the company type for the investments of foreigners in Turkey
the below main similarities and differences between limited
liability companies ("LTD") and joint stock companies
("JS") which are the two common types of companies that
the investors mainly consider to use for their operations can be
i. Both JS and LTD companies can be established
with a single (or more) shareholder.
ii. The minimum capital of JS is TL 50.000, for
LTD it is TL 10.000. Please note that for JS and LTD, the 1/4th of
the capital should be paid before the registration while the
remaining 3/4th should be paid within 2 years as of the
registration of the company.
iii. JS and LTD companies have their separate
Articles of Associations regulating the management and shareholding
structure of the companies.
iv. The management authority of LTD is left to
manager/managers while its' directors (Board members) for JS
companies. Managers and directors can be foreigners and/or Turkish
nationals. At least one of the shareholders of the LTD should be
appointed as the manager of the company. No such requirement is
regulated for the directors of JS companies. Legal entities can be
appointed as the manager of LTD and the director of the JS in which
case a real person representative of such legal entity should be
registered with the Trade Registry as well. In such case the legal
entity itself shall be deemed liable for the manager/director
duties/responsibilities and the real person representative may not
be considered as the liable party on behalf of the legal entity
manager/director. In case the manager of an LTD/director of the JS
shall not reside in Turkey and shall enter into Turkey with valid
visas, no residence permit may required to be obtained for the
managers of LTDs/director of the JS. Likewise, in case the manager
of an LTD/director of the JS shall not be actively carrying
transactions on behalf of the LTD in Turkey and/or shall not be
under the payroll of the LTD/JS, then a work permit may not
necessarily be obtained for the manager of an LTD/director of the
v. Regarding the liability on public debts
which cannot be covered by the legal entities established in
Turkey, kindly note that as per article 35 of the Law On The
Procedure For The Collection Of Public Receivables numbered 6183
(the "Law"), the shareholders of limited liability
companies are directly responsible with their own assets for public
debts which cannot/may not be collected from the companyin proportion to their
capital share and shall be subject to enforcement process as
per the provisions of the Law. The sole condition for initiation of
the enforcement proceedings against the shareholders is that the
public debts "could not be fully or partially collected or
were determined to be uncollectible from the Company"
according to the first paragraph of Article 35 of Law. Regarding
the company debts, under art. 602 of the Turkish Commercial Code it
is clearly stated that the Company is solely liable for its'
debts and liabilities with its' assets. The shareholders are
solely liable to make their capital contributions. The Law does not
contain a provision which sets forth the liability for joint stock
company shareholders due to the public debts of the company.
However, if the shareholder will act as a BOD member, then
liability of such shareholder regarding public debts of the Company
may be triggered (please refer below our explanation regarding the
liability of representatives of JS companies on public debts).
As per art.35 of the Law, public debts which could not be fully
or partially collected or were determined to be uncollectible from
the Company may be collected from the representatives of such legal
entities with their personal assets. Such representatives may
recourse the amount paid to the respective authority from the
Company. As per art.35 of the Law, LTD company managers are held
liable from the public debts, which could not be fully or partially
collected or were determined to be uncollectible from the Company
with their personal assets. Such representatives may recourse the
amount paid to the respective authority from the Company.
A part from the Law, please also note that article 10 of Tax
Procedural Law No. 213 governs the collection of tax payments from
the legal representatives of both JS and LTD companies in the event
tax payments cannot be collected from the company. As per the said
article, if a legal entity is a tax payer, duties relating to being
a tax payer will be fulfilled by its legal
representative. In case the legal representative
does not fulfill his obligation and the tax and the
receivables cannot be totally or partially collected from the
assets of the tax payer, they will be collected from the assets of
the legal representative who did not fulfill his
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.
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