Establishing Limited and Incorporated Company in Turkey

Establishing Limited and Incorporated Company in Turkey

Establishment processes of stock corporations, namely incorporated and limited companies, are more difficult as well as being more costly compared with private companies. In this article, we examined the establishment processes of stock corporations.

Establishment processes of stock corporation are more costly compared with private companies, also they require more procedural operations. Since stock corporations have important effects on the economy of the country where they operate, establishment and activity processes are organized in detail. The registration and announcement obligation of companies in the trade registry, provisions imposed while selecting trade name may be regarded as an indicator of the sensitivity in this regard.

General provisions of Incorporated Company are explained in article 329 and subsequent articles of Turkish Commercial Code, the establishment provisions are explained in article 335 and subsequent articles. General provisions and establishment provisions regarding limited company are given in article 573 and subsequent articles.

In the new Turkish Commercial Code, there is not any regulation given in the former Commercial Code regarding establishment of incorporated companies with minimum 5 partners and limited companies with minimum 2 partners. It is stated that incorporated and limited companies can be established with one partner. Another important change related with establishment and activity processes of stock corporations is that the principle preventing incorporated and limited companies from conducting operations other than the activity subjects was cancelled, this condition is given in the literature as ‘ultra vires’. Under the light of recent arrangements, indicating the major activity shortly has been found adequate.

Establishment Processes of Incorporated Companies

Incorporated Companies may be established for any economical aim and subject that is not forbidden by law.

Company is established once the founders state their will for establishing incorporated company in the articles of association that is issued legally and in which they commit to pay the capital in full unconditionally and signatures of founders are certified by public notary.

It is a condition to prepare the articles of association in writing and to certify the signatures of all founders in public notary. The points to be present in the articles of association:

• Trade name of the company and place where company headquarter is located.
• Operation field of the company whose important points are stated ad described.
• Capital of the company and nominal value of each share, payment mode and conditions for the shares.
• Share certificates, whether they are registered or bearer; privileges granted to particular shares; transfer limitations.
• Rights granted as capital other than money; values of these; amount of share to be given against these, in case of taking over any business, values of transfer and value of goods and rights purchased by founders at the expense of the company for establishment of the company, compensation, allowance or fees to be given to those who provide service in establishment of the company.
• Interests to be provided to the founders, members of board of directors and other individuals from the profit of the company.
• Number of members of board of directors, those among them who are authorized to put signature on behalf of the company.
• The way of calling general assemblies to the meeting; voting rights.
• If the company is limited with a term, this term.
• The way of putting announcements belonging to the company.
• Types and amounts of shares committed by participants.
• Account period of the company.
• Assignment of the members of first board of directors.

These companies are established by real or legal entities. Number of partner may be minimum 1. There is no maximum limit for the number of partner. When the number of partner exceeds 250, companies are subject to Capital Market Board Regulation. If 1 partner is left in the company, it can turn into one-man business structure.

Initial capital amounting minimum 50.000 Turkish Liras should be committed by partners in order to establish an incorporated company. In incorporated companies subjected to the registered capital system prescribing that capital increase up to particular maximum value can be performed by Board of Directors, the initial capital should be minimum 100.000 Turkish Liras. It does not make any difference whether the company is a public or non-public incorporated company in order to be subjected to registered capital system.

Value of a share may be minimum 1 kurus.

Establishment Processes of Limited Companies

Limited Companies may be established for any economical aim and subject that is not forbidden by law.

Company is established once the founders state their will for establishing limited company in the articles of association that is issued legally and in which they commit to pay the capital in full unconditionally and signatures of founders are certified by public notary.
It is a condition to prepare the articles of association in writing and to certify the signatures of all founders in public notary.

The records to be present in the articles of association:

• Trade name of the company and place where company headquarter is located.
• Operation field of the company whose important points are stated ad described.
•Nominal value of registered capital, number of shares of registered capital, nominal values, privileges, if any, groups of shares of registered capital. Name, surname, title and nationalities of directors.
• Form of announcements to be given by the Company.

Binding provisions having the condition of prescribing in the articles of association are also given in the law.

These companies are established by real or legal entities. Number of partner may be minimum 1, maximum 50. If 1 partner is left in the company, it can turn into one-man business structure.

Initial capital amounting minimum 50.000 Turkish Liras should be committed by partners in order to establish a limited company. Registered capital system cannot be applied for Limited Companies. Value of any share cannot be less than 25 Turkish Liras.

Establishment of companies listed in article 5 of notification published by Ministry of Customs and Trade in Official Gazette dated 15.11.2012 and numbered 28468 and amendments to be made in the articles of association are subject to the permission of Ministry of Customs and Trade.