Managing a Limited Liability Company in Turkey

Managing a Limited Liability Company in Turkey

Soner Altaş

TurkishTaxNews, April 29 2016

Manager or the Board of managers (BOM) is one of the legal bodies of the limited liability company (LLC) that has the authority to direct and represent the company. The basic legal arrangements related to the manager and board of managers are explained below.

1 – Single Manager

Such as the Former Turkish Commercial Code, the new Turkish Commercial Code (TCC) lets LLCs to be directed and represented by one manager. Therefore, LLCs may have one or more managers. As the manager or managers can be elected from shareholders, third parties (real or legal persons) can also be elected as managers.

2 – Legal Entities As Managers

Legal entities (companies, foundations, NGOs, etc) can be elected as the managers of the LLC. However, if a legal entity is elected as the manager that legal entity will have to determine a real person to act on behalf of itself.

3 – Article Requiring Authorized Representatives to be Turkish Citizens

As adopted on January 13th, 2011, the new TCC requires at least one authorized member of the LLC to be Turkish Citizen and reside in Turkey. In this regard, if a foreign real or legal person wants to establish a LLC in Turkey, he/it could not be the only manager of the company, thus he has to elect at least one Turkish citizen as manager besides him.

Such as JSCs, Turkish Government foresaw that the aforementioned provisions might have a negative effect on foreign investments, so this obligation was also repealed by Law No. 6335. In this context, foreign real or legal persons can establish a LLC in Turkey and may elect themselves or third parties from non-Turkish citizens and residents as managers, which mean that they can manage the company without leaving their country of origin.

4 – Online Meeting Of Managers

Due to the new TCC, if there is more than one manager of the LLC, it will be accepted that these managers form a board like in JSCs and this board will be called “board of the managers”. In this case, the LLC will be managed and represented by the board of the managers. Such as in case of JSCs, the new TCC allows meetings of managers to be achieved electronically. Thus, all of the managers may participate in the meetings electronically or some may participate in a particular meeting electronically while others participate physically. But, in order to ensure this, it must be stated in the company’s articles of association that the managers should participate in the meetings electronically.
Participating in the meetings of the board of managers electronically will have the same legal consequences equal to that of the physical participation. This arrangement will provide a great convenience to those LLCs that have foreign capital.