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Commercial Company Types in Turkish Law

July 2014 - Corporate & Commercial. Legal Developments by Baspinar & Partners Law Firm.

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Types of the commercial companies are determined in Turkish Commercial Code. The types of the companies can be defined in two categories, which are capital companies such as Joint Stock Companies, Limited Companies, Commandite Companies that has its capital divided into shares and partnership companies such as Collective Companies and Commandite Companies. In this memorandum we will briefly introduce all types of companies available in Turkish law. However, our main focus will be on limited and joint stock companies, which are the most preferred ones in practice.

 

It should be noted that, some types of companies are subject to the special acts in Turkey. The Companies with special legislation are Banks, private finance institutions, insurance companies, financial leasing companies, factoring companies, companies operating foreign currency exchange offices, publicly held companies subject to the Capital Markets Law. The companies that are founders and operators of free zones are still subject to get permission from the Ministry of Industry and Trade. Please be aware that companies having the subjects mentioned above are also subject on special provisions stipulated under various laws besides the Turkish Commercial Code.

 

ĂĽ  Joint Stock Company: The company's stock capital is divided into shares and the liability of the shareholders is restricted with the capital subscribed and paid by the shareholder. It is possible to have only one shareholder (real person or legal entity) and minimum capital of 50,000.00 TL is mandatory.  The mandatory company organs are general assembly, board of directors. (The number of registered Joint stock companies is less than the number of registered limited companies. However, the total capital of all joint stock companies is more than the limited companies. The reason is that joint stock companies are established to bring huge amounts of capital together to do business. Therefore, a joint stock company brings many shareholders together in the name of doing business. Limited companies are more conservative and therefore in practice the shareholders of limited companies are often under 10. Usually family companies and branches of foreign joint stock companies are established as limited companies.)

 

ĂĽ  Limited Company: It is the company established with at least 1 and at most 50 real person or legal entities and the liability of the shareholders is restricted only to the capital subscribed and paid by the shareholder. Minimum capital of 10,000.00 TL is mandatory for the incorporation. (Around %80 of all registered companies to trade registry are limited companies.)

 

ĂĽ  Commandit Company: It is the company established to operate a commercial enterprise under a trade name and, the liability of some shareholders is restricted only to the capital subscribed and paid by the shareholder (commanditer), and some shareholders is not restricted to the capital subscribed and paid by the shareholder. No minimum capital is required. The relationships between the shareholders are designated in the articles of association freely. (In practice, there are only a couple commandit companies registered to the Trade Registry.)

 

ĂĽ  Collective Company: It is the company established to operate a commercial enterprise under a trade name and, the liability of none of shareholders is restricted only to the capital subscribed and paid by the shareholder. No minimum capital is required. It is mandatory that all the shareholders be real person. The relationships between the shareholders are designated in the articles of association freely. (In practice, there are only a couple collective companies registered to the Trade Registry.)