A Turkish Limited Company Manager Runs a Competing Business: Consent, Loss and Remedies

1. Identify the corporate role before applying a competition restriction

A dispute about a Turkish company’s manager should begin with the actual office held, its dates and the operative company documents. A shareholder, employee, consultant and registered manager can owe different obligations. Calling everyone a partner in English does not establish the applicable Turkish legal position. Obtain the trade-registry record, appointment decision, company agreement and any management or employment contract. Record overlapping roles separately rather than allowing one title to conceal another relationship.

Commercial Code No. 6102, Article 626, regulates care, loyalty and competing activity in limited-company management. Article 613 separately addresses shareholder loyalty and company secrets. An employment non-compete clause governed by the Code of Obligations is not a substitute for this corporate framework. The statutory manager’s obligation must be examined even where the business never signed a document headed non-competition agreement with that person.

The conduct also needs a precise description. Identify the other undertaking, its activities, the manager’s involvement and the time period. Distinguish founding another company, working for it, directing orders to it and using company resources for its benefit. A similar trade name or registered activity code alone does not establish every factual element of prohibited competition. The operational evidence should show what business was actually undertaken and how it related to the Turkish company’s activity.

2. Determine whether the required permission exists and what it covers

Article 626(2) states the default prohibition and its exceptions. The company agreement can provide otherwise. In the absence of that alternative, the written permission of all other shareholders is relevant. The agreement can substitute a general-assembly approval decision for the shareholders’ approval. The correct consent mechanism therefore depends on the operative agreement and statute together, not simply on an informal statement that management knew about the other business.

Read the permission against the particular activity. Consent to an identified outside position should not be silently expanded into approval of every later competing transaction. Record who gave permission, in what capacity, for which entity, on which terms and during which period. Check any conditions about customers, confidential information, working time or company resources. The document’s scope matters as much as the presence of a signature on its final page.

Where general-assembly approval is the relevant route, Article 621(1)(g) places approval of conduct contrary to loyalty duties or the competition prohibition among important decisions. It requires at least two thirds of the represented votes together with an absolute majority of all capital carrying voting rights. Article 619(3) excludes the concerned shareholder from voting on a decision permitting that shareholder’s disloyal or competing activity. Establish which votes are legally available before calculating either threshold. A manager who is also a shareholder cannot establish the required consent merely by relying on their own vote.

Foreign shareholders should request the Turkish originals of historic approvals. Group-level emails, an overseas parent company’s board decision and a Turkish subsidiary’s assembly resolution are different documents issued by different legal actors. Approval at one organisational level should not be assumed to satisfy the requirement at another. A complete chronology can distinguish activity that predated appointment, conduct during management and transactions following the termination of the manager’s office.

3. An exception to the competition prohibition does not erase every duty

Article 626(1) requires managers and persons entrusted with management to perform their duties with care and protect the company’s interests within the principle of good faith. Article 626(3) also subjects managers to the loyalty obligation applicable to shareholders. These provisions require a broader review than checking whether a competing business was disclosed. A permission must be read together with the continuing obligations and the actual handling of the company’s affairs.

Article 613(1) expressly protects company secrets and states that this obligation cannot be removed by the company agreement or an assembly decision. Article 613(2) addresses behaviour harmful to company interests, including transactions giving a special personal benefit while harming the company’s purpose. Do not treat permission to maintain an outside business as a blanket authorisation to disclose confidential customer material or move the company’s property without a separate lawful basis.

Equally, an allegation of disloyalty needs particulars. Identify the information, opportunity, payment or resource involved and explain the asserted breach. Ordinary access to documents during management does not prove improper disclosure. A fall in turnover does not, by itself, identify its cause. The complaint becomes legally useful when records connect the manager’s conduct to an obligation and, where compensation is sought, to a recoverable loss.

4. Foreign group instructions require a separate company-law review

International groups often coordinate customers, procurement, finance and staff across several entities. Article 626(1) expressly preserves Articles 202–205 of the Commercial Code concerning group relationships. The existence of a foreign parent therefore requires examination of the relevant group-law conditions. It does not justify treating the Turkish subsidiary’s assets, receivables and opportunities as property that any group executive can allocate without legal consequences.

Article 202 addresses the improper use of control to cause a subsidiary loss. Under Article 202(1)(a), the relevant loss must be compensated within the financial year, or the subsidiary must receive an equivalent claim by that year’s end specifying how and when compensation will occur. Article 203’s complete-control regime requires direct or indirect ownership of one hundred percent of both shares and voting rights, and an instruction required by a defined, concrete group policy. Article 204 prohibits instructions that clearly exceed the subsidiary’s solvency, endanger its existence or cause substantial assets to be lost. Article 205’s protection for compliance must be read within those limits.

For a foreign minority shareholder, the evidence should distinguish an instruction given to pursue an identified group policy from a manager’s personal side business. Preserve the instruction, decision trail, allocation of costs and any compensation arrangement. Those records assist the legal analysis of the responsible persons and remedy. A company-law claim should not rely solely on an organisational chart that omits the transaction said to have caused the harm.

5. Separate damage to the company from direct damage to a shareholder

Article 644 applies relevant joint-stock-company liability provisions to limited companies, including Articles 553–561. Article 553 addresses culpable breach of statutory or constitutional duties and resulting loss. A claim must therefore identify the relevant duty, breach, fault, causal connection and loss within the applicable framework. The fact that a manager held office when the company performed badly is not enough to establish every element of a damages claim.

Article 555 provides that the company and each shareholder can seek compensation for loss suffered by the company, but a shareholder asserting that company loss can request payment only to the company. This distinction is central for an overseas investor. The investor’s ownership percentage does not automatically convert a corresponding percentage of the company’s alleged loss into a personal payment entitlement against the manager.

Prepare a loss schedule linked to transactions rather than a single unsupported total. Identify diverted orders, resources used, payments made and the documents supporting the financial consequences. Separate gross revenue from recoverable loss and account for costs that were avoided or payments already received. An accountant’s calculation should disclose its assumptions and source records. The legal claim determines which economic items belong in the schedule.

A shareholder alleging a separate direct loss must identify the individual right infringed and its legal basis. That analysis differs from the reduction in investment value flowing from damage to the company. Keep the two categories visible in correspondence and pleadings. An agreement settling one should not accidentally release the other or promise payment to a person who does not own the relevant claim.

The defendant selection must follow the same analysis. The manager, a competing undertaking and another group company are separate legal persons. Evidence that one received a payment does not automatically establish that all are liable for the same amount under Article 553. Explain the conduct and legal basis attributed to each proposed defendant. Where recovery is sought through more than one legal route, reconcile the amounts so the pleadings do not present a duplicated economic loss as several independently recoverable sums.

6. Preserve evidence lawfully and connect it to the alleged breach

The corporate evidence begins with appointment records, the company agreement, approval documents, meeting minutes and the applicable business policies. Transaction evidence can include company contracts, purchase orders, invoices, delivery records and correspondence obtained lawfully. Public trade-registry records can establish the other undertaking’s identity and the manager’s registered involvement. Each record should answer a specific factual question rather than merely add volume to the file.

Keep original electronic records and their context. A cropped message may omit the date, participants or attachment that explains the transaction. Preserve the complete conversation and relevant business files through authorised means. A shareholder’s concern does not confer permission to access another person’s private account or impersonate an employee. The evidence strategy must respect access rights and applicable confidentiality and data-protection requirements.

Article 614 provides the limited-company shareholder information and inspection framework. Our Article 614 guide explains the request and dispute route. Make requests specific enough to connect the accounts or documents to the identified issue. A demand for every record created during the company’s existence can obscure the transactions that need urgent review and generate avoidable disputes over scope.

Where litigation requires production of documents held by another party or a third person, the relevant provisions of Civil Procedure Code No. 6100 should be assessed. The request must identify the material and explain its relevance within the procedural rules. Do not equate a Turkish civil case with unrestricted discovery in another jurisdiction. A tailored request is more useful than importing a foreign disclosure demand unchanged.

7. Match each requested remedy to a continuing or completed problem

Changing who manages the company addresses future authority, while compensation addresses a proven past loss. Article 630 governs removal or limitation of management and representation powers within its statutory framework. The separate manager-removal article explains that route. Obtaining a change in management does not automatically determine the damages amount, and a compensation claim does not itself remove signature authority.

A continuing risk may justify examination of interim protection. Articles 389 and 390 of the Civil Procedure Code require the relevant danger, a defined measure and approximate proof of the merits. Identify the pending transfer, use of information or other concrete conduct requiring protection. A request should be capable of implementation and proportionate to the dispute. The court’s assessment cannot be replaced by an assumption that every management conflict warrants freezing all operations.

Separate corporate liability from other possible causes of action. Unfair competition, misuse of confidential information, employment obligations and contractual undertakings can raise additional issues, but each requires its own legal elements and parties. Do not use an accusation of fraud as a substitute for proving the civil claim. Criminal and civil processes must be considered on their own evidence and procedure, without promising that one will automatically produce the result sought in the other.

8. Check the relevant limitation period and the procedural route

For the liability framework addressed by Article 560, the right to seek compensation is subject to two years from learning of the loss and responsible person and, in any event, five years from the act causing the loss. The provision also addresses an act carrying a longer criminal limitation period. Record the discovery of the relevant facts carefully. An internal investigation report and the date of the underlying transaction can serve different roles in that chronology.

These periods should not be copied into every claim associated with the dispute. Challenges to corporate decisions, contractual demands and other remedies can have different rules. The lawyer must also assess competent court, venue and any mandatory pre-action procedure applicable to the precise demand. A shareholder living abroad should obtain that assessment while evidence is being assembled rather than waiting until the economic review has resolved every uncertain item.

Article 5/A of the Commercial Code makes prior mediation a condition for the commercial actions it lists concerning a monetary claim. The classification of the actual demand must therefore be checked before filing a company-loss action. A corporate resolution challenge and a claim for a quantified payment should not be treated as procedurally identical merely because both arise from the same competing activity.

9. Document the outcome and repair the authority structure

A commercial resolution should identify the conduct covered, any future permission, responsibility for company records, financial obligations and the effect on existing claims. If management changes, the legally required corporate and registry steps must follow. Banking and operational authority should be checked against the resulting legal position. A private settlement should not be mistaken for completion of every registration or representation requirement.

Check the beneficiary of each settlement payment against the ownership of the claim. Where the loss belongs to the company, a payment to an individual shareholder requires a separate lawful basis and should not be described as automatic satisfaction of the corporate claim. Record the agreed destination, allocation and discharge effect clearly. This prevents a settlement between two individuals from leaving the company’s asserted entitlement unresolved.

For overseas owners, a documented approval process reduces recurrence. Record outside interests, specify who can approve them under the company agreement and preserve the decisions through the Turkish entity’s records. Set a practical route for obtaining information about material related transactions. These measures do not guarantee that disputes will disappear; they make the facts and authority behind future transactions capable of verification when a legal question arises.

Frequently asked questions

Is a separate non-compete contract required for Article 626?

The statutory manager’s duties arise under the Commercial Code. A separate contract can be relevant, but its absence does not erase the statutory framework.

Can the company agreement permit competing activity?

Article 626(2) recognises a contrary provision in the company agreement. Its wording and relationship with continuing care, loyalty and secrecy duties must be examined.

Is one shareholder’s verbal consent sufficient?

Do not assume so. The statutory route refers to written permission by all other shareholders unless the operative company agreement establishes the relevant alternative.

Does approval by the foreign parent settle the question?

No. The Turkish company’s consent requirements and any applicable group-law provisions must be examined separately from the parent’s internal approval.

Can I demand the company’s loss be paid directly to me?

Under Article 555, a shareholder seeking recovery of company loss requests payment to the company. A separately asserted direct personal loss requires its own legal basis.

Does competition automatically establish manager liability?

No. The applicable prohibition, any permission, breach and required elements of the chosen remedy must be proved. A compensation claim also requires legally relevant loss and causation.

Is removal as manager enough to recover past losses?

No. Removal and compensation address different issues. The evidence and relief needed for each must be assessed separately.

Can I access the manager’s private email to obtain proof?

A shareholder dispute does not authorise unlawful account access. Use records available lawfully and appropriate information or court-production procedures.

What limitation period does Article 560 contain?

It provides a two-year knowledge-based period and a five-year period from the harmful act, with its stated rule for an act carrying a longer criminal limitation period.

What should a foreign shareholder send for initial review?

Provide the company agreement, manager appointment and permission records, evidence identifying the competing business, relevant transactions and a dated explanation of the claimed harm.

Official legal sources

• Commercial Code No. 6102: Articles 5/A, 202–205, 553, 555, 560, 613–614, 621, 626, 630 and 644.
• Civil Procedure Code No. 6100: document-production and interim-measure provisions.

Legal review date: 26 October 2026. The official Turkish legislation controls the original English explanation above.