One of the most important elements before doing business and opening a company in Turkey is make a decision from the types of companies in Turkey.
For such determination, formation process, the business objective of the investors, the amount of the capital, shareholder structure, the relationship between the shareholders, the volume of the future plans and the auditing preferences play a role.
The below are the types of companies in Turkey.
- Sole Proprietorship
- Limited Liability Company,
- Joint Stock Company
- Commandite Company
- Collective Company,
Also for foreigners can open “branch” and “representative office” in Turkey.
From those types of companies in Turkey most popular two alternatives are (i) Limited Liability Company and (ii) Joint Stock Company. In both company types, the shareholders are not liable to creditors with their personal assets. Their liability is limited to their committed capital.
However, in limited liability companies, for public debts, the shareholders are liable with their personal assets at the ratio of the capital share they had committed.
The major differences between the joint stock company in Turkey and limited liability company in Turkey are; (i) the number of shareholders (ii) the liabilities of the shareholders and (iii) share transfer.
Number of Shareholders
There is no upper limit for the number of shareholders for the Joint Stock Company in Turkey, however the number of shareholder for Limited Liability Company in Turkey is limited to 50
Liability of the Shareholders
While the shareholders of the Joint Stock Companies in Turkey are not responsible for the public debts after paying the capital debts, the shareholders of the Limited Liability Companies are responsible for the public depts such as taxes with the ratios they are committed for the capital.
The transfer of shares is more complicated in Limited Liability Companies in Turkey compared to Joint Stock Companies in Turkey. In LLC Turkey the transfer of the shares of the company is required to be notarized. However, in Join Stock Company in Turkey, the share transfer agreement is sufficient to complete the process.
In order to establish a joint stock company in Turkey, the initial capital of at least 50.000 TL must be committed by the partners. In order to establish a limited liability company in Turkey, the initial capital of at least 10.000 TL must be committed by the partners. At least ¼ of the nominal value of the shares promised in cash must be paid before registration and the rest must be paid within 24 months following the registration of the company in Turkey.
Taxes at the time of the sale of the Company
When you sell your stake in a limited liability company in Turkey taxes accrue. However, if you sell the shares of a joint stock company after 2 years, you do not pay taxes.
Hiring a Lawyer
It is not compulsory for Limited Liability Company in Turkey, However if the capital of Joint Stock Company in Turkey over 250.000 TL, a lawyer should be hired for the company