What are Joint Stock Companies and Limited Liability Companies?
STEPS TO FOLLOW IN ESTABLISHING A JOINT STOCK COMPANY AND A LIMITED LIABILITY COMPANY
In this article, we aim to provide our valued readers with information on what a Joint Stock Company and a Limited Liability Company are, the differences between them, and how to establish a Joint Stock Company and a Limited Liability Company.
What are a Joint Stock Company and a Limited Liability Company?
A company type with a fixed capital divided into shares, where the company is liable for its debts solely with its own assets, is called a "joint stock company." The joint stock company is regulated under Article 329 and subsequent articles of the Turkish Commercial Code (TCC) No. 6102.
A company type with a fixed principal capital established by one or more natural or legal persons coming together under a specific trade name is called a "limited liability company." The limited liability company is regulated under Article 573 and subsequent articles of the TCC.
What are the Differences Between a Joint Stock Company and a Limited Liability Company?
While a limited liability company has a smaller structure in terms of partnership, a joint stock company is structured to appeal to much broader masses of shareholders. A joint stock company is established with at least one person, and there is no upper limit. A limited liability company can be established with at least one and at most 50 partners.
In a joint stock company, if the number of shareholders exceeds 250, the shares are offered to the public. In a limited liability company, shares can never be offered to the public.
The subject of both joint stock and limited liability companies can be any economic purpose not prohibited by law. Banks, brokerage firms, investment trusts, insurance, financial leasing, and factoring companies must be incorporated as joint stock companies. A limited liability company cannot be established for these specific fields reserved for joint stock companies, nor for charitable and scientific purposes specific to associations and foundations.
The minimum capital for a joint stock company is 50,000 TL in the basic capital system and 100,000 TL in the registered capital system. The minimum capital for a limited liability company is 10,000 TL, which can be increased tenfold by a presidential decree. In a joint stock company, capital increase can be performed through a general assembly decision and an amendment to the articles of association in the basic capital system, or solely by a board of directors' decision in the registered capital system. In a limited liability company, a capital increase can only be performed by a general assembly decision; this authority cannot be delegated to the board of managers.
How to Establish a Joint Stock Company?
A joint stock company is established when the founders declare their intent to establish the company in the articles of association—which have been drafted in accordance with the law, where the commitment to pay the entire capital is unconditional and absolute, and the signatures are notarized. Within 30 days of its establishment, it is registered with the trade registry of the location where the company is established. The establishment phase is completed upon publication in the Trade Registry Gazette.
In general, the documents required to establish a joint stock company are as follows:
Petition
Approval of the articles of association
Signature declaration for all partners
Copy of the national identity card for all partners
Chamber registration declaration
Receipt proving that the capital has been deposited
For customs consultancy firms, a notarized customs consultancy permit must be submitted for partners and externally appointed managers authorized in customs operations. For authorized customs consultancy firms, a notarized copy of the authorization certificate obtained from the Undersecretariat of Customs by the partners must be submitted.
If a minor partner's mother or father, or either one of them, is a partner in the company, a court-appointed trustee decision is required for the minor partner.
How to Establish a Limited Liability Company?
To establish a limited liability company, first, the company contract is prepared and the founders' signatures are notarized. Signature declarations of persons authorized to represent the company are prepared and notarized. The Competition Authority share and the cash capital of the company are paid, and the required documents are submitted to the Trade Registry Directorate.
In general, the documents required to establish a limited liability company are as follows:
Company contract bearing the signatures of the founders
Document containing the written declarations of the members of the board of managers who are not partners, accepting their managerial duties
If there is a legal entity on the board of managers, a notarized copy of the decision of the authorized body regarding the representative determined by the legal entity, including their name and surname
If non-cash capital (immovable property) has been contributed, or if there are businesses to be taken over at establishment, and an expert has performed a valuation for the court, copies of these reports
If non-cash capital has been contributed, a document from the relevant land registry office stating that there are no restrictions (mortgages, etc.) on this non-cash capital
If non-cash capital, intellectual property rights, or similar values have been contributed, a document stating that an annotation has been placed in the registry where each is recorded
If contracts related to the establishment of the company have been signed between the founders and other persons with the company being established, copies of these agreements (including rights in rem and business transfers)
Signature declarations of the company manager or managers
Receipt or similar document proving that the Competition Authority share has been paid
In specific cases, additional documents may be required depending on the company to be established. These are the standard documents requested in every joint stock and limited liability company establishment application.