In General
There are two kinds of limited liability companies in Turkey. There are certain similarities and differences between these two forms, namely Anonim Sirket (“AS”) and Limited Sirket (“LS”).
Similarities and differences are as follows;
Both AS and LS are actually limited liability companies where the liability of shareholders of both the AS and the LS are limited to their respective capital commitment in the company.
Both AS and LS can be established by sole shareholder.
Under the current Turkish Commercial Code numbered 6102 (the “TCC”), minimum capital required for LS is 10,000.00 Turkish Liras (approximately €4,249.- EUR as of 18.01.2013) and a minimum capital of 50,000.00 Turkish Liras (approximately €21,250.- EUR as of 18.01.2013) is required for the incorporation of an AS. However, for the AS companies which accepted the registered capital system, it is a requirement to have a minimum capital of 100,000.00 Turkish Liras.
An AS is managed by its board of directors. It is possible to have a single person within the board of directors. An LS does not have board of directors but is managed instead by its general manager and shareholders. All authorities of the shareholders relating to the management of LS can be granted to a general manager or one of the shareholders.
Call for an assembly, general assembly without any calls, minutes, right to call and to make proposal of the minority, agendum, unauthorized attendance subjects which are held under articles relating to AS under TCC, shall also be applied to an LS in comparison when required.
Companies pre-defined by the Councils of Ministers shall be subject to an independent external auditing. A draft has been announced but yet not entered into force. Financial data included in the annual reports of executive organs shall be subject to auditing for the abovementioned companies as well to state if they are in parallel within the overseen financial statements. On the other hand, the board of directors’ members of an AS is empowered to review and audit the accounts, transactions, commercial books and such of the company.
It is significant to note that LS shareholders, unlike AS shareholders, may be personally liable for amounts owed by the LS to government authorities for taxes, duties and charges if the company cannot make the required payments. Therefore, the liability of the shareholders of LS, in this respect, is not limited to their own capital contribution in the company. However, in an AS, the legal representatives of the company may be liable for the non paid aforementioned public receivables.
Any transfer of shares in LS must be approved by shareholders representing the simple majority of the company and the share transfer document must be notarized and registered with the Trade Registry Office and published in the Turkish Trade Registry Gazette. A share transfer in AS does not need to be in compliance with aforementioned requirements. However, in an AS, the board of directors may object the share transfer in certain circumstances designated in TCC.
At this point, it should also be noted that AS is recommended where shareholders with potentially conflicting interests come together, such as in a joint venture, sinceWe are a full service leading Turkish law firm offering an international approach. We take pride on our work, we love law and we fully understand our clients compelling needs.company formation in turkey