Turkey has adopted the Continental European legal system (civil law) in terms of corporate law. In Turkey Company types are specific and limited in number (numerus clausus). It is not possible to change the types defined in the law or to add different features that are not suitable for the typology. The principle of adherence to type is strictly enforced. Those who want to establish a company in Turkey shall choose one of these types and design their organization according to the mandatory rules of the law. Among these company types, the most advanced form of capital partnership is undoubtedly Joint Stock Companies.
The features and provisions regarding Joint Stock Companies are basically regulated in Turkish Commercial Code (TCC) Article 329 and the following provisions. According to Art.329 of TCC, a joint stock company is a company whose capital is fixed and divided into shares and whose liability for its debts is solely limited to its assets. In this regard, the shareholders are only liable to the company for their subscribed capital contributions. These provisions are clearly the internationally accepted form of joint stock companies. In this study, you will be introduced to the basic features and provisions of joint stock companies in accordance with the related articles of TCC in Turkey.
Basic cornerstones such as the fact that the capital is fixed and divided into shares, the sole debt of the shareholders to the company, the liability of the company for its debts is limited to its assets, made joint stock companies the most advanced corporations. In principle, the free transfer of shares, the positioning of the company as a separate legal entity from the shareholders’ group, the separation of the management and ownership relations have made joint stock companies the most appropriate form for being a stock exchange company. Due to these reasons that public corporations whose shares are traded on the stock exchange in Turkey are only joint stock companies. In this respect, it is possible to divide joint stock companies basically into two as public joint stock companies and private joint stock companies, despite this distinction, the aforementioned basic features are valid for both types.
Joint stock companies may be incorporated for any kind of economic purpose and any subject matter not prohibited by law. The registered capital, which is totally subscribed in articles of association, may not be less than fifty thousand Turkish Lira. The company is deemed established once the founders declare, in the notarized articles of association, that they desire to incorporate a joint stock company and unconditionally undertake to pay up the capital. Real persons and legal entities who have subscribed to a share and
signed the articles of association, are founders.
The minimum capital amount is 50,000 Turkish Liras. (For non-public Joint stock companies accepting the registered capital system , the initial capital may be at least 100,000 Turkish Liras.) At least one quarter of the nominal value of the shares committed in cash must be paid before registration. The remaining amount shall be paid within 24 months following the registration of the company. The payment schedule may be set out in the articles of association of the company or may also be determined by the board of directors.
A joint stock company with a single share can be established. Regardless of domestic or foreign nationality, real and legal persons may be shareholders.
The Articles of Association (AoA) is the basic binding document of the company and the declaration forming its corporate identity. It is notarized in the establishment and becomes binding for both the company and the shareholders. AoA must be in writing and the signature of all the founders must be notarized. The content of AoA is limited due to mandatory legal rules. According to TCC article 340, the AoA may depart from the provisions of this Law regarding joint stock companies only if this is expressly permitted in the Law.
Joint stock companies may issue registered and bearer shares in order to represent the shares. They may also issue bonds and similar debt instruments. In principal , approval of the general assembly or board of directors is not required for the transfer of shares. Shareholders may freely transfer their shares to others. On the contrary, clauses of AoA that make the share transfer subject to approval of the company are possible according to certain and limited provisions of the Law.
Joint stock companies carrying out certain activity areas and joint stock companies exceeding the threshold values of the criteria determined according to total assets, annual net sales revenue, number of employees are subject to independent audit. Joint stock companies are the only type of company whose shares are offered to public and whose shares are traded on the stock exchange. It is necessary to state that there are two basic types of joint stock companies in Turkey , non public joint stock companies and public joint stock companies.
Joint stock company has two organs: General Assembly and Board of Directors. General Assembly, As a rule, is the organ in which all shareholders are represented and exclusively authorized to take some important decisions concerning the company (e.g. amendment of the articles of association, election of the board of directors, release of the board of directors, directors and managers, election of the auditor, termination of the company, etc.). On the other hand, board of directors is the organ that is mainly responsible for the management and representation of the company. It is possible that the board of directors consists of one member. There is no requirement for being a board member as to be a Turkish Citizen and to be resident in Turkey.
The names of the various equivalents of Turkish joint stock company (in Turkish it is defined as Anonim Şirket (AŞ) ) in the World are Corporation (Inc., Corp.) for US and Canada; Public Limited Company (plc) for UK; Aktiengesellschaft (AG) for Germany, Austria, Switzerland (German-speaking cantons); Societé Anonyme (SA) for France, Belgium, Switzerland (French speaking cantons); Società per Azioni (SpA) for İtaly; Naamloze Vennootschap (NV) for Netherlands; Sociedad Anónima (S.A.) for Spain and South America Countries.
In this study, although general definitions are included, you may find more detailed information about the titles, each of which is the subject of a separate study and has a very comprehensive content, through the relevant articles on the website.
