24/06/2023

Unlocking Business Potential: Exploring Limited Liability Companies in Turkey

Liability Companies in Turkey

When it comes to establishing a business in Turkey, entrepreneurs have a variety of corporate structures to choose from. One commonly adopted structure is the Limited Liability Company (LLC).

This article delves into the concept of Limited Liability Companies in Turkey, exploring their key features, advantages, and considerations. By understanding the nuances of LLCs, entrepreneurs can make informed decisions and harness the potential of this versatile corporate structure.

Definition and Formation

A Limited Liability Company is a business entity that combines elements of both sole proprietorship and corporate structures. It provides a separate legal identity for the business while offering limited liability protection to its owners. In Turkey, an LLC can be established with a minimum of one shareholder and requires the drafting of an articles of association, registration with the trade registry office, and obtaining necessary permits.

Limited Liability Protection

One of the primary advantages of an LLC is the limited liability protection it offers to its shareholders. The personal assets of shareholders are generally safeguarded from the company’s debts and obligations. Shareholders’ liability is limited to their capital contributions, promoting a sense of security and protecting their personal wealth.

Capital and Ownership

LLCs have a flexible capital structure, allowing shareholders to contribute their capital in cash, assets, or in-kind contributions. The capital is divided into shares, and shareholders’ rights are proportional to their share ownership. This structure promotes transparency and allows for the distribution of profits based on the shareholders’ contributions.

Management and Decision-making

LLCs in Turkey offer flexibility in terms of management and decision-making. The shareholders can manage the company themselves or appoint one or more managers to handle day-to-day operations. The articles of association outline the management structure, decision-making processes, and the authority and responsibilities of the managers. This flexibility enables efficient decision-making and allows for the implementation of the shareholders’ strategic vision.

Governance and Compliance

While LLCs in Turkey are subject to fewer regulatory requirements compared to Joint Stock Companies (JSCs), they are still required to comply with certain legal and governance obligations. LLCs must maintain proper accounting records, undergo regular audits, and prepare financial statements. They are also required to hold annual general meetings to discuss company matters and make decisions related to profit distribution, capital increases, or changes in company structure.

Transition and Expansion

LLCs provide flexibility for businesses to evolve and expand. As the business grows, an LLC can bring in new shareholders or transfer ownership shares to others. This allows for capital infusion and potential collaboration with new partners. Additionally, LLCs can merge with other companies or undergo a conversion process to transform into different business structures, such as a Joint Stock Company, when the need arises.

Conclusion

Limited Liability Companies in Turkey offer a balanced and flexible corporate structure for entrepreneurs seeking the benefits of limited liability protection and operational flexibility. With their separate legal identity, transparent governance, and capital flexibility, LLCs empower businesses to grow, collaborate, and adapt to changing market conditions. Entrepreneurs should consult legal and financial professionals to navigate the legal requirements and maximize the potential of LLCs in Turkey’s vibrant business landscape.

Azkan Group can support you in your Employer of Record (EOR) and payroll requests (also called Umbrella Company) in Turkey. We can manage your HR requests even if you don’t have a legal entity in Turkey.