A Foreign Shareholder Lent Money to a Turkish Company: Proving and Recovering the Loan

Determine whether the money created a loan or an equity interest

The repayment analysis begins with the transaction’s legal purpose. Under Article 386 of Code of Obligations No. 6098, a loan of money involves the lender transferring money and the borrower undertaking to return an equivalent amount. The essential issue is the repayment undertaking. A shareholder’s contribution to a business does not become a loan solely because that shareholder later wants the money returned.

For a Turkish limited company, Commercial Code Article 601 prohibits returning the value of the capital share to a shareholder outside the capital reduction framework and prohibits releasing the shareholder from that contribution obligation. Capital and debt therefore cannot be interchanged through a payment demand. Review the articles of association, capital subscription, resolutions and registry history alongside the financing documents. A transfer described as capital in the corporate records needs a different analysis from an established loan account.

A capital advance, reimbursement claim, dividend entitlement and loan also have different origins. Identify the legal act supporting each component of the balance. The claim should state why the company must repay the particular amount instead of presenting all funds supplied by the investor as one undifferentiated investment loss.

Identify the actual lender and the company that undertook repayment

Foreign investment structures often contain several legal entities. The shareholder appearing in the Turkish company’s records, the sender named in a bank transfer and the lender identified in the agreement must be reconciled. A parent company, treasury company and individual beneficial owner do not become the same creditor through common ownership. The claim belongs to the person whose right is established by the transaction and any valid later transfer of that right.

The same discipline applies to the borrower. Confirm the Turkish company’s full registered name, registration details and continuing legal status. Money used for the company’s business does not establish that every director or other shareholder personally undertook repayment. Article 573(2) of the Commercial Code distinguishes limited-company obligations from shareholders’ capital and other specified obligations. A separate personal undertaking requires its own legal basis and proof.

The financing schedule should identify payments made directly to the company separately from payments to suppliers, employees or another group entity. For each indirect payment, preserve the company’s instruction and the agreement explaining whether the payment created a loan, reimbursement obligation or another account entry. The destination of the money and the identity of the debtor are connected factual questions, but neither should be assumed from the other.

Check who committed the company to borrow

A loan agreement should be checked against the company’s representation arrangements at the time of execution. Obtain the relevant registry information, signature authority and resolutions. Confirm whether the person who accepted the financing acted for the company and whether the required corporate approvals exist. The lender’s ownership percentage does not itself establish authority to sign for the borrower.

Conflicts require particular attention where the shareholder is also a company officer. For a joint-stock company, Article 395(1) regulates a board member’s transactions with the company and the general assembly’s permission. Its wording gives the company a specific invalidity objection where the required permission is absent. The transaction should therefore be analysed under the rule applicable to that company and office; provisions for joint-stock companies should not be transferred wholesale to limited-company managers without checking their statutory basis.

Article 358 concerns shareholders borrowing from the company. A shareholder lending to the company is the opposite direction of financing. A repayment dispute should identify the actual money flow before invoking that restriction. Neither the shareholder’s status nor a reference to Article 358 answers whether the company validly borrowed the funds now claimed.

Build a drawdown record that explains the banking evidence

Bank records should show the payer, recipient, currency, transfer date, reference and amount credited. Preserve original statements and transfer confirmations rather than relying exclusively on a reconstructed spreadsheet. Where intermediary charges or currency conversion affect the received amount, keep the information needed to reconcile those differences. The amount sent and the company’s recorded debt should be connected by evidence.

Separate each drawdown under a continuing funding arrangement. Record the agreement or instruction supporting it, the company’s acknowledgement and any corresponding repayment. Later correspondence can clarify how the parties treated a transfer, but it should be read with its date and context. A statement acknowledging receipt of money does not necessarily acknowledge the legal character or maturity asserted by the lender.

Documents created when funds moved are particularly useful for distinguishing a recoverable advance from capital funding. Preserve payment descriptions, financing requests, approved cash forecasts and related communications. The evidentiary objective is a traceable account of the transaction, including inconsistent descriptions that require explanation, rather than a selected set of documents showing only that money left the shareholder’s account.

Treat accounting entries as evidence requiring legal interpretation

Article 64 requires merchants to keep books showing commercial transactions, financial position and debt and receivable relationships clearly. Article 82 requires preservation of specified commercial books, correspondence and supporting records for ten years, calculated under its year-end rule. These duties provide a statutory foundation for seeking the company’s loan ledger and the documents underlying it.

A shareholder account can contain several kinds of entries. The account name alone does not prove that its full balance is a matured loan. Reconcile advances, repayments, expense reimbursements, interest, conversion entries and transfers between accounts. A year-end balance should be capable of being traced back to the underlying transactions. A disputed adjustment needs its date, author, supporting document and alleged legal basis.

Article 222 of the Code of Civil Procedure regulates commercial books as evidence in commercial litigation. It imposes requirements concerning proper maintenance, approvals and consistency, and sets conditions for use in favour of the book owner. It also addresses absent or contradictory records. A ledger should not be presented as automatically conclusive merely because an accountant prepared it.

Use shareholder information rights to obtain the underlying records

For a limited company, Article 614 allows each shareholder to request information from managers about all company affairs and accounts and to examine specified matters. It provides a procedure where managers restrict access because of a risk of harmful use, followed by general assembly consideration and court review where information or inspection is unjustifiably prevented. The limited-company information rights guide addresses that procedure.

A targeted request should identify the loan account, relevant periods, supporting bank statements, resolutions and repayment entries. Information rights are used to establish facts; they do not themselves decide the debt claim. Keep the request and response so that the later file shows which records were sought and which remain unavailable.

The lender’s status must also be checked at the time of the request. A former shareholder or a lender that never held shares should not assume access under a provision granting rights to shareholders. Judicial production of documents and other procedural routes require separate assessment. Records lawfully obtained should be retained in their complete form and used for the claim for which they are relevant.

Distinguish document evidence from the required standard of proof

Civil Procedure Code Article 199 recognises electronic data and other information carriers as documents. Article 200 nevertheless imposes documentary proof requirements for legal transactions above the applicable monetary threshold, subject to the Code’s rules and exceptions. An email’s classification as a document does not establish that every email satisfies every formal proof requirement. The threshold applicable to the transaction must be checked without relying on an outdated nominal figure printed in an older text.

Article 202 permits witness evidence where there is a qualifying beginning of proof: a document issued or sent by the opposing party or its representative that makes the alleged transaction probable without fully proving it. This rule requires attention to the document’s origin and content. The lender’s own unilateral note is not equivalent to a company acknowledgement.

Preserve the complete message chain, attachments and available identifying information. A signed financing agreement, corporate acceptance and bank trail should be analysed together. Foreign-language evidence also needs a properly prepared Turkish presentation. Translation should preserve whether a statement concerns receipt, repayment, a proposed settlement or an admitted outstanding debt.

Establish when repayment became due and when default began

Apply the repayment terms actually agreed. Article 392 provides a fallback only where no repayment day, notice period or immediate maturity upon demand was agreed: the borrower is not obliged to repay until six weeks after the first request. It does not add six weeks to every fixed-term corporate loan. The demand record must identify the amount and the basis on which repayment is sought.

Article 117 separately regulates debtor default. A due obligation generally requires the creditor’s notice, with statutory exceptions including expiry of an agreed performance day. Maturity and default should therefore appear as separate dates in the calculation. A demand issued before the contractual repayment conditions exist should not be treated as proof that the company was already late.

Where both parties are merchants, Commercial Code Article 18(3) addresses notices concerning default, termination and withdrawal through specified channels. The method of communication should be selected after checking the parties’ status and the notice’s purpose. Preserve delivery evidence and any contractual notice provisions, particularly where the lender’s communications are sent from abroad.

Calculate the balance without merging debt, tax and equity questions

The principal schedule should reconcile every advance and repayment. Ordinary loan interest, default interest, expenses and exchange differences should be shown separately with their legal and contractual bases. Article 387 distinguishes commercial and non-commercial loans for ordinary interest, while Article 388 addresses the rate and payment arrangement where applicable. Special commercial rules and currency rules require their own review before selecting a rate or compounding method.

Tax treatment is a separate inquiry. The foreign shareholder thin-capitalisation guide addresses the corporate tax framework. A tax label should not be used as the sole explanation of the company’s civil repayment obligation. The contract and corporate evidence still need to establish what was borrowed and what remains due.

Current law also matters when reviewing older commentary. Commercial Code Article 615, formerly headed loans replacing equity, is repealed in the consolidated text. A present claim should not be rejected or ranked by quoting that repealed provision as operative law. Insolvency, contractual subordination, security and other applicable rules require their own current analysis.

Check limitation from the claim’s true legal basis

Article 146 establishes a ten-year general limitation period unless another rule applies. Article 147 contains shorter periods for specified claims, including interest and certain claims arising from the partnership relationship. The fact that the lender owns shares does not remove the need to classify the particular cause of action. A separate loan claim and a claim arising from the corporate relationship must be analysed on their own foundations.

Article 149 links commencement to maturity and contains a specific rule where maturity depends on notice. Delaying a demand should not be assumed to postpone limitation indefinitely. Article 154 identifies interruption events, including acknowledgement and specified judicial or enforcement steps. Mere discussion of a possible repayment is not automatically the same as a legally effective interruption.

Review later restructurings carefully. A debt-to-capital conversion, release, assignment, settlement or subordination arrangement can change the claim’s position. Preserve the operative documents and corporate steps. The ledger’s latest balance should be tested against those legal acts before the original advance is demanded again.

Choose the procedure after resolving the debt’s classification

The competent court and pre-action requirements depend on the legal nature of the dispute. Commercial Code Articles 4 and 5 identify commercial cases and the commercial court’s jurisdiction. The presence of a company in the dispute should not replace that analysis. Article 5/A requires pre-action mediation for the commercial monetary claims and associated actions within its scope.

The filing should identify the creditor, company debtor, repayment undertaking, advances, due date and outstanding amount. Accounting expertise can assist reconciliation but cannot supply a missing legal obligation by itself. Enforcement strategy should also consider the company’s current status and assets; an established debt does not establish that immediate collection is available.

Prepare the foreign lender’s procedural documents early

Article 24 of Law No. 5718 governs contractual choice of law and the connecting rules where no choice exists. Turkish repayment provisions should be applied only after the governing-law issue is addressed. Jurisdiction and dispute-resolution clauses require a separate examination.

Article 48 also addresses security from foreign persons bringing proceedings or enforcement, with the reciprocity exemption. The foreign claimant security guide explains that requirement. Corporate identity, authority documents, translations and the exemption basis should accompany a complete debt file, allowing the merits and procedural requirements to be assessed together.

Frequently asked questions

Does every shareholder payment to a Turkish company create a loan?

No. Article 386 requires an obligation to return an equivalent amount. Capital subscriptions, capital advances, expense payments and loans must be distinguished using the agreement, resolutions, banking evidence and company records. A transfer alone does not establish the legal reason for repayment.

Can I recover paid-up capital by calling it a shareholder loan?

A label in a demand does not change the original transaction. For limited companies, Article 601 restricts return of the capital share outside capital reduction. The corporate documents and any valid later restructuring must be reviewed before claiming a repayable debt.

Is the amount in the shareholder ledger automatically conclusive?

No. The ledger must be reconciled with the underlying documents. Article 222 regulates when commercial books can serve as evidence and imposes conditions. A shareholder account may include several transaction types, so its entire balance should not automatically be treated as a matured loan.

Can a limited-company shareholder inspect the loan account?

Article 614 grants shareholders information and specified inspection rights and provides a process for disputed restrictions. A request should identify the account, period and supporting records. That right helps obtain evidence but does not itself determine whether repayment is legally due.

Does Article 358 prohibit me from lending to my company?

Article 358 addresses shareholders borrowing from the company, a different direction of financing. A shareholder loan to the company requires its own authority, contractual and regulatory review. The provision should not be applied without first identifying who lent to whom.

When does the six-week repayment rule apply?

Article 392 applies where no repayment day, notice period or immediate-demand maturity was agreed. In that situation, repayment is not required until six weeks after the first request. An established fixed repayment date is not automatically extended by another six weeks.

Can I sue the other shareholders personally for the company’s loan?

Company debt and shareholder obligations are distinct. Article 573(2) sets the limited-company framework. A claim against another person requires a separate legal basis, such as an enforceable personal undertaking or an applicable liability rule, supported by its own evidence.

Does thin-capitalisation treatment decide whether the company owes repayment?

The tax analysis and civil debt analysis address different questions. The repayment undertaking, transaction classification and current balance still require proof. Tax records can be relevant evidence, but the claim should not rest on a tax label alone.

Does a foreign shareholder automatically receive a limitation extension?

No automatic extension follows from foreign status. The applicable limitation rule, maturity, notice-dependent accrual and interruption events must be checked. Articles 146, 147, 149 and 154 require a claim-specific timeline rather than a date selected solely from the original transfer.

Is mediation required before a repayment lawsuit?

Article 5/A requires pre-action mediation for commercial monetary claims within its scope. First determine whether the dispute is a commercial case under the relevant rules and which action is proposed. The company’s involvement alone should not replace that procedural classification.

Official legal sources

• Code of Obligations No. 6098 — Articles 117, 146, 147, 149, 154, 386, 387, 388, 392
• Commercial Code No. 6102 — Articles 4, 5, 5/A, 18(3), 64, 82, 358, 395(1), 573(2), 601, 614, 615 (repealed), 644
• Civil Procedure Code No. 6100 — Articles 199, 200, 202, 222
• Private International and Procedural Law No. 5718 — Articles 24, 48

The official Turkish legislation controls. The governing law, deadlines and procedural requirements must be assessed for the individual case.