Breach of Trust by Corporate Directors (TPC Art. 155/2)

The Legal Framework of the Crime: Article 155/2 of the Turkish Penal Code and its Place in Commercial Life

Although company partnerships are fundamentally commercial structures built on mutual trust, breaches of this trust are a common occurrence in practice. In particular, cases involving breach of trust by corporate directors and company partners not only create commercial disputes but also trigger serious criminal consequences—even leading to the detention or arrest of prominent business figures, as frequently reported in the Turkish media.

The primary legal provision governing these situations is Article 155/2 of the Turkish Penal Code (TPC), which addresses the criminal liability of company executives, often colloquially referred to as the embezzlement of company funds. (Note: While the technical legal term "embezzlement" strictly applies to public officials under Turkish law, it is frequently used in common parlance to describe unauthorized appropriations by corporate executives and partners as well.)

Aggravating Circumstances "Due to Service" within the Scope of Article 155/2 of the Turkish Penal Code

The crime of breach of trust, in its most basic form, is the act of using or disposing of property belonging to another person—the possession or actual control of which was transferred for safekeeping or for a specific use—for one’s own benefit or the benefit of a third party, contrary to the purpose of that transfer.

However, when this act is committed by an executive, partner, or authorized employee within a commercial entity, the legal qualification and the severity of the sanction change fundamentally. The crime of breach of trust committed "due to service," as codified under TPC Article 155/2, penalizes abuses of trust that arise directly out of an existing professional, commercial, or service relationship.

Individuals serving as company managers, general directors, accountants, or commercial representatives are granted custody of company cash, bank accounts, vehicles, and commercial assets solely to perform designated corporate duties. Exceeding this mandate—such as transferring corporate funds to personal accounts or utilizing company assets for private gain—constitutes an aggravated breach of trust within a service relationship and is subject to severe penal liability under TPC 155/2.

Differences Between Simple Breach of Trust and Offenses Committed in the Context of Service

Substantive procedural and punitive differences exist between simple breach of trust and the aggravated offense committed within a service context:

• Complaint Requirement: Simple breach of trust (TPC Article 155/1) is subject to a formal complaint, requiring the victim to initiate legal action within six months. Conversely, breach of trust within a service relationship (TPC Article 155/2) is prosecuted ex officio (by the public prosecutor on their own initiative). Even if an internal company complaint is formally withdrawn, the public prosecution proceeds uninterrupted.

• Reconciliation: Offenses falling under TPC 155/2 are strictly excluded from statutory penal reconciliation procedures, whereas the simple form allows for mediation.

• Sanction Severity: While simple breach of trust carries an imprisonment term of 6 months to 2 years, offenses committed due to a service relationship carry a statutory prison sentence of 1 to 7 years, alongside a judicial fine of up to 3,000 days.

Legal Status: Breach of Trust by Corporate Directors, Board Members, and Representatives

The institutional role of the accused within the corporate hierarchy serves as the cornerstone of the judicial inquiry:

• Criminal proceedings involving breach of trust by corporate directors in limited liability companies (LLCs) or board members in joint-stock companies (JSCs) represent the most frequent litigation profiles.

• Sole managing directors often construct their defense around business judgment, arguing that disputed expenditures fell within their general management authority and served the company’s broader interests.

• The Turkish Court of Cassation meticulously evaluates whether unauthorized transactions, excessive indebtedness, or appropriation of company property constitute mere commercial mismanagement or deliberate criminal intent.

• In companies with equal shareholding where one partner exercises de facto management, fraudulent actions against the non-managing partner materialize as a criminal breach of trust when management authority is weaponized for personal enrichment.

Breach of Trust: Commercial Code Liability or Criminal Liability?

Causing a company financial loss does not automatically equate to a crime under TPC Article 155/2. Disentangling civil liability from criminal conduct remains one of the most contentious points in corporate litigation.

A corporate officer may adopt flawed investment strategies, miscalculate market exposure, or inadvertently steer the company into insolvency. Such scenarios trigger civil liability for damages under the Turkish Commercial Code (TCC), warranting director liability and compensation lawsuits before the Commercial Courts of First Instance.

However, when damages result from deliberate actions intended to secure personal gain or siphon corporate assets into private or affiliated entities—such as fabricating accounting entries, drawing undocumented cash, or executing unauthorized transfers—the dispute moves past the boundaries of the Commercial Code and enters the domain of criminal justice. In such instances, the proper recourse requires filing a formal criminal complaint with the Chief Public Prosecutor’s Office for white-collar fraud and breach of trust.

What Does This Mean?

Holding a managerial title or partnership stake does not confer unfettered ownership over corporate capital and assets. The law treats company property as distinct from personal wealth; appropriating company resources or abusing managerial signing power to defraud fellow shareholders is an aggravated criminal offense. Unlike ordinary commercial debt disputes, the statutory penalty is substantially elevated because the perpetrator violates an institutional position of trust. Treating the company treasury as a personal account creates not just a civil debt, but direct exposure to criminal indictment and statutory imprisonment.

Most Common Typical Crime Scenarios Encountered in Companies

In business, the abuse of trust doesn't usually happen suddenly; it often begins with actions that become habitual over time and are attempted to be justified with the mindset of "it's my company anyway." The cry of "my partner is robbing the company, what should I do?" frequently voiced by victimized partners, stems from typical irregularities and the unjust enrichment of company officials, which are most commonly encountered in practice.

The most common practical scenarios that fall under criminal prosecution within the scope of Article 155/2 of the Turkish Penal Code are as follows:

Unauthorized/Unexplained Money Transfers from Company Bank Accounts to Personal Accounts

The most common point of contention in companies is what happens if a company partner withdraws money from the cash register or transfers cash from the bank without authorization. This concerns a director or managing partner with signing authority;

• Transferring money from company accounts to one's personal account or to relatives without any general assembly resolution, shareholders' meeting approval, or commercial contract,

• Attempting to legitimize these transfers in accounting records with temporary items such as "partners' current account" and never repaying them to the company,

• When a criminal investigation begins, the prosecutor's office first examines the company's bank account transactions through prosecutorial review and MASAK (Financial Crimes Investigation Board) data. Any unexplained money outflow is considered direct evidence of breach of trust.

Using Company Assets as Collateral/Mortgage for Personal Debts

A company's vehicles, machinery, real estate, or deposits may only be used for the company's business purposes.

• The manager selling company assets without the knowledge of the other partner and transferring the proceeds to his personal account,

• Placing a mortgage on company real estate to cover personal debts, individual loans, or personal investments,

• Transferring company assets and depleting the company's resources, thereby harming creditors and other partners, is a typical example of a company partner causing financial losses to the company and carries a high risk of severe imprisonment.

Personal Collection of Payments for Goods or Services Received on Behalf of the Company (Leaving it Off the Book)

Another classic method is for customer payments to never enter the company's cash register or official bank accounts.

• Concealing company revenues by telling customers to "send the money to my personal IBAN instead of the company account,"

• The failure to record cash payments received by hand by not issuing invoices or receipts,

• This situation directly answers the question of whether concealing company profits constitutes abuse of trust ; yes, deliberately understating the balance sheet, depriving a partner of their dividend, and embezzling company funds is a clear crime.

Transferring the company's customer portfolio, expertise, or business opportunities to secretly established/parallel companies.

The practice of executives or authorized partners secretly setting up backdoor companies is a frequent subject of legal proceedings in the business world.

• The legal answer to the question that many partners wonder about – is it a crime to set up parallel companies and steal business? – is very clear: It is a crime for a company manager or partner to open shell companies in the name of their spouse, child, or trusted third parties.

• The existing company could transfer its most profitable clients, tenders, supply chain, or intangible rights such as patents/know-how to this new company.

• This action not only violates the non-compete clause under the Turkish Commercial Code, but also constitutes a crime under Article 155/2 of the Turkish Penal Code by misappropriating the company's trade secrets and economic assets.

Accounting for Company Credit Cards and Budget versus Personal Luxury Expenditures

Deliberately blurring the line between corporate and individual spending is one of the most common violations.

• Is it a crime to use a company credit card for personal expenses? Using a company card for vacation expenses, luxury clothing purchases, or personal expenses of family members is clearly a crime if it is not compatible with the company's business activities.

• If these expenses are attempted to be recorded in accounting as "representation and hospitality" or "company general expenses," or if the company director issues fake invoices or provides inaccurate receipts to cover up the situation, the matter goes beyond mere breach of trust; it also encompasses forgery of documents and violations of the Tax Procedure Law.

What does this mean?

A partner transferring money from the company account to their own account under the pretense of "it's my company anyway," secretly selling the company car or real estate and pocketing the proceeds, or failing to record funds collected on behalf of the company are all clear manifestations of a crime. A person in a position of authority treating company resources as their personal cash reserves legally constitutes grounds for criminal prosecution. A company's legal entity is entirely independent of the partners' personal accounts; therefore, every penny withdrawn from the company's treasury without authorization represents a partner defrauding another and a breach of trust under the law.

Investigation Procedure, Criminal Sanctions, and Trial Process

When irregularities are discovered within a company, the legal process goes far beyond a simple commercial dispute. Many victims or suspects wonder whether a company board member will go to jail or whether a company executive will be prosecuted for embezzlement . The answer lies in the strict procedures of criminal justice and the severe penalties prescribed by law.

Imprisonment and Fine Ranges Envisaged Under Article 155/2 of the Turkish Penal Code (1 to 7 Years Imprisonment)

The legislator has imposed very severe penalties because it considers the abuse of commercial trust to be extremely dangerous for social order and the functioning of commercial life.

• According to Article 155/2 of the Turkish Penal Code , the penalty for the perpetrator of the crime is imprisonment from one to seven years and a judicial fine of up to three thousand days for breach of trust .

• If the crime is repeated by the same manager in a chain of events, that is, with multiple invoices and money transfers on different dates, the penalty is increased by one-quarter to three-quarters according to Article 43 of the Turkish Penal Code.

• In cases of breach of trust during trial, it may not always be possible to grant a suspended sentence (HAGB ); if the damage is not fully compensated or the sentence is imposed above the minimum limit, imprisonment becomes inevitable.

• In these crimes of breach of trust, the competent court is generally the Criminal Court of First Instance; however, if the act is committed together with aggravated fraud or forgery of official documents, the case falls within the jurisdiction of the High Criminal Court.

Investigation of the Crime: Complaint-Based Requirements and Statute of Limitations Criteria (Ex Officio Investigation)

One of the most confusing issues is whether the crime of breach of trust is subject to complaint .

• While there is a 6-month complaint period for simple breach of trust, the aggravated form of breach of trust under Article 155/2 of the Turkish Penal Code, which arises from service, is not subject to complaint. The prosecutor's office initiates an investigation ex officio (on its own initiative) from the moment it learns of the act.

• In terms of the statute of limitations, a generous period is granted to protect the victims: The statute of limitations for breach of trust due to service is 15 years according to Article 66 of the Turkish Penal Code. This allows for the initiation of legal proceedings, even for wrongful acts committed years ago, through retrospective accounting, without being hindered by the statute of limitations for criminal proceedings between company partners .

Situations Excluded from Mediation

Although alternative dispute resolution methods have become widespread in criminal law, the legal answer to the question of whether mediation exists in cases of breach of trust due to service is clear:

• Article 155/2 of the Turkish Penal Code is outside the scope of mediation according to the Code of Criminal Procedure.

• Even if the complaining partner later withdraws their complaint, or the parties sign a protocol, the prosecutor's office cannot close the case; the court is obliged to conduct the public prosecution and render a judgment.

• If the company's losses are fully compensated, a reduction in sentence may be applied only under Article 168 of the Turkish Penal Code, which concerns "effective repentance."

Measures to Measure: Detention, Seizure of Company Assets, Judicial Control, and Arrest in Cases of Suspicion of Tampering with Evidence.

The most critical stage of the investigation is securing the evidence:

• Actions such as concealing or removing company ledgers , deleting log records in accounting programs, or transferring company assets to third parties directly create suspicion of "destruction of evidence."

• In such cases, the magistrate's court may issue an arrest warrant for the company executive or impose judicial control measures including a travel ban abroad.

• Furthermore, pursuant to Article 128 of the Code of Criminal Procedure, the court may, upon the request of the prosecutor, seize or impose precautionary measures on the suspect's personal real estate, bank deposits, and company shares that are believed to have been obtained through criminal activity.

Restriction of Commercial Registry and Signature Authorities by Court Order

Special measures are taken to prevent the executive from continuing to burden the company with debt and deplete its assets while the criminal investigation is ongoing.

• Interim rulings are requested from the courts to suspend or restrict the manager's representation and signing authority.

• The appointment of a temporary administrator may be considered if the company's organs become inoperable or if there is a risk of continued abuse.

• If a conviction is handed down at the end of the trial, according to Article 53 of the Turkish Penal Code, the individual will be completely deprived of their rights to hold positions as a company director, board member, and commercial representative for a specified period.

What does this mean?

This crime is not a minor dispute; it carries a prison sentence of 1 to 7 years, and in most cases, even if the parties reach a settlement, the prosecutor's office does not close the investigation but directly initiates a public trial. Particularly for suspects who risk concealing or evading evidence or falsifying company records, judicial authorities may apply very severe security measures such as searches, freezing of accounts, travel bans, and even arrest.

Evidence Gathering and Application Strategy in Internal Company Disputes

The most common handicap in trust crises within a company is the inability to support the allegations with legal evidence. Suspecting that a partner or manager has embezzled company assets is not enough to initiate legal proceedings; the central question is how to prove the manager's breach of trust . The most frequent "Decision of No Grounds for Prosecution" (dismissal) issued by prosecutors in criminal proceedings stems from the fact that the incident is considered a "simple commercial debt dispute" rather than a criminal offense. A strategic evidence and application plan must be implemented to mitigate this risk.

Examination of Company Ledgers, Commercial Records, and Bank Transactions

The first step in establishing a legal basis for internal company suspicions is to fully implement the steps for gathering evidence in cases of suspected internal company irregularities :

• Legal business books (journal, general ledger, inventory book, and share register) should be compared with the actual cash balance. Partners often worry about potential criminal charges for discrepancies in the company's cash register ; inconsistencies between cash accounts and bank transactions directly raise suspicion of violating Article 155/2 of the Turkish Penal Code.

• Bank statements should be thoroughly reviewed; suspicious money transfers, wire transfers, and EFTs to the manager's personal accounts, relatives, or third parties with whom they have no business relationship should be listed in chronological order.

• E-invoice and e-archive system records should be reviewed to trace items showing inaccurate expenses and collections made without invoices.

The Role of Special Audits, Certified Public Accountant (CPA) Reviews, and Expert Reports

Criminal courts and prosecutors cannot directly analyze complex corporate accounting records; therefore, technical reports form the backbone of the case.

• When examining Supreme Court rulings on breach of trust within the scope of employment relationships , it is observed that the high court mandates concrete financial reports for criminal convictions.

• A comprehensive "Special Audit Report," prepared by certified public accountants (CPAs) or independent auditors, will document when, through what transaction, and in what amount the money was transferred out of the company.

• These technical reports expedite the prosecution's process of directly requesting expert examination and prevent the case from being delayed.

Coordination of Civil Proceedings (Liability and Dismissal Cases under the Turkish Commercial Code) and Criminal Proceedings

When a dispute arises , legal avenues against the manager who caused the company harm should not be limited solely to criminal proceedings, but should be pursued simultaneously through commercial law mechanisms.

• In cases of breach of trust, within the scope of the rights of company shareholders , according to the Turkish Commercial Code (TTK), a general assembly must be convened immediately to dismiss the manager, or a request for dismissal based on just cause must be made to the court.

• In practice, the question of whether a limited company partner can be expelled from the partnership in a criminal case is answered at this stage; a lawsuit for "expulsion from the partnership for just cause" can be filed against the partner who intentionally caused damage to the company and abused trust.

• Furthermore, a lawsuit for monetary damages based on the legal responsibility of the manager under Article 553 of the Turkish Commercial Code should be filed, aiming to recover the stolen or misappropriated company assets with legal interest.

Preventing the Destruction of Evidence: Requests for Provisional Measures and Evidence Gathering from the Court

The greatest danger is that the suspect executive is aware of the situation and deletes the digital records or removes the company ledgers.

• Prior to or simultaneously with filing a criminal complaint, an urgent request for evidence gathering regarding breach of trust should be made to the Commercial Court of First Instance under the Code of Civil Procedure (HMK).

• Through the court, it is ensured that images (forensic copies) of the company's computer servers, accounting ERP programs (databases), and minutes books are obtained.

• This makes it technically impossible for the manager to commit accounting fraud or destroy records retrospectively.

Mandatory Elements to be Included in a Complaint Petition to be Submitted to the Public Prosecutor's Office

For a successful criminal investigation, the procedure for filing a lawsuit against a company partner for breach of trust must be meticulously designed:

• A complaint letter is not like an ordinary complaint text; it must be written chronologically, explaining the sequence of events, the division of authority within the company, and the perpetrator's intent to abuse the transfer of possession.

• The petition should include the suspect's title, company articles of association, signature circulars, bank statements, audit reports, and witness statements as separate attachments.

• It must be clarified how the elements of the crime meet the employment relationship requirement in Article 155/2 of the Turkish Penal Code, and in order to prevent the process from being misdirected and to avoid irreparable loss of rights, the case must be prepared with the support of a commercial criminal law attorney .

What does this mean?

Alleging that "my partner is embezzling money" is not enough on its own; criminal cases are not conducted on abstract accusations, but on concrete bank statements, accounting records, and financial audit reports. Before going to the prosecutor's office, the company's records must be professionally secured, and the allegations must be proven with figures and official documents. Otherwise, it is inevitable to be put in the wrong despite being in the right and to receive a rejection from the prosecutor's office.

How is the legal process conducted in such disputes?

When internal company misconduct and financial irregularities come to light, the most frequent question asked by the parties is , "My business partner is embezzling our money, where should I report this?" or how to manage this process. Internal criminal and commercial law disputes are not limited to a simple legal complaint; they are a multi-layered process aimed at protecting the continuation of company operations, shareholder rights, and commercial reputation. The basic steps taken within this scope are as follows:

Internal Audit and Legal Risk Analysis

Before applying to any official authority, a legal and financial snapshot of the company needs to be taken:

• All of the company's past bank records, e-invoice transactions, general assembly and board of directors meeting minutes are examined according to the criteria for collecting evidence in cases of suspected internal company irregularities .

• Transfers of funds from company accounts to personal accounts , the use of fraudulent expense documents to report expenses, or unauthorized transfers of company assets are detected and analyzed in accordance with the legislation.

• The risk analysis conducted at this stage clarifies whether the situation constitutes "mismanagement" only within the meaning of the Turkish Commercial Code, or whether it constitutes a crime punishable under Article 155/2 of the Turkish Penal Code .

Prosecution and Court Stages

If irregularities are detected, a criminal investigation and legal process will be initiated.

• A criminal complaint for corporate fraud is prepared based on concrete evidence, bank statements, and financial audit reports, with the aim of filing a complaint with the prosecutor's office against the company director on behalf of the victimized partners or the company's legal entity.

• During the investigation phase, the prosecutor's office requests a review of the company's bank account transactions, MASAK (Financial Crimes Investigation Board ) reports, and precautionary measures against the suspects' assets.

• On the other hand, for executives who are subjected to unfair or unfounded accusations, defense strategies are devised that prove they acted in the company's commercial interests, presenting expenditures and authorization decisions made in the company's favor.

Compensation and Protection of Company Rights

While criminal proceedings aim to punish the perpetrator, compensation for the economic damage suffered by the company is provided in commercial courts.

• Legal action is taken against the manager who caused the company losses, and compensation and debt claims based on the manager's legal responsibility are filed in the Commercial Court of First Instance.

• In order to secure company assets that have been embezzled or misappropriated, precautionary measures and provisional attachment orders are urgently requested from the court.

• In cases of breach of trust, while protecting the rights of company shareholders , the evidence in the criminal case file and expert findings are used as definitive material data in favor of the company in these compensation lawsuits.

Negotiation and Liquidation Processes

If the dispute leads the company to a deadlock or brings business operations to a standstill, structural solutions are implemented:

• If trust between partners is completely lost , can a limited company partner be expelled from the partnership? Criminal proceedings can be initiated, and lawsuits for expulsion for just cause can be filed.

• To prevent the crisis from escalating and to protect the company's market value, the parties negotiate a share transfer, determination of the exit share from the partnership, or a partial spin-off of the company.

• In scenarios where a settlement is not possible, the company's dissolution and liquidation mechanisms for just cause are implemented, and the legitimate rights of the shareholders are distributed under the supervision of liquidators and the court.

Do you suspect any suspicious asset loss or irregularities within your company?

Breach of trust between company partners or managers has serious consequences that directly threaten both personal liberty and the company's commercial future. Detecting irregularities, gathering evidence before it is lost, and establishing the correct balance between criminal and commercial law requires technical scrutiny and an expert perspective to prevent irreparable harm. You should consult with an expert lawyer at every step of the process to determine the right strategy.

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Frequently Asked Questions (FAQ)

Is the crime of breach of trust due to service between company partners subject to complaint?

No. The crime of breach of trust due to service, as defined in Article 155/2 of the Turkish Penal Code, is not subject to complaint; it is investigated ex officio (on its own initiative) by the prosecutor's office and is subject to a 15-year statute of limitations.

What is the prison sentence for a company director or manager under Article 155/2 of the Turkish Penal Code?

According to Article 155/2 of the Turkish Penal Code, the perpetrator of this crime is sentenced to imprisonment for one to seven years and a judicial fine of up to three thousand days. The penalty is increased if the act is committed repeatedly.

Is this crime eligible for mediation, and will the case be dropped if the complaint is withdrawn?

Article 155/2 of the Turkish Penal Code is not subject to mediation. Even if the complaining partner withdraws their complaint, the public prosecution does not cease; the trial continues ex officio.

How can it be proven that a company partner embezzled money or breached trust?

The company's claims are proven through concrete data such as business ledgers, bank account statements, private audit/certified public accountant reports, and evidence gathering mechanisms requested from the court.