Introduction

The question of when an administrator must submit the income and expense account is answered within the framework of different laws and and regulations, depending on the administrator’s legal status (apartment/site administrator, company manager, cooperative manager, etc.). The judicial decisions examined reveal that the timing of this obligation is subject to relevant legislation, primarily the Condominium Law no. 634 (KMK), the Turkish Commercial Code no. 6102 (TTK), and the Turkish Code of Obligations no. 6098 (TBK), as well as contractual arrangements between the parties (management plan, articles of association).

Judicial decisions have determined specific dates and periods for the administrator’s accountability, according to different legal regimes.

Administrators Subject to the Condominium Law

The primary regulation in this area is Article 39 of the Condominium Law (KMK). Supreme Court decisions consistently apply this article.

Primary Rule: Accounts are rendered on the dates specified in the management plan.

Secondary Rule: If a date is not specified in the management plan, the administrator is obliged to present the income and expense account to the board of co-owners “within the first month of each calendar year (January)” (Supreme Court 18th Civil Chamber, 2010/11917; Supreme Court 20th Civil Chamber, 2017/3644; Supreme Court 20th Civil Chamber, 2017/3573).

Exceptional Circumstance: Half of the co-owners, regardless of their land shares, may request that the account be shown outside of the times specified in the management plan (Supreme Court 20th Civil Chamber, 2017/3644).

Additional Obligation: The manager is obliged to have the resolution and operation books that they are required to keep “closed by a notary within one month starting from the end of each calendar year” (Adana 2nd Commercial Court of First Instance, 2022/396; Court of Cassation 18th Civil Chamber, 2014/14359). This is an important procedural step confirming that the accounting period must be closed annually.

Managers Subject to the Turkish Commercial Code (Companies): In joint stock and limited liability companies, the reporting period of the management body is regulated by the TCC.

In joint stock companies, the board of directors, “prepares and submits to the general assembly the financial statements, their annexes, and the board of directors’ annual activity report pertaining to the past accounting period… within the first three months of the accounting period following the balance sheet date” (Antalya 1st Commercial Court of First Instance, 2023/669 – in reference to TCC art. 514). These documents must be made available for examination by shareholders at least fifteen days before the general assembly meeting (Ankara 14th Commercial Court of First Instance, 2021/838 – in reference to TCC art. 437).

Managers Subject to the Turkish Code of Obligations (Ordinary Partnership): In ordinary partnerships, the obligation of the managing partner to provide an account is regulated by a mandatory provision in the TCO.

Managing partners, “are obliged to render an account at least once a year and pay profit shares to the partners.” It was emphasized that this rule is mandatory and agreements to extend the accounting period are absolutely null and void (Court of Cassation 3rd Civil Chamber, 2023/4233 – in reference to TCO art. 630/3).

Other Legal Structures (Cooperatives etc.):

In Cooperatives: The time for accountability is primarily determined by the cooperative’s articles of association. In a relevant decision, it was stated that the board of directors must provide the balance sheet and income-expense statements “to the members of the supervisory board at least … months before the general assembly meeting” (Antalya 4th Civil Court of Commerce, 2017/432).

Structures Subject to Special Laws: In a decision by the Constitutional Court, it was ruled that the management company in a region established by a special law “must have all its accounts and transactions audited annually in January of the following year” by a sworn financial advisor (Constitutional Court, 2022/158).

Review and Evaluation

Judicial decisions, in addition to providing specific dates, also contain important details regarding the fundamental nature and scope of the accountability obligation.

A Continuous and Comprehensive Obligation: Irrespective of the obligation to provide an account on a specific date, many decisions of the Court of Cassation reiterate the principle that the manager is “obliged to account for the revenues obtained and expenses incurred during their tenure as manager” (Court of Cassation 5th Civil Chamber, 2021/3719; Court of Cassation 18th Civil Chamber, 2012/11654; Court of Cassation 20th Civil Chamber, 2018/3427). This indicates that the debt of accountability is a continuous debt that arises during the term of managerial duty and becomes due upon the termination of the duty.

Termination of Duty: When the manager’s duty ends, the obligation arises to deliver all books, receipts, and documents related to the management to the new manager. If the former manager avoids this obligation, the delivery of the documents can be ensured by requesting the intervention of the judge in accordance with Article 33 of the Condominium Law (KMK) (Supreme Court, 18th Civil Chamber, 2009/1359). This situation reveals that the handover of duty is also a critical timing for accountability.

Procedure and Content of Accountability: The Supreme Court emphasizes that accountability is not merely a statement, but must be based on books and documents. However, strict formalism has been avoided in this regard. According to the established jurisprudence of the Supreme Court; “it is not mandatory for the documents showing the expenses incurred by the manager to be invoices or cash receipts. A written and signed document proving that an expense was made for a completed task or transaction is considered sufficient, and even the confirmation that the task related to the expense, made due to urgency and necessity and entered into the ledger without a document, was performed and that the reported amount is appropriate, is accepted as sufficient.” (Supreme Court, 20th Civil Chamber, 2019/4823; Supreme Court, 18th Civil Chamber, 2014/18069).

Conclusion

The timing for the manager to provide the income-expense account varies according to the legal regime they are subject to.

Apartment and Complex Managers (Condominium Law): As a rule, they must provide an account to the general assembly of unit owners every January, unless a different period is stipulated in the management plan.

Company Managers (Turkish Commercial Code): They are obliged to prepare and submit financial statements and the activity report to the general assembly within the first three months following the accounting period.

Ordinary Partnership Managers (TBK): are obliged to render accounts at least once a year.

Cooperative Managers: are obliged to render accounts within the periods specified in the articles of association.

In addition to these specific timeframes, the manager has fundamental and ongoing obligations such as properly recording and documenting all income and expenses throughout their tenure (Condominium Law Art. 36) and transferring all records to the new management upon the termination of their duty. Rendering accounts is a requirement of the manager’s fiduciary responsibility, and failure to fulfill this obligation may lead to legal and criminal liability. A paper suggestion

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