Introduction

The purpose of this essay is to compare and contrast the legal and practical differences between a JSC and an LLC without delving into too much detail about each type of business.

Shareholders’ Number

A JSC could be formed by at least five shareholders prior to July 2012, when the new Turkish Commercial Code took effect. An LLC required a minimum of two shareholders.

The minimum number of shareholders for both the JSC and the LLC has been reduced to one under the new commercial law. Therefore, under Turkish legislation, both a solitary shareholder JSC and a sole shareholder LLC are now viable.

A JSC, on the other hand, can have an infinite number of shareholders, whereas an LLC can only have 50.

Capital

A limited liability company (LLC) can only have a basic capital structure. As a result of such a capital structure, the share capital can only be increased by a general assembly decision.

In its articles of organization, a JSC, on the other hand, might select between the basic capital system and the registered capital system. As a result, the board of directors of a JSC with registered capital can increase its share capital (within the limitations of the registered capital) without having to go through the trouble of getting a resolution from the company’s general assembly.

An LLC’s minimum share capital is 10.000 TRY.

A JSC’s share capital cannot be less than 50.000 TRY under the basic capital system. A JSC that adopts the registered capital system must have a minimum share capital of 100.000 TRY.

Payments Extras

The shareholders of an LLC may be asked to make additional payments (other than the subscribed capital) if the firm is losing money or can’t continue operations without the additional funds, etc. if it is clearly mentioned in the articles of association.

Unless they willingly agree to make additional payments, the shareholders of a JSC can only be held liable for the capital they subscribed.

Transfer of a Share

A share transfer agreement must be signed and notarized in order to properly transfer the shares of an LLC. The transfer of shares must be approved by the general assembly, registered with the trade registry office, and recorded in the company’s shareholders’ ledger.

The process of transferring a JSC’s shares is significantly less difficult. The share transfer agreement does not need to be notarized, registered in the trade registry office or shareholders’ ledger, or approved by the general assembly. The shares can be transferred by a share transfer agreement between the seller and the purchaser, or by simply endorsing the share certificates to the purchaser, unless the articles of organization clearly prohibit it.

Exemption from Capital Gains Tax on Share Transfers

If a JSC shareholder retains his shares for more than two years, he will be excused from paying income tax on the profit he makes when he sells them.

The profit a shareholder of an LLC makes when he transfers the shares is not free from income tax, regardless of how long he owns the shares.

Stockholder Out

A vote of the general assembly (assuming that it is specifically permitted in the articles of association of the firm) or a court verdict for justified reasons can force an LLC’s stockholders out.

A JSC’s shareholders, on the other hand, cannot be pushed out in principle.

Government Debt Liability

An LLC’s shareholders are individually liable for public debts. The shareholders are responsible for the company’s tax obligations in proportion to their capital shares. Their duty for the LLC’s employees’ social security premium payments is for the entire debt, not in proportion to their share of the capital.

Shareholders of a JSC, on the other hand, are solely liable for the JSC’s legal and tax duties up to the amount of share capital they purchased.

Issuing Financial Securities

To raise funds, a JSC can issue both equity and debt securities. As a result, a JSC can become publicly traded.

A limited liability company (LLC) cannot raise funds by issuing securities. As a result, an LLC cannot issue either equity or debt securities. As a result, an LLC is unable to go public in any way.

Loans to Shareholders

The loans given to an LLC by its shareholders cannot be repaid unless all of the company’s other debts are paid off.

A JSC is not constrained by such restrictions, which means it can pay its shareholders’ debts at any moment without worrying about other creditors.

Management

Both types of businesses have general assemblies, where the company’s shareholders convene in regular and special sessions to make critical decisions.

An LLC’s director is in charge of the company’s day-to-day operations (s).

The board of directors is the managing body of a JSC, and it is responsible for the company’s commercial and everyday activities (which, in principle, can be composed of a single member).

Using the Services of a Legal Adviser

A JSC with a share capital of more above 250.000 TRY is required to appoint an in-house or outside legal counsel.

Regardless of the size of the LLC’s share capital, it is not required to hire a lawyer.