Establishing a Limited Liability Company in Turkey: What You Need to Know
Establishing a Limited Liability Company in Turkey: What You Need to Know
Introduction
In Turkey, limited liability companies are one of the most widely preferred business structures, especially for SMEs (Small and Medium-sized Enterprises) and family businesses. The flexible management structure, limited liability of shareholders and simpler incorporation and operation procedures compared to joint stock companies make limited liability companies ideal for many entrepreneurs. However, despite this popularity, its establishment is strictly bound by certain rules and procedures set by the Turkish Commercial Code (TCC).
In this article, we will discuss the process of establishing a limited liability company in Turkey, the necessary conditions, the steps to be followed and the important legal details to be considered in this process in an understandable language for our clients.
What is a Limited Liability Company and What are its Main Features?
A limited liability company is a capital company established by one or more real or legal persons under a trade name, with a certain capital and consisting of the sum of the shares of the capital.
Key Features:
Limited Liability: This is the most basic feature of a limited liability company. The partners are not liable for the debts of the company, but are only obliged to pay the capital shares they have subscribed. Their liability is limited to the capital they bring to the company.
Establishment with a Single Partner: A limited liability company can be established with a single partner. The upper limit for the number of partners is 50.
Management Flexibility: The management and representation of the company may be carried out by the shareholders themselves or by a professional manager or board of directors appointed from outside.
Transfer of Shares Subject to Form: Unlike joint stock companies, the transfer of shares in limited liability companies must be made through a transfer agreement to be issued by a notary public and this transfer must be approved by the general assembly and recorded in the share ledger.
Limited Liability Company Establishment Conditions and Preliminary Preparations
Before starting the establishment process, the following basic issues should be resolved.
1. Partners:
Natural or legal persons can be partners. A single-partner structure is possible.
2. Minimum Capital:
As of January 1, 2024, the mandatory minimum initial capital for limited liability companies has been increased to TRY 50,000. It is not mandatory to deposit this capital in a bank before registration. The payment of the entire capital can be completed within 24 months following the registration.
3. Company Title:
The trade name of the company must include the phrase "Limited Liability Company" and a phrase indicating the company's field of activity (e.g. "consultancy", "food", "textile"). The trade name must not be similar to another previously registered trade name in a way to cause confusion.
4. Field of Activity:
All subjects that the company will be engaged in must be clearly written in the company agreement. A limited liability company may be established for any economic purpose and subject that is not contrary to the law and morality.
5. Company Headquarters:
The company must have a legal headquarters address where notifications will be made and official records will be kept.
Limited Company Establishment Procedure: Step-by-Step Process
Step 1: Drafting the Articles of Association
The company agreement, which constitutes the legal basis of the establishment, is prepared online through MERSIS (Central Registry Registration System). The agreement must include the following minimum elements:
Trade name and headquarters of the company.
A business subject with its essential points specified and defined.
Nominal amount of the share capital, number of shares of the share capital, their nominal values.
Names, surnames, titles and citizenship of the directors.
The form of announcements to be made by the Company.
Step 2: Notarization of Documents and MERSIS Transactions
The contract prepared through MERSIS is signed by all partners and the signatures are notarized. A signature declaration is also issued under the title for the manager or managers who will represent the company. All these transactions are carried out with the request number received from MERSIS.
Step 3: Competition Authority Share Payment
The amount of four per ten thousand (0.04%) of the total capital shall be deposited through the cashier of the Trade Registry Office or into the bank account of the Competition Authority.
Step 4: Trade Registry Registration and Announcement
Together with documents such as MERSIS application, notarized contract, signature declarations of the directors, chamber registration declaration and Competition Authority payment receipt, a registration application is made to the Trade Registry Directorate where the company headquarters is located. Upon registration, the company becomes a legal entity and the registration decision is announced in the Turkish Trade Registry Gazette.
What to Do After Establishment
Although registration gives the company legal existence, additional steps are required to actually start operating:
Tax Office Registration and Tax Certificate: After registration, the tax office is notified and a tax certificate is obtained.
Notarization of Legal Books: Legal commercial books such as journal and general ledger are notarized.
Signature Circular: After registration, the company director must obtain a signature circular from a notary public under the company title.
SSI Transactions: If personnel will be employed in the company, workplace registration must be made at the SSI.
Conclusion
Establishing a limited liability company is a relatively fast and practical process when the right steps are followed and the necessary preliminary preparations are made. However, mistakes, especially on fundamental issues such as drafting the articles of association and determining the shareholding structure, may lead to disputes and legal problems between the partners in the future. Therefore, getting support from an experienced legal professional from the very beginning of the incorporation process is critical for you to start your business activities on a solid legal ground.
This article is for informational purposes only and does not constitute a legal opinion. Each case must be evaluated in its own particular circumstances. You are strongly advised to consult a lawyer for professional legal advice.