THE LEGAL AND FISCAL DIFFERENCES OF PRIVATE COMPANIES, JOINT STOCK COMPANIES AND LIMITED LIABILITY COMPANIES IN TURKEY

According to the Turkish Commercial Code, the commercial companies are made up of joint stock company, limited liability company, collective company, commandite company and cooperatives. The collective company and commandite company are defined as private companies and joint stock company, limited liability company and commandite company divided into shares, are defined as the capital companies.

The shareholders of collective companies and the unlimited shareholders of commandite companies are liable with their properties for all type of debts of the company. Therefore, the collective company and the commandite company are not often preferred companies in Turkey. The most preferred type of companies in practice, the joint stock company (A.Ş.) and the limited liability company (Ltd. Şti.) which are the capital companies.

Joint Stock Company is company which the shareholders are liable to the company for only investing the capital that they have undertaken and the shareholders are not liable to the private, tax and public debts.

To establish a joint stock company, at least 50.000 TRY capital if the original capital system is agreed, at 100.000,00 TRY if the registered capital system is agreed, in cash or kind, should be undertaken and at least ¼ of undertaken capital should be invested before the registration and the remaining capital should be invested in the following 24 months from the registration. 

The management body of the joint stock company is the board of management. The board member can be elected at most 3 years. Unless otherwise agreed, the member whose term expired, can be re-elected.

Part of the joint stock company shares can be issued as privileged share. Hereof, the greater right can be accorded to the part of the shares related to the dividend distribution, right to preference, right to vote, liquidation dividend distribution, with the regulation on the articles of association.

If the joint stock shares transfer within 2 years from the acquirement, the income from the transfer will be subject to the income tax. After 2 years from the acquirement, the profit from the transfer will not be subject to the income tax.

If the capital of joint stock company is 250.000,00 TRY or more, at least one contracted lawyer should be employed.

Limited Liability Company is company which the shareholders are liable to the company for investing the capital that they have undertaken and the shareholders are not liable to the private debts. 

Contrary to the joint stock company, the shareholders of the limited liability company are liable for tax and public debts that cannot be collected from the properties of company, at the rate of their shares. (Code on the Procedure for the Collection of Public Receivables Art. 35) For example; if shareholder “A” has %25 of the shares of the limited liability company and if the company has 100.000,00 TRY tax debt that has not collected from the company properties, “A” would be liable for the 25.000,00 TRY part of this tax debt.

If the shareholder transfers her all shares, the transferer and the transferee would be jointly and severally liable from the tax or public debt that has arisen before the transfer. 

To establish a limited liability company, at least 10.000 TRY capital, in cash or kind, should be undertaken. Contrary to the joint stock company, no obligation to invest capital before the registration for the limited liability company. But such as the joint stock company, all the capital should be invested in the following 24 months from the registration.

The management body of limited liability is managers. If there is more than one manager, the board of managers would be established. Unless otherwise agreed, the managers can be elected without specifying the period.

No privileged share regulation for the limited liability company. But only, the right of vote for the shareholder who has more than one share, can be limited. 

No obligation to employ a contracted lawyer for the limited liability company.

In the event of share transfer, the income from the transfer, no matter when the share has been acquired, will always be subject to the income tax.

In addition to the liability of tax and public debts of the company types stated above, because the legal representatives of the legal entities are liable for the liability of tax of the entities according to the Code of Tax Procedure Art. 10, the board members of the joint stock companies and the managers of the limited liability companies are, no matter if they are shareholder or not, liable with their assets for the taxes and public debts that cannot be collected from the company assets and caused by them.

To compare the joint stock companies and the limited liability companies with the notes above;