th local and international entrepreneurs. However, understanding the legal framework for establishing a business in Turkey is crucial for success. The Turkish Commercial Code (TCC) lays down the rules governing the types of companies that can be formed in Turkey and the procedures for their incorporation. This article aims to provide a comprehensive guide on the types of companies recognized under Turkish law, along with a detailed overview of the steps involved in their formation.
1. Types of Companies Under Turkish Law
The TCC recognizes several types of companies, each with its own characteristics, advantages, and legal requirements. The main types of companies under Turkish law include:
Joint Stock Company (Anonim Şirket - A.Ş.)
The Joint Stock Company (A.Ş.) is one of the most common corporate forms in Turkey, particularly for large businesses. This type of company can be established with a minimum of one shareholder, and there is no upper limit on the number of shareholders. The capital is divided into shares, and shareholders are liable for the company’s debts only to the extent of their capital contribution.
Key Features:
Minimum capital requirement: 50,000 TRY.
Managed by a board of directors.
Shareholders' liability is limited to their shares.
Shares can be transferred easily.
Ideal for businesses that plan to go public.
Limited Liability Company (Limited Şirket - Ltd. Şti.)
The Limited Liability Company (Ltd. Şti.) is the most preferred type of company for small and medium-sized enterprises (SMEs) in Turkey. It can be established by at least one and up to fifty shareholders. Unlike A.Ş., the shares of an Ltd. Şti. are not freely transferable without the approval of other shareholders.
Key Features:
Minimum capital requirement: 10,000 TRY.
Managed by one or more managers.
Shareholders' liability is limited to their capital contribution.
Shares are not publicly traded.
Suitable for family businesses and SMEs.
Commandite Company (Komandit Şirket)
The Commandite Company is a hybrid form of partnership where the partners are divided into two categories: active partners (commandite) and silent partners (commanditaire). Active partners have unlimited liability, while silent partners are only liable up to their capital contributions.
Key Features:
No minimum capital requirement.
Requires at least one active and one silent partner.
Active partners manage the company.
Silent partners have limited liability.
Rarely used in practice.
Collective Company (Kollektif Şirket)
A Collective Company is a type of partnership where all partners have unlimited liability for the company's debts. It is typically used by small businesses where the partners know and trust each other.
Key Features:
No minimum capital requirement.
All partners have equal management rights.
Partners have unlimited liability.
Simple structure, but high-risk due to unlimited liability.
Not commonly preferred.
Cooperative (Kooperatif)
A Cooperative is an association of individuals or entities who come together to meet common economic, social, or cultural needs through a jointly-owned enterprise. Cooperatives operate on the principles of democracy, with each member having one vote regardless of the number of shares held.
Key Features:
No minimum capital requirement.
Managed by a board of directors.
Members' liability is limited to their capital contribution.
Focused on mutual benefit rather than profit.
Common in agriculture, housing, and banking sectors.
2. Incorporation Process of Companies in Turkey
The incorporation process in Turkey varies depending on the type of company, but the general steps are as follows:
Preparation of Articles of Association (AoA)
The Articles of Association is the most important document for company incorporation. It outlines the company’s purpose, its management structure, the rights and obligations of shareholders, and other fundamental rules. The AoA must be prepared in accordance with the Turkish Commercial Code.
Notarization and Legalization of Documents
Once the AoA is prepared, it must be notarized. Additionally, other documents such as the signature declarations of the company representatives, the identification documents of the shareholders, and the declaration of the company's registered address must also be notarized.
Registration with the Trade Registry
After notarization, the company must be registered with the Trade Registry Office. The registration process involves submitting the AoA, notarized documents, and the proof of payment of the capital contribution. Upon successful registration, the company gains legal personality.
Publication in the Turkish Trade Registry Gazette
Following registration, the company’s AoA must be published in the Turkish Trade Registry Gazette. This publication serves as an official announcement of the company’s establishment.
Obtaining a Tax Identification Number
The company must obtain a tax identification number from the local tax office. This number is required for tax filings and other official transactions.
Opening a Bank Account and Depositing Capital
The company must open a bank account in its name and deposit the initial capital. For certain types of companies, a portion of the capital must be deposited before registration, while the remaining amount can be deposited after incorporation.
Registration with the Social Security Institution (SSI)
If the company plans to employ workers, it must register with the Social Security Institution (SSI). This registration is necessary to meet the company’s social security obligations towards its employees.
Compliance with Sector-Specific Regulations
Depending on the industry in which the company operates, additional licenses or permits may be required. For example, companies in the finance, energy, or healthcare sectors must comply with sector-specific regulations.
3. Conclusion
Incorporating a company in Turkey is a structured process governed by the Turkish Commercial Code. Entrepreneurs have the flexibility to choose from various types of companies, each suited to different business needs and levels of liability. Understanding the legal requirements for each type and the steps involved in incorporation is essential for setting up a successful business in Turkey. Whether you are a local entrepreneur or an international investor, familiarizing yourself with Turkish corporate law will provide a solid foundation for your business endeavors.
If you require more specific guidance or legal assistance in forming a company in Turkey, our law firm is here to help. With our extensive experience in Turkish corporate law, we can provide the expertise you need to navigate the complexities of the incorporation process.
Additional Notes:
This article should be reviewed periodically to ensure that the information remains accurate, particularly with any changes in the Turkish Commercial Code or related regulations.
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