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Comparison of the Turkish private limited company and the Turkish public limited company

The Turkish public limited company in comparison to the Turkish private limited company

For banks, insurance companies, leasing and capital investment companies in Turkey, the corporate form of Anonim Şirketi (A.Ş.), a public limited company, is mandatory. The establishment of an A.Ş. requires at least five founder members and a nominal capital of 50,000 TRY. In other areas, the question is whether an A.Ş. or an Ltd. Şti. is the most suitable corporate form. Often, this question is prematurely decided in favour of the foundation of a Ltd. Şti., as this requires less effort, however, without having sufficiently considered the advantages of the A.Ş. with regard to liability issues.

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Public limited company (Anonim Şirketi - A.Ş.)

The form of a public limited company is permitted for all lawful purposes of a company. Upon establishment of the company, the entire nominal capital is issued in the form of shares to the shareholders. The shareholders can be individuals or legal entities. The public limited company's liability  as a legal entity towards creditors extends to the corporate assets.

The A.Ş. is obligatory forbanks, insurance companies, leasing and capital investment firms


Nominal capital of the A.Ş.

50,000 TRY, corresponds to approx. 22,900 EUR (09/2009)


Special rules for


insurance companies



significantly higher capital thresholds


Minimum of 5 shareholders


Company name

The public limited company must always use the addition A.Ş. in its company name. If foreigners hold shares in the A.Ş., foreign names can also obtain approval.



For the foundation, a minimum of five shareholders is required.
Upon its entry into the trade register, the A.Ş. becomes legally effective and obtains the status of a legal entity.
Should the number of shareholders fall below five, the A.Ş. will not be dissolved automatically; however, every shareholder, creditor, or the ministry for industry and trade can apply to a court for dissolution.


At present, an A.Ş. can be formed by means of a uniform foundation or simultaneous foundation, or by means of a foundation by stages.
In practice, foundation by stages can be neglected. The new commercial code makes allowance for this development and only provides for the uniform foundation. In case of a uniform foundation, the founders of the A.Ş. initially take over all corporate shares.


Administrative board, general meeting and supervisory board

In addition to the normal written form requirements in the A.Ş.'s articles of association, with the minimum requirements regarding the number of founders, the purpose of the company, the headquarters, the term of the company, the form and amount of the nominal capital, the number of shares and the face value of the shares etc., the A.Ş. consists of the administrative board, the general meeting and the supervisory board.

Restriction of corporate purposes for the Ltd. Şti.


 Further information on

the Turkish private limited company

Private limited company (Ltd. Şti.)

Purpose of the company

The corporate purpose of an Ltd. Şti. may not exclusively relate to bank, insurance and financing transactions, as these would mandatorily require the legal form of the A.Ş.The number of shareholders is limited to between two and fifty. If the number of shareholders falls below two, this constitutes a reason for a dissolution which the creditors can apply for at court.



In order to establish aLtd. Şti., a written company agreement must be drafted, containing information on the shareholders and the company.
This agreement must be notarised prior to its filing with the trade registry.
Upon entry of the Ltd. Şti. in the trade register, the company will obtain the status as an independent legal entity.


Corporate bodies of an Ltd. Şti.

The general meeting and the directors are the corporate bodies of the Ltd. Şti. If a company has more than twenty shareholders, the law additionally provides for a supervisory board. Important resolutions, such as changes of the company agreement, the appointment, removal and the discharge of directors, will only be legally effective if they are taken during a general meeting.


The law allows the replacement of shareholders; the withdrawal of a shareholder who has not paid in his/her contribution is only possible with the approval of all shareholders.


Transformation of the corporate form

The transformation of the Ltd. Şti. into a different legal form is permitted, provided that the prerequisites for the foundation of the intended legal form are being fulfilled.

Shareholders' liability

Liability of the shareholders of an A.Ş.

Pursuant to Art. 269 of the Turkish commercial code, the nominal capital of the A.Ş. is divided into shares. Whoever purchases or subscribes a share of the A.Ş., becomes a member. Membership results in a variety of rights and obligations for the shareholder. One of the shareholders' obligations is to pay in the agreed capital contribution. A release from this obligation is not possible, nor is the option to request repayment of the capital contribution.
With regard to capital, the provisions are the same as for the Ltd. Şti.

  • The shareholders must pay a minimum capital contribution in accordance with the capital market law. If the number of shareholders is less than 5, the A.Ş. is to be liquidated. The shares have a certain face value. They represent the shareholder's rights and obligations.
    According to the Turkish commercial code, it is permitted to extend or restrict the shareholders' membership rights in the articles of association.
  • This allows, for instance, the purchase of preferential shares.
  • This means that a shareholder can sell his/her shares independently of the other shareholders. However, these rights may be restricted by the articles of association. The share documents are securities, either as bearer shares or as registered shares. The A.Ş.'s liability is limited to its corporate assets. This means that the shareholders are not liable with their personal funds for the A.Ş.'s liabilities. This naturally does not include the shareholders' capital contribution.


Liability of the Ltd. Şti. shareholders

Liability for the company's acts and omissions is restricted to the company and its assets. The shareholders will not have any personal liability towards third parties; the company's liability may in principle lead to the depletion of the capital contribution. However: If the state (tax office, social security authorities) is unable to collect a claim from the company, it has the right to take action against the shareholders. Their liability will in such cases be restricted to the share of the claim which corresponds to this shareholder's share in the company's capital.

Liability of board members and directors

Liability of the A.Ş.'s board

Under its obligation to manage operations, the board is liable to the shareholders for the proper conduct of business. In cases of abuse of authority, individual members of the board may be liable towards the shareholders or the company's creditors. In principle, there is the possibility of exculpation. If the supervisory board does not properly attend to its official duties, it may also face liability claims.


The Turkish commercial code provides for three corporate bodies as a minimum requirement: the administrative board, the general meeting and the controllers.

  • The administrative board is elected by the general meeting.
    It manages and represents the company in relation to third parties.
    This power of representation is restricted by the purpose of the company. The administrative board consists of three or more individuals who must at the same time be shareholders of the A.Ş.
    This is where the A.Ş. differs from the Ltd. Şti., where the director does not need to be a shareholder. If individuals who do not hold shares are elected to the administrative board, they must subsequently become shareholders. The members of the administrative board do not have to be Turkish nationals. The articles of association may contain rules according to which the power to represent the administrative board can be transferred to a director. The members of the administrative board are elected for a term of not more than three years, but may be re-elected. Under its obligation to manage operations, the board is liable to the shareholders for the proper conduct of business.
    The members of the administrative board may in exceptional cases be liable for certain acts, towards the company, the individual shareholders or the company's creditors.
  • The general meeting is the decision-making body. It is the highest corporate body, and as such is responsible for all important and essential decisions in the interest of the company.
  • The controllers have the capacity of a supervisory board.
    They comprise not more than five individuals and supervise the activities of the A.Ş. and of the board. The members of this body do not need to be shareholders. Upon the foundation of the company, they are appointed for a term of one year; subsequently, for three-year terms. An important point is that legal entities can also exercise the tasks of a controller. However, membership of foreign individuals or a legal entity is linked to Turkish nationality by a certain ratio. Only when this ratio has been fulfilled can a foreigner be a controller.


Liability of the Ltd. Şti.'s directors

The managing shareholders of an Ltd. Şti. are liable for claims against the company up to the sum of their capital contribution. However, as of 01 Jan. 1999, they are also personally liable without restrictions for the company's tax liabilities and for unpaid social security contributions for employees.They are not liable for capital contributions which other shareholders have failed to pay in. Liability in tort affects the directors of the Ltd. Şti. just as the board of the A.Ş. if they acted intentionally or in a grossly negligent manner.

Important differences with regard to liability rules

Advantages of the A.Ş. in comparison to the Ltd. Şti.

In practice, foreign direct investments in Turkey frequently give preference to the Ltd. Şti. rather than the A.Ş., without any profound examination. The foundation process which seems to be more complicated, the higher minimum number of shareholders - five for the A.Ş. in comparison to two for the Ltd. Şti. - and the more formalised procedures of the decision-making process in the various corporate bodies are often decisive here, as, at first sight, the A.Ş. does not seem to have any tax-related or other advantages in comparison with the Ltd. Şti.


Issues which often are neglected during the selection process are innocuous, but certainly important differences of the two corporate forms with regard to the "piercing of the corporate veil", i.e. the danger that the corporate liability shield protecting the shareholders may be disregarded.

  • The founders of an A.Ş. as well as the founders of a Ltd. Şti. are liable to the creditors and shareholders for a period of four years from the registration date of the company for any damage caused by incorrect information regarding the foundation documents of the company, the nominal capital or its distribution among the shareholders.
  • However, the founding shareholders of a Ltd. Şti., in contrast to those of an A.Ş., will not be released from their liability, even after expiry of the four-year period, by selling their shares and withdrawing from the company. They continue to be subject to subordinate liability, after the present shareholders. This means that if the present shareholders cannot sufficiently satisfy the creditors, they can take action against those of their predecessors who were registered in the share registry during a five-year period prior to the withdrawal of the shareholder against whom the original claim had been asserted; their liability is ranked in accordance with the sequence of their registration.
    The liability chain will only be interrupted after expiry of ten years from the registration in the share register of the withdrawal of the shareholder against whom the original claim had been asserted.

Majority rules

Majorities (majority of shares) are important in connection with votes during annual general meetings or shareholder meetings. In addition to the so-called simple majority (more than 50% of the votes) the
qualified majorityis particularly relevant for limited companies.


According to the legal and statutory regulations under German law, certain shareholder resolutions will only become legally binding if they are taken by a qualified majority, i.e. by a majority which is larger than the simple majority of votes and/or capital or by a majority of three quarters of the votes cast.


A majority of at least three quarters (German law) or two thirds (Turkish law) of the nominal capital represented upon passing of the resolution is required during the A.Ş.'s annual general meetings for:


  • Amendments of the articles of association (in contrast to this, Turkish law additional requires approval by the ministry of industry and commerce)
  • Reduction of capital
  • Dismissal of members of the supervisory board
  • Merger resolutions
  • Dissolution of the company

In Germany, the law regulating GmbH's also provides for a qualified majority:
In case of an intended amendment of the company agreement, section 53 (2) GmbHG requires a majority of three quarters of the votes cast, whilst, pursuant to Art. 513 (1) of the Turkish commercial code a majority of two thirds of the votes is sufficient under Turkish law.

Control stock

33 per cent plus one share

Protection of minorities, control stock

Under German law, "control stock" means a majority of at least 25 per cent plus one share of the nominal capital represented at the annual general meeting of an AG. Amendments of the articles of association are not possible against this qualified minority. This makes it possible to prevent capital increases or mergers. Under Turkish stock market law, this threshold is 33 per cent plus one share, as an amendment of the articles of association requires a two-thirds majority.

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