Company formation in Turkey: limited liability company or joint-stock company, and what are the steps?
In Turkey, the two types most often chosen for commercial activity are the limited liability company (limited şirket) and the joint-stock company (anonim şirket); both can be formed with a single shareholder, and as a rule the shareholders (ortaklar) are not personally liable for the company's debts. This guide summarizes the steps, from choosing the type to registration and from share transfer to disputes between shareholders, with reference to the articles of the Turkish Commercial Code (TCC).
Last updated: · Prepared by: Av. Barış Kaymaz
Which question, which guide?
| Your question | Related guide | One-line answer |
|---|---|---|
| How can I see my company's legal risks? | Legal Risk Analysis for Companies | A preliminary check that summarizes the company's legal risk areas based on the answers given to the questions. |
| How are shares transferred in a limited liability company? | Guide to share transfer in a limited liability company | A written agreement, notarized signatures and, as a rule, the approval of the general assembly (genel kurul) are required (TCC Article 595). |
| How do I protect the company name as a trademark? | Trademark registration guide | Trademark protection is obtained through registration; registration of the trade name (ticaret unvanı) does not take its place (Industrial Property Law No. 6769 (SMK), Article 7). |
| Can a foreign shareholder work in Turkey? | Foreigners' Law | A work permit is required for a foreign shareholder or manager who will work in Turkey (International Labour Force Law No. 6735, Article 6(2)). |
| Which page covers commercial receivables and contract disputes? | Commercial Law | Commercial contracts, collection of receivables and commercial lawsuits. |
| What work does the firm handle in this area? | Corporate Law | Company formation, articles of association, share transfers, general assemblies and disputes between shareholders. |
What is the difference between a limited liability company and a joint-stock company?
The main difference lies in capital and structure: a limited liability company is formed with a capital of at least TRY 50,000 and a joint-stock company with at least TRY 250,000; a limited liability company has at most 50 shareholders, whereas the law sets no upper limit for a joint-stock company (TCC Articles 574, 580 and 332).
A joint-stock company is liable for its debts only with its own assets; shareholders are liable only to the extent of the capital share they have undertaken, and only towards the company (TCC Article 329). In a limited liability company, too, the shareholders are not liable for the company's debts; they pay the capital share they have undertaken and fulfil the additional payment and ancillary performance obligations (ek ödeme ve yan edim yükümlülükleri) set out in the articles of association (TCC Article 573(2)). However, shareholders of a limited liability company are directly liable, in proportion to their capital shares, for public receivables (amme alacakları) that cannot be collected from the company (Law No. 6183 on the Collection Procedure of Public Receivables, Article 35).
Share transfer also differs: in a joint-stock company, registered shares (nama yazılı paylar) are as a rule transferred freely, by endorsement and transfer of possession (TCC Article 490); in a limited liability company, the transfer is made in writing, the signatures are notarized and, as a rule, general assembly approval is required (TCC Article 595).
| Topic | Limited liability company | Joint-stock company |
|---|---|---|
| Minimum capital | TRY 50,000 (TCC Article 580) | TRY 250,000; under the registered capital system, initial capital of TRY 500,000 (TCC Article 332) |
| Number of shareholders | 1–50 (Articles 573 and 574) | 1 or more (Article 338) |
| Payment before registration | No 25 percent advance payment requirement (Article 585) | At least 25 percent of the cash capital (Article 344) |
| Signing of the articles of association | At the trade registry directorate (Article 575) | Notarization or in the presence of the trade registry (Article 339(1)) |
| Management | Manager (müdür) or managers; at least one shareholder authorized to manage and represent (Article 623) | Board of directors (yönetim kurulu) consisting of one or more persons (Article 359) |
| Share transfer | Written, notarized and, as a rule, approved by the general assembly (Article 595) | Registered share: endorsement and transfer of possession (Article 490) |
| Shareholder's liability for public debts | For uncollectible public receivables, in proportion to the capital share (Law No. 6183, Article 35) | Shareholder liable to the extent of the capital share undertaken (Article 329(2)) |
How much capital is required to form a company?
Under Presidential Decision No. 7887 dated 24 November 2023, the minimum capital is TRY 250,000 for a joint-stock company, TRY 500,000 as initial capital for a non-public joint-stock company that adopts the registered capital system, and TRY 50,000 for a limited liability company (TCC Articles 332 and 580).
In a joint-stock company, at least 25 percent of the nominal value of the shares subscribed in cash is paid before registration and the remainder within 24 months following registration; share premiums (çıkarma primi) are paid in full before registration (TCC Article 344). In a limited liability company, the joint-stock company provisions apply by analogy to the payment of capital, but the requirement to pay 25 percent before registration does not apply (TCC Article 585).
Capital may also be contributed in a form other than money, as capital in kind (ayni sermaye); in that case, the rights and assets contributed, their values and the shares to be given in return are stated in the articles of association (TCC Article 339(2)(e)), and the court-appointed assessor (bilirkişi) report on the valuation is submitted to the trade registry directorate (ticaret sicili müdürlüğü) (Article 354(3)).
What are the steps to form a company?
Formation is completed in 4 steps: drafting the articles of association covering the trade name, scope of business, capital and management structure; signature by the founders; payment of the capital (at least 25 percent before registration in a joint-stock company); and registration with the trade registry and publication (TCC Articles 339, 344 and 354).
For the articles of association of a joint-stock company, the founders' signatures are notarized, or the articles are signed in the presence of the trade registry director or deputy director (TCC Articles 335 and 339(1)); the articles of association of a limited liability company, by contrast, are signed in the presence of authorized personnel at the trade registry directorate (TCC Article 575).
The company acquires legal personality upon registration with the trade registry (TCC Articles 355(1) and 588(1)). Those who carry out transactions on behalf of the company before registration are personally and jointly and severally liable for those transactions; if it was expressly stated that the transaction was made on behalf of the company to be formed and the company accepted it within 3 months after registration, only the company is liable (Article 355(2)).
How is the MERSİS application made?
The formation application is made through the Ministry of Trade's Central Registry Recording System (MERSİS): the trade name, address, capital, shareholders and managers are entered into the system, the articles of association are generated in the system, and the founders then attend the trade registry directorate to sign. In practice, a tax identification number is obtained in advance for foreign individual shareholders.
How do registration with the trade registry and publication work?
In a joint-stock company, the articles of association are registered with the trade registry of the place where the head office is located and published in the Turkish Trade Registry Gazette within 30 days following formation; in a limited liability company, the articles of association are registered and published within 30 days following the date on which the signatures were affixed at the trade registry directorate (TCC Articles 354(1) and 587(1)). During registration, the opening certifications of the commercial books are made by the trade registry directorate (TCC Article 64(3)).
| Step | What is done? | Time limit or legal basis |
|---|---|---|
| 1. Preparation | The trade name, scope of business, capital and management structure are determined; the articles of association are generated in MERSİS | TCC Article 339 |
| 2. Signature | Joint-stock company: notarization or in the presence of the trade registry; limited liability company: at the trade registry directorate | TCC Articles 335, 339(1) and 575 |
| 3. Capital payment | Joint-stock company: at least 25 percent of the cash capital before registration | The remainder within 24 months of registration (TCC Article 344) |
| 4. Registration and publication | Trade registry of the place where the head office is located; Turkish Trade Registry Gazette | 30 days from formation or signature (TCC Articles 354 and 587) |
| 5. Books | Opening certifications are made by the trade registry directorate during registration | TCC Article 64(3) |
Can foreigners form a company in Turkey?
Yes; unless otherwise provided in international agreements and special laws, foreign investors are free to make direct investments in Turkey, and foreign investors are subject to equal treatment with domestic investors (Foreign Direct Investment Law No. 4875, Article 3(a)). Limited liability and joint-stock companies may also be formed with foreign individuals or legal entities (TCC Articles 338 and 573).
Foreign shareholders follow the same formation steps; in practice, a notarized Turkish translation of the passport and a tax identification number are requested, and for a foreign legal entity shareholder, certificates of activity and authorization documents bearing an apostille or certified by a consulate are requested.
Being a shareholder in a company does not by itself give the right to work in Turkey: foreigners within the scope of the International Labour Force Law No. 6735 are prohibited from working or being employed in Turkey without a work permit (Article 6(2)). The investor's net profits, dividends, and sale and liquidation proceeds may be freely transferred abroad through banks (Law No. 4875, Article 3(c)).
| Topic | Rule | Legal basis |
|---|---|---|
| Freedom to invest | Unless otherwise provided, foreign direct investment is free | Law No. 4875, Article 3(a)(1) |
| Equal treatment | Foreign investors are subject to equal treatment with domestic investors | Law No. 4875, Article 3(a)(2) |
| Expropriation | No expropriation unless the public interest requires it and compensation is paid | Law No. 4875, Article 3(b) |
| Transfer | Net profits, dividends, and sale and liquidation proceeds may be freely transferred abroad | Law No. 4875, Article 3(c) |
| Work | A work permit is required for a foreign shareholder or manager who will work in Turkey | Law No. 6735, Article 6(2) |
What should the articles of association cover?
The articles of association of a joint-stock company contain at least the following: the trade name and head office; the scope of business, with its essential points specified; the capital, the nominal value of the shares and the method of payment; whether the shares are registered or bearer shares, and any transfer restrictions; capital in kind; the number of members of the board of directors and the persons authorized to sign; the calling of the general assembly and voting rights; the form of announcements; and the financial year (TCC Article 339(2)). The first members of the board of directors are appointed by the articles of association (Article 339(3)).
If the scope of business is drafted narrowly, an amendment requiring a heavy quorum may later be needed: in a joint-stock company, a complete change of the scope of business requires the affirmative votes of shares representing at least 75 percent of the capital (TCC Article 421(3)); in a limited liability company, a change of the scope of business requires at least two thirds of the votes represented and an absolute majority of the capital carrying voting rights (TCC Article 621).
The provisions that most affect the relationship between shareholders are restrictions on share transfers, pre-emption and purchase rights, privileged shares, additional payment and ancillary performance obligations, and the manner in which the power of representation is exercised (TCC Articles 339 and 587(1)). In a limited liability company, at least one shareholder must have the right to manage and represent the company (TCC Article 623(1)).
| Resolution | Joint-stock company | Limited liability company |
|---|---|---|
| Ordinary resolutions | Meets with at least one quarter of the capital; majority of the votes present (TCC Article 418) | Absolute majority of the votes represented (TCC Article 620) |
| Amendment of the articles of association | Meets with at least half of the capital, majority of the votes present; at least one third at the second meeting (Article 421(1)) | Non-transferable power of the general assembly; heightened quorum for the matters listed in Article 621 (Articles 616 and 621) |
| Change of the scope of business | Affirmative votes of at least 75 percent of the capital (Article 421(3)) | Two thirds of the votes represented and an absolute majority of the capital (Article 621) |
| Relocation of the head office | Relocation abroad: unanimity of the entire capital (Article 421(2)) | Change of head office: two thirds and an absolute majority of the capital (Article 621(1)(f)) |
| Capital increase | Quorum for amending the articles of association (Article 421(1)) | Two thirds and an absolute majority of the capital (Article 621(1)(d)) |
How are shares transferred and new shareholders admitted?
In a limited liability company, the transfer of a capital share and transactions giving rise to an obligation to transfer are made in writing and the parties' signatures are notarized; unless the articles of association provide otherwise, the transfer becomes valid with the approval of the general assembly, and the general assembly may refuse approval without stating a reason (TCC Article 595(1)–(3)). A transfer that is not refused within 3 months of the application is deemed approved (Article 595(7)).
If transfer is prohibited by the articles of association or approval has been refused, the shareholder's right to leave the company for just cause is reserved (Article 595(4)–(5)).
In a joint-stock company, registered shares are transferred without being subject to any restriction unless otherwise provided in the law or the articles of association; transfer by legal transaction may be made by passing possession of the endorsed share certificate to the transferee (TCC Article 490). A new shareholder is usually admitted through a capital increase; in a limited liability company, an increase of the capital is resolved by two thirds of the votes represented and an absolute majority of the capital (TCC Article 621(1)(d)).
What obligations begin once the company is formed?
The first obligation concerns the commercial books: every merchant (tacir) is required to keep commercial books (TCC Article 64(1)). For physical books, the opening certification for subsequent periods is obtained from a notary by the end of the month preceding the first month of the period; the closing certification of the journal (yevmiye defteri) is made by the end of the 6th month of the following period, and that of the board of directors' resolution book by the end of the 1st month; these certifications are not required for electronic books (Article 64(3)).
The ordinary general assembly meets within 3 months from the end of each financial year (TCC Articles 409(1) and 617(1)); the financial statements, the annual report, the distribution of profit and the release (ibra) of the managers are resolved at this meeting. In a limited liability company, the general assembly is called at least 15 days before the meeting date (Article 617(2)).
If the number of shareholders falls to one, this is notified to the management within 7 days, and the fact that the company has a single shareholder is registered and published (TCC Articles 338(2) and 574(2)).
| Obligation | Time limit | Legal basis |
|---|---|---|
| Keeping commercial books | Continuously from formation | TCC Article 64(1) |
| Opening certification of physical books for subsequent periods | By the end of the month preceding the first month of the period | TCC Article 64(3) |
| Closing certification of the journal | By the end of the 6th month of the following period | TCC Article 64(3) |
| Closing certification of the board of directors' resolution book | By the end of the 1st month of the following period | TCC Article 64(3) |
| Ordinary general assembly | Within 3 months from the end of the financial year | TCC Articles 409(1) and 617(1) |
| Falling to a single shareholder | Notification within 7 days, followed by registration and publication within 7 days | TCC Articles 338(2) and 574(2) |
| Remaining capital in a joint-stock company | Within 24 months of registration | TCC Article 344 |
What happens if a dispute arises between shareholders?
General assembly resolutions contrary to the law, the articles of association and in particular the principle of good faith (dürüstlük kuralı) may be challenged by an action for annulment filed within 3 months from the date of the resolution at the commercial court of first instance (asliye ticaret mahkemesi) of the place where the company's head office is located (TCC Article 445). The action may be filed by a shareholder who voted against the resolution at the meeting and had the dissent recorded in the minutes, by shareholders who allege irregularities in the call or the agenda, and by the board of directors (Article 446).
In a joint-stock company, where just causes exist, shareholders representing at least one tenth of the capital, or one twentieth in a publicly held company, may request the dissolution of the company; instead of dissolution, the court may decide that the claimants be removed from the company upon payment of the actual value of their shares, or decide on another appropriate solution (TCC Article 531).
In a limited liability company, each shareholder may, where just causes exist, file an action for a decision allowing that shareholder to leave the company (TCC Article 638(2)); the company may also, by general assembly resolution, ask the court to exclude a shareholder for just cause (Articles 616(1)(h) and 621(1)(h)).
Frequently asked questions
References
- Turkish Commercial Code No. 6102 (Türk Ticaret Kanunu) (Articles 64, 329, 332, 335, 338, 339, 344, 354, 355, 359, 409, 418, 421, 445, 446, 490, 531, 573–575, 580, 585, 587, 588, 595, 616, 617, 620, 621, 623, 638) — Legislation Information System (Mevzuat Bilgi Sistemi) (accessed: )
- Foreign Direct Investment Law No. 4875 (Doğrudan Yabancı Yatırımlar Kanunu) (Article 3) — Legislation Information System (Mevzuat Bilgi Sistemi) (accessed: )
- Law No. 6183 on the Collection Procedure of Public Receivables (Amme Alacaklarının Tahsil Usulü Hakkında Kanun) (Article 35) — Legislation Information System (Mevzuat Bilgi Sistemi) (accessed: )
- International Labour Force Law No. 6735 (Uluslararası İşgücü Kanunu) (Article 6) — Legislation Information System (Mevzuat Bilgi Sistemi) (accessed: )