Article 573 of the Turkish Commercial Code No. 6102 defines a limited liability company as a company formed by one or more natural or legal persons coming together under a trade name. In this company type the share capital is determined in advance and is made up of the aggregate of the capital shares.
Formation denotes the completion of all the transactions the law requires for legal personality to come into being. The legislature regards these transactions — which begin with the drafting of the articles of association and conclude with registration — as an indivisible whole; none of the links may be left out.
The fact that the Act refers, on a great many matters concerning limited liability companies, to the provisions governing joint-stock companies has given rise to a broad area of similarity between the two company types. In this respect our study titled Formation of a Joint-Stock Company is also complementary.
The figures show how widespread this choice is: the number of companies and cooperatives formed in 2024 was 30,292. The 26,255 limited liability companies registered in the same period accounted for 76.8% of the total capital. The limited liability company is one of the most frequently used company forms in Türkiye.
Definition and Essential Characteristics of a Limited Liability Company
A limited liability company is a capital company formed by a single person or by more than one natural or legal person under the roof of a trade name. Its share capital is fixed, and that capital is made up of the sum of the capital shares.
The obligation of the members does not extend to the company’s debts. The members are obliged only to pay up the capital shares they have subscribed and, where the articles of association so provide, to meet additional payment obligations and ancillary performance obligations.
Any economic purpose and object not prohibited by law may be designated as the field of activity of a limited liability company.
Since the company has a legal personality separate from its members, it must choose and use a trade name. The only assets liable for the company’s debts are the company’s own assets; recourse may not be had to the members in respect of those debts.
Shareholding Structure, Shares and Transfer of Shares
At the formation stage, each member must subscribe for one or more capital shares against the capital they are to contribute. The minimum capital amount has been set, as of 2024, at TRY 50,000. Where the company is formed by a single person, that person either subscribes for a single share equal to the share capital or holds several capital shares in their own person.
Where there is more than one member, each holds shares in proportion to the capital they have subscribed. While there is nothing to prevent shares from being embodied in share certificates or registered certificates, there is no obligation on the company to make such an arrangement. The rule is that limited liability company shares are not embodied in certificates. Another point that differs from the joint-stock company is this: in a limited liability company the members have no possibility of demanding that their rights be embodied in a certificate.
Shares may be transferred and may be made subject to a pledge or a usufruct. Where a transfer takes place, membership and the financial rights conferred by the share pass in their entirety to the other party. Contracts relating to the transfer of a capital share and to transactions creating an obligation to transfer must be made in writing and the parties’ signatures must be certified by a notary.
The Organs of a Limited Liability Company
The Act makes two organs mandatory for a limited liability company: the general assembly and the managers. Other organs may also be provided for by inserting a provision to that effect in the articles of association; this, however, is not obligatory. While the general assembly formed by the shareholders functions as the decision-making organ, management and representation are the task of the managers.
Representation and Signing Authority
The organ of representation and authority of the company is the board of managers. Representation is effected by the persons granted authority to sign on behalf of the company. Unless the articles of association provide otherwise, and where there is more than one manager, the power of representation is exercised by the board of managers on a joint-signature basis.
Registered Address and the Virtual Office Option
Limited liability companies must notify an address as their registered office and show that address in the articles of association. A legal address is a basic requirement for tax liability to arise.
The company’s registered office is furthermore registered with the trade registry and announced. Provided the matter arises solely out of the membership relationship, in actions brought by the company against one of its members, or by a member in that capacity against the others, the court of the place where the registered office is situated has exclusive territorial jurisdiction.
The virtual office solution, which removes the need to rent physical premises and is low in cost, may also be used by limited liability companies; such an address may be notified as the registered office. During tax inspections, however, the company’s representative is expected to be present at the virtual office address notified.
Founders of a Limited Liability Company
The natural and legal persons who subscribe for shares and sign the articles of association bear the capacity of founder. For the company to be formed it is sufficient that there be at least one founder holding shares.
Who May Be a Founder and What Are Their Liabilities?
A limited liability company may be formed by a single person; in other words, the Act does not require a minimum number of members. The capacity of founder is available both to natural persons and to legal persons. Under the Turkish Commercial Code No. 6102, where founders culpably breach the obligations arising from the Act and from the articles of association, they are held liable for the resulting loss towards the company, the shareholders and the company’s creditors.
The Act also regulates other specific heads of liability. Documents submitted at formation not reflecting the truth, and failure to pay up the share capital, may be given as examples.
Liability for Debts:
As a rule, the liability of the members of a limited liability company is owed to the company alone; they bear no liability in respect of the company’s debts. That liability towards the company arises from the obligation to pay the subscribed capital share and, where the articles of association so provide, from additional payment and ancillary performance obligations.
The exception to the rule is public receivables. Article 35 of the Act on the Procedure for the Collection of Public Receivables (AATUHK) contains the following provision:
AATUHK Art. 35
“the members of a limited liability company shall be directly liable, in proportion to their capital shares, for a public receivable that cannot be collected from the company in whole or in part or that is understood to be uncollectible, and shall be subject to enforcement under the provisions of this Act.”
Company Formation in Türkiye by Foreign Natural Persons
There is no legal obstacle to foreign natural persons forming a limited liability company in Türkiye. The Foreign Direct Investment Act No. 4875 has placed foreigners on an equal footing with Turkish citizens as regards company formation and has indeed granted certain additional safeguards. The aim of this approach is to attract foreign capital into the country.
Company Formation in Türkiye by Foreign Legal Persons
Foreign companies may likewise form a limited liability company in Türkiye. For foreign legal persons the process is subject to a more detailed procedure and the number of documents required increases. Documents drawn up abroad must bear notarial certification and an apostille.
Stages in the Formation of a Limited Liability Company
The acquisition of legal personality is tied by the Act to a particular sequence. The process begins with the formation among the members of the intention to establish a company. An application is then made through MERSİS (the Central Registry Record System) and an appointment is obtained with a request number. Where capital in kind is to be contributed, those assets are valued. The next link is the preparation of the articles of association and the certification of the founders’ signatures. Once signature declarations have been obtained from the company’s officers, an application is made to the Trade Registry Directorate for registration and announcement.
Choosing the Trade Name
Since a limited liability company carries on its activity under a trade name, the first step to be taken is to determine that name. Registration cannot take place without an addition enabling the name to be distinguished from one previously registered at any registry directorate in Türkiye. A trader may use any addition that includes at least one of the objects of the business and that does not create a misleading impression about the business. The words “Limited Şirket” must appear in the name; where the name contains a forename and surname, those words may not be written in abbreviated form. Branches, for their part, must use the trade name of the head office and indicate in the name that they are a branch.
Drafting the Articles of Association and Their Mandatory Content
The articles of association function as the company’s constitution; they determine the relations of the members with the company and with one another and the legal position of the organs. The articles must be drawn up in writing and signed by the founders at the trade registry directorate. Unlike in the joint-stock company, the option of having the founders’ signatures certified before a notary has been removed entirely for the articles of association of limited liability companies.
The elements that the law requires to appear in the articles are as follows:
- The place where the registered office is situated and the trade name
- The company’s object, with its essential points shown and defined
- The nominal amount of the share capital, the number and nominal values of the shares, the groups of capital shares and any privileges granted
- The forenames and surnames of the managers, the titles they hold and their nationalities
- The manner in which announcements to be made by the company are to be effected
The founders are not free to include in the articles any provision they wish. Under Art. 579 of the Turkish Commercial Code No. 6102, the articles of association may depart from the Act’s provisions on limited liability companies only on those points where the Act expressly so permits.
Payment of Share Amounts and Capital Structure
The legislation sets the lower limit of the initial capital in limited liability companies at TRY 50,000.00. With Act No. 7099, the requirement that at least twenty-five per cent of the cash capital subscribed be paid before registration was repealed. Today, cash capital shares may be paid within twenty-four months following formation. This flexibility does not apply to capital in kind.
Documents to Be Submitted to the Trade Registry
The documents that must be filed with the registry directorate are as follows:
- The text of the articles of association bearing the certified signatures of the founders
- Signature declarations of the company’s managers
- Written declarations of members of the board of managers who are not members of the company stating that they accept that office
- Where a legal person sits on the board of managers, the forename and surname of the natural person designated to act on its behalf together with it, and a notarised copy of the decision of the competent organ making that designation
- Where capital in kind is contributed or a business is to be taken over on formation, the valuation reports prepared by court-appointed experts for the determination of the value of those assets
- Where capital in kind has been contributed, a letter obtained from the relevant registry showing that there is no restriction over the assets in question
- A document proving that an annotation has been entered in the registries in which the immovables, intellectual property rights and other assets contributed as capital in kind are recorded
- The contracts concluded in connection with the formation between the company being formed and the founders and third parties; those relating to the taking over of assets in kind and of a business are also within this scope
Documents to Be Submitted to the Chamber of Commerce and the Registration Process
The documents to be transmitted to the chamber are as follows:
- Application petition
- Chamber registration declaration
- Formation notification form
- For foreign national natural person members, notarised Turkish translations of their passports and a document obtained from the tax office showing the tax identification number or the identity number issued to foreigners; where the member resides in Türkiye, in addition a notarised residence permit
- Where the articles of association prepared through MERSİS are to be signed by the members in person, the presence of the members at the relevant office at the appointment time; where the signature is affixed by a proxy, production of the original or a notarised copy of the power of attorney suffices and the members need not attend the directorate, the attendance of the proxy being sufficient
- Signature declaration of the authorised person or persons
- For managers who are not members, a document showing that the office has been accepted
- Where a legal person has been elected as manager, a notarised copy of the decision of the competent organ, taken so as to show the forename and surname, address, nationality and Turkish identity number — or, for foreign nationals, the tax identification number or the identity number issued to foreigners — of the natural person designated by that legal person to act on its behalf together with it
- Where the legal person holding the position of manager or member is foreign, a document containing its current registry records
- An amount corresponding to four ten-thousandths of the capital as the Competition Authority levy; this sum is collected by the chamber’s cash office at the time of payment
- Where there is a cash subscription, the inclusion in the capital clause of the wording “The nominal values of the shares subscribed for in cash shall be paid within twenty-four months following the registration of the company.”
- Where capital in kind has been contributed, the decision appointing the expert, the expert report, the court decision and the original of the letter to be obtained from the registry stating that there is no restriction over the capital in kind, together with the original of the document proving that an annotation has been entered in the registries to which the immovable, intellectual property rights and similar assets constituting capital in kind belong
- Where the mother and father of a minor member, or only one of them, are also members of the company, a court decision appointing a trustee on behalf of the minor member; the articles must be signed on behalf of that member by the trustee
- On the formation of customs brokerage companies, the notarised customs broker licence of all the members and of the managers with unlimited power of representation elected from among non-members; in the case of authorised customs brokerage companies, the authorised customs broker certificate of all the members and of the managers empowered to represent and bind the company
- Where the founders include municipalities, other local authorities or unions formed by them, a copy of the Presidential Decision permitting the participation of those authorities
- The contracts made in connection with the formation, including those relating to the taking over of assets in kind and of a business
Registration with the Tax Office
Once registration is complete, the company must be entered on the records of the tax office. When the documents are filed and registration takes place, a tax inspection visit is made to the company. The documents that must be submitted at this stage are as follows:
- Commencement notification
- Registry certificate
- Notarised copy of the articles of association
- Notarised copy of the signature circular
- Notarised identity card of the company’s directors
- Lease agreement relating to the business premises
- Accountancy services agreement
- Where applicable, the certified public accountant (SMMM) agreement
- E-notification form
- Request for an online tax office password
The Cost of Forming a Limited Liability Company
For limited liability companies formed on or after 01.01.2024, the minimum capital required is TRY 50,000. Following the amendment made, the requirement to pay one quarter of the cash capital at the moment of formation has been removed, and that amount may be paid within twenty-four months following registration.
Various fees and expenses arise during the formation process. The principal ones are the drafting of the articles of association, notarial transactions, tax office expenses, registration and announcement costs, the chamber of commerce registration fee, the accountant’s service fee and the Competition Board levy. The average amounts for 2026 are as follows:
- Registration and announcement fee payable to the chamber: TRY 16,500 – 20,000
- Expenses relating to notarial transactions: TRY 6,500 – 8,000
- SMMM formation service fee: TRY 10,000 – 16,000
- Company stamp cost and stamp duty: TRY 500.00
To these items may be added registration and licence fees, office expenses, equipment purchases, staff costs and the working capital needed to commence operations. Since the amounts in question vary according to circumstances and formation is a relatively costly process, it is important that the transactions be structured correctly from the outset.
Tax obligations also arise upon formation. Companies pay corporation tax on the income they earn; a company selling goods or services is, in addition, liable for Value Added Tax (VAT), which is a consumption tax.
Points to Watch When Forming a Limited Liability Company
The Act lays down a detailed procedure for the formation of a limited liability company; since these transactions are both costly and demanding in terms of effort and time, conducting the process carefully and, where possible, obtaining professional support will forestall potential losses.
The matters that stand out in practice may be summarised as follows:
- Choosing and registering the trade name: a name that will not give rise to confusion with other companies should be settled on and registered in accordance with the prescribed procedure.
- Drafting the articles of association in full: none of the elements the law requires to appear in the articles should be omitted.
- Clarifying the object, purpose and registered office: the company’s fields of activity and its registered address should be defined clearly.
- Preparing and submitting the required documents in full: the documents that must appear in the formation file need to be completed.
- Carrying out the MERSİS procedures: the registrations and applications that must be made through the Central Registry Record System should not be neglected.
- Completing registration with the trade registry: the company must be registered and entered on the official records.
- Obtaining a tax identification number: the conduct of official transactions depends on this number being obtained.
- Social Security Institution (SGK) procedures: the necessary SGK notifications should be made in respect of employees.
- Cost and revenue projection: start-up expenses and expected revenues should be calculated in detail.
Legal Advisory Services for Companies
Independent Legal provides comprehensive legal advisory services with a team specialised in different areas of law. This service is directed principally at companies and gives priority to understanding the client’s business model, its commercial strategy and the requirements of the sector in which it operates.
Our Approach
- Legal solutions tailored to the structure: companies’ legal needs are analysed and effective solutions compatible with the business model are developed.
- Strategic advice: while legal support is provided to help companies reach their objectives, potential risks are identified in advance and the necessary measures are taken.
- Regard for sectoral requirements: solutions specific to the sector are produced having regard to the dynamics and the legal framework of the field in which the client operates.
Our Areas of Service
- Company formation: advising on the formation stages of joint-stock and limited liability companies and carrying out the transactions.
- Drafting and reviewing contracts: preparing contracts suited to the need and reviewing existing texts from a legal standpoint.
- Regulatory compliance advice: ensuring compliance with the rules relating to the field of activity and providing information on current legislation.
- Dispute management: conducting litigation in the legal disputes encountered and bringing alternative dispute resolution methods into play.
Independent Legal’s Assessment
Although, taken on its own, the formation of a limited liability company looks like a routine registration exercise, a significant proportion of the disputes that emerge in later years is fed by the decisions taken at the formation stage. How the provisions on share transfers, the election of managers, the power of representation and general assembly quorums are drafted in the articles of association determines the ground on which later disagreements between the members will be resolved. Setting these matters out in detail from the outset, so far as the Act permits, is far more protective than using a template.
When the formation file is being prepared, the following points in particular should be reviewed:
- Where capital in kind is to be contributed, completing the valuation report and the registry annotations before registration
- Planning the twenty-four-month payment schedule for the cash capital in writing among the members
- Taking into account from the outset that, for public receivables, the members will be directly liable in proportion to their capital shares
- Regulating the scope of the power of representation and the joint-signature rule expressly in the articles of association
- Where there is a foreign member or a foreign legal person, completing the apostille and translation requirements early
- Where a virtual office is to be notified as the registered address, assessing the requirement of actual presence looked for during inspections
Independent Legal provides advisory and litigation services across the whole field of company law, from company formation to share transfers and the resolution of disputes between members.