A company in Turkey is a contractual association of several people who pursue a common purpose. (Exception: one-person start-ups in corporations). Concerning the number of company forms, the “numerus clausus principle” applies. The number of company forms made available by the legislator is therefore final. However, it is different with a foundation.

While drawing up the contract, the general rules of interpretation of Art. 2 of the Turkish Commercial Code (so-called customary rules, see Paragraph 346 of the German Commercial Code: among merchants, concerning the meaning and effect of actions and omissions on the customs applicable in trade and customs to be considered) apply to the relationship between the shareholders. The purpose of a society can be anything, entrepreneurial or ideal. This purpose must be legally permissible and must therefore not violate any legal prohibitions. It is crucial that the shareholders must pursue a common purpose (Art. 331, 573/3 Turkish Commercial Code).

For a company, it is necessary that the shareholders must promote the common purpose. This is often done through deposits in the capital. Services are also possible shareholder contributions.

Company Forms in Turkey

Partnerships

Stock Corporations

  1. General partnerships
  2. Limited partnerships
  3. Partnerships under Civil Law 
  1. Stock company
  2. Limited liability Company
  3. Cooperatives 

General partnership in Turkey

A general partnership is a special form of a civil law partnership. This is made clear by the fact that Art. 214 Turkish Commercial Code refers to it. If the conditions for a general partnership are met, the company must be entered in the commercial register by the partners as a general partnership according to Article 215 Turkish Commercial Code and will receive its legal personality through this registration. The announcement will then be made in the Commercial Register (Ticaret Sicili Gazetesi). This type of company is comparable to the German “Offenen Handelsgesellschaft (OHG) – general partnership”.

The articles of association, in the case of a general partnership, must be in writing and contain a minimum of content such as company name, corporate purpose, powers of representation, etc. The signatures of the partners must be certified by a notary. A minimum share capital is not provided.

Liability of the general partnership

The partners of a general partnership in Turkey are personally liable with all their assets without limitation.

Termination of the general partnership

The general partnership ends with the dissolution, death, or resignation of a partner. This is followed by liquidation, in which the company’s assets are to be wound up. After its termination, the company will be deleted from the Turkish commercial register.

The general societies play a very subordinate role in Turkish economic life. In 2014, according to the statistics of the Turkish Ministry of Customs and Trade, only one of 1,351,312 Turkish company formations was registered as a general partnership.

Limited Partnership in Turkey

Just like the general partnership, the limited partnership is a partnership, the purpose of which is to operate a trade. Concerning the form and details of the partnership agreement and the termination of the limited partnership, the same statements apply as for the general partnership.

Liability of a Limited Partnership in Turkey

A decisive difference to the general partnership is that here at least one partner is not unlimited but is only involved with his contribution (limited partner, Art. 304/2 Turkish Commercial Code). In contrast, contributions in the form of labor are not considered for limited partners.

The unlimited partner, on the other hand, is liable like a general partner. Its contribution can also take the form of manpower and things. In the case of limited partners, a distinction must be made between the sums of liability and the deposits. The deposit can exceed the liability amount; In addition, it can not only consist of cash benefits but can also be brought in in another form. The limited partner is only liable to the creditors of the KG up to the amount of his contribution. Insofar as the contribution has been made, however, liability is excluded (Art. 319 Turkish Commercial Code).

It is also worth mentioning that a mixed form of the legal forms of German limited GmbH and KG (GmbH & Co. KG) is not intended in Turkey. Therefore, a general partner may only be a natural person but not a legal entity.

Partnerships under Civil Law according to the Turkish Law

A partnership under civil law is the original form of partnership. A distinction must be made between external and internal partnerships.

The normal case of the civil partnership is the external company, in which several people appear uniformly to the outside world. The internal society does not take part in legal relations, it does not appear as a society externally.

Compared to other partnerships and corporations, they are easier to set up. Initially, all that is required is the conclusion of articles of association. Formal requirements, notaries, and an entry in the commercial register are not provided. 

The partnership agreement is a contract under the law of obligations that is concluded between the partners to pursue a specific purpose. In the case of companies that have not yet been put into effect, provisions under the law of obligations are also applicable that eliminate the company. In the case of companies that have been put into effect, this is not possible, so that there is only the possibility of termination (Art. 639 Turkish Civil Code).

Art. 625 Turkish Civil Code regulates the management authority, while Art. 637 Turkish Civil Code regulates the power of representation and its scope. To understand management and representation, it is essential to distinguish between internal and external relationships. Internal relationships are the relationships between the shareholders, external relationships are the relationships between the company and third parties. 

Unless otherwise agreed in the articles of association, the company is managed as a whole, i.e. the shareholders may only act jointly.

The Turkish Civil Code does not provide for any restrictions on management.

The management is not subject to any instructions. Nevertheless, can be controlled following the Art. 631 Turkish Civil Code.

The joint-stock company according to Turkish law (Inc.)

The Inc., as a corporation, is a legal person under civil law, which is established by Article 335 of the Turkish Commercial Code through the agreement of the shareholders’ declaration of intent. They are created through entry in the commercial register. 

The Inc. is established by concluding the articles of association and notarizing the signatures. These articles of association must have certain minimum content, in particular the company name, corporate purpose, etc. The share capital is at least 50,000 TL (Art. 332 Turkish Commercial Code). All shares must be taken over by the founders. This type of company has a capital accumulation function, i.e. shareholders participate in the Inc. with their capital.

The mandatory organs of the Inc. include the board of directors, which must consist of at least one member. This is the leading body of the AG and is elected by the general meeting for a maximum of 3 years. As a representative body, it manages the company’s business.

You can become a shareholder in an Inc. in several ways: by taking over when founding, by subscribing new shares when increasing capital, and by derivative acquisition. The share is a security whose possession is necessary to exercise the rights resulting from it.

The shareholder does not exercise his influence on the Inc. Legally, he can only exercise his influence in the general assembly.

The essential rights of a shareholder, which are regulated in the articles of association, include, among others, participation and voting rights at the general meeting, the right to challenge resolutions of the general meeting, and information rights on company matters. The shareholder has a duty of loyalty. He may not damage the Inc. by influencing the organs, otherwise, he will be liable for damages.

Another body of the Inc. is the general meeting. As the highest decision-making body of the Inc., it appoints the Supervisory Board and the Management Board. In particular, it is responsible for the decision-making authority on how to proceed with the balance sheet profit. However, the general meeting can only distribute the balance sheet profit.

The general meeting of an Inc. decides by resolution. This can be void or contestable in cases specified by law. If the legal requirements are violated, the resolutions are null and void or can be challenged. This contestation takes place through a draft lawsuit and seeks the ineffectiveness of the resolution.

Liability of the Inc. in Turkey

The Inc. is only liable to the creditors of the Inc. with the company’s assets. The company’s assets are to be separated from the share capital. The share capital is important for the balance sheet so that the profits can be distributed according to the holdings. The share denotes the participation quota allotted to it.

The members of an Inc. (shareholders) are not obliged. The company’s capital is solely liable for the company’s liabilities. Since only the Inc. with its share capital is liable to the creditors, it should be protected against a reduction through withdrawals. It is therefore to be shown in the balance sheet on the liabilities side. This ensures that the company’s assets cannot be reduced to below the amount of liability through profit distributions. The prohibition of the return of capital contributions applies to prevent an uncontrolled outflow of the company’s assets to the shareholders.

Termination of the Inc.

Termination as a result of a court order, a shareholder resolution, or bankruptcy can be considered. After the dissolution is entered in the commercial register, the liquidation and deletion in the commercial register occur.

Limited Liability Company

One of the widespread and preferred forms of a company is the limited liability company. It is because of the limited liability and the low share capital.

The limited liability company, like the Inc. as a corporation, is a legal person under civil law. Its establishment requires a partnership agreement certified by the commercial register (since 2018, the notarization of the articles of association is no longer carried out by the notary!), whereby the minimum content results from Art. 576 Turkish Commercial Code. The share capital only needs to amount to at least 10,000 TL. The GmbH is created when it is entered in the commercial register.

The limited liability company has many similarities with the Inc. so that there are many parallels between this and the Inc. The optional and compulsory organs are also listed in their statutes.

The mandatory organs of the limited liability company are the managing directors and the shareholders’ meeting.

The managing director does not have to be a partner. The power of representation of the managing director cannot be restricted externally. The distribution of tasks is incumbent on the articles of association, i.e. there is no strict assignment of tasks as with the Inc. . If nothing is regulated, the law assumes that the managing director is responsible for all tasks and that all competencies are entitled.

The rights of the shareholders are essentially limited to the distribution of profits and the supervision of the management.

The shareholders’ meeting makes its decisions by resolution. Further important tasks are according to Art. 616 Turkish Commercial Code:
– Approval of the annual financial statements and the use of the result
– Appointment and dismissal of managing directors and release
– Supervision of the management

The shareholder has a share in the limited liability company. They have co-administration as well as property rights.

Liability of the limited liability company

Only the company’s assets are liable for the company’s liabilities. The personal liability of the shareholders towards third parties is excluded. However, they are liable for public claims if the company’s assets are insufficient. However, this is limited to the original amount of the contribution.

Termination of the limited liability company

Concerning the termination of the limited liability company, the same statements apply as for the Inc. Accordingly, the limited liability company is dissolved by the opening of bankruptcy, a shareholder resolution, and a court order. After the planned liquidation process has been completed, it is deleted from the commercial register.












Advantageous Company       


Advantages and Disadvantages of the limited liability company and Inc. – Which legal form is the best?



Limited Liability Company












Inc.

Common feature

Formation by one person possible

Formation by one person possible

Common feature

Convening the general meeting once a year

Convening the general meeting once a year

Common feature

At least one general manager 

At least one board member

Joint-stock company more advantageous

 – In the case of a  “One-Person Limited Liability Company”, this person is also the managing director 

in the case of a limited liability company with two or more shareholders, at least one shareholder has to appoint a general manager 

– in the case of a limited liability company with two or more shareholders, at least one shareholder has to appoint a general manager


– If the above two provisions are met, non-shareholders can also be appointed as managing directors

Regardless of the number of shareholders you can

Non-shareholders can be appointed as board members

joint-stock company more advantageous

In the case of a limited liability company, company shares are transferred before the notary and through an entry in the commercial register. Compared to a stock corporation, the transfer of company shares in a GmbH is more expensive and takes longer.

In the case of a joint-stock company, company shares are not transferred before the notary; through an entry in the commercial register is not necessary.

Compared to a  limited liability company Compared to a  limited liability company , the tra, the transfer of  company shares in a stock corporation is cheaper, easier, and takes less time.

joint-stock company more advantageous

The taxation of the sale of the company share is based on the provisions on the increase in value.

If the company share is sold within two years of its acquisition, 

there is no taxation.

joint-stock company more advantageous

Managing directors have unlimited liability for public debts, the shareholders only following their share of the business.

Only board members are liable for public debts,

the shareholders are not liable.

Limited liability company more advantageous

At the limited liability company there is no deadline for exercising the management authority.

A joint-stock companies board members are appointed for 3 years. An election takes place every 3 years.

joint-stock company more advantageous

In the case of decisions that require a change to the articles of association (e.g. change in the company’s areas of activity), the approval of 2/3 of the capital is required.

Decisions that require an amendment to the statutes 

require a presence of half of the represented Capital and 

the approval of the simple majority

Limited liability company more advantageous

No presence of the representative of the Ministry is required to take decisions in the General Assemblies.

Presence of the representative of the Ministry at the General 

meeting required for the following decisions: 

–  Increase or decrease in capital

–  Change in the field of activity of the company for which

an amendment to the articles of association is required

–  merger, split

These activities are more expensive compared to the limited liability company takes longer. 

joint-stock company more advantageous

In the case of a limited liability company, shareholders can be withdrawn from the company by a court decision

In the case of a stock company, shareholders can not be withdrawn from the company by a court decision.

joint-stock company more advantageous

In the case of a limited liability company, the shareholders have to pay social security contributions.

 

 At a stock company, there is no obligation on the part of the Shareholders to pay social security contributions.

(However, there is an obligation for board members)

Limited liability company is more advantageous

For the establishment of a limited liability company a share capital of 10.000 TL is required, before establishment there is no obligation to pay the share capital .

A share capital of 50,000 is required to found a stock company, before the foundation ¼ of the share capital has to be paid in.

Limited liability company is more advantageous

Regardless of the share capital, the limited liability company has no obligation to authorize a lawyer

At a share capital of more than 250.000 TL, the stock company has an obligation to authorize a lawyer. 

 

Please do not hesitate to contact us for any further assistance

For information on advocacy or counseling services; You can fill out the form below, send an email to info@kocaersoz.com or call us at +90 212 660 49 00

Contact Us: *