable profit. Lost turnover does not always equal lost damages because performance costs, taxes, labor expenses, and other deductions may be relevant.

A shareholder’s personal loss is also different from the company’s loss. If the contract belonged to the company, the primary compensation claim usually belongs to the company. A shareholder may need to pursue a corporate claim, a director-liability action, or a separate claim based on a direct violation of personal rights.

Corporate Remedies Against the Director

Litigation may not be the only solution. The company may need to take immediate corporate measures to prevent further losses.

Depending on the company structure and governing documents, shareholders may consider calling a general assembly, removing or replacing the director, changing signing authority, restricting access to company accounts, requesting corporate records, and investigating related-party transactions.

If the company is controlled equally by competing shareholders, the dispute may also create a management deadlock. In serious cases, shareholders may need to evaluate exit rights, share valuation, dissolution-related remedies, or court applications concerning the company’s management.

A careful corporate strategy is essential because poorly prepared resolutions may later be challenged.

Can a Criminal Complaint Be Filed?

A criminal complaint may be considered if the conduct involves fraud, breach of trust, unauthorized use of company assets, falsified documents, unlawful data use, theft or disclosure of trade secrets, or diversion of payments.

The criminal assessment depends on the director’s intent, the documents used, the financial benefit obtained, and the exact method of transferring the contracts. A criminal complaint does not automatically compensate the company. Commercial claims, interim measures, and corporate proceedings may also be required.

The complaint should be supported by a clear timeline and concrete evidence rather than general allegations.

Rights of Foreign Shareholders

Foreign shareholders and international investors can usually appoint a Turkish lawyer to investigate the transfer and pursue legal remedies. A power of attorney may be issued before a Turkish consulate or a local notary and may require legalization, apostille, and an official translation.

A lawyer can review company records, communicate with directors and accountants, preserve digital evidence, seek interim protection, file commercial proceedings, and coordinate criminal or corporate applications.

The governing documents should be reviewed in both the original language and any translated version because differences in the wording of approval, non-compete, confidentiality, and dispute-resolution clauses may be important.

2026 Legal Considerations

In 2026, electronic records are often central to related-party contract disputes. Corporate e-mail, cloud accounting, customer relationship systems, electronic invoices, online banking, digital signatures, and messaging applications may demonstrate who negotiated the contract and where the commercial benefit was redirected.

Courts may also examine whether the company maintained adequate internal controls. Access permissions, approval workflows, conflict-of-interest declarations, and accounting records can affect both liability and evidence.

Because customer and employee records may contain personal data, the company should preserve and use such information lawfully. Commercial protection and data-protection obligations may arise together.

Frequently Asked Questions (FAQ)

1. Can a company sue a director for transferring a profitable contract to a related company?

Yes. If the transfer breached the director’s duties, violated company documents, caused financial loss, or involved unfair conduct, the company may pursue compensation and other legal remedies.

2. Is every related-party transaction illegal in Turkey?

No. A related-party transaction may be lawful if it is transparent, properly approved, commercially justified, and completed on fair terms.

3. Can the company request an injunction?

The company may request interim protection where continued use of confidential information, further contract diversion, payment transfers, or destruction of evidence creates an urgent risk.

4. Can the director be personally liable?

Yes. Personal liability may arise when the director misuses authority, diverts a corporate opportunity, causes intentional or negligent damage, or obtains an improper benefit.

5. What evidence is most important in a contract diversion dispute?

Contracts, e-mails, board records, customer communications, accounting documents, bank records, CRM logs, access histories, and proof of the related company’s involvement are often important.

6. Can the company claim lost profits?

Potentially. The company must prove the expected profit, the contract’s value, the causal connection, and the fact that the loss resulted from the director’s conduct.

7. Can a foreign shareholder start proceedings from abroad?

Yes. A foreign shareholder can generally grant power of attorney to a Turkish lawyer to take legal and corporate steps in Turkey.

8. Can the company recover the related company’s profits?

The available remedy depends on the legal basis and evidence. The financial benefit obtained by the related company may be relevant to compensation, restitution, or other claims.

9. Can a criminal complaint be filed against the director?

A criminal complaint may be possible where the conduct involves fraud, breach of trust, misuse of assets, unauthorized data use, trade-secret violations, or falsified documents.

10. How quickly should the company act?

The company should act immediately. Delay may allow additional contracts to be diverted, evidence to be deleted, and company assets or accounts to be transferred.

This article is provided for general informational purposes only and does not constitute legal advice. We recommend consulting a lawyer about your specific circumstances to avoid any loss of rights.

Expert Legal Support for Related-Party Contract Transfers

Expert legal support is essential to avoid loss of rights. By working with a lawyer experienced in director liability, related-party transactions, unfair competition, shareholder disputes, and compensation claims, serving clients throughout Turkey and internationally, you can protect your legal interests.

Fırat Fesih Kaya Law Office provides professional legal support in corporate investigations, contract diversion disputes, director liability claims, urgent injunction applications, unfair competition proceedings, and compensation cases.

Phone: +90 312 434 22 22
Mobile/WhatsApp: +90 532 769 22 22
Email: ffk@ffkpartnerhukuk.com.tr
Address: Mevlana Boulevard No. 221, Yildirim Tower, Unit No. 148, Balgat, Cankaya, Ankara, Turkey