Turkey: Company Formation Under The New Turkish Commercial Code

Last Updated: 3 April 2012
Article by Gözde Esen Sakar

Limited Liability Companies (LLC) and Joint Stock Companies (JSC) are the common choices for setting up a business in Turkey. The new Turkish Commercial Code (NTCC) is expected to come into force on 1st July 2012, bringing with it sweeping changes to the way these companies are governed.

We set out some of the headline changes for both company types below with the benefit of exclusive Of Counsel from Prof. Dr. Veliye Yanlı, who headed the parliamentary commission during enactment of this NTCC.

Turkish Limited Liability Companies (LLC)

One Shareholder in LLCs

The number of shareholders in LLCs can be decreased to one. In the event that the number of shareholders is decreased to one, this must be notified in writing to the manager(s) of the company. Within 7 days from receipt of such notification, the manager(s) must apply to the trade registry for the registration and announcement of the company's new structure, indicating the name, residence and nationality of the single shareholder. The company management will be liable for non-compliance with this application requirement.

Increase of Share Capital

With the NTCC, minimum share capital of LLCs is increased from 5,000TL to 10,000TL. If the share capital of the LLC is below this threshold, the share capital must be increased to at least 10,000TL within 3 years of the publication of the NTCC (published 14th February 2011).

Full Payment of Share Capital

Share capital must fully be paid in to the LLC.

Owing Debt to the LLC

The shareholders of an LLC in principle are not allowed to be debtors of the same company. However, this prohibition shall not apply where the debt arises from a transaction which falls within the scope of the company's and the shareholder's scope of activity, provided that such debt carries identical or similar terms applicable to similar transactions (i.e. market conditions).

If such prohibited indebtedness has already occurred, the indebted shareholder(s) must pay such debts in cash funds within 3 years of the effective date of the NTCC, which is due to be 1st July 2012.

Amendment of the Articles of Association

The LLC must ensure the articles of association in compliance with the requirements of the NTCC within 18 months of the date of publication thereof (being 14th February 2011).

Committee for Early Detection and Management of Risks

The LLC must establish a committee for early detection and management of risks. This committee shall be assembled from the manager(s) of the company. If, however, the company is determined to be a small limited company, as per the calculation criteria determined by the Ministry of Industry and Trade, then such a committee will not be compulsory. At time of writing these calculation criteria are still being formulated by the Ministry.

Domicile of the LLC Manager

At least one of the managers of the LLC must be domiciled in Turkey and that manager must have the sole authority to represent the company.

Appointment of a Chairman of the Board

If the LLC has more than one manager, one of them must be appointed chairman of its board of managers by the general assembly. The chairman will no longer need to be a shareholder in the company.

Keeping the Share Ledger

The LLC must keep a share ledger. The share ledger shall reflect the following; names/titles and addresses of the shareholders, number of shares held by each shareholder, share transfer details, nominal value of shares, class of shares, encumbrances over the shares and the names/titles and addresses of beneficiaries of such encumbrances created over the shares.

Keeping the Commercial Books

The LLC is obliged to keep the commercial books indicating the commercial transactions and asset structure of the company. The LLC shall observe and apply Turkish Accounting Standards as announced by the Turkish Accounting Standards Board, including the conceptual framework of accounting principles and interpretations while keeping its commercial books. An important change however, is that the compulsory accounting standards will adopt International Financial Reporting Standards (IFRS). The opening and closing of the books must be certified by a notary public.

Financial Statements and Activity Reports

The manager(s) of an LLC must prepare and submit to the attention of the general assembly the financial charts, appendices and the activity report of the company for the preceding accounting period. This must be done in accordance with the Turkish Accounting Standards and within the first three months of the relevant accounting period (fiscal year) following the balance sheet date.

The relevant Turkish Accounting Standards will be applicable from 1st January 2013.

Independent Audit

The auditor should be an independent auditing firm whose auditors are either chartered or certified public accountants.

  1. Transactional Audit - LLCs must go through an auditing procedure as part of transactions such as mergers, spin-offs and conversions. Such transactions must be audited by an independent auditor appointed by the general assembly of the LLC and an audit report has to be issued.
  2. Audit of Financial Charts and Activity Report - Financial charts and activity reports for the managers of the LLC (and group of companies, if applicable) must be independently audited in accordance with the Turkish Auditing Standards which will also be compliant with international auditing standards. This auditor must be appointed by the general assembly of the LLC. The auditor must be re-elected for each fiscal year activity period and this election must take place within the first four months of the activity period. The auditor so elected shall be registered with the trade registry and their details must be published on the LLC's web-site. This requirement to audit the financial charts and activity reports will come into effect on 1st January 2013.

LLC Web-Site

Limited companies must have and maintain a web-site. If there is already a web-site in place, it must be brought into conformity with the content required by the new code. The minimum required content of the web-site is stated in the regulations, including various documents, financial statements and resolutions, but it does not limit addition of other information that the company may wish to convey.

Turkish Joint Stock Companies (JSC)

One Shareholder ın JSCs

One shareholder will be sufficient for the establishment of a joint stock company, replacing the current need for a minimum of five, with no limit to the maximum number of shareholders.

Minimum Amount of Share Capital

The required amount of share capital of JSCs with principal share capital remains the same and shall not be less than 50,000TL. Where there is a deviation however, is that under the new code joint stock companies will have the right to incorporate registered share capital, but then it shall be a minimum of 100,000TL initial share capital whether or not publicly traded.

Payment of Share Capital

If the shares are subscribed in cash, at least 25% of the share capital must be paid up before registration and the remaining share capital shall be paid within 24 months following the registration. Full payment of share premium will also be regulated; when shares are subscribed via share premium, such share premium must be fully paid in during the subscription.

Owing Debt to the JSC

The shareholders cannot owe to the JSC except for the obligation to pay the share capital. However, this prohibition shall not apply where the debt is arisen from a transaction which falls within the company and the shareholder's scope of activity provided that such debt carries identical or similar terms applicable to comparable transactions.

The Prohibition of Board Members Owing to the JSC

The board members, their relatives up to a certain degree and some companies in which they are the shareholders are prohibited to owe to the JSC. In this essence, the possibility of the JSC to grant securities, assume obligations for such persons and/or to take over the debts of such persons is abolished.

Establishment of the Risk Committee

The NTCC stipulates that JSCs whose share certificates are traded on the stock exchange shall establish a risk committee. This committee shall identify potential factors that could endanger the existence, progress and continuation of the company and shall endeavor to take necessary precautions and ensure the risks are effectively managed.

Board of Directors

It is sufficient for the board of directors to consist of just one member. Irrespective of the total number, at least one member must reside in Turkey and must be a Turkish citizen.

A legal entity can also be a board member; however in this case, a real person must be designated to represent the legal entity. It should also be noted that it is not possible to place more than one real person on the board of directors on behalf of a single legal entity.

Board members are no longer required to be a shareholder in the JSC.

Representation Authority of the Board of Directors

The NTCC abolishes the rule restricting the rights and obligations of a JSC to within context of the field of activity stipulated in its articles of association (ultra vires); the board of directors may also execute transactions outside the scoped field of activity of the company.

Duties and Authority Delegation of the Board of Directors

The NTCC clearly dictates that certain duties and authority levels of the board of directors cannot be assigned and shall only be affected by the board of directors.

Financial Statements

The financial tables of a JSC are to be prepared in accordance with the financial reporting standards determined by the Turkish Accounting Standards Board. These standards will be amended to comply with International Financial Reporting Standards (IFRS).

JSC Website

Within the scope of the NTCC, companies are obliged to have a website online and to allocate a part of this website to publish certain issues, documents, financial statements and resolutions whether publicly traded or not.

Board of Directors in an Electronic Environment

The NTCC enables the board members to attend and to vote in meetings via transfer of image and voice according to the provisions of the articles of association of the company.

The provisions regarding the meeting and decision quorum of the board of directors shall also be applicable if the meetings of the board of directors are held in an electronic environment.

General Assembly in an Electronic Environment

The NTCC stipulates the rights of shareholders to attend, give proposals, declare opinions and vote at the general assembly of JSCs via electronic means; and sets out the obligation to apply such a system within those companies whose shares are floated on the stock exchange.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions