When you receive satisfactory answers to your question “Why should I invest in Turkey?”, your next question will be what type of companies can be established in Turkey.
In accordance with the principle of equality emphasized by the laws, foreigners can establish any type of company that Turks can establish in Turkey. In the former era of the law, only permission to establish joint-stock companies and limited liability companies was granted to foreigners. Now, there is no restriction on the type of company for foreigners.
In general, companies in Turkey are divided into two main groups:
A- Capital Companies
B- Personal Companies
A- CAPITAL COMPANIES
Joint Stock Company (JSC) (Turkish: Anonim Şirket):
a-) A type of company with specified capital divided into shares, and its liabilities are only covered by its assets.
b-) A single shareholder joint-stock company can be established.
c-) Shareholders are only responsible for the capital they have committed to the company.
d-) Both individuals and legal entities can be shareholders.
e-) A minimum capital of 250,000 TL is required for the year 2024.
f-) Joint-stock companies can be established for any legal economic purpose not prohibited by law.
g-) You can find more details about Joint Stock Companies in Turkey in my article.
Limited Liability Company (LLC) (Turkish: Limited Şirket):
a-) A type of company with specified capital divided into shares, and its liabilities are only covered by its assets.
b-) A single shareholder limited liability company can be established, and the number of shareholders cannot exceed 50.
c-) Shareholder are not liable for the company’s debts, only obligated to pay their committed capital shares and fulfill additional payment and performance obligations specified in the company contract. They are liable for public debts in proportion to their capital shares.
d-) Both individuals and legal entities can be shareholders.
e-) A minimum capital of 50,000 TL is required for the year 2024.
f-) Limited liability companies cannot be publicly traded.
g-) You can find more details about Limited Liability Companies in Turkey in my article.
Commandite Company with Divided Capital (Turkish: Sermayesi paylara bölünmüş komandit şirket):
A company with divided capital, where some of the partners are jointly responsible for the company’s creditors as collective partners, and others are responsible as shareholders of a joint-stock company. I do not recommend this complex structure for foreign investors.
Simple Partnership (Turkish: Adi Şirket):
A commercial entity with no separate existence from its owner is called a simple partnership. Also known as a general partnership, the establishment of this type of personal company is quite straightforward. Since it does not have legal entity identity and is not subject to registration requirements, it is one of the most common types of companies. Taxation for simple partnerships is based on the individual’s tax identification number for all taxes, including withholding tax and value-added tax.
Simple Commandite Company (Turkish: Adi Komandit Şirket):
A simple commandite company is a personal company. A commandite company can be established by at least two shareholders, one being a commandite (unlimited liability) partner and the other being a commanditer (limited liability) partner. Commandite partners can only be individuals, while commanditer partners can be either individuals or legal entities. I do not recommend this complex structure for foreign investors.
General Partnership (Turkish: Kollektif Şirket):
A general partnership is established with at least two partners, and only individuals can be partners. There is no capital requirement for general partnerships.
Cooperative Company (Turkish: Kooparatif Şirket):
Organizations established for professional groups or mutual assistance with a minimum of 7 partners.
FAQ
1. What are the main types of companies that can be established in Turkey?
Answer:
In Turkey, the main types of companies that can be established are Joint Stock Companies (A.Ş.), Limited Liability Companies (LTD.), Collective Companies, Commandite Companies, and Cooperative Companies. Joint Stock and Limited Liability Companies are the most common among foreign investors.
2. What is a Joint Stock Company (A.Ş.) in Turkey?
Answer:
A Joint Stock Company (A.Ş.) in Turkey is a type of company where the capital is divided into shares, and shareholders are liable only to the extent of their shares. It requires at least one shareholder and has a minimum capital requirement of 250,000 TRY. A.Ş. is suitable for larger businesses.
3. What is a Limited Liability Company (LTD.) in Turkey?
Answer:
A Limited Liability Company (LTD.) in Turkey is a business entity where the liability of the shareholders is limited to their capital contributions. It requires a minimum of 50,000 TRY capital and is commonly used by small and medium-sized enterprises (SMEs).
4. Can a foreigner establish a sole proprietorship in Turkey?
Answer:
Yes, a foreigner can establish a sole proprietorship in Turkey. This type of business is owned and managed by a single individual who is personally liable for all business debts. It is simpler and less expensive to set up but offers no separation between personal and business liabilities.
5. What is the difference between a Collective Company and a Commandite Company in Turkey?
Answer:
A Collective Company in Turkey is a partnership where all partners have unlimited liability, whereas a Commandite Company has two types of partners: active partners with unlimited liability and silent partners whose liability is limited to their capital contribution. Both types are less common among foreign investors.
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