Due to the recent amendments in the Turkish Commercial Code and
the equity principle between domestic and foreign investors, the
number of established local and international companies has been
increasing in recent years in Turkey. As a conclusion, the question
which company type shall be established comes to the fore
frequently. Before the clarification of differences between these
company types, it is important to provide information regarding the
legal amendments in Turkish company law.
Reforms in company law with the New Turkish Commercial
An investor shall determine before starting a project in Turkey
which company type may be appropriate for his/her investment. Joint
stock companies and limited liability companies have been the most
preferred company types by investors. According to the statistics,
more than 80 % of established companies in Turkey are limited
As mentioned above, the number of company establishments in
Turkey have increased in last years. Especially the amendments in
company law with the New Turkish Commercial Code and it's
harmonization with EU Laws play an essential role in increase of
number of company establishments in Turkey.
An important reform which has been brought with the new Turkish
Commercial Code is that a limited liability company and a joint
stock company may be established by one person. Single-shareholder
company, defined as a company with one shareholder, which has been
existing in many other jurisdictions for a long time, plays an
essential role especially for foreign investors that it is not
required to find a second shareholder in Turkey.
The simplified and accelerated incorporation due to online
company establishment system and minimized bureaucracy, and the
possibility of online general meetings are other amendments which
may be regarded as essential law reforms which affect the number of
company establishments in Turkey in a positive way.
Online company establishment and online general meeting
As mentioned above, companies shall use the online establishment
and they may benefit from online general meeting options within the
frame of the new system in company law. The online company
establishment system, which does not depend on the type of the
company, provides transparency and authenticity for companies along
with reduction of bureaucracy.
The online general meeting is another system which has been
enabled by the New Turkish Commercial Code. Accordingly, companies
using this system may conduct their general meetings without
difficulties in an online platform. The conditions of this system
and for which companies it is required and for which companies not,
has been regulated. Accordingly, a company may or shall use this
system depending on the conditions which have been regulated by the
Which company type may be advantageous?
Even if joint stock companies and limited liability companies
have been regulated as capital companies with a limited liability,
the both company types differ from each other in many aspects such
as their capital amounts, liability of shareholders and directors
for tax debts social security premiums. For instance, a limited
liability company is not able to issue and offer its shares to
public whereas a joint stock company has this possibility.
Apart from the advantages and disadvantages, the type of the
company depends on many factors such as the sector and amount of
the investment, costs of company establishment which the investor
intends to pay and institutionalization purposes. There are several
sectors such as banking and insurance, in which the establishment
of a joint stock company is required. Moreover, a joint stock
company is also appropriate for corporate governance.
In conclusion, the law reforms with the New Turkish Commercial
Code and the new system of online general meetings and company
establishment affect company establishment in Turkey in a positive
way. Even if there may be differences, advantages and disadvantages
of both company types, it is important to determine the correct
company type in accordance with all facts such as capital,
investment purposes and the sector in which the company will
operate before taking the decision about the company type.
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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