One of the most important decisions you must take while putting your venture into practice in Turkey is the type of the company. If you choose to establish incorporated company between limited company or stock corporation choices, you must decide whether you will establish limited company or incorporated company?
There are some points which you should take into account for this. While taking decision, knowing (i) responsibility difference of partners, (ii) company bodies and (iii) share transfer transactions between the company types will have an impact on the decision you will take.
Limited Company
Partners
• One-man limited company can be established but the number of partners cannot exceed 50.
• Partners of limited companies can be excluded from the partnership by decree of court.
• Capital
• It can be established with a principal capital amounting minimum 10.000 Turkish Liras.
Responsibility of Partners
The only responsibility of partners is to pay the capital payables they commit. Partners are responsible against the company only with the capital amount they commit for the company. 15% Gross Domestic Product is deducted from pensions of retirees who are partners of Limited Company.
Responsibility from Public Debts
Partner has responsibility from public debts. They are responsible with all assets from the part of tax, SSI premium debts which cannot be collected. Pursuant to article 35 of Law on Collection Procedure of Public Receivables numbered 6183; company partners may be regarded as responsible to the extent capital share rates for the public debts which cannot be collected or have been understood that they cannot be collected from the Limited Company.
Bodies
• There are two bodies in the Limited Company as general assembly and board of directors.
• Directors are selected among partners or externally by the general assembly.
• In case of several directors, board of directors forms and this assembly takes decision by majority.
• In case of several directors, one of them is assigned as chairman of board of directors by general assembly.
• Unless otherwise agreed in the articles of association, vote of the chairman predominates in case of equal votes in meetings of board of directors.
Transfer of Share
• For transfer of shares in the limited company, a written contract regarding the transfer of share is required to be prepared and this contract must be certified by public notary, transfer of share is to be approve by general assembly of the company and registered in trade registry and finally, it is to be entered into stock register of the company.
Going Public
• There is no opportunity for going public.
Exemption from Tax
• The income obtained from the selling of company shares is subjected to income tax no matter how many years after the share is sold. If real person retains the share of company partner for more than 2(two) years and sells, the earning arising from the sale of partnership shares is subjected to income tax and there is no exemption.
Incorporated Company
Partners
• One-man incorporated company can be established but the number of partners is unlimited.
• Partners of incorporated companies cannot be excluded from the partnership.
• Capital:
• It can be established with a principal capital amounting minimum 50.000 Turkish Liras.
Responsibility of Partners
• The only responsibility of partners is to pay the capital payables they commit. Partners are responsible against the company only with the capital amount they commit for the company. The partner who paid the capital debt has no responsibility from any debt including public debts. 15% Gross Domestic Product is not deducted from pensions of retirees who are partners of Incorporated Company.
Responsibility from Public Debts
• Partner has no responsibility from public debts. Partner has no responsibility from tax, SSI and other debts of the company in the Incorporated Companies.
• However, members of Board of Directors have responsibility with their personal assets due to public receivables.
Bodies
• There are two bodies in the Incorporated Company as general assembly and board of directors.
• Board of Directors consists of minimum one member elected by General Assembly from among partners or non-t. Member of Board of Directors may be legal entity as well as real person.
• Board of Directors gather by majority of whole member number and take decisions by majority of members who are present at the meeting.
• In case of equality in votes, the matter shall be left for a further meeting, in case of equality in the second meeting, the said suggestion is regarded as being rejected.
Transfer of share
Shares in the Incorporated Companies may be only transferred by share transfer contract. If share certificates have been printed or interim certificates have been issued against shares, they can be endorsed and transferred. There is no obligation for transferring the shares before the public notary. Transfers are not registered in trade registry.
Going Public
• There is opportunity for going public.
Exemption from Tax
The income obtained from the selling of company shares is not subjected to income tax if company share certificate is sold after 2 years. If real person retains share certificates of company partners for more than 2(two) years and sells, tax exemption is granted for the income obtained.
