Introduction
With Industry Istanbul’ s consultacy : Under Turkish law, a joint stock company (JSC)(1) is a corporation with a capital divided into shares and a debt responsibility restricted to its assets.
Under a trade name, a JSC can be formed by one or more real or legal persons with a certain amount of capital. There is no maximum limit on the number of shareholders in Turkish law.
A JSC can be owned entirely by foreigners under Turkish legislation. A power of attorney allows a foreigner who has never visited Turkey to become a shareholder in a Turkish JSC.
Capital
A privately-held JSC could only pick a basic capital system before July 2012, when the new Turkish Commercial Code went into effect. You can now choose between a basic capital system and a registered capital system.
A JSC’s share capital cannot be less than 50.000 TRY under the basic capital system.
(2) A firm that adopts the registered capital system must have a minimum share capital of 100.000 TRY. The book value per share can be as little as 0.01 TRY or as high as multiples of that.
Before registration, at least 25% of the nominal value of the shares subscribed in cash must be paid in cash, and the remaining share capital must be paid within 24 months of registration.
Cash contributions for the share capital must be put into a separate bank account that will be opened in the name of the newly formed company. The relevant trade registry office will get a bank letter confirming that the subscribed share capital has been put into an account. The corporation can withdraw the money placed after presenting the necessary establishing documents proving that it has legal personality. (3)
It is acceptable to make a contribution in kind.
Establishment of a Joint Stock Company (JSC) received approval.
In concept, under Turkish law, forming a JSC does not require approval from any authority. However, there are some businesses that require approval from the Ministry of Customs and Trade. These businesses are:
Banks, insurance companies, financial leasing firms, factoring firms, consumer financing and card services firms, asset management firms, holding firms, independent auditing firms, and so on.
Even in these cases, the Ministry of Customs and Trade will only be entitled to interfere if there is a violation of the commercial code’s necessary provisions. Aside from that, the commercial code specifically states that no authority is required to grant approval for the establishment or alteration of any JSC’s articles of association.
Shareholders
A JSC’s shareholders might be both legal and non-legal entities. Non-residents can become shareholders of a Turkish JSC without having to live in Turkey.
To establish and sustain a JSC, the earlier commercial code dictated that there must be at least 5 shareholders. A single shareholder JSC is now conceivable thanks to the revised business legislation (in effect since July 2012).
If the JSC is formed with only one shareholder or the number of shareholders is reduced to one later, the shareholder’s name, address, and citizenship details must be registered with the trade registry office and published in the trade registry gazette.
The general assembly is the JSC’s organ where the shareholders are represented. The general assembly meetings are where shareholder motions are passed. The general assembly can meet in either regular or extraordinary sessions. Ordinary meetings must take place at least once a year, within three months of the fiscal year’s end. Extraordinary meetings can be called by the board of directors or by shareholders owning at least 10% of the company’s stock. (4) The general assembly has the authority to alter the articles of incorporation, appoint and dismiss board members, approve financial statements, allocate profits, dissolve the company, and so on.
A simple majority of the share capital represented in the meeting constitutes a decision quorum on topics touching the company’s ordinary business. For big decisions such as mergers, demergers, capital increases or decreases, voluntary dissolution, and so on, the commercial code mandates larger decision quorums.
Members of the Board of Directors
A JSC’s board of directors is its governing body. A one-member board of directors is now permitted under the new Turkish Commercial Code.
Foreigners may be appointed to the board of directors.
(5) A person who is not a JSC shareholder can be appointed to the board of directors. Members of the board of directors can even be legal entities. However, in this instance, a real person must attend board meetings as the legal person’s representative.
Liability
With Industry Istanbul’ s consultacy :
Shareholders’ liability for the company’s obligations is limited to their participation in the JSC’s share capital. Furthermore, they have a direct obligation to the corporation, not to third parties.
Association Articles
The articles of association, which serve as the company’s constitution, must be prepared before a JSC may be formed. Before the trade registry office, all of the JSC’s shareholders (or their representatives by proxy) must sign several copies of the articles of association (unless the shareholders or their representatives are illiterate or handicapped or cannot speak Turkish in which case the AoA must be signed before a notary public).
The following must be included in the wording of the articles of association:
a) The founders’ names and surnames, addresses, and citizenship information, b) The company’s commercial name,
c) The company’s main area of activity and subject matter,
d) The company’s address,
e) The company’s duration,
f) The company’s capital, number of shares, nominal value of each share, and how the capital will be subscribed,
g) The members’ names and surnames.
In practice, draft articles of association documents are provided by trade registry agencies.
A JSC’s articles of association can be modified by a general assembly resolution.
The Procedure for Establishment
MERSS, Turkey’s Central Registration Recording System, handles trade registration transactions for all types of businesses.
The shareholders’ preferred commercial name for the JSC must be submitted via MERSS, and its approval will be taken in principle online. The business name must not be deceptive or offensive.
Once the articles of organization have been attested by the trade registry office or a notary public, the company must apply to the relevant tax authority for a prospective tax identity number. This possible tax identification number is required to create a bank account in order to deposit the Company’s share capital.
It is necessary to obtain a letter from the bank where the company’s subscribed share capital is deposited. The name of the company and its shareholders, as well as the amount each of them has deposited, should be included in this letter.
As a fee to the Turkish Competition Authority, 0.04 percent of the share capital must be placed in a public bank account.
If the company is one of the aforementioned sorts of companies, such as a bank, insurance company, or financial leasing company, clearance from the Ministry of Customs and Trade is also required.
Documents Required
With Industry Istanbul’ s consultacy :
The following documents(6) must be presented to the relevant trade registry office when the basic preparations have been completed:
a) A letter of application signed by the board of directors or those with power to represent the company. The request for registration must be included in the application letter, as well as information about the company’s name, share capital, address, and establishment date, as well as the name of the tax office where the company will be registered and a list of annexes.
a) Form of incorporation declaration The authorized persons must fill out three copies of this form and sign them. Four copies of the document must be filled out and signed if there is a foreign stakeholder.
Unless the founders sign the articles of association in front of trade registry authorities, c) Notarized copies of the articles of association(7)
d) The “Chamber Registration Declaration”(8), which the company’s founders must fill out and sign.
e) Notarized copies of foreign shareholders’ and board members’ passports and certificates of residence, as well as a special tax ID number provided to foreigners.
f) Notarized signature specimens(9) of those with power to represent the company unless they sign written statements in front of the trade registry officers,
g) Notarized acceptance letters attesting to the non-shareholder board of directors’ acceptance of their duties as members of the company’s board of directors.
h) A bank receipt for the payment of the Competition Authority fee, which is 0.04 percent of the company’s share capital.
I The bank letter, which includes the name of the company and its shareholders, as well as the total and individual amounts deposited (10)
j) Contracts between the corporation and its shareholders or other third parties (if any),
k) A letter from the Ministry of Customs and Trade approving your application (in case such approval is required because of the type of the company).
Completion
The JSC’s registration is notified in the Turkish Commercial Registry Gazette once the registration process is completed.
The JSC registration process usually takes a couple of weeks to complete.
(1) The Turkish phrase for a joint stock company is “Anonim sirket.” In Turkish, the abbreviated variant is “A.”.
(2) You can find the current EUR/TRY and USD/TRY exchange rates here and here, respectively.
(3) If the company does not establish legal personality within three months, the depositors have the option to withdraw their funds.
(4) For publicly traded JSCs, this percentage is 5%. In the articles of association, a lower ratio can be determined.
(5) If they want to stay in Turkey, they must apply for a work permit.
(6) Other documentation must be prepared in the event of a contribution in kind or in other circumstances. To avoid causing any confusion, we have left such data out of our paper. If you require information that is not included in this page, please contact one of our team members.
(7) For the notarization of the articles of association, certain notarial expenses are waived.
(8) This is the application for the company to be registered with the relevant chamber of commerce.
(8) These signature specimens must also feature the company’s name.
(10) It should be emphasized that without a special letter from the bank, trade registry offices will not accept bank receipts alone.
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