JOINT-STOCK COMPANY IN TURKEY

According to Article 329 of the Turkish Commercial Code No. 6102 (TCC), The joint-stock company is the company whose capital is specific, divided into shares, and is responsible for its debts only with its assets. Joint-stock companies can be established for all kinds of economic purposes and issues that are not legally prohibited.

Joint-stock companies are essential for corporate identity prestige. It creates a reputation in the perception of third parties. Besides, since banks have an advantage in company reviews, it is the preferred reason for entrepreneurs who need financing.

Joint-stock companies can be established with a capital of at least 50,000 Turkish Liras. Joint-stock companies which are established by acquiring the non-public and registered capital system can be established with a capital of at least 100,000 TL.  The capital in kind can also be added as capital. However, the expert who is appointed by the commercial court of the first instance where the company's headquarters is located must make a valuation. For joint-stock companies, 25% of the subscribed capital in cash for their companies must be paid before registered in the Trade Register and rest must be paid within 2 years after registration. Also, the amount to be paid in the capital (1/4) must be blocked in any bank.

What is a Registered Capital System? According to the provision of the company in the main contract, “registered capital” is the registered capital to the Trade Registry showing the amount of capital ceiling that the board of directors may issue a stock (capital increase) without complying with the capital raising provisions of the Turkish Commercial Code. The initial capital of partners moving to the registered capital system cannot be less than 100,000 TL and also cannot exceed five times the initial capital in the specified ceiling capital.

Companies that prefer registered capital during the establishment must have paid all their initial capital. In the registered capital system, the maximum duration of the increasing authority granted to the board of directors is five years and there is an opportunity for extension in five-year periods before the end of this period. In companies whose establishment and main contract change are not subject to the permission of the Ministry, the main contract changes related to increasing the capital ceiling registered are not subject to the permission of the Ministry of Customs and Trade.

Non-public joint-stock companies can be established with at least one and a maximum of 500 people. The number of partners in public companies is unlimited.

Joint-stock companies may issue registered and bearer shares. However, fully unpaid shares cannot be issued as a bearer share.

The transfer of shares in joint-stock companies can be carried out by a share transfer agreement. There is no obligation to make it from the notary. The transfer of shares in the joint-stock company takes place through processing the register in the share book after making share transfer agreement. Besides, if the bearer shares are issued, it can be transferred by turnover without the obligation of registration to the trade record. However, when the first-time bearer shares are issued, the decision of the board on the issuance of bearer shares is subject to the registration and announcement. An interim certificate is issued until the issuance of share certificate.

(When making the share transfers, notarized copy of the share book page can be obtained to create evidence in later processes.)

If the share transfer in joint-stock companies is made to a real person, it is not taxable after 2 years. When selling shares, the cost value is determined through increasing in proportion to an increasing rate in the wholesale price index. This rate must be at least 10%. When it is transferred to legal persons, it is exempt from value-added-tax (VAT) on the condition that there is an interim certificate or share certificate. 75 % of the profits from the sale of shares held for at least two years are exempt from tax and 25 % is taxable.

Joint-stock companies with capital exceeding 250,000 Turkish Liras must have lawyers. The cases of companies that exceed these limits must be made through lawyers. Companies that do not fulfil the obligation to have lawyers are punished with an administrative fine as equivalent to a two-month gross amount of minimum wage for those over 16 years of age who work in the industrial sector.

If there is no contradicting provision in the law or the original contract, the contract can be amended with the participation of the half of the shareholders and the absolute majority of the participants. (Amendments in article 429, item 2, of this law are exceptional.)

The decisions of the general assembly are subject to the registration in the trade registry directorate and the announcement.

Shareholders who are not board members in the joint-stock company, do not need to be social insurant.

The joint-stock company is managed and represented by the board of directors. The board of directors can be determined by the main contract, or appointed by the general assembly. The board can consist of one or more people. The board of directors does not need to be consist of shareholders. Board Members (authorized-unauthorized) have no personal responsibilities due to the debts and labour receivables arising from the company's commercial activity. However, they are responsible for all their personal assets due to public debt. 

The shareholders are solely responsible for the company's commercial debts to the company with the capital they have committed. This prevents the company's creditors from tracking the shareholders' assets in the joint-stock company. This is also same for public debts.

The situation is different in SSI (Social Security Institution) premium debts. According to the provision of the article 88 of the Social Insurance and General Health Insurance Act No. 5510, If the insurance premiums and other receivables of the institution are not paid for the periods specified in the Law without any justification, Senior executives or officials and legal representatives, including corporate board members (authorized-unauthorized) of legal entity employers are jointly and severally responsible for the institution together with their employers.

According to Article 553 of the Turkish Commercial Code: Due to the failure of the board to fulfil its responsibilities in the law or the original contract, board of directors are responsible for the damage to the company, shareholders and company creditors with all their assets.

In joint-stock companies, a representative from the Ministry of Customs and Trade is required to take part in decisions on the amendments in the main contract, mergers, divisions or such changes for increasing or reducing capital, moving to registered capital system, exiting the registered capital system or increasing ceiling in the registered system and changing the activity issue.

In joint-stock companies, partners can't owe the company, unless the partners pay off their due debts arising from the capital commitment and the company covers the losses of the past year with its reserve funds.

Advance dividends can be distributed to partners. What is an advance dividend? it is the distribution of the net profit obtained during temporary periods, before the profits of businesses at the end of the period, through offsetting the profit distributions at the end of the period.

It is not possible to remove shareholders in joint companies by court order. However, shareholders with unpaid capital will be deprived of the shares they have committed if they do not pay the capital with interest despite the call.

Daybook, ledger, inventory, share ledger, board’s decision book, general assembly meeting and negotiation book are mandatory books kept in joint-stock companies. Until the end of December, joint-stock companies which are not subject to e-books must certify opening of the daybook, inventory books, ledger, the board's decision book which will be used in the following year. The closing of the current year's daybook must be approved until the end of the following June.

Note: Taxpayers (with turnover 5,000,000 TL in 2018) who are required to issue e-invoices must be included in the ledger system. Therefore, taxpayers who are included in the e-invoice system do not need to certify the opening and closing of the daybook, inventory book and ledger.

The joint-stock company is subject to 22% corporate tax.

Copyright © 2022 | Imporium | All Rights Reserved.| Design By Cogen®Software