ESTABLISHMENT OF CAPITAL STOCK COMPANIES IN TURKEY

Natural or legal people who’d like to carry out commercial activities via capital stock companies in Turkey, may establish a stock corporation, especially the types of joint stock company and limited liability company, provided that investing the legal minimum capital and the fulfilling other legal conditions. A natural or legal person may establish the joint stock company or limited liability company solely in Turkey.

Subscribed capital could be the capital in cash and the capital in kind. As the capital in kind, the assets which do not have limited rights in rem, lien or measure, could be evaluated in cash and transferable (real estate, vehicle, machine etc.) and intellectual property rights that have these features (trademark, patent, copyrights etc.) and virtual platforms could be invested as capital. Acts of service, personal labour, business reputation and overdue receivables cannot be invested as the capital. 

When the capital in kind is subscribed, the founders apply to the commercial court where the company will be located in Turkey for the valuation of the capital in kind. The court assigns the expert for the valuation and after the expert examining the reports is presented indicated the value of the capital in kind. The founders and the beneficiaries are entitled to take objection to the report. The court may decide to re-examine the objections by taking the objections into consideration or reject the objections and approve the expert report. The expert examining approved by the court is definitive.

When the capital in cash is subscribed, the capital will be invested to the special accounts will be opened on behalf of the company in the banks operated in Turkey. 

In practise, two types of stock corporation are being established in Turkey: Joint stock Company (A.Ş.) and Limited Liability Company (Ltd. Şti.)

About Joint Stock Companies; if the joint stock that represent the capital fully committed with the Articles of Association, cannot be less than 50.000,00 Turkish Liras, and in non-public joint stock companies that have accepted the registered capital system in capital increase, indicating the ceiling of authority granted to the Board of Directors, the initial capital cannot be less than 100.000,00 Turkish Liras.

At least 25% of the capital amount that committed in cash in Joint Stock Companies must be paid to the bank account to be established on behalf of the company before registration. The remaining cash capital cost must be paid within 24 months following the registration.

When the establishment of a Joint Stock Company, there should be a Board of Directors consisting of at least one natural or legal person member, mentioned in the Articles of Association. Both shareholders and non-shareholder can be appointed as the member of the Board of Directors.

Limited Liability Companies must have a minimum capital of 10.000.00 Turkish Liras. If the capital in cash is committed in Limited Liability Companies, there is no obligation to invest capital before registration as in Joint Stock Companies. A Limited Liability Company can be registered without paying the committed capital, but the entire capital must be invested within 24 months following the registration. If capital in kind is committed, the above-mentioned issues regarding Joint Stock Companies also apply to Limited Liability Companies.

When the establishment of Limited Liability Company, at least one natural or legal person mentioned in the articles of association, is appointed as the manager. The managers are the managing body of the Limited Liability Company. A Limited Liability Company may have more than one manager and a Board of Managers may be formed. Both shareholders and non-shareholder can be appointed as the Manager. But at least one of the shareholders must be appointed as the Manager and have the authority to represent. 

In order to start the establishment of the company in Turkey, establishment procedures are started through the Central Registration Registry System of the Ministry of Commerce, called as MERSIS. The title, address, purpose and subject, founding partners, capital, members of the board of directors or managers of the company are specified and the company’s articles of association are created through the system MERSIS. After MERSIS application, an appointment is made from the trade registry directorate at the place where the company will be established, and the founders of the company or the attorney who appointed by the power of attorney issued by the notary public, should be present at the appointment time. During the appointment, the company’s articles of association, chamber registration statement and other relevant documents are signed by the attendants.

In the establishment of Joint Stock Companies, after the signatures at the appointment time, a certified copy of the articles of association is given by the trade registry directorate. With this copy, an application can be made to a bank established in Turkey to open a bank account on behalf of the company to be established and to invest the minimum capital amount before registration. After the bank account is opened and the minimum capital is invested, the bank issues a blockage letter to the applicants stating that the capital has been invested and blocked until registration. The Joint Stock Company is registered with the delivery of the blockage letter to the trade registry directorate.

In Limited Liability Companies, because there is no obligation to invest capital before registration, if it is stated in the articles of association that no capital will be invested before registration, the company is registered by signing the appointment time.

DIFFERENCES BETWEEN JOINT STOCK COMPANY AND LIMITED LIABILITY COMPANY

In terms of capital between the Joint Stock Company and the Limited Liability Company; as we mentioned above, there is a difference in terms of capital limits.

About the management bodies, as mentioned above, the managing body of the Joint Stock Company is the Board of Directors, and the managing body of the Limited Liability Company is the manager(s).

As for liability from taxes and public debts; Tax and public receivables (duties, social security premiums etc.) that cannot be collected or are understood to be uncollectible from the assets of companies; it is collected from the Board Members in Joint Stock Companies and from the Manager(s) in Limited Liability Companies in accordance with the Code No.6183 on the Collection of Public Receivables.

In addition to the responsibility of the above-mentioned management body, the shareholders of the limited liability company are directly liable in proportion to their capital shares for the public receivables that cannot be fully or partially collected from the company or are understood to be uncollectible. In Joint Stock Companies, the shareholders who are non-member of the Board are not responsible for the public receivables that cannot be collected from the company.