Types of Business Organizations
Source: Prime Ministry, Undersecretariat of Treasury; Types of
business organizations
Joint
Stock Company (Anonim Sirket - A.S.)
Limited Liability Company (Limited
Sirket - Ltd. Sti.)
Branches and Liaison Offices
Companies or Branches in Turkish Free
Trade Zones
Joint Stock Company
A joint stock company is defined as a corporation
having its own trade name and a predetermined amount of capital divided by
shares. The liability of the shareholder is limited to their capital.
The structure and organisation of joint stock
companies are subject to regulation by the Turkish Commercial Code.
However, the founders of joint stock companies are afforded significant
flexibility in drafting the articles of association, thereby serving the
needs of the specific venture. Capital Market Board regulations also apply
to joint stock companies whose shareholders' number at least 250, or who
have issued bonds or whose shares are quoted on the Istanbul Stock
Exchange.
A minimum of five shareholders, who may be either
real persons or legal entities, are required for the formation of a joint
stock company. The overall share capital must be a minimum of 5 billion TL
and the minimum capital contribution by each foreign shareholder is US $
50,000.
The capital of a joint stock company is divided
into shares of equal value which are treated as negotiable commercial
paper. The shares may be issued in either registered or bearer form.
Registered shares are freely transferable subject to approval by the board
of the company, unless prohibited by the company's articles of association.
Bearer shares are freely transferable under the Code of Obligations, unless
otherwise agreed by the parties.
Decision making in a joint stock company is by
majority vote; but the Turkish Commercial Code includes certain provisions
to protect minority interests. Minority shareholders may also request the
appointment of a special auditor on their behalf.
Limited Liability Company
Limited liability companies may be composed of
real persons or legal entities and must consist of at least 2 and no more
than 50 partners. The overall share capital must be a minimum of 500
million TL and the minimum capital contribution by each foreign shareholder
is the TL equivalent of US $ 50,000. All partners are personally liable for
the debts of the company up to a maximum of their contribution, however,
partners are not held liable for the unpaid portions of others'
contributions. They are also more directly exposed to the tax liabilities
of the company, limited however to their own shares.
Shares held in a limited liability company are
non-negotiable and may be transferred only with the approval of the other
partners. Transfers must be approved by at least a 75% majority vote, with at
least 75% of the total capital represented. Limited liability companies are
also prohibited from engaging in banking or insurance business. A limited
liability company differs from the joint stock company in that its capital
is not divided into shares of stock nor represented by share certificates.
There is no board of directors for a limited company. Instead, the
appointed manager has authority to run the company.
Branches and Liaison Offices
Foreign companies may also operate through
liaison offices or branches providing they are established in accordance
with the relevant legislation. The income of a branch derived in Türkiye is
taxed in the same way as resident corporations.
Liaison offices may be used to establish a
presence in Türkiye, but may not carry on any commercial activity and must
be funded by the parent company outside Türkiye.
