The Role of the Commercial Court in Company Dissolution and Liquidation Cases

In joint-stock and limited liability companies, the grounds for dissolution, dissolution for just cause, lack of governing bodies, and the powers of the commercial court during the liquidation process are discussed. The liquidator, supplementary liquidation, and practical evidence suggestions are also covered.

Companies are actors in economic life based on the principle of "continuity." Therefore, the legal system designs the termination of a company as an exceptional and controlled process; especially in cases where conflict between partners has paralyzed the company, it aims to protect both commercial security and the balance of interests of the partners through court intervention. It is precisely at this point that the Commercial Court of First Instance, in a request with serious consequences such as the "termination" of a company, not only makes the decision but also often constructing the appropriate solution, determining the persons who will manage the liquidation, and swiftly resolving disputes within the liquidation process.

1) Concepts: Termination – Dissolution – Liquidation Are Not the Same Thing

A company's "cessation" doesn't happen in a single stroke. Termination/dissolution is a "cause/decision"; liquidation , as a natural consequence of termination, is the process of converting the company's assets into cash, paying off debts, and distributing the remaining balance to the rightful owners.

The reasons for the termination of a joint-stock company are listed in the law (expiration of the term, realization/impossibility of the business purpose, general assembly decision, bankruptcy, etc.). A company that has ceased operations, as a rule, liquidation and continues to have legal personality under the designation "in liquidation" until the liquidation is complete; the authority of its organs is limited to the purpose of liquidation.

This distinction has critical consequences in practice:

• "The company has been dissolved" doesn't mean everything is over; the company can still be a party to a lawsuit, and may file or be sued, while the liquidation process continues

• During the liquidation process, most operations liquidators ; the role of other bodies is narrowed.

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2) Competent and Authorized Court: Why the Commercial Court?

a) Duty (Primary Commercial Court)

Disputes relating to the dissolution, termination, and liquidation of a company fall, by their nature, within the realm of commercial jurisdiction. The approach of the Turkish Commercial Code, which regulates the jurisdiction of commercial courts, aims for specialization in commercial disputes.

b) Authority (Headquarters / Branch / Possibility of definitive authority)

The general rule of jurisdiction is the court of the defendant's (natural or legal person) domicile. However, in cases arising from company/partnership relationships, according to Article 14/2 of the Code of Civil Procedure, the court of the place where the legal entity's headquarters are located is considered to have exclusive jurisdiction (provided that it is limited to partnership/membership relationships).

Furthermore, in cases arising from branch transactions, the court located where the branch is situated may also have jurisdiction.

Specifically, regarding joint-stock companies with insufficient governing bodies and dissolution for just cause, and limited liability companies with insufficient governing bodies and dissolution for just cause, the law explicitly states that the lawsuit in the primary commercial court located where the company's headquarters are situated .

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3) Main Types of Termination Cases and the Role of the Court

3.1. Lack of Organs / Inability of the General Assembly to Convene: The Court Takes a "Restorative" Action First, and a "Dissolving" Action Afterwards

If a legally required organ of a joint-stock company has been absent for a long time, or if the general assembly has been unable to convene, the commercial court, upon the request of shareholders, creditors, or the relevant administration, will hear the management and grant them a period of time to bring the situation into compliance with the law; if the situation is not rectified, it will decide on the dissolution of the company.

A similar mechanism exists in limited liability companies: if the governing bodies are absent or the board cannot convene, the court grants a grace period; if the matter is not resolved, it issues a dissolution order.

The logic behind this arrangement is clear: termination is a last resort. The court does not act with the reflex of directly "shutting down" the company, but rather by first ensuring that the company is made operational again.

Moreover, when a lawsuit is filed, the court necessary measures . In practice, these "measures" in most cases aim to unlock the company's management and protect its assets: measures to ensure the general assembly can convene properly, protection of company accounts and records, temporary arrangements to fill the management vacuum, etc.

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3.2. Termination for Just Cause: The Court Produces a "Solution," Not Just a "Termination"

a) Joint-stock company (Turkish Commercial Code, Article 531)

If there are justifiable reasons, shareholders representing at least one-tenth ( or one-twentieth in publicly traded shares ) of the capital may request dissolution from the primary commercial court at the company's headquarters. Instead of dissolution, the court may order the removal of the plaintiffs' shares at their true value , or rule on another solution appropriate to the situation.

This provision removes the commercial court from the dilemma of "grant termination/reject termination." Depending on the severity of the specific case, the court may also rule on alternative solutions that will ensure the company's continued existence

b) Limited company (Turkish Commercial Code, Article 636/3)

In a limited liability company, a broader right is granted regarding the request for dissolution for just cause: each partner can request dissolution from the court. The court may, instead of dissolution, choose to pay the plaintiff partner the true value of their share and remove them from the company, or select another suitable solution.

c) How is "just cause" evaluated in practice?

The law does not list specific examples of "just cause"; the assessment is shaped by judicial precedents and the characteristics of the specific case. In practice, the core question the court focuses on is this:

"Can the partnership relationship still be expected to continue within the framework of the principle of honesty?"

In practice, the argument for justifiable reasons mostly revolves around the following facts:

• Management deadlock: when decisions cannot be made and the company effectively comes to a standstill.

• Majority oppression / systematic exclusion of the minority: rights such as access to information, calling general meetings, dividends, and participation in management are effectively rendered unusable.

• Deviation from company purpose / misuse of resources: diverting company assets for “other purposes”, harming the common interest.

• The breakdown of trust: the issue of trust is discussed more effectively, especially in limited companies, where the "personal factor" is more prominent.

the Supreme Court , it is frequently emphasized that the request for termination should be a "last resort," and that the court may, within the framework of proportionality, turn to alternative solutions instead of termination; there are examples where the request for termination can be rejected if there is an appearance of de facto agreement/cooperation between the partners in the concrete case.

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4) After the Dissolution Decision is Issued: The Role of the Commercial Court in Initiating Liquidation

The dissolution decision activates the "liquidation button." At this stage, the commercial court's role doesn't end with simply issuing a ruling; it can identify critical actors for the liquidation to proceed and intervene quickly in internal liquidation disputes.

4.1. Appointment of Liquidator: The Court May Appoint Directly

In a joint-stock company, if the articles of association or the general assembly have not appointed a liquidator, the liquidation is generally carried out by the board of directors; however, if the dissolution is due to a court decision, the liquidator is appointed by the court.

This is a very crucial authority in practice: because dissolution proceedings are often initiated when internal trust within the company has been broken, and the parties no longer want each other in management. The liquidator appointed by the court has the ability to conduct the liquidation with a "non-partisan" discipline.

4.2. The Backbone of Liquidation: Inventory, Balance Sheet, and Creditor Calling

As soon as the liquidators begin their duties, an inventory and balance sheet; if necessary, experts may be consulted to appraise the company's assets.

The summoning of creditors is the safety valve of the liquidation: known creditors are summoned by registered mail, and others by public announcement; the principle adopted is that summonses , in the Trade Registry Gazette and on the company's website .

The court's role here is not simply to "make the announcement"; it is to determine whether the liquidation process is being conducted in accordance with the law and to provide a swift solution if any disputes arise.

4.3. Distribution of Liquidation Share and Court's Permission for "Early Distribution"

In liquidation, after debts are paid and share capital is returned, the remaining assets are, as a rule, distributed among the shareholders.

The law states that the remaining assets cannot be distributed before three months have passed since the third call to creditors ; however, depending on the circumstances and if there is no danger to the creditors, the court may allow distribution before three months. This is an example that clearly demonstrates the role of the commercial court in maintaining "economic stability" during the liquidation process.

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5) If a Dispute Arises During Liquidation: The Commercial Court is the Expedited Resolution Authority

The liquidation process, by its nature, involves numerous decisions and actions; conflicts between shareholders and liquidators are common. The law has simplified the resolution of these disputes through a simplified judicial procedure , stipulating that the court, if it deems necessary, may hear the parties and make a decision within 30 days .

This regulation aims to prevent the liquidation process from being delayed: if the liquidation is delayed, the company's assets may erode, creditors may suffer losses, and shareholders may lose their rights.

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6) Additional Liquidation: Where you thought the liquidation was closed, the court process can reopen it

A common scenario in practice: A company is deregistered; however, a "forgotten" asset, an outstanding litigation receivable, a newly discovered debt, or a transaction that needs to be completed subsequently emerges. The law provides a solution to this situation an additional liquidation institution.

If, after the liquidation is closed, it becomes clear that additional liquidation procedures are necessary, the final liquidators, board members, shareholders, or creditors the re-registration of the company . If the court deems the request justified, it will order the re-registration and appoint a liquidator to oversee the registration and announcement until the procedures are completed.

This shows that the commercial court can intervene in company affairs in a limited and purposeful manner, even in the "post-liquidation" period.

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7) Litigation Strategy in Practice: How to Convince the Court with Your Case?

Dissolution and liquidation cases proof . Especially in cases of dissolution for just cause, the court usually seeks to answer the question of "is it possible for the company to continue, and is dissolution truly unavoidable?"

Therefore, the strong set of evidence in a case usually consists of the following:

• Commercial registry records (headquarters, representative office, organs, registrations)

• General assembly call processes (was the call made, was it blocked, could the meeting not be held?)

• Books and financial documents (share register, board of directors' resolution book, balance sheet/income statements)

• Notices and correspondence (rejection of information requests, warnings about protecting company assets)

• The need for expert examination (especially for determining "true value," asset valuation)

The court's authority to offer alternative solutions (payment of the share at its true value, deletion, etc.) directly raises the need for a valuation ; therefore, expert appraisal reports are crucial in most cases

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8) Frequently Asked Questions

1) In cases of termination for just cause, does the court necessarily dissolve the company?
No. Instead of dissolution, the court may order the removal of the plaintiff by paying the true value of the shares, or rule on another solution appropriate to the situation.

2) Is a minority share required in a limited liability company?
No. Every partner has the right to request dissolution for just cause.

3) Who is the liquidator?
If the articles of association/general assembly haven't appointed one, the management (or the board of directors in the case of a joint-stock company) generally carries out the liquidation; however, if the dissolution is by court order, the court appoints the liquidator.

4) What happens if the shareholders and the liquidator cannot reach an agreement during liquidation?
Disputes are subject to simplified judicial procedure; the court will hear the parties and make a decision within 30 days if it deems it necessary.

5) What happens if new assets emerge after the liquidation is closed?
An additional liquidation process is initiated; the court may decide on re-registration and the appointment of a new liquidator.

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 The Commercial Court is not a "Closure" Authority, but an Authority for "Balance and Resolution,"

Because company dissolution and liquidation cases have serious consequences, such as ending a company's economic life, the legal system leaves this area to the expertise of the commercial court. The court;

• In crises such as organ shortages, to bring the company into compliance with the law .

• In termination for just cause, it strikes a balance between "termination and alternative solution"

• It identifies the individuals who will manage the liquidation after the dissolution decision, swiftly resolves internal liquidation disputes, and, if necessary, reintroduces the company to the legal scene in a limited manner through additional liquidation.