Turkey: Company Law In Turkey

Last Updated: 20 March 1997

Certain types of legal entities are classified in the Turkish Commercial Code (the "TCC"), as business associations (ticaret sirketleri) . They are (a) General Partnership (kollektif sirket); (b) Limited Partnership (komandit sirket); (c) Limited Partnership in which the Capital is Divided into Shares (sermayesi paylara bolunmup komandit sirket); (d) Limited Liability Company (Limited sirket) and (e) Joint Stock Company (Anonim sirket).

These associations acquire separate legal personality upon registration in the Trade Registry where the head quarter of the association is located.

The Joint Stock Company (hereinafter referred to as "JSC"), being the most commonly used form of business associations shall be the first subject of consideration.



A JSC is the business association where the liabilities of the shareholders are limited to their contribution to share capital and where the capital is divided in shares. JSCs may be established by way of immediate formation under the provisions of the TCC or the shares may be offered to the public by the founders pursuant to the of Capital Market regulations. If there is a foreign founding shareholder, the provisions of Law Concerning the Encouragement of Foreign Capital shall apply.


The following requirements should be accomplished for the establishment:

  • A Turkish JSC should have at least five founding shareholders and the share capital can not be less than 5 billion Turkish Liras. In cases where there are foreign founding shareholders, each foreign shareholder should subscribe and pay to the JSC at least US$ 50.000 or its equivalent in another foreign currency. Such payment should be realised pursuant to the permission of the General Directorate of Foreign Investment which is a department of the Undersecretariat of Treasury ("GDFI").
  • If the investment is eligible for an "Incentive Certificate", such certificate may be obtained together with the requisite permit from the GDFI.
  • The Articles of Association of the Company should be prepared in written form, signed by all the founders or their respective authorised representatives and notarised.
  • Permission from the Ministry of Industry and Commerce
  • After obtaining a permit from the municipality where the Headquarter of the Company shall be located, the Company shall be registered with the Trade Registry at the place of the head office of the Company and duly announced in the Trade Registry Gazette of Turkey. Upon registration, the Company will gain its legal-entity.

Following the registration and publication, the Company will then be registered with the Chamber of Commerce or the Chamber of Industry , the books of the Company will be certified by a Notary Public; and the Company will be registered with the tax office. The establishment of the Company should be notified to the Ministry of Industry and Commerce , and to the GDFI.

Share certificates will be issued and delivered to the shareholders only after the completion of all the formalities relating to the formation of the Company.


I- General Assembly of Shareholders:

The General Assembly is the organ with the ultimate control of a JSC. The General Assembly of the Company must meet at least once a year within the first three months of the fiscal year upon invitation of the Board of Directors or the Auditors. The General Assembly is vested with the powers that are highly important for the Company including among many others; the amendment of the articles of association, election and removal of the members of the Board of Directors and the auditors, increase and decrease of capital, issuing bonds and resolving on the distribution of net profit.

II- Board of Directors:

The Board of Directors is the executive organ responsible for the day-to-day business, and representation of the Company. Unless within the realm of the General Assembly, all decisions related to the administration of the company are taken and implemented by the Board of Directors (the "Board"). The Board is composed of at least three directors elected by the General Assembly. The Board is also responsible for designating the Officers of the Company, and for exercising control and supervision over such Officers.

Under Turkish Law, members of the Board and managers of a Company also have personal liabilities for Corporate acts in the following cases where:

(1) the payments made by shareholders as purchase price of the shares are not exact;

(2) the dividends distributed and paid are fictitious;

(3) the statutory books of the Company are deficient, irregular or non-existent;

(4) the resolutions of the General Meeting are not executed without any acceptable reason;

(5) the other duties given to the Board by the TCC or the Articles of Association are not fulfilled intentionally or negligently.

III- Auditors:

A JSC may have at least one but no more than five auditors to be elected by the General Assembly. The main responsibility of the auditors is to verify that, the balance sheet and profit and loss account are in compliance with the books of the Company, that these books are properly kept, and that the legal provisions concerning valuation are complied with.


  • The representatives of the Company are authorised by the Board of Directors. They shall be entitled to execute all business within the scope of the objects (intra vires) of the Company.
  • In the absence of any clause to the contrary in the articles of association, the signatures of the two representatives authorised by the relevant board resolution to represent the Company are sufficient for the validity of documents executed on behalf of the Company.
  • The limitations of the power of representation are not effective as regards bona fide third persons.
  • An ultra vires transaction, although executed by the authorised signatures of a corporation, might not be binding for the Company.


(i) Administrative Rights:

Shareholders possess a wide range of administrative rights under the TCC.

  • The right to vote,
  • The right to obtain information about the business of the Company,
  • The right to file complaints with the Auditors,
  • The right to institute legal action against Directors and/or Auditors,
  • The right to institute legal action for the cancellation of the General Assembly resolutions.

(ii) Monetary Rights:

Shareholder possesses a wide range of monetary rights.

  • Right to dividends: Every shareholder is entitled to participate to the net profits set aside for distribution to shareholders.
  • To exercise pre-emptive rights: When capital is increased, shareholders are entitled to a number of new shares in the capital of the company.
  • The right of having proceeds of liquidation after the payment of any debts.
  • To receive payments of interest, if provided in the Articles of Association during the period preceding the "full activity".

(iii) Privileged Shares Authorised Under Turkish Law

In matters such as dividends, or the distribution of assets on the liquidation of the company, or "other privileges," it is possible for the investor to create privileged shares.

(iv) Vested Property Rights of Shareholders

Those rights belonging to shareholders which are not subject to the resolutions of the General Meeting or of the Board of Directors, are considered "vested" property rights. These rights include:

  • being a member;
  • voting;
  • bringing a law-suit for cancellation;
  • receiving dividend;
  • participation in the proceeds of the liquidation No alteration may be made in the vested rights of individual shareholders without their consent.

(v) Minority rights

Minority rights have been granted to shareholders or a shareholder owning one tenth of the corporate capital.

  • To postpone deliberations of the ordinary General Assembly of Shareholders related to the approval of the balance sheet
  • To institute actions for damages caused to the Corporation by Directors and/or Auditors on behalf of the Corporation
  • To refuse the release of Founders, Directors and Auditors in connection with the liabilities incurred.
  • To appoint an ad hoc Auditor
  • To complain to the Auditors
  • To call the General Assembly for an extraordinary meeting.
  • To add an item to the agenda of the General Assembly meeting


The company is liable for its debts to the extent of its assets. The liability of shareholders is towards the Company and limited with the shares they have subscribed.

Next Issue: Book Keeping Requirements; Distribution of Dividend; Dissolution and Liquidation of the Company

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.

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 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
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

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