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MisakLex • Company law • Updated: 13 September 2026
Several companies belonging to the same family or group of investors can make day-to-day operations easier. Financing is managed together, employees support different companies, and a stronger company provides security for another. But belonging to one economic group does not mean that all the companies own a single pool of assets. Each company has its own creditors, shareholders and obligations.
Legal risk often arises when that distinction is forgotten. An undocumented transfer from a cash-rich company to another, a subsidiary's security for group debts, or management decisions made solely on the parent's instructions can later give rise to liability disputes. This article addresses management, financing and reporting arrangements for domestic holdings and family businesses, as well as foreign groups with subsidiaries in Türkiye.
1. A holding company and a group of companies are not the same concept
The word “holding” does not itself denote a separate legal type of company. The company's legal form—for example, a joint stock company—continues to matter. When assessing a group of companies, however, the relationship of control matters more than the name. Voting rights, the power to select a majority of the management body, contractual arrangements or control by other means may be decisive. 1 , 21,2
A structure without “holding” in its name may therefore still fall within the group-of-companies rules. Conversely, merely using a common brand does not always establish the control relationship required by law. Alongside direct shareholdings, indirect participations and agreements under which shareholders act together should be examined. A simple ownership chart sometimes fails to reflect the true control structure.
Article 195 of the Turkish Commercial Code (TTK) also covers cases where the controlling party is an enterprise other than a company. Its rule for situations in which at least one controlling or dependent company has its registered office in Türkiye is particularly important for international groups. Instructions from a parent structure in Russia or Uzbekistan to its Turkish subsidiary should not be assessed solely under the rules of the parent's home country. 1 , 31,3
The first legal review should go beyond listing the group companies' names. It should show share ownership, voting rights, appointment powers, control agreements and the actual decision-making process together. Establish also where each company was incorporated and what business it carries on. This map forms the basis for later reviews of security and reporting.
2. Each company's interests must be considered separately
Companies in one group may share economic goals, but a loss suffered by one cannot in every case be explained away by saying “the group benefits overall”. Article 202 of the TTK limits the exercise of control in a manner that causes a dependent company to suffer a loss. Transfers of funds or assets, unfavourable contracts, suretyships and guarantees may be assessed within this framework. 1 , 31,3
For example, cash from a profitable manufacturing company might be transferred for a long period and without security to another group company in financial difficulty. Even if the transaction meets an urgent group need, the financing requirements of the company providing the money and its repayment risk must be assessed separately. The interests of its minority shareholder or creditor cannot be ignored merely to rescue the other company.
Intragroup transactions are not all prohibited or harmful. Services purchased on market terms, joint procurement and reasonable financing arrangements may benefit the companies. What matters is that the terms, expected benefit and assumed burden can be explained when the decision is made. A general explanation of “group benefit” written later will not always cure gaps in the transaction file.
3. What can compensation for loss achieve, and what can it not achieve?
The statutory compensation mechanism is intended to make good the loss suffered by a dependent company. Under Article 202(1)(a) of the TTK, the loss must actually be remedied within the relevant financial year, or the dependent company must, by the end of that year at the latest, be granted a claim of equivalent value specifying how and when it will be satisfied. A vague promise of assistance at some future time does not meet this requirement. 1 , 31,3
The money transferred is therefore not the only matter that must be recorded. The calculation of the loss, the party responsible for making it good, the content of the claim granted and the payment terms should all be explained. An accounts-receivable entry is not the same, for legal purposes, as the grant of an enforceable right with real value. The debtor company's ability to pay can also affect the assessment.
If no compensation is made, the controlling company and managers who caused the loss may face liability under the statutory conditions. Shareholders' and company creditors' remedies do not have the same scope; who should receive any payment and the conditions for a claim must be determined separately. Accordingly, one should not assume that a year-end adjustment to the accounts alone removes all liability after a loss has arisen. 11
Capital-markets rules are also important in a structure containing a publicly held company. The compensation mechanism under the TTK cannot be read as general permission to transfer concealed profits. Scholarship likewise discusses the need to assess these rules together in view of their different purposes and sanctions. The same transaction policy should therefore not be applied without adjustment to both public and private group companies. 44
4. Full ownership does not confer unlimited power to give instructions
Where a parent owns all of a dependent company's shares and voting rights, the full-control rules in Article 203 et seq. of the TTK may apply. Subject to specified conditions, the law permits instructions required by concrete group policies. This does not, however, mean that any transaction endangering the dependent company's existence may be undertaken. 11
Article 204 of the TTK limits instructions that plainly exceed a dependent company's solvency, could endanger its existence or could cause it to lose significant assets. “We already own the whole company” does not therefore eliminate all duties of assessment imposed on its management body. The conditions for full control and the substance of an instruction must be examined separately. 1 , 31,3
The same care is needed for instructions from abroad. Approval of a financing plan by group headquarters does not replace decisions by the Turkish company's organs or its local statutory obligations. To protect the legal position of the manager implementing an instruction, the transaction file should show its purpose, its effect on the dependent company and the statutory limits.
5. Intragroup borrowing and cash management
When group companies lend to one another, the amount, currency, maturity, interest or other charges, source of repayment and security should be specified clearly. A payment reference on a bank transfer does not set out the entire contractual relationship. In particular, long-outstanding current accounts should be reviewed regularly to determine which transactions they comprise and how the parties have reconciled them.
For tax purposes, the arm's-length principle matters in transactions with related parties. Article 13 of the Corporate Tax Law governs disguised profit distribution through transfer pricing where prices or consideration depart from market conditions. Intragroup loans and services are not outside tax scrutiny simply because the companies belong to the same economic group. 55
If group headquarters invoices management services, it also matters whether those services were actually supplied and whether the receiving company needed them. The content of the service, allocation key and basis for the fee should be explained. The Revenue Administration's guidance does not infer the existence of an intragroup service from group membership alone. Its rulings on particular facts should not be read as unconditional permission for every company. 66
If a cash pool is established, specify when and on what terms a company contributing funds may recover them. Keeping ostensibly short-term cash with another company continuously may change the nature of the original arrangement. Restrictions on borrowing and security in bank agreements should also be reviewed. Financing to or from abroad calls for a separate transaction-specific check of applicable foreign-exchange, tax and notification rules.
6. Giving security for another group company
A company's suretyship, guarantee, aval or mortgage for another company's loan can impose substantial risk on it. Examine not only the principal secured but also interest, costs, extensions of maturity and terms that broaden the security's scope. A fee for providing security or the receipt of other protection may be relevant, but does not alone resolve every legal issue. 1 , 71,7
The decision file should explain why the company providing security accepted that risk. Will its borrowing capacity shrink, will its own investments be delayed, and what happens if the debtor company cannot pay? These questions matter for the company's managers' liability, not only for the bank. General management approval does not cure a breach of mandatory law.
Release of the security should also be planned from the outset. Sale of a group company or the end of the ownership relationship may not automatically terminate an existing guarantee. The sale agreement may make release of security a closing condition, but the creditor's consent may be required. An intragroup protocol does not, by itself, narrow a bank's existing rights.
7. One manager serving in several companies
Shared managers can make group coordination easier. But where two group companies contract with each other, one manager may be trying to represent both sides' interests at once. Rules on conflicts of interest, restrictions on taking part in negotiations, transactions with the company and non-compete duties must be examined in light of each company's legal form. The same person's signature for every company does not alone make the transaction safe. 11
Required corporate decisions and powers of representation must be identified separately for each company. The decisions should explain the rationale, pricing basis, risks and any dissenting views. Using one company's board resolution as if it were the other's is inconsistent with their separate legal personalities. Each company's own decision and records file should document its transaction.
The allocation of duties should also be clear. Support from a group legal, finance or accounting team does not mean that it assumes all statutory duties of the local management body. Non-delegable duties under the TTK and managers' duty of care remain in force. Preparing a decision at foreign headquarters and merely signing it in Türkiye does not automatically release the local manager from responsibility. 11
8. The affiliation report and notification duties
Article 199 of the TTK requires a dependent company's management body to prepare a report on relationships during the previous financial year within the first three months of the new financial year. For a company using the calendar year, that means the first three months of the year; the same calendar should not be copied for a company with a different accounting period. The report covers transactions with the controlling company and other dependent companies, as well as related measures. 1 , 31,3
The report should not consist solely of a concluding sentence that “the company suffered no loss”. The terms of transactions, reciprocal benefits provided, measures taken or omitted and any assessment of compensation should be supported by their underlying records. The conclusion required by law and public access to the report's entire contents are different questions. Confidentiality and information rights must be addressed under their own rules.
Notification, registration and publication duties under Article 198 of the TTK must also be assessed when certain shareholding or voting thresholds change. Preparing an annual report does not, by itself, fulfil each of these duties. A transfer of shares from one group company to another warrants a separate check even if ultimate economic control remains in the same family. 11
For sound reporting, keep distinct records of intragroup transactions throughout the year rather than searching for scattered papers at year-end. Loan agreements, security documents, service fees, reconciliations and related decisions can be collected in that file. The report will then rest on auditable records instead of retrospective guesses about past transactions.
9. Sharing a brand, employees and information
Using a common group brand may build customer confidence. Article 209 of the TTK provides, under specified conditions, for liability arising from reliance induced by a group's reputation. A shared logo does not, however, automatically make every group company liable for every debt of another. The assessment concerns what reliance was induced, by whom and how it relates to the particular transaction. 11
When employees serve several group companies, the identity of the employer, who directs the work and who owes wages should be clear. Sending an employee to another company is not a transaction whose every labour-law consequence can be resolved by an internal email. A business transfer, a temporary employment relationship or a services agreement should each be examined under its own conditions. Belonging to the same group does not remove employees' statutory rights. 88
Unrestricted access by every group company to customer and employee data also requires separate assessment. Determine which company processes which data for what purpose and who may access it. Where data are transferred to a headquarters system abroad, Türkiye's rules on transferring personal data overseas must be taken into account. Merely using a shared accounting or human-resources system is not a legal basis for all data sharing. 99
10. Before growth and restructuring
Forming a new company, consolidating shares under a holding company or selling a subsidiary can affect existing debts and security. Before such transactions, update the ownership, management and financing map. Tax consequences, contractual consents, employee relationships and sectoral permits should be considered together. Focusing only on how to complete the registry filing may leave out important links in the business.
A merger or acquisition analysis also turns on whether control truly changes and on the position of the relevant economic group. It is not possible to say that every transaction labelled “intragroup” automatically requires approval, or automatically does not. The structure should be checked against the Competition Authority's rules and guidelines updated in 2026. 10 , 1110,11
A workable governance system identifies review steps, signing powers and document owners for intragroup transactions above a stated amount or risk level. It should not needlessly halt ordinary business, but it should prevent unexplained transactions affecting a company's assets. Actual use of the policy in decisions and contracts matters as much as the policy's existence.
Conclusion: group coordination operates alongside separate responsibilities
A holding or corporate-group structure may allow shared resources to be used efficiently. For that arrangement to remain legally sustainable, each company's interests, debts, security and management decisions must be visible. Mapping the group, documenting related-party transactions and establishing a reporting system reduce uncertainty in domestic and international structures alike. Updating the file before new financing or a subsidiary sale makes decisions easier.
This article provides general information. No definitive conclusion about the validity of a group transaction or managers' liability should be drawn without examining the control relationship, public-company status, foreign links and financing documents.
Sources
Sources checked on 13 September 2026. The numbers in the text refer to the following sources.
[1] 6102 sayılı Türk Ticaret Kanunu (Turkish Commercial Code No. 6102). Relevant company-law provisions; legislative text with amendment notes, KS Law Mevzuat Access source
[2] Ministry of Trade, Company Information: company types, capital payments and groups of companies Access source
[3] 6102 sayılı Türk Ticaret Kanunu, text adopted by the Grand National Assembly. Used to compare unchanged provisions; subsequent amendments checked separately Access source
[4] Üzeler Demirağ, Sanem. “Assessment of the Possibility of Compensation in a Group of Companies in Relation to the Prohibition of Disguised Profit Transfers in Public Companies.” Hacettepe Law Faculty Journal, 12(1), 2022, pp. 232–298. DOI: 10.32957/hacettepehdf.1100163 Access source
[5] Revenue Administration, General Communiqué on Corporate Tax, Series No. 1, section 13: Disguised Profit Distribution Through Transfer Pricing; explanations of Article 13 of the Corporate Tax Law Access source
[6] Revenue Administration, tax ruling on the assessment of intragroup services and transfer pricing, record 27634. A fact-specific administrative opinion, not treated as general permission Access source
[7] 6098 sayılı Türk Borçlar Kanunu (Turkish Code of Obligations No. 6098), particularly Articles 26–27, 112, 202 and 581–603. Legislative text with amendment notes Access source
[8] 4857 sayılı İş Kanunu (Labour Law No. 4857), particularly Articles 6–7. Ministry of Labour and Social Security legislative publication Access source
[9] Personal Data Protection Authority, Transfers Abroad: current framework under Article 9 of Law No. 6698 Access source
[10] Competition Authority, “Merger and Acquisition Legislation Updated!”, 11 February 2026. Amendments to Communiqué No. 2010/4 by Communiqué No. 2026/2 Access source
[11] Competition Authority, “Updated Merger and Acquisition Guidelines Published”, 4 May 2026 Access source