Under Turkish law, business structures can be set up as: 

  • capital companies, in the form of:
    • joint stock companies (JSCs) (similar to AGs);
    • limited liability companies (LLCs) (similar to GmbHs); and 
    • limited partnership companies with capital divided into shares; or 
  • sole proprietorship companies, in the form of collective or limited partnerships.

The most common types of business structures in Türkiye are JSCs and LLCs. There is no required minimum number of shareholders in both company types; thus, both of them can be established by a single shareholder by a foreigner or a Turkish citizen. The shareholder can be natural person or legal entity. In principle, the liability of shareholders in JSCs and LLCs is limited to the share capital committed by the shareholders. However, in case public receivables cannot be collected from an LLC, the shareholders can be held liable for such debt with their own assets in proportion to their shareholdings. 

In practice, JSCs are known for their flexibility; the ease with which shares can be transferred; and their ability to raise capital through public offerings. 

Meanwhile, LLCs offer the advantage of reflecting the parties’ commercial understanding. It is possible to include strict share transfer restrictions, drag-along rights, rights of first refusal and more in their articles of association, making them a preferred choice for smaller and medium-sized enterprises.

The capital requirements for different types of business structures in Türkiye vary depending on the legal entity.

The minimum capital requirement for a JSC is TRY 250,000. However, for non-public JSCs that opt for the registered capital system, the initial capital must be at least TRY 500,000. When establishing a JSC, a crucial requirement is that at least one-quarter of the share capital be paid before registration of the company. The remaining amount can be paid within 24 months of registration. The payment schedule can be specified in the articles of association or set by the board of directors.

LLCs also have a minimum share capital requirement of TRY 50,000. For LLCs, there is no payment requirement at the registration, and it is possible to pay the entire capital amount in cash within 24 months of registration. Similar to JSCs, the payment schedule for LLCs can be stipulated in the articles of association or decided on by the appointed managers.

Joint stock companies (JSCs) and limited liability companies (LLCs) must have two management bodies:

  • the general assembly of shareholders; and
  • the board of directors in JSCs and the board of managers in LLCs (in both company types, it can consist of one person). 

In essence, the general assembly of shareholders consists of company shareholders and may only decide upon matters that are listed under the Turkish Commercial Code. The general assemblies of both LLCs and JSCs are exclusively authorised to:

  • amend the articles of association;
  • appoint and dismiss auditors; 
  • approve financial statements and annual reports; 
  • declare dividends and profit shares; and 
  • dissolve the company. 

Non-delegable powers of the general assembly of shareholders in JSCs further include: 

  • the appointment, discharge and removal of members of the board of directors and determination of their financial rights and remuneration; and
  • the sale of a significant amount of company assets.

Similarly, the general assemblies of shareholders of LLCs are authorised to decide upon:

  • the appointment, discharge, removal and determination of financial rights of managers; 
  • applications to court for the expulsion of a shareholder; and
  • the approval of acquisitions of the company’s own shares. 

The board of directors in JSCs and the board of managers in LLCs are appointed by the general assembly of shareholders and are authorised to undertake the management and representation of the company. They are mainly responsible for the day-to-day management and strategic decision-making of the company. 

Liabilities of shareholders 

The shareholders of JSCs are liable to the company only with the capital that they have committed. Once the capital debt has been fulfilled, it is not possible to incur new and additional capital debts without the consent of the shareholders. 

In LLCs, on the other hand, the shareholders are directly liable for public receivables that cannot be collected from the company in whole or in part, or that are understood to be uncollectible, in proportion to their capital shares. 

Moreover, the Turkish Commercial Code imposes certain liabilities on the controlling shareholder of a group of companies. As a main principle, the controlling shareholder may not exercise its dominance in a way that causes loss to subsidiaries.

Shareholders in JSCs and LLCs may be subject to civil or criminal liability in very limited circumstances. Accordingly, in the case of a group of companies, the controlling shareholder may be held liable towards other shareholders and creditors with regard to losses that a subsidiary has incurred due to its decisions. The rules governing the liability of the controlling company are set out in Articles 202 and following of the Turkish Commercial Code. In such cases, the controlling company may not exercise its dominance in a way that causes losses to a subsidiary – in particular, by: 

  • reducing or transferring the profits of the subsidiary; or 

restricting its assets with rights in rem or in personam.