Turkey’s dynamic business environment offers numerous opportunities for entrepreneurs and investors looking to establish a presence in this strategic location bridging Europe and Asia. Understanding the various company types available is crucial for making informed decisions about your business structure.
As experienced legal professionals at Akkas & Associates Law Firm, we’ve guided countless clients through the complexities of Turkish corporate law since 1992.
Table of Contents
- Overview of Company Types in Turkey
- 1. Joint Stock Company (Anonim Şirket – A.Ş.)
- 2. Limited Company (Limited Şirket – Ltd. Şti.)
- 3. Branch Office (Şube)
- 4. Liaison Office (İrtibat Bürosu)
- 5. Collective Company (Kollektif Şirket)
- 6. Commandite Company (Komandit Şirket)
- 7. Cooperative Company (Kooperatif)
- Choosing the Right Structure for Your Turkish Business
- Frequently Asked Questions (FAQs)
- Reach us for Company Types in Turkey
The Turkish Commercial Code (TCC) outlines five primary company structures. Each offers distinct advantages and disadvantages regarding liability, capital requirements, and management. Choosing the right one is crucial for your venture’s success and legal compliance.
Overview of Company Types in Turkey
Turkey’s dynamic economy presents lucrative business opportunities, attracting entrepreneurs and investors worldwide. Understanding the legal options for company structures in Turkey is pivotal for success. At Akkas & Associates Law Firm, Istanbul’s premier full-service legal provider since 1992, we assist clients in navigating these choices efficiently and compliantly.
According to the Turkish Commercial Code No. 6102 and Cooperatives Law No. 1163, five main types of companies operate in Turkey:
| Company Type | Liability | Capital Type | Commonality | Description |
|---|---|---|---|---|
| Joint Stock Company (A.Ş.) | Limited to capital committed | Capital divided into shares | 13% of companies | Suited for larger enterprises, can issue shares publicly. |
| Limited Liability Company (Ltd. Şti.) | Limited to capital committed | Capital divided into shares | 82% of companies | Most popular for SMEs, flexible and simpler to manage. |
| Collective Company | Unlimited, joint liability | No capital division | ~1% | Partners have unlimited liability, less common. |
| Limited Partnership | Mixed liability; some unlimited | Capital divided | ~1% | General partners have unlimited liability; limited partners only liable to capital. |
| Cooperative | Limited liability by members | Cooperative shares | 4% | Member-owned, oriented toward mutual benefits. |
1. Joint Stock Company (Anonim Şirket – A.Ş.)
The Joint Stock Company (A.Ş.) is a highly preferred structure for large-scale investments and businesses aiming for public offerings or significant capital raising. Its capital is divided into shares, and shareholders’ liability is limited to their committed capital. This provides a crucial shield for personal assets.
An A.Ş. requires a minimum share capital of TRY 250,000. At least 25% of the nominal value of cash shares must be paid before registration, with the remainder payable within 24 months. This structure is ideal for attracting a broad range of investors.
2. Limited Company (Limited Şirket – Ltd. Şti.)
The Limited Liability Company (Ltd. Şti.) is the most common company type in Turkey, particularly favored by small and medium-sized enterprises (SMEs). It offers a balance of flexibility and legal protection. Similar to the A.Ş., the liability of shareholders is limited to their capital contribution.
An Ltd. Şti. can be established by one or more real or legal persons, with a maximum of 50 shareholders. The minimum share capital required is TRY 50,000. This structure is simpler to establish and manage than an A.Ş., making it attractive for many businesses.
3. Branch Office (Şube)
A Branch Office in Turkey is an extension of a foreign parent company that operates locally but does not have a separate legal personality from its parent company. This means the branch can conduct commercial activities within the scope defined by the parent company’s Articles of Association but legally remains part of the parent entity
While there’s no explicit minimum capital requirement, a branch office must demonstrate that the parent company has allocated sufficient capital for its operations. This structure is ideal for foreign companies looking to directly engage in commercial activities in Turkey without forming a completely new legal entity.
4. Liaison Office (İrtibat Bürosu)
A Liaison Office (also known as a Representative Office) is established by foreign companies primarily for non-commercial activities. It cannot engage in any revenue-generating or commercial operations. Its main purpose is to conduct market research, establish business connections, gather information, and promote the parent company’s products or services.
Liaison offices are not subject to corporate income tax in Turkey as they do not generate profit. They are simpler to establish and have fewer regulatory obligations compared to other company types. An initial permit for a liaison office is usually granted for three years, with possibilities for extension.
This option is suitable for foreign companies that want to explore the Turkish market or maintain a representative presence without committing to full commercial operations.
5. Collective Company (Kollektif Şirket)
A Collective Company is a partnership established to operate a commercial enterprise under a trade name. All partners have unlimited liability for the company’s debts and obligations, meaning their personal assets are not protected. This structure is typically chosen for smaller, more intimate ventures, often among family members or close associates.
There is no minimum capital requirement for a Collective Company. All partners must be real persons. While offering simplicity, the unlimited liability aspect makes it a less common choice for foreign investors or those seeking significant risk mitigation.
6. Commandite Company (Komandit Şirket)
The Commandite Company is a hybrid structure featuring two types of partners: general partners (komandite) and limited partners (komanditer). General partners have unlimited liability for the company’s debts and are typically involved in management. Limited partners, on the other hand, have their liability limited to their capital contribution and generally do not participate in management.
This structure allows for a combination of active management with limited investment. There is no minimum capital requirement. It’s suitable for ventures where some individuals wish to contribute capital without bearing full personal liability.
7. Cooperative Company (Kooperatif)
Cooperative Companies are legal entities formed by individuals or legal entities voluntarily joining together to collectively address their economic, social, or cultural needs. They operate on principles of democratic decision-making, where each member typically has one vote regardless of their investment.
Cooperatives are regulated by the Turkish Cooperative Law. While the liability of members is generally limited to their capital contributions, the focus is on mutual benefit rather than profit maximization. They are prevalent in sectors like agriculture, housing, and credit.
Choosing the Right Structure for Your Turkish Business
Selecting the appropriate company type is a pivotal decision. It impacts your liability, administrative burden, and ability to raise capital.
Foreign investors often gravitate towards Limited Liability Companies (Ltd. Şti.) and Joint Stock Companies (A.Ş.) due to their limited liability protection and clear regulatory frameworks. For a detailed comparison and personalized advice, explore our services on Turkish Company Formation.
Understanding the nuances of the Turkish Commercial Code is essential for seamless establishment and operation. For instance, processes related to Company Registration in Turkey vary significantly depending on the chosen structure. Proper legal guidance ensures compliance and minimizes potential pitfalls.
Furthermore, consider long-term goals. If your vision includes significant growth, public listing, or large-scale investment, an A.Ş. might be more suitable despite its higher initial capital and administrative requirements.
For smaller, more flexible operations, an Ltd. Şti. often proves to be the most efficient choice. Discover more about our expertise in Turkish Corporate Law.
Frequently Asked Questions (FAQs)
Q1: Can a foreigner wholly own a company in Turkey? A1: Yes, foreign nationals can own 100% of the shares in most Turkish company types, particularly Limited Liability Companies (Ltd. Şti.) and Joint Stock Companies (A.Ş.), without requiring a Turkish partner.
Q2: What is the minimum capital requirement for an Ltd. Şti. in Turkey? A2: The minimum share capital required for a Limited Liability Company (Ltd. Şti.) in Turkey is currently TRY 50,000.
Q3: How long does it typically take to establish a company in Turkey? A3: The company formation process in Turkey generally takes between 7 to 14 working days, provided all necessary documents are prepared and submitted correctly.
Q4: Do I need a physical office address to establish a company in Turkey? A4: Yes, Turkish law requires a company to have a registered address. This can be a physical office or, in some cases, a legally compliant virtual office.
Q5: What are the key differences in liability between an A.Ş. and an Ltd. Şti.? A5: In both A.Ş. (Joint Stock Company) and Ltd. Şti. (Limited Liability Company), shareholders’ liability is limited to their capital contribution, protecting their personal assets. The main distinctions lie in capital requirements, governance structure, and suitability for public offerings.
Q6: Are there any specific sectors where certain company types are mandatory? A6: Yes, certain regulated sectors such as banking, insurance, and financial services often mandate the establishment of a Joint Stock Company (A.Ş.) due to their higher capital requirements and stricter regulatory oversight.
Reach us for Company Types in Turkey
Understanding the optimal company structure for your specific business objectives in Turkey is critical. Akkas & Associates Law Firm, with its profound expertise in Turkish commercial law, is ready to assist you.
Whether you’re considering a Limited Liability Company, a Joint Stock Company, or any other entity, our English-speaking attorneys provide unparalleled legal guidance for company formation, company registration, and ongoing corporate compliance in Turkey. Do not hesitate to contact Akkas & Associates Law Firm for comprehensive legal advice tailored to your needs.
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