How to Safeguard Your Business Interests When a Business Partner is Placed Under Trusteeship in Türkiye

Introduction

In the past year alone, approximately 115,000 companies were incorporated in Türkiye, 64.7% of which involve foreign capital.[1] For these entities, operating in compliance with Turkish law and international standards requires a holistic compliance strategy.

Despite internal safeguards, global risks such as bribery, corruption, money laundering, and terrorist financing remain significant priorities. Even when companies implement their own control mechanisms, they can only be partially certain that third parties are exercising adequate due diligence. Furthermore, any process involving a human element remains susceptible to misconduct. In recent years, many companies in our country have had trustees appointed due to their failure to fulfill their obligations and their suspicious activities regarding bribery, corruption, money laundering, and terrorist financing. This article outlines the strategic steps and compliance measures to be taken if a trustee is appointed to one of your business partners in Türkiye.

Core Concepts and Legal Framework

Eliminating the risks of financial crime is an impossible task globally, and Türkiye is no exception. According to the 2025 Basel AML Index, which ranks jurisdictions based on money laundering and related risks, Türkiye scored 5.65 out of 10, ranking 62nd out of 177 countries for high financial risk.[2]

Under the Turkish Criminal Procedure Code No. 5271 (“CPC”), the following offenses may trigger the appointment of a trustee;

• Human trafficking and migrant smuggling;
• Manufacturing and trafficking of narcotics;
• Counterfeiting currency;
• Embezzlement;
• Laundering of assets acquired through crime;
• Armed organization or arms smuggling;
• Crimes against state secrets and espionage.

Pursuant to Article 133 of the CPC, a court may appoint a trustee to manage a company if (i) there is strong suspicion that these crimes are being committed within the scope of the company's activities and (ii) the appointment is necessary to uncover the material truth. Furthermore, under Article 128(10) of the CPC, a trustee may be appointed specifically to manage assets, including real estate, vehicles, bank accounts, securities, and partnership shares. Such appointments are officially announced in the Trade Registry Gazette and other appropriate means.

When the Savings Deposit Insurance Fund of Türkiye (“TMSF”) is appointed as a trustee, it is legally obligated to manage the company as a "prudent merchant" in accordance with commercial customs, ensuring the company’s continued contribution to the national economy. In these instances, the powers of the General Assembly are exercised by the TMSF, independent of the standard provisions of the Turkish Commercial Code. It is important to note that the TMSF Board may decide to sell or liquidate the company or its assets based on its financial status or market conditions. In this case, a report detailing the reasons for the sale or termination and liquidation shall be prepared first. However, it should also be noted that in recent years, not every company appointed as a trustee in our country has decided to sell its assets or liquidate.

The sale of company shares, both in terms of partial trustee (share trustee) and full trustee, means the transfer of shares in a sense. The trustee may seek the consent of the shareholder for such transfers or may proceed directly with the transfer.[3] However, the trustee must take into account the interests of both the shareholders and the company, as well as the public interest.

Proceeds from a sale conducted by the management body are blocked in a public bank account on behalf of the shareholders and placed in interest-bearing instruments until the conclusion of the investigation and trial. Following the sale of company assets or specific property interests, any remaining balance—after the settlement of outstanding liabilities—may be utilized for the company’s operations or asset management.[4]  This process is reported to the relevant judicial authorities. Upon the transfer of shares or assets, the judiciary is notified to ensure the formal revocation of the trusteeship.

In the event of a liquidation, the trustee management is duty-bound to act as a prudent merchant, taking all necessary measures to preserve the company’s assets and rights while finalizing the liquidation as expeditiously as possible. Any residual balance following liquidation is blocked in a public bank account for the shareholders until the legal proceedings conclude, with the judiciary being duly informed. Consequently, since business partners are not directly notified of these developments, companies must proactively monitor whether a partner has entered a sale or liquidation phase.

Regarding the investigations and prosecutions that trigger the appointment of a trustee, two fundamental principles apply: the presumption of innocence and the personality of criminal liability. Criminal liability cannot be attributed to the corporate entity itself; it is strictly limited to the individuals who committed the offense. Furthermore, no guilt can be ascribed to individuals until the prosecution is finalized. Under the CPC , investigations may be kept confidential via a court-ordered secrecy mandate to preserve the integrity of the process. Accordingly, the information available to you when inquiring about a partner under trusteeship may be limited; however, specific strategic avenues remain available to obtain information and mitigate risk.

Compliance Strategy and Risk Mitigation

It is possible to obtain information about the company's status by contacting the company, and therefore the trustee, through TMSF or by e-mail/phone calls to company officials. However, for parties seeking to enhance their legal protections, several strategic avenues exist to secure specific representations and warranties regarding the business relationship:

• Termination of the Business Relationship: The first step is to review the existing contract for specific trigger events. If there are clauses regarding breaches of AML (Anti-Money Laundering) or CFT (Countering the Financing of Terrorism) obligations, these rights should be exercised. In the absence of specific compliance triggers, the relationship may be terminated by invoking the standard termination-for-cause or termination-for-convenience provisions. However, at this point, it is crucial that a written contract is signed between the parties, that the AML and CFT provisions are included in the contract, and that there is a clause regarding the immediate and compensation-free termination of the contract in case of breach of these provisions.

In cases where a foreign entity is a shareholder in a company placed under trusteeship, a share transfer may be considered alongside the measures mentioned above. However, it must be noted that holding registered shares does not impede the trustee’s exercise of management and control powers. As previously discussed, while a trustee may unilaterally decide to sell company shares if deemed necessary, a foreign shareholder wishing to exit must obtain the trustee’s approval for any share transfer. In such instances, the trustee retains the right to vet and approve any prospective new partner. [5]

• Letter of Comfort (LoC): If the decision is made to maintain the relationship—or if a transition period is required due to the nature of a project—it is advisable to obtain a Letter of Comfort from the trustee-led management. This letter should ideally include the following covenants:     

- A commitment to provide updates on any developments in the AML/CFT investigations that may materially affect your company.

- Formal notification of the new management’s identities and powers, along with a guarantee that all performance obligations will be met fully and without interruption until the relationship concludes.

- Confirmation that any fees paid or services rendered are entirely unrelated to the ongoing investigation or prosecution.

- A commitment to provide immediate notice if a report is drafted recommending the sale or liquidation of the company.

- Periodic updates regarding the status of the investigation and the company’s standing throughout the duration of the partnership.

• Reputation Management: Depending on the nature of the alleged offense, managing the public association with a trustee-managed company is critical. While the "presumption of innocence" remains a guiding principle until a final verdict is reached, companies should proactively protect their brand by suspending existing collaborations, avoiding new joint projects, and refraining from joint public announcements until the legal process is resolved.

Conclusion

In Türkiye, where the perception of corruption has been on a negative trend, the appointment of a trustee to a company, its shares, or its assets during criminal investigations or prosecutions has become an increasingly common practice. According to recent data from the TMSF, approximately 1,200 companies are currently under full or partial trusteeship.[6] For foreign entities operating in Türkiye, there are specific strategic measures available when a business partner or a co-shareholder is placed under trusteeship. Companies may manage their reputational risk by requesting formal disclosures and representations through a Letter of Comfort, or they may opt to terminate the business relationship entirely.

From a corporate perspective, third-party and internal risks can never be fully eliminated. However, several proactive measures can significantly mitigate these risks: (i) fostering a well-managed corporate ethical culture that encourages a "speak-up" environment, (ii) implementing effective, data-driven internal controls, for particularly regarding financial audits, and (iii) ensuring a decent separation of powers within the organization. While the appointment of a trustee is a commercially challenging event, it does not necessarily signal the end of operations. With a sound process and a dedicated compliance strategy, these situations can be managed effectively.

References

(Only in Turkish) Kayyım Olunan Şirketlere İlişkin Veriler. (2025, 12). Retrieved from Savings Deposit Insurance Fund of Türkiye (TMSF): https://www.tmsf.org.tr/tr/Tmsf/Kayyim/kayyim.veri

(Only in Turkish) Kurulan/Kapanan Şirket İstatistikleri. (2025, 12). Retrieved from Türkiye Odalar ve Borsalar Birliği: https://www.tobb.org.tr/BilgiErisimMudurlugu/Documents/ResmiDosya/2025/2025-12.xls

Basel AML Index 2025: 14th Public Edition Global Money Laundering And Financial Crime Risk Ranking. (2025). Retrieved from Basel Institute on Govarnance.

Kuzu, O. (2025, 09). Restricted Registered Shares not Listed on the Stock Exchange, The Appointment of the Sdif as Trustee to the Joint Stock Companies Holding Such Shares, and the Subsequent Status of These Shares. Istanbul Medeniyet University Journal of the Faculty of Law. Retrieved from https://dergipark.org.tr/en/download/article-file/5152094

The Law on the Adoption of the Decree-Law Amending the Decree-Law on Certain Regulations Within the Scope of the State of Emergency No. 6758, Article 19.