Why do investors start their companies in Turkey?
Types of companies in Turkey, Many foreign investors head to Turkey to do their business because of the commercial importance of Turkey which offers many advantages such as low taxes and a relatively cheap real estate market while granting Turkish citizenship to foreign investors under certain simple conditions.
Foreign investors in Turkey share the same rights as any local citizen in terms of liabilities and the country encourages and protects those investors according to law.
What are the types of companies in Turkey?
types of companies in Turkey are divided into two capital stock companies and commercial companies. Joint-stock companies, limited liability companies, and partnerships limited by shares are called capital stock companies.
- Joint-stock companies
Joint stock companies are companies with fixed capital divided into shares, whose liability for debts is limited to their assets.
Shareholders are liable to the company only for the capital shares they contribute. It is also preferred by many investors who want to establish a large company in Turkey.
The minimum capital is 50,000 TL, and for the JSC accepting the registered system, the capital can be at least 100,000 TL.
At least one-quarter of the registered capital must be paid in cash before registration, and the remaining amount must be paid within 24 months after registration.
This is the only type of company whose shares are offered to the public and also traded on the stock exchange.
Joint-stock companies must have two bodies authorized to represent the company.
1- The General Assembly: a body in which all shareholders are usually represented and which has the power to make important decisions for the company, such as amendments to the Articles of Association, the election of members of the Board of Directors, the election of the auditor, liquidation of the company, etc.
2- The Board of Directors: a body essentially responsible for the management and representation of the company. It is possible that the Board of Directors consists of a single member. There is no requirement that the members must be Turkish citizens or residents of Turkey.
Conditions for both foreign and local investors to start this type of company are :
1- Minimum capital amount: joint stock companies are established with a fixed capital of TRY 50,000 unless special laws provide otherwise.
In addition, at least 25% of the shares must be paid up in cash into a bank account opened in the name of the company before its registration.
2- The number of shareholders: for joint stock companies, there must be at least one shareholder. There is no limit to the maximum number of shareholders; however, if it exceeds 250, the company is subject to the Capital Markets Act.
- Limited liability companies
A limited liability company is a company with a certain capital divided into shares and liable for debts only with its assets.
The limited liability company is most suitable for small and medium-sized enterprises.
The partners of a limited liability company are not liable for debts, but only have to pay in the capital shares they have contributed.
The capital of the limited liability company is at least TL 10,000 and must be fully paid up in cash within 24 months of the company’s registration.
The advantages of limited liability companies in Turkey are also that they can be used for various activities.
Among other things, they can be established as holding companies and are thus an excellent solution for tax optimization.
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The limited liability company has two organs:
1- The General Assembly:
It is the only authorized body composed of the shareholders and decides on matters such as the amendment of the Articles of Association, the election of the director/auditor, and the dissolution of the company.
The managing and representative body of a limited liability company is its director. A director with one member is allowed.
A person who is a shareholder of the limited liability company must be appointed as a director. Foreigners may be appointed as directors.
- Limited partnership
There are two types of limited partnerships, namely the simple limited partnership and the limited partnership in which the capital is divided into shares.
The simple limited partnership is a private partnership, while the limited partnership with divided capital is a corporation.
This type of partnership can be established by at least two persons, one of whom is an active partner (unlimited liable) and the other a silent partner (limited liable).
Creditors who cannot cover their claims from the company’s assets can turn to active partners. Active partners manage the company.
The responsibility of dormant partners is limited by the amount of capital they have contributed or committed. Silent partners cannot manage the company.
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- Cooperative company
This type of company is not a private or a capital company, now we are talking about commerce companies that need 7 business partners to be established with a partnership share of 100 TL.
The board of directors of this company must consist of four Turkish citizens who meet other requirements specified in the law.
One or more auditors shall be elected by the General Assembly for at least one year as the supervisory body of the Cooperative Company.
The auditors must meet the requirements to be members of the Board of Directors.
All shareholders, except those who have not been shareholders for three months prior to the general assembly, may participate in the general assembly of the cooperative.
This requirement is not necessary for building cooperatives.
- Collective company
The board of directors of this company must be composed of four Turkish citizens who meet other requirements established by law.
It is mandatory that this type of company is established by only one real person, and the maximum number of shareholders is 2, with no capital required.
The shareholders of the Collective Company have unlimited liability to the creditors of the company. Each shareholder has the right and duty to manage the company alone.
However, the management may be delegated to one, several, or all of the shareholders, either by the association or by the majority of the shareholders.