Limited liability

Limited liability is the principle that shareholders of Turkish capital companies are not personally answerable for company debts; their risk is capped at the capital they have subscribed. Only the company, as a legal entity, is liable with its own assets.

This principle makes joint-stock and limited liability companies attractive vehicles, since creditors cannot in principle reach the shareholders' personal assets. Important exceptions exist, however. Members of a limited liability company may be liable, pro rata to their shares, for taxes and social security premiums uncollectible from the company, and legal representatives may be pursued for public debts.

In practice, personal suretyships given by shareholders for company debts are the most common way this protection is lost. Turkish courts also accept piercing the corporate veil in exceptional cases of abuse.