Limited liability company shareholders
In accordance with the principle of equal treatment specified in the Foreign Direct Investment Law No. 4875 of 2003, foreign investors may freely set up companies in Turkey.
The following question is from Jack:
“Dear Orhan, I live in Australia. I have a Turkish friend, and he is dealing with a flower marketing business in Turkey. He wants to establish a company with me. He has asked me to be the company partner. As far as I know, the type of company is a ‘limited company.’ I am wondering how I will be partnered in this company? How can this company be established? If I will be a partner, what are my responsibilities? Can I leave the company when I want? Thanks!”
Dear Jack, in accordance with the principle of equal treatment specified in the Foreign Direct Investment Law No. 4875 of 2003, foreign investors may freely set up companies in Turkey. In terms of both Turks and foreigners, limited companies are the most common form of companies in Turkey. So, you can set up a limited company in a few steps.
[HH] Establishment
A limited company can be established by a minimum of two real people or legal entities. The minimum amount of capital required is 5,000 Turkish Liras. Limited company partners are liable for the amount of capital that they pledge. By the way, limited companies cannot go public and their shares cannot be operated in the stock market.
In Turkey, the establishment procedure of a limited company is simplified. It is possible to establish a company even in a few working days. The establishment of a company consists of these steps:
• Signing of the agreement by all partners
• Authentication of signatures by a notary
• Preparation of the petition and form of company establishment
• Preparation of the following documents: If there is a foreign real person among the founders, a photocopy of his/her passport must be presented – either the actual passport or a notary-certified copy of the passport is needed. In the case of legal persons, the legal entity’s Commercial Activity Certificate must be prepared by a competent court or the chamber of commerce to which the company is registered, and must be approved by the related Turkish Consulate according to The Hague Conference on Private International Law (with an apostle stamp on it) and its notary-certified translation.
• The application can be filed for registration at the register office when submitting all the documents, an invoice that shows that the minimum amount of capital has been paid and a list of authorized signatures. After the registration, filing an application to the tax office is required.
• Registration shall be published in the Trade Registry Gazette (Ticari Sicil Gazetesi). After the registration, a company can start business operations.
[HH] Liability of shareholder(s)/partner(s)
Limited companies are capital companies, in which the shareholders/partners have limited liability based on their shareholding/partnership stake. In a limited company, a partner is liable up to the percentage of his/her partnership ratio in the total capital. However, the liabilities are not limited for public debts including to corporate tax, social security premiums, etc.
[HH] Company’s management
In limited companies, the company's partner is also a manager. Foreigners also can become directors of their limited company, but they should have a work permit to do so. The work permit requirement is a significant disadvantage for foreign partners.
[HH] Leaving the company
A limited company partner can leave the company at any time. However, other partner(s) must allow the other to leave. If not, the partners who want to leave should apply to the court. The court shall examine the claims and defense of parties and will appoint an officer to run the company during the termination process if needed. The process may take four months to one year, depending on the complexity of the transactions accomplished during the commercial life of the company.
[HH] Last advice
Forming a limited company is not difficult. However, especially for foreigners, company management and leaving will not be easy. For this reason, limited companies are established as a family company in generally. So, if you cannot participate in the company’s management and your partners are not very reliable, you should not partner in a limited company. Finally, before company partnership, you should get a legal consultation.
Hurriyet Daily News/22.01.2010
The following question is from Jack:
“Dear Orhan, I live in Australia. I have a Turkish friend, and he is dealing with a flower marketing business in Turkey. He wants to establish a company with me. He has asked me to be the company partner. As far as I know, the type of company is a ‘limited company.’ I am wondering how I will be partnered in this company? How can this company be established? If I will be a partner, what are my responsibilities? Can I leave the company when I want? Thanks!”
Dear Jack, in accordance with the principle of equal treatment specified in the Foreign Direct Investment Law No. 4875 of 2003, foreign investors may freely set up companies in Turkey. In terms of both Turks and foreigners, limited companies are the most common form of companies in Turkey. So, you can set up a limited company in a few steps.
[HH] Establishment
A limited company can be established by a minimum of two real people or legal entities. The minimum amount of capital required is 5,000 Turkish Liras. Limited company partners are liable for the amount of capital that they pledge. By the way, limited companies cannot go public and their shares cannot be operated in the stock market.
In Turkey, the establishment procedure of a limited company is simplified. It is possible to establish a company even in a few working days. The establishment of a company consists of these steps:
• Signing of the agreement by all partners
• Authentication of signatures by a notary
• Preparation of the petition and form of company establishment
• Preparation of the following documents: If there is a foreign real person among the founders, a photocopy of his/her passport must be presented – either the actual passport or a notary-certified copy of the passport is needed. In the case of legal persons, the legal entity’s Commercial Activity Certificate must be prepared by a competent court or the chamber of commerce to which the company is registered, and must be approved by the related Turkish Consulate according to The Hague Conference on Private International Law (with an apostle stamp on it) and its notary-certified translation.
• The application can be filed for registration at the register office when submitting all the documents, an invoice that shows that the minimum amount of capital has been paid and a list of authorized signatures. After the registration, filing an application to the tax office is required.
• Registration shall be published in the Trade Registry Gazette (Ticari Sicil Gazetesi). After the registration, a company can start business operations.
[HH] Liability of shareholder(s)/partner(s)
Limited companies are capital companies, in which the shareholders/partners have limited liability based on their shareholding/partnership stake. In a limited company, a partner is liable up to the percentage of his/her partnership ratio in the total capital. However, the liabilities are not limited for public debts including to corporate tax, social security premiums, etc.
[HH] Company’s management
In limited companies, the company's partner is also a manager. Foreigners also can become directors of their limited company, but they should have a work permit to do so. The work permit requirement is a significant disadvantage for foreign partners.
[HH] Leaving the company
A limited company partner can leave the company at any time. However, other partner(s) must allow the other to leave. If not, the partners who want to leave should apply to the court. The court shall examine the claims and defense of parties and will appoint an officer to run the company during the termination process if needed. The process may take four months to one year, depending on the complexity of the transactions accomplished during the commercial life of the company.
[HH] Last advice
Forming a limited company is not difficult. However, especially for foreigners, company management and leaving will not be easy. For this reason, limited companies are established as a family company in generally. So, if you cannot participate in the company’s management and your partners are not very reliable, you should not partner in a limited company. Finally, before company partnership, you should get a legal consultation.
Hurriyet Daily News/22.01.2010
