LLC vs. JSC: Which Type of Company to Choose in Turkey?

Limited Liability Companies vs. Joint-Stock Company in Turkish law

SHOULD YOU REGISTER AN LLC OR A JSC IN TURKEY?

The two most common companies in Turkish law are Limited Liability Company (LLC or “LTD”) and Joint-Stock Company (JSC or “A.Ş.”). LLC and JSC are both capital companies, meaning the shareholders’ liability is limited to the amount of capital that they invest into the company. A frequently asked question is whether to start an LLC or a JSC for a certain type of business in Turkey.

Limited Liability Companies vs. Joint-Stock Company in Turkish law

In a nutshell, here are the main differences:

 Characteristics of LLC in TurkeyCharacteristics of JSC in Turkey
Minimum Starting Capital10,000 TL50,000 TL
Minimum Payable Amount of Capital in Advance0%. 25% 
Separation of business and personal liabilityNot strict.Strict 
Separation of ownership and managementAt least one of the shareholders must be a director.Shareholders and directors may be completely different persons and entities.
Transfer of sharesDifficultEasy
Tax on income from transfer of sharesNo tax exemptionExempted after 2 years
Anonymity of its Current ShareholdersCurrent shareholders are made publicCurrent shareholders may remain mostly anonymous

Click here learn the differences between LLC and JSC in Turkish Law in more detail. 

Which Type of Turkish Company is Should You Incorporate?

To sum up, in Turkish Law, a Limited Liability Company may be considered advantageous for being less costly to establish and operate, involves less bureaucracy. On the other hand, a Joint-Stock Company in Turkey can be advantageous for offering some anonymity to its shareholders, strict limitation of liability, and the freedom to conveniently trade shares with an added bonus of tax exemption.

Which type of Turkish company one should choose in Turkey depends on the purpose of the company. When in doubt, one should ask themselves: what is optimal for me?

Which Type of Turkish Company is Optimal for You?

  • Do I need to simply limit my liability to a certain capital amount while doing business, or do I aim to grow the business in order to attract investors?
  • If you have partners, are you partnering with your family members and/or close associates, or are you partnering with new business partners?
  • Do you wish to keep this as a family-owned business, or do you wish to have an Initial Public Offering (IPO) someday in the future and transform your company to a publicly traded and owned entity?
  • Do you wish to personally run the company, or do you wish to leave its day-to-day management to professionals?

If the answers to the aforementioned questions affirm the former option, then the answers point out to incorporating a Limited Liability Company in Turkey. However, in case of latter options are preferred, this indicates the necessity of registering a Joint-Stock Company in Turkish Law.

In Turkey, Limited liability Companies are generally preferred by entrepreneurs and start-ups who are mainly seeking to limit their liability when doing business. On the other hand, Joint-Stock Companies in Turkey are generally preferred by investors and those who seek investment, whether it may be by means of private equity or public offering.

Antalya Lawyer  Baris Erkan Celebi and his  Law Firm in Antalya offer legal support and legal assistance in all areas of Turkish corporate law. Turkish corporate attorney Baris Erkan Celebi’s services include but are not limited to limited liability company incorporation in Turkey and legal support in management, joint-stock company incorporation in Turkey and legal support in management, obtaining necessary permits for the company’s relevant fields of operations, applying for and benefiting state incentives that are offered to foreign investors in Turkey.