In short
An allegation of diversion of assets is looked at through the evidence of collusion, of responsibility, and of the measure; it is not an ordinary distribution of profit.
It is looked at through the evidence of collusion, of responsibility, and of the measure. It is not an ordinary distribution of profit.
A general partnership dispute stands apart.
The title and the bank movement are the face of the fact.
Related articles: a partnership disagreement.
An unexplained outflow of money from the company account, the transfer of vehicles or immovables to related persons, or stocks disappearing from the records, may be a serious indication of risk. Despite this, accusing the other partner publicly on the basis of suspicion alone, or entering the company system without authority, is not the correct first step.
First determine which asset was transferred, on which date, to whom, and for which price. Then examine the authority of the person who made the transaction, the company decisions, and whether the counter-performance entered the company. If there is an urgent danger of a transfer, temporary legal protection should be assessed without being content with a request for information. This content is for general information; the dimensions of criminal law, of company law, and of enforcement law are separated according to the concrete event.
What are the signs of suspicion?
Not every extraordinary transaction is contrary to law. Companies sometimes sell an asset because of a need for cash, take a service among group companies, or give an expense advance to managers. The problem is the commercial basis, the authority, or the counter-performance of the transaction not being there.
The principal signs that require examination are these:
- An unexplained transfer from the company account to the partner's personal account
- A sale to a related person markedly below market value
- A high-amount payment without an invoice, or whose service is unclear
- Stock, a vehicle, or a machine being taken out of the company without a record
- An unrequited waiver of a company claim
- An extraordinary loan being given to close persons
- A suspicion of a management decision that is forged or does not reflect the truth
- The company book and the bank information being hidden from the other partners
- Assets being transferred quickly while the debts increase
These indications are the start of an investigation; they do not prove the legal result by themselves. The contract, the invoice, the bank counterpart, and the accounting record of the transaction may exist. Each transaction should be examined on a separate line.
First draw the map of the company and of the assets
If it is not clear which assets the company owns, what was diverted cannot be determined either. The trade registry, the financial statements, the list of fixed assets, the vehicle and title records, the stock reports, the bank accounts, and the important claims may be gathered in an inventory.
The map may contain the following information:
- The definition of the asset and its registered owner
- The approximate value
- The date it was last seen or used
- The document of transfer or of payment
- The person who made the transaction and who approved it
- The relation with the buyer or with the person who received the payment
- Whether the counter-performance entered the company
- The risk of a close new transaction
The company's asset and the partner's personal asset should not be mixed. A vehicle registered in the company's name is company property even if it is used in practice by the partner. By contrast, the taking back of a personal asset that the partner made available to the company may give birth to a different legal relation.
Check the authority and the organ decisions
The authority of the person who made the transaction to represent the company should be examined through the trade registry and the internal directives. There may be rules such as a single signature, a double signature, a limit of amount, or the approval of the general assembly in particular transactions. The effect of internal limitations on third persons is assessed separately.
A manager having authority of representation does not mean that they may use the company's assets for their own interest. The duty of care and of loyalty continues. In transactions where there is a conflict of interest, disclosure, the approval of the organ, and conformity to market conditions gain importance.
If it is put forward that there is a decision of the management or of the general assembly, the decision book, the call to the meeting, the attendance, and the signatures should be checked. For a document thought to have been drawn up later, the examination of the original records, and if needed the establishment of evidence, may come onto the agenda.
Follow the money flow transaction by transaction
The final recipient of the money that left the company account, and its counterpart, should be investigated. A single bank movement is sometimes only the first ring of the chain of payment. The bank transfer should be matched with the invoice, the contract, and the record of delivery or of the service.
In a transaction-based table, the following columns may be used:
- The date and the amount
- The sending company account
- The recipient's name and account
- The bank description
- The invoice or contract number
- The accounting account
- The goods or the service that were delivered
- The manager who approved
- The related-party connection
The recipient company being controlled by the same partner does not invalidate the transaction by itself. The market price, the real service, the conditions of payment, and the company's interest are examined. An unrequited transaction, or one at an excessive price, may lead to a loss of the company.
Use the right to obtain information in writing
Partners have rights to obtain information and to examine, according to the type of company. The request should show particular transactions and periods. Bank accounts, sale contracts, cash movements, or stock records may be asked for separately.
A written request may contain the following elements:
- The date of the suspicious transaction and the parties that are known
- A clear list of the records that are asked for
- The connection of the examination with the right of shareholding
- A reasonable period for the answer and for access
- A request that the documents be preserved
If the company puts forward a ground of commercial secret, the concreteness of this ground is examined. The right to information is not a tool of taking data in order to be used in a competing activity; by contrast, the expression "commercial secret" does not form an unlimited shield for hiding an irregular transaction.
In case of a refusal or of no answer, the route of the general assembly and of the court may be assessed according to the type of company. The content a dispute among company partners explains these corporate mechanisms more widely.
A special audit and an independent examination
In a joint-stock company, after using the right to obtain information, a shareholder may ask that the particular events necessary for them to be able to use their rights be clarified by a special audit. The decision of the general assembly and the conditions of applying to the court are regulated in the statute. The request needs to focus on particular transactions or events.
A special audit is not leaving the whole management of the company to an auditor for an indefinite period. For example, the sales made to a related company in a particular period, the price of a transfer of an asset, or particular account movements may be examined. The conditions of shareholding and the periods should be confirmed according to the current legislation.
In a limited company, the need to obtain information, to examine, and for an audit runs through different provisions. A mechanism particular to a joint-stock company cannot be used by determining the type of company wrongly. The parties may also agree on an independent financial examination; access to the report and its scope should be arranged in writing, however.
Routes of establishment when there is a risk of loss of evidence
If there is a concrete danger that the books will be changed, that digital records will be deleted, or that the asset will be disposed of, the establishment of evidence may be assessed. The purpose is to take onto the record, in a reliable way, the existing state that will be used in a future action.
The request for establishment should not be left abstract. Which record, device, asset, or transaction carries a risk of being lost, and why, should be explained. The court may use methods such as an expert examination, an establishment on site, or the taking of a sample of the record.
A notarial establishment, and copies of the trade registry and of official records, may also help according to the character of the event. Instead of presenting only a chosen part of a screenshot of an email or a message, the integrity and the source of the conversation should be preserved. The establishment of evidence is not an unlimited tool of discovery for investigating all the company transactions that are not yet known.
An interim measure and other temporary protections
If a close transfer of assets, or the carrying out of a company decision, would leave the later action ineffective, an interim measure may come onto the agenda. For example, a concrete protection may be asked for as regards the transfer of a particular immovable, the carrying out of a general-assembly decision, or the destruction of the records.
In a request for a measure, the following elements are important:
- The definition of the principal right and of the action that will be opened
- The particular asset or transaction that will be protected
- The serious loss that will arise in the delay
- The documents of approximate proof
- The request being proportionate
A request that stops all the bank accounts and the activity of the company may give birth to an excessive result as regards the employees and the creditors. The court may choose a narrower protection, or may ask for security. After the measure, the principal action needs to be opened within the period.
If the aim is to secure a money claim, the conditions of a provisional attachment are examined separately. A measure and a provisional attachment are not the same institution; the choice suitable to the character of the request should be made.
The general assembly and a change of management
If the person who made the suspicious transaction is a manager or a director, removal from the duty, a change of the authority of representation, and a new audit arrangement may come onto the agenda. These decisions should be taken according to the type of company, the articles of association, and the quorums of the meeting.
Removal from the duty does not end the person's partnership automatically. As a shareholder, their rights of information and economic rights may continue. Their responsibility relating to the past period of management does not disappear with leaving the duty either.
The new arrangement of representation should be notified to the banks and to the trade registry in time. Only saying "they can no longer sign" in the partners' message group may not be enough against third persons. Bank access, the electronic signature, and the company systems should also be updated in a way in accordance with the law.
Determining the company's loss and the owner of the claim
The transfer of company property at a low price mostly leads to a direct loss of the company. The fall in the value of the partner's share is an indirect effect. This separation is important from the side of who will open the action, to whom the claim will be paid, and which provisions of responsibility will be applied.
In the manager's responsibility, fault, contrariness to law, the loss, and the causal link are examined. A manager does not become responsible by themselves because the transaction later failed from the commercial side. Whether, at the moment of the decision, they acted with sufficient information and in the company's interest is assessed.
If there is a related-party transaction, a hidden gain, or a personal interest, the allegation of responsibility may strengthen. The return of a payment made in the company's name, the invalidity of the transaction, or compensation of the loss, are different claims. The good faith of the third person, and the authority of representation, also affect the result of the transaction.
Limit the criminal-law dimension correctly
The transfer of the company's assets to a personal account, the drawing up of a forged document, or the appropriation of property that was entrusted, may bring allegations of an offence onto the agenda. By contrast, a bad investment decision, a sale of low profit, or an account disagreement among the partners is not always an offence.
In a criminal application, the particular transaction, the date, the document, and the flow of money should be shown. An abstract account in the form of "my partner is diverting all the assets" does not strengthen the investigation or the commercial action. A charge of an offence contrary to the truth may give birth to responsibility separately.
An investigation by the public prosecutor's office does not collect the company's loss automatically. The civil action, the general assembly, the measure, and the enforcement routes are conducted in their own conditions. It should not be assumed that a seizure or an expert examination in the criminal file stands in for the commercial claim.
The position of the company's creditors
If the transfer of assets carries the purpose of the company diverting property from the creditors, a dimension of enforcement and bankruptcy law may arise. Annulment of the disposition, collusion, a provisional attachment, or bankruptcy processes may be assessed according to the capacity of the creditor and the character of the transaction.
The rights of the partner and of the company's creditor are not the same. While the partner has corporate claims based on the company's loss, if they have a personal claim that has fallen due they may use the routes of collection in the capacity of a creditor. The current account, the partner's debt, and the debt of contributing capital should be classified correctly.
If the company is in difficulty of payment, payments that favour some creditors, and the managers' obligations in the face of insolvency, are examined separately. Collection of a commercial claim and an objection to enforcement proceedings explain the collection side of this intersection.
Mediation and negotiation
A claim for compensation of the loss, for the partner's current account, or for payment of a particular sum, may be within the scope of mediation as a condition of a commercial action. Corporate claims such as annulment of a general-assembly decision, obtaining information, or a change of management are assessed separately.
If the loss of assets is close, waiting for the mediation meeting may be risky from the side of protection. While the condition of the action is preserved, the possibility of asking the court for a temporary measure may be assessed according to the concrete procedure. Mediation does not remove the need for a measure by itself.
If the parties agree, the asset that will be returned, the payment calendar, the change of management, an independent audit, and the transfer of the share may be arranged in the same protocol. Steps that need a decision of a company organ, the registry, or the approval of a third person should be completed separately, however.
Confidentiality and commercial reputation
While the suspicious transaction is investigated, making an uncontrolled explanation to the company's customers, to the employees, or to social media may lower the value of the company further. The information should be shared limited to the persons who need to investigate the transaction and to the official authorities.
Personal data, bank information, and commercial secrets should be used to the extent necessary for the application. If the private account movements belonging to other partners are unconnected with the company transaction, they should not be included in the file. The scope of sharing data with the lawyer, the financial adviser, and the independent auditor should also be determined.
Instead of forcing the company employees to leak confidential information, the routes of obtaining information officially and of production of documents should be used. An employee being a witness, and taking data out of the company system without authority, are different.
Where the record of asset diversion is read
An allegation of diversion of assets is read from the book, the slip, and the document of authority. A term of imprisonment and a year that are not written in the file are not added. An Ankara lawyer separates, from the company record, that the office being in Çankaya does not choose the competent authority. Not every related transaction is counted as an offence by itself.
The following steps may make seeking a right harder:
- Sending only an accusing message, instead of documenting the transaction
- Entering the bank or the system without authority of representation
- Calculating the company's loss like a direct personal loss
- Counting every related-party transaction as invalid automatically
- Waiting only for the result of a meeting while there is an urgent risk of a transfer
- Stopping the company's activity entirely with a disproportionate measure
- Assuming that a criminal application will bring the property back
- Neglecting the general assembly and the registry proceedings
- Disclosing the company's data to the public
Even if the transaction is truly in accordance with the law, a lack of explanation and of a record leads to a crisis of trust among the partners. Setting up regular financial reporting and a related-party policy in advance may prevent the dispute.
A workable urgent plan
The order that may be followed is this:
- List the suspicious assets and transactions on the basis of date and amount.
- Confirm the registry, the representation, and the organ decisions.
- Match the bank, the invoice, the contract, and the accounting record.
- Convey the request to obtain information in writing and in a particular form.
- If the loss of evidence or of the asset is close, assess the options of establishment and of a measure.
- Examine whether the arrangement of management and of representation can be changed.
- Determine whether the loss belongs to the company or to you.
- Separate compensation, return, annulment of the decision, and the criminal dimension.
- Check the scope of mediation for monetary claims.
Protecting the company's assets is an interest wider than the partner's personal quarrel. Employees, creditors, and the other shareholders may also be affected by a wrong or excessive intervention. For this reason the request for protection should be built in a way that is concrete, measured, and based on a document.
The general frame of company law is on the page commercial law. This text is not a legal opinion particular to a person; the type of company, the documents of the transaction, the current legislation, and the urgent risk should be examined together.
Conclusion
This article is for general information. The document, the period, and the procedure of the concrete event should be read separately; there is no promise of a result from memory.