Where the company is still registered with the trade registry and its assets have not yet been distributed, a return from liquidation is carried out by general assembly decision (Article 548 of the Turkish Commercial Code). Where an asset comes to light after the company has been struck off the registry, supplementary liquidation applies (Article 547); where a struck-off company needs to be re-registered for a particular legal transaction, a restoration action is brought. For companies struck off automatically under Provisional Article 7 of the Turkish Commercial Code, a restoration request is subject to a five-year period running from the date of the strike-off. The three procedures are not alternatives to one another; the company’s position on the registry determines which route applies.
Which route applies? Decision chart
What is the difference between the three procedures?
Return from liquidation
The company is still on the registry. By general assembly decision it permanently resumes commercial activity.
Supplementary liquidation
The company has been struck off. For an asset coming to light afterwards, a re-registration limited in purpose is made by court decision.
Restoration
The company has been struck off. It is re-registered by court decision so that a particular legal transaction can be completed.
| Criterion | Return from liquidation | Supplementary liquidation | Restoration |
|---|---|---|---|
| Position of the company | On the registry, in liquidation | Struck off the registry | Struck off the registry |
| Legal basis | Article 548 | Article 547 | Article 547 / Provisional Article 7 |
| Deciding authority | General assembly | Commercial Court of First Instance | Commercial Court of First Instance |
| Time limit | Until distribution of assets begins | Depends on identification of the asset | Five years from the strike-off under Provisional Article 7 |
| Outcome | The company continues its commercial activity | Re-registration limited to the transaction, followed by a further strike-off | Re-registration limited to the transaction, followed by a further strike-off |
| Typical reason | A new business opportunity, a decision to continue trading | Real estate, a receivable or a tax refund coming to light afterwards | A pending court case, enforcement proceeding, incomplete liquidation |
What is a return from liquidation and when is it possible?
A return from liquidation means that the decision to close a company in liquidation is abandoned and the company continues its commercial activity. This can only be done before the company has been struck off the trade registry.
Under Article 548 of the Turkish Commercial Code the following conditions must be met together:
- The liquidation period has not expired, or the liquidation has come to an end by general assembly decision
- Distribution of the company’s assets to the shareholders has not yet begun
- Affirmative votes representing at least 60 per cent of the capital are obtained at the general assembly
- Where the articles of association provide for a higher quorum, that quorum is complied with
What formalities are carried out on a return from liquidation?
- The liquidators prepare a report showing that distribution of the company’s assets to the shareholders has not begun.
- The general assembly decides that the company returns from liquidation and continues its activities.
- The managers or board members and the form of representation are determined afresh.
- The return from liquidation application is created through the central registry system.
- The notarised general assembly decision, the attendance list, the liquidators’ report, the chamber registration declaration and the authority documents are prepared.
- The decision is registered and announced at the trade registry.
- The words “In Liquidation” are removed from the trade name.
- The trade name and authorised signatory details are updated with the tax office, the social security institution, banks and electronic systems.
A return from liquidation cannot be applied after the company has been struck off the registry. For a company already struck off, supplementary liquidation or restoration must be sought through the court.
What is done about assets coming to light after the liquidation?
Where real estate, a vehicle, a bank account, a receivable, a tax refund, a right of action or another asset belonging to the company comes to light after the liquidation has been completed and the company struck off, no general assembly decision can be taken, because the company’s legal personality has come to an end. In that case a supplementary liquidation action must be brought under Article 547 of the Turkish Commercial Code.
How is the supplementary liquidation process conducted?
- The end-of-liquidation and strike-off records of the company are obtained.
- The asset that has come to light is documented.
- A supplementary liquidation action is brought before the Commercial Court of First Instance at the place of the company’s head office.
- In the action, re-registration of the company solely for the purpose of completing the necessary transactions is requested.
- Appointment of the last liquidator, or of a new person, as supplementary liquidator is requested.
- The final court decision is registered and announced at the trade registry.
- The additional transaction is completed — transfer of real estate, sale of a vehicle, closing a bank account, collection of a receivable or conduct of the court case.
- A supplementary liquidation balance sheet is prepared and the company is struck off the trade registry again.
Supplementary liquidation does not mean that the company returns to normal commercial activity. Re-registration takes place solely so that the transactions stated in the court decision can be carried out.
How is a struck-off company restored through the court?
Restoration of a company means the re-registration, by court decision, of a company struck off the trade registry so that a particular legal transaction can be completed. The first step in the process is to establish the ground on which the strike-off was made:
- Strike-off following an ordinary liquidation
- Automatic strike-off under Provisional Article 7 of the Turkish Commercial Code
- An administrative process connected with closure of the tax registration
- Bankruptcy or a court decision
- Incomplete or improper liquidation
- A strike-off made despite a pending court case or enforcement proceeding
What steps are followed in a restoration action?
- The trade registry records and the strike-off announcement are obtained.
- The legal ground for the strike-off is established.
- The legal interest requiring restoration and the transaction to be carried out are set out concretely.
- A restoration action is brought before the Commercial Court of First Instance at the place of the company’s head office.
- The correct defendants are identified according to the type of strike-off.
- Restoration limited to the transaction to be carried out is requested, rather than a permanent return to activity.
- Appointment of a liquidator by the court and a decision on re-registration are obtained.
- The final court decision is registered and announced at the trade registry.
- Once the transaction giving rise to the restoration is completed, the further strike-off process is carried out.
Restoration through the court and a return from liquidation are not the same procedure. On a return from liquidation the company is still on the registry; on a restoration, a company whose legal personality has come to an end is re-registered by court decision.
Can companies struck off under Provisional Article 7 be restored?
Provisional Article 7 of the Turkish Commercial Code governed the automatic strike-off of certain companies and cooperatives from the trade registry under a special and temporary procedure. Creditors of companies struck off under that provision, and persons with a legal interest, may request restoration of the company on justified grounds within five years of the date of the strike-off.
What checks are carried out on a restoration under Provisional Article 7?
- It is established whether the company was in fact struck off under Provisional Article 7.
- The strike-off announcement and the trade registry file are examined.
- It is checked whether the required notices were duly served on the company and its officers.
- It is investigated whether any court case or enforcement proceeding was pending on the date of the strike-off.
- The five-year application period is calculated.
- The documents evidencing the legal interest are prepared.
- A restoration action is brought before the Commercial Court of First Instance at the place of the company’s head office.
- As a rule the relevant trade registry directorate is named as the statutory defendant.
- After the court decision the company is re-registered and the necessary transaction is completed.
Frequently asked questions
What quorum is required at the general assembly for a return from liquidation?
Under Article 548 of the Turkish Commercial Code, affirmative votes representing at least 60 per cent of the capital are required. Where the articles of association provide for a higher quorum, that quorum applies.
Can a company return from liquidation once distribution of assets to shareholders has begun?
No. One of the conditions for a return from liquidation is that distribution of the assets to the shareholders has not begun. This condition is evidenced by the liquidator’s report.
How are funds in the bank account of a struck-off company collected?
Because the legal personality has come to an end, no general assembly decision can be taken. A supplementary liquidation action is brought under Article 547 of the Turkish Commercial Code, requesting re-registration of the company for a limited purpose and the appointment of a liquidator.
Does a restoration decision allow the company to resume commercial activity?
No. Re-registration is limited to completing the transaction stated in the court decision. Once the transaction is completed, the company is struck off the trade registry again.
In which court is a restoration action brought?
It is brought before the Commercial Court of First Instance at the place of the company’s head office. The defendant must be correctly identified according to the type of strike-off.
Is there another route if the five-year period under Provisional Article 7 has expired?
Expiry of the period does not on its own end the assessment. Whether service was duly effected, whether the conditions for the strike-off were met, and whether a court case or enforcement proceeding was pending on the date of the strike-off are examined on a file-by-file basis.
What is done about tax and social security records after a return from liquidation?
After registration and announcement, the trade name and authorised signatory details must be updated with the tax office, the social security institution, banks and electronic systems. The words “In Liquidation” are removed from the trade name.
For questions on company restoration you may contact us.
