Hidden Liabilities in Turkish Companies: What Foreign Buyers Must Check Before an Acquisition | 2026 Legal Guide

Discover the hidden liabilities foreign buyers must investigate before acquiring a Turkish company. Learn about tax debts, litigation, employment claims, regulatory risks, data protection, competition clearance, and contractual safeguards in this 2026 updated legal guide.

Acquiring an established company in Turkey may provide foreign investors with immediate access to customers, employees, licenses, commercial contracts, intellectual property, and local distribution networks. However, purchasing shares in a Turkish company may also transfer economic exposure to liabilities that do not appear clearly in the company’s financial statements.

Undisclosed tax assessments, employee claims, pending lawsuits, customs penalties, personal data violations, unpaid social security premiums, shareholder disputes, environmental obligations, and defective contracts can substantially reduce the value of an acquisition. Some risks may surface months or even years after closing.

The distinction between a share acquisition and an asset acquisition is especially important. In a share purchase, the target company continues to exist with its historical rights, debts, contracts, investigations, and potential liabilities. The buyer therefore acquires control of the legal entity together with its past. An asset purchase may allow the buyer to select particular assets and obligations, although statutory, contractual, employment, tax, or successor-liability rules may still create exposure.

This 2026 Updated Legal Guide explains the principal hidden liabilities foreign buyers should investigate before acquiring a Turkish company and the contractual protections that should be negotiated before closing.

1. Corporate Registration and Ownership Risks

The first stage of legal due diligence should confirm that the target company legally exists and that the seller owns the shares being offered.

The buyer should examine:

• Trade registry records.
• Articles of association.
• Share ledgers.
• Registered share capital.
• Share certificates, where issued.
• Previous capital increases and reductions.
• Share transfers.
• Privileged shares.
• Voting arrangements.
• Beneficial ownership information.

The review should determine whether shares are subject to pledges, usufruct rights, transfer restrictions, attachment orders, options, pre-emption rights, or third-party claims.

A buyer should never rely exclusively on the seller’s statements. Corporate records, statutory books, shareholder resolutions, and public registrations must be compared for inconsistencies.

2. Authority to Sell the Shares

The seller must have valid authority to execute the transaction.

Where the seller is a legal entity, the buyer should verify:

• Authorized signatories.
• Board or shareholder approvals.
• Signature authorities.
• Powers of attorney.
• Internal approval requirements.
• Restrictions imposed by financing agreements.

If the necessary corporate approvals are missing, the validity or enforceability of the transaction may later be challenged.

3. Tax Debts and Undisclosed Tax Exposure

Tax liabilities are among the most serious risks in Turkish acquisitions. A target may appear profitable while remaining exposed to assessments arising from earlier accounting periods.

Due diligence should cover:

• Corporate income tax.
• Value Added Tax.
• Withholding tax.
• Stamp tax.
• Special Consumption Tax, where applicable.
• Transfer pricing.
• Related-party transactions.
• Payroll taxation.
• Tax incentive compliance.
• Pending tax inspections.
• Settlement or restructuring arrangements.
• Alleged use of false or misleading invoices.

A tax clearance document alone should not be treated as conclusive evidence that no future liability exists. A company may still face a later tax audit covering periods before the acquisition. The buyer should review tax returns, audit reports, accounting records, correspondence with tax authorities, and contingent tax provisions.

Turkish tax legislation requires businesses to maintain detailed books and records, and inaccurate, concealed, or unreliable accounting documentation can create assessments, interest, administrative penalties, and, in serious cases, criminal exposure.

4. Social Security and Employment Liabilities

Employee-related obligations are frequently underestimated during acquisitions.

The target company may have exposure arising from:

• Unpaid salaries.
• Overtime claims.
• Severance pay.
• Notice compensation.
• Annual leave entitlements.
• Workplace accidents.
• Occupational disease claims.
• Unregistered employment.
• Underreported salaries.
• Social security premium deficiencies.
• Reinstatement proceedings.
• Mobbing or discrimination allegations.
• Foreign employees working without valid authorization.

The buyer should examine employment agreements, payroll records, Social Security Institution filings, workplace accident reports, personnel files, collective bargaining arrangements, and pending labor disputes.

A share acquisition does not remove the target company’s historical employment liabilities. Contractual indemnities may provide recourse against the seller, but they do not prevent employees or public authorities from pursuing the target.

5. Pending Litigation and Enforcement Proceedings

A complete acquisition review must identify all existing and threatened disputes.

The investigation should include:

• Commercial lawsuits.
• Debt enforcement proceedings.
• Labor cases.
• Tax litigation.
• Administrative proceedings.
• Consumer claims.
• Product liability cases.
• Intellectual property disputes.
• Real estate litigation.
• Arbitration proceedings.
• Criminal investigations involving the company or its managers.

The buyer should also determine whether the company has issued guarantees, sureties, promissory notes, mortgages, or other security for related companies or shareholders.

A lawsuit may not yet have produced a final judgment, but it may still represent a significant contingent liability that should affect pricing, escrow arrangements, or closing conditions.

6. Financial Debt and Off-Balance-Sheet Obligations

Financial statements may not reveal every contractual or contingent obligation.

Foreign buyers should investigate:

• Bank loans.
• Shareholder loans.
• Leasing agreements.
• Factoring arrangements.
• Letters of guarantee.
• Suretyships.
• Mortgages and pledges.
• Derivative transactions.
• Undisclosed side agreements.
• Customer refund obligations.
• Supplier financing.
• Early termination penalties.

Particular attention should be paid to change-of-control clauses. A loan, lease, distribution agreement, or major customer contract may allow termination or accelerated repayment when ownership changes.

The buyer should obtain written confirmations from banks and major creditors rather than relying solely on management schedules.

7. Related-Party Transactions

Transactions with shareholders, directors, affiliated companies, or family members may conceal value transfers or artificial liabilities.

The review should identify:

• Non-commercial loans to shareholders.
• Assets transferred below market value.
• Excessive management fees.
• Unusual consultancy payments.
• Related-party leases.
• Personal expenses paid by the company.
• Guarantees granted for affiliates.
• Unrecorded receivables or payables.

These transactions may create tax, corporate governance, fraud, or asset-recovery risks.

8. Material Contracts and Customer Dependency

The buyer should review every contract that is important to the target’s revenue or operations.

Key agreements may include:

• Supply contracts.
• Distribution agreements.
• Franchise agreements.
• Customer contracts.
• Agency agreements.
• Technology licenses.
• Commercial leases.
• Financing documents.
• Insurance policies.
• Government contracts.
• Joint venture arrangements.

The review should identify automatic renewal provisions, unilateral termination rights, exclusivity obligations, minimum purchase commitments, penalties, indemnities, foreign currency exposure, and unfavorable dispute resolution clauses.

A business heavily dependent on a single customer, supplier, or license may be worth significantly less if that relationship can be terminated after closing.

9. Regulatory Licenses and Sector-Specific Approvals

Companies operating in regulated sectors may require administrative licenses or approvals.

Relevant sectors include:

• Energy.
• Banking and financial services.
• Insurance.
• Healthcare.
• Pharmaceuticals.
• Telecommunications.
• Transportation.
• Mining.
• Tourism.
• Food production.
• Customs and warehousing.

The buyer must confirm that licenses are valid, transferable where necessary, and unaffected by the ownership change. Any pending inspection, warning, suspension risk, or administrative penalty must be investigated.

A transaction should not close on the assumption that regulatory approval will automatically be granted.

10. Competition Law and Merger Clearance

Certain acquisitions require authorization from the Turkish Competition Authority before implementation.

In February 2026, the turnover thresholds under Turkey’s merger-control framework were updated. The individual Turkish turnover threshold increased from TRY 250 million to TRY 1 billion, the combined Turkish turnover threshold from TRY 750 million to TRY 3 billion, and the worldwide turnover threshold from TRY 3 billion to TRY 9 billion. The revised rules and updated guidance must be assessed before closing.

Parties should avoid transferring control or implementing the transaction before obtaining mandatory clearance. Closing a notifiable acquisition without approval may result in administrative sanctions and complications affecting the transaction.

11. Intellectual Property Liabilities

A target’s brand, software, technology, and commercial know-how may represent a substantial part of its value.

The buyer should verify:

• Trademark registrations.
• Patents and utility models.
• Industrial designs.
• Copyright ownership.
• Software development rights.
• Domain names.
• Employee and contractor assignments.
• Licensing agreements.
• Infringement allegations.
• Open-source software compliance.

A company may use valuable software or branding without actually owning it. Rights may belong to a founder, employee, foreign parent, or third-party developer.

12. Personal Data and Cybersecurity Risks

An acquisition may expose the buyer to historical violations involving employee, customer, supplier, and user data.

Due diligence should examine:

• Privacy notices.
• Data processing inventories.
• Data security policies.
• Data breach records.
• Cross-border data transfers.
• Data processor agreements.
• Retention and deletion procedures.
• Registration obligations.
• Cybersecurity incidents.

The due diligence process itself must also comply with data protection principles. The parties should limit personal data disclosure, use secure virtual data rooms, redact unnecessary information, and regulate access through confidentiality agreements. The Turkish Data Protection Authority has specifically highlighted the importance of evaluating personal data rules during merger and acquisition due diligence.

13. Customs and International Trade Liabilities

Targets involved in importing or exporting may carry hidden customs exposure relating to:

• Incorrect tariff classifications.
• Customs valuation.
• Rules of origin.
• Preferential certificates.
• Royalties and license fees.
• Import licenses.
• Product safety controls.
• Temporary import procedures.
• Anti-dumping duties.
• Post-clearance audits.

Customs liabilities may arise after goods have already been released. Import declarations, broker communications, customs audit reports, and product compliance files should therefore be reviewed carefully.

14. Environmental, Real Estate, and Operational Risks

A company owning or operating factories, warehouses, mines, energy facilities, or industrial sites may face liabilities concerning:

• Soil contamination.
• Waste disposal.
• Environmental permits.
• Emission limits.
• Hazardous substances.
• Workplace permits.
• Zoning violations.
• Building licenses.
• Occupancy permits.
• Mortgages and annotations.
• Lease termination risks.

Environmental remediation costs can exceed the purchase price of the shares if they are not identified before closing.

15. Contractual Protection Against Hidden Liabilities

Due diligence cannot identify every risk. The share purchase agreement must therefore allocate undiscovered liabilities between the buyer and seller.

Important protections include:

• Detailed representations and warranties.
• Specific tax indemnities.
• Litigation indemnities.
• Disclosure schedules.
• Purchase price adjustments.
• Escrow or holdback arrangements.
• Warranty retention periods.
• Material adverse change provisions.
• Conditions precedent.
• Seller liability caps and exceptions.
• Rights to terminate before closing.

Known high-risk matters should be addressed through specific indemnities rather than general warranties.

Frequently Asked Questions

1. Does a foreign buyer inherit the target company’s old debts?

In a share acquisition, the target company continues to hold its existing debts, obligations, litigation exposure, and contingent liabilities. The buyer acquires ownership of the company subject to those risks.

2. Is a tax clearance certificate enough before acquiring a Turkish company?

No. It may confirm the company’s recorded status at a particular time, but it does not eliminate the possibility of future assessments concerning previous tax periods.

3. How can a buyer discover pending lawsuits?

Legal counsel should examine available court, enforcement, arbitration, corporate, and regulatory records and obtain a complete litigation disclosure from the seller.

4. Can employee claims arise after the acquisition?

Yes. Former or current employees may bring claims based on periods before closing. Historical payroll, severance, overtime, leave, and social security exposure should be reviewed.

5. Does every acquisition require Turkish Competition Authority approval?

No. Notification is required only when the transaction qualifies as a concentration and the applicable turnover thresholds are met. The thresholds were revised in 2026 and should be checked for every transaction.

6. Can a seller be held responsible for undisclosed liabilities?

Yes, if the transaction documents contain enforceable warranties, indemnities, disclosure obligations, or fraud-related protections covering the undisclosed matter.

7. Is an asset acquisition safer than a share acquisition?

An asset acquisition may allow the buyer to select particular assets and obligations, but it does not eliminate every potential tax, employment, regulatory, contractual, or successor-liability risk.

8. What is the most effective protection against hidden liabilities?

The strongest protection combines comprehensive legal, financial, tax, operational, and regulatory due diligence with carefully negotiated warranties, indemnities, escrow arrangements, and closing conditions.

Legal Support – Protect Your Acquisition in Turkey

Acquiring a Turkish company without comprehensive due diligence may expose a foreign buyer to years of undisclosed debt, litigation, tax assessments, regulatory investigations, and contractual disputes. Independent legal review before signing or closing is essential to verify the target’s actual position and negotiate effective protection against historical liabilities.

Fırat Fesih Kaya and our legal team advise foreign investors, multinational corporations, private equity funds, family offices, entrepreneurs, and international buyers on Turkish company acquisitions, legal due diligence, share purchase agreements, transaction structuring, competition clearance, regulatory compliance, post-closing disputes, and commercial litigation.

For a legal risk assessment tailored to your proposed acquisition, you may contact our corporate and commercial law team. Working with an experienced Turkish acquisition lawyer helps prevent hidden liabilities from becoming the buyer’s financial burden.

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