Company Profits Hidden Through Related-Party Expenses in Turkey: How Can Foreign Shareholders Respond? – 2026 Updated Guide

Learn how foreign shareholders can investigate hidden profits, related-party expenses, unlawful transfers, director liability and compensation claims in Turkey.

Foreign shareholders may discover that a Turkish company appears to have low profits because money is being transferred to companies, directors, relatives or business partners connected to the majority shareholder.

Related-party expenses are not automatically unlawful. However, inflated invoices, sham consultancy agreements, excessive management fees, unnecessary commissions and below-market asset transfers may be used to hide company profits and transfer value away from minority investors.

This 2026 updated guide explains how foreign shareholders can investigate suspicious expenses and pursue inspection, commercial, civil, tax-related and criminal remedies.

What Are Related-Party Expenses?

Related-party expenses are payments or transactions involving persons or companies connected to the company’s shareholders, directors or managers.

Examples may include payments for consultancy, rent, accounting, licensing, management, marketing, transportation, commissions, loans, guarantees, employee services or intellectual property. The expense may be legitimate if it reflects a real service at a reasonable market price.

A serious problem arises when the service was never provided, the price is excessive, the agreement was concealed or the payment benefits the majority shareholder rather than the company.

How Are Company Profits Hidden?

Company profits may be reduced through repeated payments to an affiliated company, inflated purchase prices, unnecessary expenses or loans granted on unusually favorable terms.

A majority shareholder may also use a related company to receive customers, contracts, employees or intellectual property from the Turkish company. In some cases, funds move through several connected entities before reaching the person who controls the group.

The financial statements may therefore show low profits even though the company is generating significant revenue. This can reduce dividends, decrease the value of the foreign shareholder’s shares and weaken the minority investor’s control.

Warning Signs of Abusive Related-Party Transactions

Foreign shareholders should examine recurring payments to companies with the same address, directors, shareholders or beneficial owners. Payments described with vague explanations, missing deliverables or identical invoice wording may also require investigation.

Other warning signs include expenses that increase shortly before a general assembly, payments made without a written contract, prices substantially above market value, loans without repayment schedules and transactions approved by directors who personally benefit from them.

The existence of a family or business relationship does not prove misconduct. The important questions are whether the transaction served a genuine company purpose, whether the price was reasonable and whether the transaction was properly approved and recorded.

What Can a Foreign Shareholder Request from the Company?

A shareholder may request financial statements, accounting records and explanations concerning suspicious transactions, subject to the company type and applicable legal requirements.

The request should identify the relevant accounting period, the related party, the payment category and the reason the information is connected to shareholder rights. A focused request is usually more effective than a general demand for every company document.

The shareholder may also request information about management fees, related-party contracts, bank transfers, loans, guarantees, commissions, asset sales and transactions involving companies controlled by the majority shareholder.

What Should Be Done When the Company Refuses Information?

The foreign shareholder should submit a written request and preserve proof of delivery. If the company gives no response or provides incomplete information, the refusal should be documented.

The shareholder should preserve previous financial statements, meeting minutes, invoices, bank documents, corporate emails and messages. A written objection may also be submitted before a general assembly where the suspicious expenses or financial statements are being approved.

Refusal to provide information does not automatically prove that profits were hidden, but it may support a request for inspection, a special audit or judicial examination.

Can a Foreign Shareholder Inspect Company Books?

Depending on the company type, shareholders may have rights to examine books, accounting records and documents relevant to the company’s activities or a specific general assembly agenda.

Inspection may help determine whether a related-party payment was genuine, whether the service was actually performed and whether the price was consistent with market conditions.

The company may protect legitimate trade secrets and impose reasonable inspection procedures. It should not, however, use confidentiality as a blanket excuse to conceal transactions from shareholders.

Can a Special Audit Be Requested?

Where ordinary information rights do not reveal the truth, a foreign shareholder may consider requesting a special audit or another judicial review mechanism if the statutory conditions are satisfied.

The request should explain the specific transactions that raise concerns. It may focus on payments to an affiliated company, loans to directors, inflated procurement costs, asset transfers or management expenses.

A special audit request supported by invoices, bank records, market comparisons and corporate messages is stronger than an unsupported allegation that the company’s profits are inaccurate.

Can the Foreign Shareholder Apply to Court?

Yes. A foreign shareholder may apply to the competent commercial court for information, inspection, evidence preservation or other appropriate relief.

The court application may request examination of accounting records, contracts, bank transactions, invoices and electronic communications. The shareholder should explain why the documents are relevant and why the company’s refusal or incomplete response is unlawful.

If the suspicious expenses were approved through a general assembly or board resolution, the shareholder may also challenge that decision and seek a declaration of invalidity, annulment or another appropriate remedy.

Can an Injunction Stop Further Profit Diversion?

An interim injunction may be requested where there is a real risk that company funds or assets will continue to be transferred to related parties.

Urgent protection may be relevant when the company is preparing additional payments, selling assets below market value, transferring contracts, changing bank authority or destroying accounting records.

The court generally considers the apparent strength of the claim, the urgency and the risk of serious or irreversible harm. An injunction is not automatic and must be supported by concrete evidence.

Can Directors or Majority Shareholders Be Held Liable?

Directors and managers may be liable if they approve transactions that damage the company, fail to act loyally, conceal related-party payments or use company resources for personal benefit.

A majority shareholder may also face liability if they direct the company’s affairs for improper personal gain or cause the company to enter into unfair transactions with affiliated entities.

Claims may include recovery of transferred funds, compensation for company losses, repayment of unauthorized expenses, loss of profits and damage caused to the value of the foreign shareholder’s investment.

The correct claimant must be assessed carefully. A loss suffered by the company may need to be pursued in the company’s interest, while the shareholder may have a separate claim where their personal rights were directly violated.

Are There Tax or Criminal Consequences?

Unexplained or inflated related-party expenses may create tax risks, including questions about the reality of the service, the market value of the transaction and whether company income was improperly transferred.

Where the conduct involves forged invoices, fabricated contracts, fraudulent accounting records, breach of trust or intentional misuse of company funds, a criminal complaint may also be considered.

A commercial dispute is not automatically a criminal offense. The legal qualification depends on the evidence, the participants and the way the transactions were carried out.

What Evidence Should Foreign Shareholders Preserve in 2026?

Electronic evidence is increasingly important in 2026 company disputes. Foreign investors should preserve electronic invoices, accounting software records, online banking documents, cloud files, email histories, digital signatures and document metadata.

Market comparisons can be useful. Independent price offers, previous contracts, customer records and evidence showing that the alleged service was never delivered may help demonstrate that an expense was excessive or fictitious.

Original files should be preserved without alteration. Screenshots may support an argument, but original records and reliable copies are generally more valuable.

Can a Foreign Shareholder Act from Abroad?

A foreign shareholder may often act through a Turkish lawyer without traveling to Turkey. A power of attorney can be issued before a Turkish consulate or a local notary. Legalization, apostille and official translation may be required depending on the issuing country.

A lawyer can request corporate records, coordinate forensic accounting, apply for inspection, seek an injunction, challenge resolutions and pursue recovery or liability claims.

Lawyer Fırat Fesih Kaya assists foreign shareholders with hidden profit investigations, related-party transactions, financial statement disputes and commercial litigation in Turkey.

Frequently Asked Questions (FAQ)

1. Are all related-party expenses illegal in Turkey?

No. A related-party expense may be lawful if it concerns a genuine service, has a reasonable market value and is properly documented and approved.

2. How can I prove that company profits were hidden?

Bank records, invoices, contracts, accounting records, market comparisons, electronic communications and expert financial analysis may help prove hidden profit diversion.

3. Can a foreign shareholder inspect company accounts?

Information and inspection rights may be available depending on the company type and the relevance of the requested documents.

4. Can the company refuse to show related-party contracts?

A company may protect legitimate confidential information, but a general refusal without a lawful reason may be challenged.

5. Can I request a special audit?

A special audit or judicial examination may be possible if statutory conditions are met and the request identifies serious, specific concerns.

6. Can I stop payments to a related company?

An interim injunction may be requested where there is evidence of continuing transfers and a risk of serious financial harm.

7. Can directors be sued for approving excessive expenses?

They may be liable if they breach their duties, act negligently or knowingly approve transactions that damage the company.

8. Can a majority shareholder be personally liable?

Personal liability may arise where the majority shareholder abuses control, directs unlawful transactions or obtains an improper benefit.

9. Can hidden profit transfers result in criminal charges?

Potentially, if the conduct involves fraud, forged records, breach of trust or intentional misuse of company assets. The evidence must be assessed carefully.

10. Can I begin the investigation without traveling to Turkey?

In many cases, yes. A Turkish lawyer may act under a properly prepared power of attorney.

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 Expense Disputes

Hidden related-party expenses can reduce company profits, eliminate dividends and transfer the value of a foreign shareholder’s investment to connected persons or companies. Early document preservation and financial investigation are essential.

Fırat Fesih Kaya Law Office provides professional legal support to foreign shareholders in related-party transaction disputes, financial inspections, hidden profit investigations, director liability claims, injunction applications and commercial recovery proceedings.

Call: +90 312 434 22 22
WhatsApp: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Address: Mevlana Boulevard No:221, Yildirim Tower, Balgat, Cankaya, Ankara, Turkey