The joint stock company is among the most widely preferred company types in Türkiye. The core legal framework governing the incorporation of a joint stock company is set out in Article 329 et seq. of the Turkish Commercial Code No. 6102 (“TCC”).
A. Capital Requirements for a Joint Stock Company
A joint stock company may be incorporated with a minimum capital of TRY 250,000. For non-publicly held joint stock companies that adopt the registered capital system, the minimum initial capital is TRY 500,000. Shareholders who undertake to make capital contributions in cash must pay in at least one quarter of the nominal value of their shares prior to registration, with the remaining amount payable within 24 months following the company’s registration.
In addition to cash capital, it is also possible to incorporate a joint stock company with in-kind (contribution-in-kind) capital. In this context, shareholders may contribute, as in-kind capital, assets that are free of any limited rights in rem, liens, or injunctions, and that are capable of being valued in monetary terms and transferred — including intellectual property rights and virtual assets. In practice, real property is among the most commonly preferred forms of in-kind capital. Where in-kind capital is contributed, additional documents must be submitted to the Trade Registry Directorate for registration purposes. These include the original or a certified copy of the court’s decision appointing an expert, and the original or a certified copy of the expert appraisal report prepared by court-appointed experts to determine the value of the in-kind capital contributed and of any businesses and in-kind assets to be taken over at the time of incorporation.
B. Shareholding Structure of a Joint Stock Company
There is no minimum number of shareholders prescribed for a joint stock company. It is possible for a single shareholder to incorporate a joint stock company.
C. Board of Directors Structure of a Joint Stock Company
The board of directors is the mandatory corporate body that manages the joint stock company and represents it before third parties. The initial members of the board of directors are determined in the articles of association, while subsequent members are elected by the general assembly. Article 359 et seq. of the TCC govern the establishment and functioning of the board of directors.
- Minimum number of members: The board of directors may consist of as few as one member. Where a single-member board is preferred, that individual is not required to be the sole shareholder; it is sufficient for a single member to be appointed by way of the articles of association or a general assembly resolution.
- No shareholding requirement: Being a shareholder in the company is not a prerequisite for serving as a member of the board of directors; in this respect, the A.Ş. structure is well suited to including independent professionals on the board.
- Term of office: Board members are elected for a term of up to three years; the same person may be re-elected.
- No nationality or residency requirement: Board members are not required to be Turkish citizens or to reside in Türkiye. A company may be established and managed by a board of directors composed entirely of foreign-national members.
- Legal entity members: Legal entities may also be elected as members of the board of directors. In such cases, a natural person must be designated to attend meetings and cast votes on behalf of the legal entity member, and that individual must be registered, announced, and disclosed to the public on the company’s website. Such natural persons, once registered and announced on behalf of the legal entity member, may vote at board meetings.
- Representation authority: In boards of directors comprising more than one member, representation authority is exercised by joint signature unless otherwise provided in the articles of association. The board of directors may delegate management, in whole or in part, to one or more members or to third parties by means of an internal directive.
- Duty of care and loyalty: Members of the board of directors and any third parties involved in management are obliged to act in accordance with the principle of good faith and to safeguard the interests of the company.
As a general rule, delegation of management authority by the board of directors does not entirely eliminate personal liability. The non-delegable duties of the board of directors set out in the TCC — namely, senior (top-level) management; determining the management organization; establishing the accounting system, financial audit, and financial planning; exercising senior oversight of persons entrusted with management; keeping the company’s books; preparing the annual activity report; preparing for general assembly meetings and implementing general assembly resolutions; and notifying the court in the event of over-indebtedness (technical insolvency) — remain, in all cases, the responsibility of the board of directors.
D. Step-by-Step Incorporation Process
Foreign-national shareholders and board members are required to obtain a potential tax identification number in Türkiye. The incorporation of a joint stock company is initiated through MERSİS (the Central Registry Recording System); once all documents are complete, registration is carried out before the relevant Trade Registry Directorate. The principal stages are as follows:
- Preparation of the articles of association: The articles of association, which must include the mandatory elements set out in Article 339 of the TCC, must bear the signatures of all founders. The provisions of the articles of association may not depart from the law except where expressly permitted by the TCC.
- Registration with MERSİS: The founders, or the attorney authorized by them, enter all founder information into the Central Registry Recording System and submit the application required for incorporation of the company.
- Execution of the articles of association: The articles of association may be signed by all founders in the presence of the Trade Registry Director. Alternatively, where the articles of association are to be signed by proxy, it is sufficient for the proxy holder to appear at the Trade Registry Directorate together with the original or a notarized copy of the power of attorney; the founders are not additionally required to sign the articles of association in person at the Trade Registry Directorate.
- Deposit of capital into a blocked account: At least 25% of the capital undertaken to be paid in cash must be deposited, prior to registration, into a blocked account opened specifically in the name of the company to be incorporated at a bank.
- Payment of the Competition Authority share prior to registration, four in ten thousand (0.04%) of the undertaken capital must be transferred to the Competition Authority’s account, and the corresponding receipt must be included in the application file.
- Application to the Trade Registry: All documents prepared are submitted to the Trade Registry Directorate. Following review of the completeness and legal compliance of the documents, the Directorate issues its decision on registration.
- Announcement in the Turkish Trade Registry Gazette: The company acquires legal personality once it is registered and announced in the Turkish Trade Registry Gazette (TTSG).
Where the founders of a joint stock company are foreign nationals and prefer not to be personally present in Türkiye for the incorporation formalities, any powers of attorney executed abroad by the foreign founders must bear an apostille, and a notarized Turkish translation of such powers of attorney must be submitted to the Trade Registry Directorate.
Küçüktuncay Law Firm provides advisory services to domestic and international clients on the incorporation of joint stock companies, the establishment of corporate governance structures, and ongoing compliance obligations under Turkish law. For questions on this subject, you may contact us at info@kucuktuncaylaw.com.