In line with the present legislation related to corporate law and the Turkish Commercial Code numbered 6762, dated July 9, 1956, published at the Official Gazette numbered 9353 (hereinafter shall be referred to as “the TCC”), joint stock company (hereinafter shall be referred to as “JSC”) and limited liability company (hereinafter shall be referred to as “LLC”) are the two most common company types.
You may find a chart below that designates the fundamental characteristics of a JSC and its differences from a LLC. We would like to remind that the mentioned explanations are for the present TCC.
1- Capital: JSC
§ Minimum of TRY 50,000.
§ 100% of foreign participation.
§ Whole of the capital shall previously be determined and undertaken.
§ Payments of the shareholder may be executed before or after a certain period of the incorporation.
§ Capital may be issued in cash or in kind.
1- Capital: LLC
§ Minimum of TRY5,000.
§ 100% of foreign participation.
§ Whole of the capital shall previously be determined and undertaken.
§ Payments of the shareholder may be executed before or after a certain period of the incorporation.
§ Capital may be issued in cash or in kind.
2- Duration of the Company: JSC
§ May be incorporated for an indefinite period.
2- Duration of the Company: LLC
§ Shall not be incorporated for an indefinite period. Shall only be incorporated for a period of 99 years.
3- Minimum and Maximum Shareholder Numbers: JSC
§ Min. 5 (shall be an individual or legal entity). There is no determination related to maximum shareholder number.
3- Minimum and Maximum Shareholder Numbers: LLC
§ Min. 2 (shall be an individual or legal entity). Max. 50.
4- Issuance of Stocks and Bonds: JSC
§ Stocks are issued per procuration of the shares.
§ Shares may be offered to public.
§ May issue bonds.
4- Issuance of Stocks and Bonds: LLC
§ Shall not issue stocks.
§ Shall not offer the shares to public.
§ Shall not issue bonds.
5- Transfer of Shares: JSC
§ Share transfer may be executed upon the agreement of both parties.
5- Transfer of Shares: LLC
§ Shares may be transferred upon a notarized agreement provided that such agreement is executed within the approval of ¾ of the shareholders that represent ¾ of the capital.
6- Representation of the Company and Statutory Auditors: JSC
§ Shall be represented by a Board of Directors formed of three members minimum.
§ Min. 1 – max. 5 statutory auditors shall be present.
6- Representation of the Company and Statutory Auditors: LLC
§ Shall be represented by directors. Unless otherwise is determined by the shareholders or designated in the Articles of Association of the company, shareholder are deemed to be the directors of the company.
§ In case the LLC has more than 20 shareholders, one auditor shall be present. There is no such obligation for LLC’s with less than 20 shareholders.
7- Field of Activity and General Assembly Meetings: JSC
§ May operate in every field.
§ It is statutory to convene a general assembly meeting once a year.
§ Extraordinary general assembly meetings may be convened at any time.
7- Field of Activity and General Assembly Meetings: LLC
§ Shall not operate in fields of banking and insurance and in other fields that are determined by specific laws.
§ Non-obligatory for LLC’s with less than 20 shareholders.
§ Resolutions may be settled with written voting of the shareholders.
In addition to above, all resolutions of the LLC’s with less than 20 shareholders shall be settled with written voting of the shareholders.
Additively, there are some problems with LLC’s incorporated with less than 4 shareholders in practice; problems may arise for share transfers that require the approval of ¾ of the shareholders that represent ¾ of the capital. In the event that the company is incorporated with only 2 shareholders, a situation that is impossible to be solved may occur in case the shareholders disagree on share transfers.
In comparison of JSC’s and LLC’s from a commercial view, incorporating a JSC may bring advantages along. In the event that financial institutions are in the position of creditors, they find the structure of a JSC more credible and influential. Besides, some specific tenders require companies incorporated in Joint Stock structure.
