Which legal structure can I choose?

In Turkey, a company may adopt the following legal forms:

• Joint stock companies/ Anonim Şirketler A.S. (JSC)

• Limited liability companies/ Limited Şirketler – Ltd. Sti. (LLC)

• Collective companies/ Kollektif Şirketler

• Partnership limited by shares/ Kommandit Şirketler (Commandite Company)

• Cooperative association/ Kooperatifler

The common forms of companies for start-ups are explained below in more detail:

Joint Stock Company (JSC)

A Joint Stock Company is the company possessing a trade name, whose capital is determined and divided into shares, being liable for its debts only up to the amount of its estate.

• Can be incorporated by one of more shareholders

• Can be established either as a public company or as a private company

• The company’s stock capital is divided into shares and the liability of the shareholders is limited to the subscribed capital and paid by the shareholder

• At least one shareholder (real person or legal entity) and a minimum capital of TRY 50,000 are mandatory

• Shareholders are not liable for the debts of the company in terms of their personal assets

• A statutory auditor (independent audit firms pursuant to Turkish Accounting Standards) is required

Limited Liability Company (LLC)

A Limited Liability is a company formed by one or more real or legal persons, having a corporate title and a predetermined (fixed) capital and with a liability limited to the corporate assets. The liability of the shareholders is towards the company and is limited with their share of the capital.

• Can be incorporated by one of more shareholders *this is a major change introduced by the New Turkish Commercial Code

• Number of the shareholders cannot exceed 50
• The minimum capital requirement is TRY 10,000
• Not able to offer shares to the public
• Shareholders are not liable for the debts of the company in terms of their personal assets
• A statutory auditor is required if and when it has more than 20 partners

Ordinary Partnership

An ordinary partnership agreement is defined as an agreement whereby two or more persons undertake to join efforts and/or goods to reach a common goal, which ultimately is to generate a profit. An ordinary partnership is not a legal entity.

• Owned by 2 or more persons

• Each person shall make a contribution which may be in money, debts, property, other property or skill and are severally liable for the debts of the business

• Partnerships are governed by a written agreementbetween the partners

• No minimum capital requirements

• Partnership will be dissolved if one of partners resign, dies or becomes bankrupt or if corporate partner is dissolved

How do I set up a company in Turkey?

In order to establish a company in Turkey, all documentation regarding the incorporation need to be notarized and translated into Turkish. The incorporation shall be registered before the Trade Registry corresponding to the company’s headquarters and registered before the corresponding Tax Office in order to obtain a tax number and therefore enable the company to conduct commercial activities.

Below is a quick summary of steps of setting up a company in Turkey, provided by Doing Business of World Bank:

1. Submit the memorandum and articles of association online at MERSIS

2. Execute and notarize company documents

3. Deposit a percentage of capital to the account of the Competition Authority

4. Deposit at least 25% of the startup capital in a bank and Obtain proof thereof

5. Apply for registration at the Trade Registry Office

6. Certify the legal books by a Notary Public

7. Follow up with the tax office on the Commercial Registry’s company establishment notification

For more information about the business registration process, you can visit here.

Useful Links

• New Turkish Commercial Code (the ‘New TCC’)

• Establishing a Business in Turkey

• Doing Business in Turkey – PricewaterhouseCoopers

• Doing Business in Turkey – HSBC

• Doing Business in Turkey – Baker Tilly International