General Comparison of LLCs and JSCs
Under Turkish law, most preferred corporate types by investors are limited liability companies (“LLC”) and joint stock companies (“JSC”). This memorandum aims to provide general information regarding Turkish LLCs and JSCs by comparing main features of the mentioned company types. More information on specific points requires further analyses.
- Can be established with one shareholder. Shareholder number cannot exceed 50.
- Can be established with a minimum capital amount of TL 10,000.
- The share capital of the company can be changed with 2/3 positive votes of the shareholders.
- LLC cannot have registered share capital. For capital increase/decrease a shareholders decision is required.
- LLCs are managed by shareholders assembly and manager/board of managers. At least one of the shareholders of the LLC must be appointed as the manager of the company unless contrary is regulated under the articles of association of the company.
- Shares can be transferred with a share transfer agreement executed before a notary public.
- LLCs cannot go public.
- JSCs cannot issue bonds.
- Shareholders are responsible from public debts (such as tax, social security debts etc.) with their own assets in proportion to their capital share.
- Gains made out of share transfers are subject to income tax.
- No requirement to have a ministry representative present in general assembly meetings.
- No requirement to obtain legal consultancy from an attorney at law.
- LLCs can agree on exclusion of a shareholder from the company with a general assembly decision to that end. The company is entitled to apply to the authorized court to exclude one of the shareholders based on just cause. Each shareholder is entitled to apply to the court for their own exclusion from the company provided that there is just cause.
- Shareholders of a LLC are entitled to request termination of the company.
- The managers of a LLC are personally liable for the public debts of the company.
- Can be established with one shareholder. No limitation on shareholder number.
- Can be established with a minimum capital amount of TL 50,000.
- Articles of association of the company can be amended with the majority votes of the shareholders.
- Whether public or not, JSCs can have registered share capital. Provided that the capital increase is within the limits of the registered share capital, the board of directors is entitled to increase the share with a decision taken to that end.
- JSCs are managed by general assembly and board of directors. Directors of JSCs are not required to be shareholders in the company.
- No legal requirement to execute share transfer agreement before a notary public.
- JSCs can go public.
- JSCs are entitled to issue bonds.
- Shareholders are not responsible from public debts.
- Gains made out of share transfers are not subject to income tax provided that the transfer is made two years after such shares are acquired.
- A ministry representative has to be present in specific general assembly meetings such as capital increase, decrease, merger, change of type etc.
- JSCs which have a capital amount of 250,000 TL or more are required to obtain legal consultancy from an attorney at law.
- Rights regarding exclusion of shareholders from the company are not granted to the JSC or the shareholders.
- No such right is granted to shareholders of a JSC.
- The company itself is liable for public debts and not the managers or shareholders.