Director Makes Unauthorized Payments to Related Companies in Turkey: Liability and Recovery Options (2026 Updated Guide)

A director transfers company funds to related companies without proper authority in Turkey. Learn about director liability, repayment claims, shareholder remedies, injunctions, evidence and recovery options.

Payments between companies belonging to the same corporate group are not automatically unlawful in Turkey. Companies may legitimately make payments under loan agreements, service contracts, supply arrangements, management agreements, cost-sharing structures or other commercial relationships. The legal risk arises when a director transfers company funds to a related company without proper authority, without a genuine commercial basis, contrary to the company’s interests or through transactions designed to benefit another company, shareholder or director at the expense of the paying company. In serious cases, the dispute may extend beyond corporate liability into restitution, damages, interim measures and potentially criminal allegations depending on the facts.

For shareholders and foreign investors, the first priority is to reconstruct the money trail and determine why each payment was made. The existence of a related-company relationship alone is not enough to establish wrongdoing. The decisive questions include whether there was a genuine debt, whether the company received value in return, who authorized the payment, whether conflicts of interest were properly managed and whether the director complied with the duties imposed by Turkish company law.

When Does a Related-Company Payment Become Legally Problematic?

A payment becomes particularly concerning where company funds are transferred without an underlying invoice, contract, loan agreement or other identifiable obligation. Similar concerns arise where a company pays another group company’s debts, transfers funds on unusually favorable terms, makes undocumented advances, pays fictitious consultancy fees or repeatedly sends money to an affiliate without receiving a corresponding commercial benefit.

The transaction must therefore be examined economically as well as formally.

Related Companies Are Separate Legal Entities

Companies within the same group generally retain separate legal personalities. The fact that two companies have the same shareholder or ultimate beneficial owner does not automatically permit directors to move money freely between them.

A director managing Company A should be able to explain why a payment made by Company A to Company B was justified from Company A’s legal and commercial perspective.

Director Duties Are Central to the Dispute

Directors and managers are expected to exercise their powers consistently with their statutory and corporate duties. Where a director causes company assets to be transferred without legitimate justification and the company suffers loss, personal liability may become an important issue.

The precise analysis depends on the type of company, the director’s position, the company’s articles, internal delegation arrangements and the circumstances surrounding the transaction.

Was the Director Authorized to Make the Payment?

The first question is whether the director possessed the necessary representation and signing authority.

Review the trade registry records, articles of association, internal directives, board resolutions, signature arrangements and bank mandates applicable when the payment was made.

A director may have authority to operate the company’s bank account while still potentially breaching internal duties by using that authority improperly.

External Authority and Internal Liability Are Different Questions

A payment does not necessarily become legally acceptable merely because the bank processed it using an authorized signature.

The director may possess external representation authority but still incur internal liability if the transaction breached corporate duties or exceeded internally approved limits.

This distinction is particularly important in shareholder disputes.

Was There a Board Resolution?

Determine whether the payment was approved by the board or another competent corporate body.

If a resolution exists, review when it was adopted, who participated, whether conflicts were disclosed and whether the resolution actually authorized the transaction in question.

A generic authorization should not automatically be treated as approval for every related-party transfer.

Check for Conflicts of Interest

A director may have interests in both the paying and receiving companies. For example, the director may own shares in the recipient company or have a personal relationship with its controlling shareholder.

Such circumstances require particularly careful examination of the decision-making process.

Was There a Genuine Contract?

Request the underlying agreement immediately.

If the transfer was allegedly payment for consulting, management, software, licensing, goods, financing or another service, determine whether the agreement existed before the payment and whether the promised performance actually occurred.

A contract created after the dispute begins deserves careful scrutiny.

Examine the Invoices

Invoices alone should not end the investigation. Determine whether the invoiced goods or services were genuinely provided.

Compare invoices with purchase orders, delivery records, emails, reports, inventory records and accounting entries.

Management Fees Require Particular Attention

Group companies sometimes charge management, consultancy or administrative fees. Such arrangements can be legitimate, but the company should be able to demonstrate what services were actually provided and why the amount was commercially justified.

Repeated round-number payments without supporting work product may require deeper examination.

Related-Party Loans Should Be Documented

If the payment is described as an intercompany loan, review the loan agreement, maturity, interest arrangements, repayment schedule, corporate approvals and accounting treatment.

A transfer described as a temporary loan can become problematic where no repayment was ever expected.

Review the Company’s Accounting Records

General ledgers, current accounts, bank records and financial statements can reveal how the transaction was recorded.

Compare the accounting description with the explanation later provided by the director.

If a payment described to shareholders as a loan was recorded differently in the books, that inconsistency may become significant evidence.

Follow the Money After the First Transfer

Do not stop with the recipient company’s bank account.

Where legally obtainable, determine whether the money was subsequently transferred to a shareholder, director, another affiliate or third party.

A chain of transfers may reveal the actual economic purpose of the transaction.

Repeated Transfers Can Show a Pattern

One unusual payment may have an innocent explanation. Dozens of similar transfers over several years may indicate a systematic related-party arrangement.

Prepare a transaction table showing date, amount, recipient, payment description, approving person, accounting entry and supporting documentation.

Can the Company Demand Repayment?

Potentially. If the recipient company received funds without a valid legal basis, contractual, restitutionary or other recovery claims may arise depending on the facts.

The correct cause of action should be determined after identifying the actual legal relationship between the companies.

Can the Director Be Personally Liable?

Potentially. If a director breaches applicable duties and causes loss to the company, personal liability may arise under Turkish company-law principles.

However, liability should not be assumed merely because a business decision later proved unsuccessful. The alleged breach, damage and causal connection should be established.

The Business Decision Must Be Examined in Context

A transaction that initially appears unfavorable may have had a legitimate commercial purpose when made.

The investigation should therefore examine information available to the director at the time rather than evaluating the transaction solely with hindsight.

Group Interest Does Not Automatically Eliminate Company-Level Duties

A director cannot necessarily justify a damaging transaction simply by saying that it benefited the wider corporate group.

Where one group company is disadvantaged for the benefit of another, Turkish corporate-group rules and the specific structure of the transaction may become relevant.

Controlling-Company Liability May Also Arise

If the payment resulted from instructions or influence exercised by a controlling company, the dispute may extend beyond the individual director.

The relationship between the controlling and dependent companies should therefore be analyzed where the transfer forms part of a broader group policy.

Minority Shareholders Should Obtain Evidence Quickly

Minority investors who discover suspicious payments should preserve available board minutes, financial statements, audit materials, bank information and correspondence.

Evidence can become harder to obtain once a shareholder dispute becomes openly adversarial.

Shareholder Information Rights May Be Important

Depending on the company’s legal form and circumstances, shareholders may have rights enabling them to seek information concerning company transactions.

These rights should be used strategically to identify the payment’s legal basis and supporting records.

General Assembly Records Should Be Reviewed

Determine whether related-party payments were disclosed through financial statements, annual reports or general assembly discussions.

The existence of approval, release or other shareholder resolutions may affect the legal analysis and should be examined carefully rather than assumed to eliminate every possible claim.

Can the Director Be Removed?

Potentially, depending on the company’s legal form, governance structure, shareholder voting position and seriousness of the allegations.

Removal may stop future transactions, but it does not by itself recover money already transferred.

Recovery and governance remedies should therefore be planned separately.

Bank Authority Can Become an Emergency Issue

Where unauthorized transfers are continuing, the company may need to review representation powers and banking arrangements urgently.

Any attempt to restrict a director’s authority should comply with corporate decision-making and registration requirements rather than relying solely on informal instructions to the bank.

Interim Judicial Protection May Be Necessary

If there is a concrete risk that assets will be dissipated before a final judgment, interim judicial measures may need to be evaluated.

The appropriate remedy depends on the nature of the claim, evidence available and assets targeted.

Precautionary Attachment May Be Relevant

Where the legal requirements are satisfied and the company has a monetary claim, precautionary attachment can potentially become important in preserving assets pending litigation.

Its availability should be analyzed specifically rather than treated as automatic.

Evidence Preservation Can Be as Important as Asset Preservation

Accounting databases, electronic correspondence and corporate records may contain crucial evidence.

Where there is a genuine risk that evidence will disappear or become inaccessible, available procedural evidence-preservation mechanisms should be evaluated promptly.

Emails and Messaging Records Can Reveal the Real Purpose

Internal correspondence may show whether the payment was a genuine commercial transaction or was made because a shareholder instructed management to move funds.

The legality and admissibility of electronic evidence should nevertheless be considered when collecting it.

Independent Audit Evidence Can Be Valuable

A forensic accounting review can reconstruct transfers across multiple companies and identify unusual payment patterns.

This can be especially useful where hundreds of transactions are spread across several accounting periods.

Expert Examination May Be Necessary

Complex disputes can involve company valuation, accounting treatment, transfer pricing, financing arrangements and calculation of corporate loss.

Expert evidence may therefore become central to determining the financial impact.

Tax Treatment Should Be Reviewed Separately

Related-company payments can also raise tax questions, particularly where the commercial basis or pricing is disputed.

Corporate-law liability and tax consequences are distinct issues and should be analyzed separately.

Can the Recipient Company Be Sued?

Potentially. The company that received the funds may be a direct defendant where there is a legal basis for repayment.

The litigation strategy should consider whether recovery should be pursued against the director, recipient company or multiple parties.

What If the Recipient Has Already Transferred the Money?

Further asset tracing may be necessary.

The fact that the immediate recipient no longer holds the funds does not automatically determine the outcome of claims, but it can make practical recovery more difficult and increase the importance of urgent measures.

Foreign Shareholders Should Review Group-Level Documents

Where the shareholder is an international investor, relevant evidence may exist outside Turkey.

Shareholder agreements, investment agreements, group policies, board materials and financing documents can help establish whether the disputed payments violated agreed governance rules.

Shareholders’ Agreements May Provide Additional Remedies

A transfer may breach contractual restrictions even where separate company-law questions remain disputed.

Reserved matters, related-party transaction clauses, approval thresholds and director-appointment rights should therefore be reviewed.

Arbitration Clauses Should Not Be Overlooked

If the dispute also involves a shareholders’ agreement, investment agreement or intercompany contract containing an arbitration clause, some claims may fall within arbitration while statutory corporate claims remain subject to different procedures.

Jurisdiction should be analyzed before proceedings are started.

Criminal Liability May Arise in Serious Cases

Not every unauthorized payment is a criminal offense. Many disputes remain civil or corporate matters.

However, where evidence indicates deliberate appropriation, fraudulent documentation, falsified corporate records or intentional diversion of company property, criminal-law issues may arise depending on the facts.

A criminal complaint should not be used merely as leverage in an ordinary commercial disagreement.

False Invoices Can Increase the Risk

If fictitious invoices or fabricated contracts were used to justify transfers, the dispute can become significantly more serious.

Preserve the original documents and determine who created, approved and recorded them.

Do Not Assume Every Related-Party Payment Is Fraud

Corporate groups routinely conduct legitimate transactions among affiliates.

The strongest case is built by identifying the specific absence of authority, consideration, documentation or commercial justification rather than treating the relationship between the companies as proof of wrongdoing.

Quantify the Company’s Loss

Determine the amount transferred, value received in return, repayments made, interest, additional costs and other measurable financial consequences.

Damages should be calculated using evidence rather than simply equating every gross transfer with final loss.

Limitation Periods Must Be Reviewed

Potential claims against directors, recipients and other parties can be subject to different limitation rules.

The transaction dates and discovery timeline should therefore be mapped immediately.

Review Every Payment Separately

Where transfers occurred over several years, do not treat them as one transaction without analysis.

Different payments may have different contracts, approvals, recipients and limitation issues.

2026 Practical Strategy for Foreign Investors

Foreign investors discovering suspicious related-company payments should create a rapid evidence and asset-protection strategy. The first phase should reconstruct the payment chain and corporate authority. The second should determine whether the recipient had a legitimate entitlement to the money. The third should quantify company loss and identify responsible parties. Only then should the company determine the appropriate combination of corporate resolutions, director-liability proceedings, repayment claims, interim measures and, where genuinely justified by the evidence, criminal-law remedies.

Lawyer Fırat Fesih Kaya advises foreign shareholders and international companies facing director misconduct, unauthorized related-party transactions and corporate asset-diversion disputes in Turkey.

Frequently Asked Questions

Can a Turkish company director transfer money to another company in the same group?

Potentially, where there is proper authority and a legitimate legal and commercial basis. Group membership alone does not automatically justify the transfer.

Is a payment automatically lawful if the director had bank-signing authority?

No. External signing authority and compliance with the director’s internal corporate duties are separate questions.

Can the company recover an undocumented payment?

Potentially. The legal basis for repayment depends on why the money was transferred, whether consideration was received and the relationship between the parties.

Can the director be personally sued?

Potentially, where the legal requirements for director liability are satisfied and the director’s breach caused loss to the company.

Can shareholders obtain bank records?

Access depends on the company’s structure, procedural position and applicable shareholder or judicial mechanisms. Relevant information rights and evidence procedures should be evaluated.

Can the recipient related company also be sued?

Potentially, particularly where there is a legal basis requiring repayment of funds received.

Can company assets be protected before the case ends?

Depending on the circumstances and statutory requirements, interim measures or precautionary attachment may potentially be available.

Does an invoice prove that the payment was legitimate?

Not necessarily. The underlying goods or services, contractual basis and actual performance should also be examined.

Is every unauthorized related-company payment a criminal offense?

No. Many disputes concern corporate or civil liability. Criminal liability requires separate analysis of the conduct and applicable offense.

What should a foreign shareholder do first?

Secure the evidence and reconstruct the money trail. Identify every payment, its recipient, alleged legal basis, corporate authorization and ultimate destination before deciding which recovery and liability proceedings should be pursued.

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

Unauthorized related-company transfers can expose a business to asset loss, shareholder disputes, director-liability claims, hidden related-party transactions, accounting irregularities and potential criminal investigations. Fırat Fesih Kaya Law Office assists foreign investors, shareholders and international companies in investigating suspicious corporate payments, tracing company funds, challenging unauthorized transactions, pursuing repayment and damages claims and seeking urgent asset-protection measures where legally available.

Fırat Fesih Kaya Law Office

Lawyer Fırat Fesih Kaya

Phone: +90 312 434 22 22

Mobile / WhatsApp: +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