COMPANY FORMATION AND COMPANY TYPES IN TURKEY. HOW CAN I FORM COMPANY IN TURKEY?
According to the c Turkish Commercial Code (“TCC”)(code numbered 6102) there are five different types of companies in Turkey. These are; Joint stock company, limited company and limited partnership divided into shares are the capital companies.
In capital companies, the partners are only liable to the company with the capital they have committed.
The establishment, basic characteristics and operation of these companies are regulated in the Turkish Commercial Code No. 6102.
Joint stock companies and limited companies are the most common type of companies in Turkey. Approximately 82% of all companies are limited companies, while 13% are joint stock companies and 4% are cooperatives. The total of collective and limited partnership companies is around 1%. ( Republic of Turkey Ministry of Trade, ticaret.gov.tr)
As it has can be understood clearly, foreigners wants to form (register) company in Turkey has two choices:
- Limited Company
- Joint Stock Company
1-LIMITED COMPANY (LİMİTED ŞİRKET) (TCC Art. 573-644)
A limited company (limited şirket) is a company whose capital is definite and divided into shares and is responsible for its debts only with its property holdings.
A limited company with a single shareholder can be established. The number of shareholders may not exceed fifty. Partners of a limited company may be real or legal persons.
In limited companies, bearer shares (hamiline yazılı ) can not be issued.
The transfer of limited company shares is subject to the approval of the general assembly. (TCC, Art. 595)
The limited company has a company contract written and registered to the trade registry at the place where its headquarters is.
Limited companies cannot be offered to public.
The shareholders are not liable for the debts of the company, they are obliged to pay only the capital shares they have committed and to fulfill the additional payment and performance obligations stipulated in the company contract. Shareholders are responsible for debts due to uncollectible public debts (tax, social insurance premium etc.) in the rate of their capital shares. (Law No 6183, Art. 35)
The capital of the limited company is at least 10,000 Turkish Liras. It is possible to pay all of the capital brought in cash within 24 months after the registration of the company. Payment schedule can be arranged in the company contract or may be determined by the directors.
Limited Companies have two organs;
i. GENERAL ASSEMBLY (TCC, Art. 616 -622)
As a rule, it is the organ exclusively authorized to take some important decisions about the company (eg changing the company contract, selecting the directors, selecting the auditor, termination of the company, etc.) where all shareholders are represented. It is the organ mainly responsible for the management and representation of the company.
ii. DIRECTOR/BOARD OF THE DIRECTORS (TTC, Art. 622-632)
It is possible that the company has only one director. At least one of the directors must be a partner of the company. There is no requirement for directors to be a Turkish Citizen and to be resident in Turkey.
Shortly, all shareholder and director of limited company can be foreigner.
Various equivalents of limited company in the world
United States of
America : Limited Liability Company (LLC)
European Union : Societas Privata Europaea (SPE)
Germany, Austria : Gesellschaft mit beschränkter Haftung (GmbH)
United Kingdom : Private Limited Company (Ltd, Limited)
Italy : Società a Responsabilità Limitata (Srl
Spain : Sociedad Limitada (S.L.)
Mexico, Argentina : Sociedad de Responsabilidad Limitada (S.R.L., S. de R.L.)
France, Belgium,
Switzerland : Societé à Responsabilité Limiteé (SARL, SàRL)
- JOINT STOCK COMPANY (Anonim Şirket) (TCC Art. 329-562)
A joint stock company is a company whose capital is definite and divided into shares and which is responsible for its debts only with its property holdings.
Shareholders are only liable to the company with the capital shares they have committed.
Joint stock companies may be established for any economic purpose and subject that is not prohibited by law.
Joint stock company has a articles of association written and registered to the trade registry at the place where its headquarters is.
A joint stock company with a single share can be established. Real and legal persons may be shareholders.
As a rule, approval of the general assembly is not required for the transfer of shares. Shareholders may freely transfer their shares to others.
Joint stock companies are the only type of company whose shares are offered to public and whose shares are traded on the stock Exchange.
The minimum capital amount is 50,000 Turkish Liras. (For non-public Joint stock companies accepting the registered capital system , the initial capital may be at least 100,000 Turkish Liras.) At least one quarter of the nominal value of the shares committed in cash must be paid before registration. The remaining amount shall be paid within 24 months following the registration of the company. The payment schedule may be set out in the articles of association of the company or may also be determined by the board of directors.
Joint stock companies may issue registered and bearer shares in order to represent the shares. They may also issue bonds and similar debt instruments.
Joint stock companies carrying out certain activity areas and joint stock companies exceeding the threshold values of the criteria determined according to total assets, annual net sales revenue, number of employees are subject to independent audit.
Joint stock company has two organs ;
GENERAL ASSEMBLY
As a rule, it is the organ in which all shareholders are represented and exclusively authorized to take some important decisions concerning the company (e.g. amendment of the articles of association, election of the board of directors, election of the auditor, termination of the company, etc.).
BOARD OF DIRECTORS
It is the organ that is mainly responsible for the management and representation of the company. It is possible that the board of directors consists of one member. There is no requirement for board members to be a Turkish Citizen and to be resident in Turkey.
Members of the Board of Directors are responsible with all their personal assets for public receivables that cannot be collected or understood to be uncollectible from the assets of the Joint Stock Company. ( Law No:6183, dup Art. 35, Law No:213, Art.10)
Shortly, all shareholder and board member of joint stock company can be foreigner.
Various equivalents of joint stock company in the world
United States of America, Canada: Corporation (Inc., Corp.)
European Union : Societas Europaea (SE)
Germany, Austria : Aktiengesellschaft (AG)
France, Belgium, Switzerland: Societé Anonyme (SA)
United Kindom : Public Limited Company (plc)
Italy : Società per Azioni (SpA)
Spain Mexico, Argentina : Sociedad Anónima (S.A.)
Attention: Establishment and amendments to the articles of association of certain joint stock companies are subject to the permission of the Ministry of Trade :
Banks, financial leasing companies, factoring companies, consumer finance and card services companies, asset management companies, insurance companies, holding companies established as joint stock companies, companies operating foreign exchange buffets, companies engaged in public retailing, agricultural products licensed warehousing companies, product specialized stock exchange companies, independent auditing companies, observing companies, technology development zone management companies, companies subject to the Capital Markets Law No. 6362, founder and operator companies of the free zone.
Documents required for company registration in Turkey are;
- Passport copy of founder
- Photos of founder
- Duly issued power of attorney.
These are all documents we need it for company formation in Turkey. All other documents will be prepared by us.
For further information, please contact info@tercanlegal.com
The content of this article is not a legal advice, it is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
