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Exploring Business Structures in Turkey: Joint Stock Companies and Limited Liability Companies
Turkey's dynamic economy presents a wealth of opportunities for entrepreneurs from around the globe. Its strategic location, bridging Europe and Asia, along with a diverse and growing market, makes it an attractive destination for business ventures. For nomads and international investors looking to tap into this potential, understanding the local corporate landscape is key. The Joint Stock Companies (JSC) and Limited Liability Companies (LLC) are particularly noteworthy for their flexibility and investor-friendly features.
Joint Stock Companies (JSC) in Turkey
A Joint Stock Company (JSC) in Turkey, known as "Anonim Şirket" in Turkish, is characterized by its capital divided into shares, which facilitates the raising of capital from public and private investors. This type of company is liable for its debts only to the extent of its assets, providing a layer of protection for shareholders. The sole obligation of the shareholders is to pay their committed share of the capital.
A JSC must include the phrase "Anonim Şirket" in its trade name, alongside an indication of its business activity. The minimum capital requirement for a JSC is 250,000 Turkish Liras, with an increased minimum of 500,000 Turkish Liras for those adopting the registered capital system but not public. At least one-quarter of the nominal value of the cash committed shares must be paid before registration, and the remainder within 24 months post-registration. Importantly, a Joint Stock Company can be publicly traded on the stock exchange, and there is no limit on the number of shareholders it can have.
Limited Liability Companies (LLC) in Turkey
Limited Liability Companies (LLC), or "Limited Şirket" in Turkish, offer a more flexible and less formal structure compared to JSCs. The liability of the shareholders is limited to their contribution to the company's capital, with no personal responsibility for the company's debts. However, the shareholders are directly liable, in proportion to their share of the capital, for public debts of the company that cannot be fully or partially collected.
An LLC can be established with a single shareholder and can have up to fifty shareholders, who can be either natural persons or legal entities. The minimum capital requirement for an LLC is set at 50,000 Turkish Liras, and the value of capital shares must be at least twenty-five Turkish Liras or multiples thereof. The capital contribution committed in cash must be fully paid within 24 months following the company's registration. LLCs must clearly state "Limited Şirket" in its trade name, alongside an indication of its business activity. Importantly, a LLC cannot be publicly traded on the stock exchange.
Difference between Joint Stock Companies (JSC) and Limited Liability Companies (LLC)
Feature | Limited Liability Company (LLC) | Joint Stock Company (JSC) |
Trade Name Requirement | The trade name must include the phrase "Limited Şirket" and an indication of the business activity. | The trade name must include the phrase "Anonim Şirket" and an indication of the business activity. |
Minimum Capital Requirement | 50,000 Turkish Liras | 250,000 Turkish Liras (500,000 Turkish Liras for those adopting the registered capital system but not public) |
Capital Shares | Must be at least 25 Turkish Liras or multiples thereof | Divided into shares, facilitating investment from public and private investors |
Liability | Shareholders are liable only up to their contribution to the capital. | Shareholders are only liable up to their investment for company debts but directly liable for uncollectible public debts based on their capital share. |
Number of Shareholders | Can have one to fifty shareholders, who can be natural or legal persons | No limit on the number of shareholders, open to public and private investment |
Management | Managed by one or more managers who can be partners or third parties, but at least one shareholder must be a manager | Managed by a board of directors elected by the shareholders |
Payment of Capital | All cash contributions must be fully paid within 24 months of registration. | At least one-quarter of the nominal value of cash committed shares must be paid before registration, with the remainder within 24 months. |
Conclusion
Both Joint Stock Companies and Limited Liability Companies offer investors and entrepreneurs in Turkey flexible and efficient means to structure their businesses according to their specific needs, size, and operational scope. The choice between a JSC and an LLC depends on factors such as the desired level of shareholder protection, capital requirements, and the scale of operations. Understanding the nuances of each type can help in making an informed decision that best aligns with the business objectives and growth strategies in Turkey's dynamic market environment.
Frequently Asked Questions (FAQ)
Can management and representation be delegated to a third party in JSCs and LLCs?
In JSCs, management authority can be partially or completely delegated to board members or a third party. However, in LLCs, management or representation cannot be entirely delegated to a third party; at least one shareholder must be appointed as a manager.