Types of Companies in Türkiye

Starting a Business in Turkey : Types of Companies

Types of companies in Türkiye vary depending on the foreign and domestic investors’ business needs and goals. The most common types include:

1.Limited Liability Company (Ltd. Şti.)

 Overview: The Limited Liability Company (Ltd. Şti.) is the most popular type of company for small and mediumsized businesses. It requires a minimum of one shareholder, and the liability of shareholders is limited to their capital contribution.

Capital Requirement: The minimum capital requirement is TL 50,000 (roughly 1.300 USD), which can be paid in cash or in kind (assets).

Key Features:

• Suitable for small to medium businesses.
• Partners are not personally liable for the company’s debts beyond their share of the capital.
• Requires at least one partner as a manager.

2.Joint Stock Company (A.Ş.)

Overview: The JointStock Company (Anonim Şirket, or A.Ş.) is typically used for larger businesses or companies that wish to raise capital by issuing shares. This structure allows for more complex corporate governance.

Capital Requirement: The minimum capital requirement is TL 250,000 (approximately 6,600 USD).

 Key Features:

• Suitable for larger businesses or those seeking to go public.
• Shareholders are also only liable up to their contribution to the capital.
• Can issue shares to the public, making it suitable for businesses that plan to raise funds through stock market listings.
• Requires a board of directors for management.

3.Partnership (Collective Company)

Overview: A partnership (Collective Şirket) involves two or more individuals or entities that form a business where they share responsibility for the company’s liabilities and profits.

Capital Requirement: No minimum capital requirement.

Key Features:

• Partners are personally liable for the company’s debts.
• Less common, as the partners have unlimited liability.
• Can be a flexible option for closely held businesses or small ventures.

4.Limited Partnership (Komandit Şirket)

Overview: A limited partnership consists of at least one general partner with unlimited liability and one or more limited partners who are only liable up to their capital contribution.

Capital Requirement: No minimum capital requirement.

Key Features:

• The general partner has unlimited liability, while the limited partner’s liability is restricted to the amount of their investment.
• It allows for more flexibility in business ownership and liability but is typically less common than LLCs or jointstock companies.

5.Cooperative

Overview: A cooperative is a type of business that is owned and managed by its members, who work together for a common goal. This is usually used for agricultural or trade purposes.

Capital Requirement: The cooperative’s capital structure is determined by its members, who contribute funds.

Key Features:

• The main focus is on mutual benefit and collaboration among the members.
• Can be organized for various activities, including consumer or worker cooperatives.
• Profits are typically distributed among the members.

6.Free Trade Zone Companies

Overview: Companies established within Turkey’s Free Trade Zones (FTZs) enjoy certain tax and customs exemptions. These zones are designated areas intended to promote foreign trade.

Capital Requirement: There is no specific capital requirement for a company in an FTZ, but the business must meet the necessary criteria to be eligible for FTZ registration.

Key Features:

• Tax exemptions and incentives such as customs duty exemptions, reduced corporate taxes, and VAT exemptions.
• Companies located in FTZs are allowed to export and import goods with fewer regulatory constraints.
• They must follow the specific rules set by the Free Zone’s administration.

7.Branch Office

Overview: A branch office is an extension of a foreign company, and it is not a separate legal entity. It can carry out business activities but cannot operate independently in terms of its liabilities or structure.

Capital Requirement: There is no specific minimum capital requirement for a branch office, but the head office must have sufficient financial resources.

Key Features:

• The branch must be registered with the Turkish Trade Registry.
• It is considered a part of the foreign parent company and is subject to Turkish corporate tax.
• Can carry out similar activities to the parent company, but with some restrictions on its scope of activities.
• The parent company must appoint a representative.

8.Representative Office

Overview: A representative office is not a legal entity and cannot carry out commercial activities. Its primary function is to conduct market research, promote the parent company, or coordinate business development activities.

Capital Requirement: No capital requirement, as the office can only engage in noncommercial activities.

Key Features:

• Cannot engage in direct sales or generate revenue.
• Can only conduct promotional activities, market research, and maintain liaison with potential clients or distributors.
• Must be registered with the Turkish Ministry of Industry and Technology.

Summary of Key Corporate Types

Types of Companies in Türkiye are like those in the European Union. When selecting the right company structure in Turkey, it’s important to consider factors like the business size, scope, capital, and liability preferences. Consulting with a legal or business advisor familiar with Turkish regulations can help ensure the most appropriate structure for your business goals. Please feel free to contact us for more information and further inquiries about our unique services. You can also subscribe to Tacirsoft Hukuk Bilgi Sistemi, that is Turkey’s only Corporate Law and Organized Industrial Zones Law database.