Limited company or joint stock company in Türkiye? Making the right choice at formation

One of the first questions for anyone starting a business or investing in Türkiye is which type of company to form. The two most common capital companies are the limited company (limited şirket, Ltd. Şti.) and the joint stock company (anonim şirket, A.Ş.). In both, shareholders are, as a rule, not personally liable for the company's debts; but they differ significantly on capital, share transfers, management and liability for public debts. These differences often surface years after formation - when a shareholder wants to leave or an investor is brought in. This article compares the two and explains when each may be more suitable.

Side-by-side comparison

Capital: how much, and when?

From 1 January 2024 the minimum capital is TRY 50,000 for limited companies and TRY 250,000 for joint stock companies. Non-public joint stock companies adopting the registered capital system need initial capital of at least TRY 500,000.

The timing of payment also differs. In a joint stock company, at least twenty-five per cent of the nominal value of shares subscribed in cash is paid into a bank account opened in the company's name before registration, and the balance within 24 months of registration. In a limited company, since a 2018 amendment there is no requirement to pay before registration; the capital may be paid within 24 months of registration. Unpaid capital is a receivable of the company from its shareholders and also matters to the company's creditors.

Share transfers and leaving the company

A limited company is a closed structure built on personal relationships. A share transfer requires a written transfer agreement signed before a notary, as a rule general assembly approval, and registration with the trade registry. This keeps unwanted persons out of the shareholder base but makes transfers slower and more costly.

Share transfers in a joint stock company are easier. Registered shares are transferred by endorsement and delivery; entry in the share ledger is required for the transfer to have effect against the company. The articles of association may restrict transfers. Transfers of bearer shares must be notified to the Central Registry Agency (MKK).

The difference also shows when a shareholder wants to leave. In a limited company, a shareholder may ask the court to allow them to exit on just cause, and the articles may grant an exit right. In a joint stock company, a shareholder can as a rule leave only by transferring their shares.

Management and representation

A joint stock company is managed and represented by its board of directors, which may consist of a single member. A limited company is managed by one or more managers; the law requires at least one shareholder to hold management and representation powers as a manager. In both, managers who breach their duties under the law and the articles may be liable to the company, the shareholders and creditors.

Liability for public debts

This is the least-known difference in practice. Under Article 35 of Law No. 6183, shareholders of a limited company are directly liable, in proportion to their capital share, for tax and similar public receivables that cannot be collected from the company. Shareholders of a joint stock company have no such liability. In both company types, however, the legal representatives (directors and managers) may separately be liable for public debts.

Which one fits?

Formation step by step

The formation process

1. Trade name and business purposeThe trade name and fields of activity are chosen, and availability of the name is checked.
2. Articles of associationThe articles are prepared through the MERSİS system, setting out capital, shareholdings, management and representation.
3. CapitalFor a joint stock company, at least a quarter of the cash capital is deposited with a bank; contributions in kind are valued.
4. Signatures and applicationThe founders sign before the trade registry or a notary, and the formation application is filed.
5. Registration and publicationThe company is registered and announced in the Turkish Trade Registry Gazette.
6. Tax and social securityTax registration, opening of statutory books, electronic notification and, where needed, social security workplace registration are completed.

A note for foreign shareholders

Under the Foreign Direct Investment Law No. 4875, foreign individuals and companies receive the same treatment as Turkish investors and may form either type of company. Apostille and sworn translation of foreign shareholders' identity and corporate documents, obtaining a tax number and, where needed, work permits should be built into the formation timetable from the outset.

Frequently asked questions

Can a company be formed with one shareholder?

Yes. Both limited and joint stock companies can be formed with a single shareholder.

Can I convert a limited company into a joint stock company later?

Yes. Under the conversion provisions of the Turkish Commercial Code, a limited company can be converted into a joint stock company without liquidation, provided the minimum capital for a joint stock company is met.

Must all the capital be paid at formation?

No. In a joint stock company at least a quarter of the cash capital is paid before registration and the rest within 24 months. A limited company has no pre-registration payment requirement; the capital is paid within 24 months.

My company's capital is TRY 10,000 - what should I do?

If your capital is below the new minimum, you must complete a capital increase by 31 December 2026; otherwise the company will be deemed dissolved without any further decision. Because the general assembly, payment and registration steps take time, you should start without delay.

Which type carries less personal risk for shareholders?

In both types, shareholders are as a rule not liable for the company's debts. Because limited company shareholders may be liable for public debts that cannot be collected from the company, joint stock company shareholders are better protected in this respect.

Legislation and sources

• Turkish Commercial Code No. 6102: Art. 181 (conversion), Arts. 332 and 344 (joint stock company capital), Art. 490 (share transfer), Art. 580 (limited company capital), Art. 595 (transfer of limited company shares), Art. 638 (exit)
• Presidential Decision on minimum capital (in force 01.01.2024)
• Law No. 6183 on the Collection of Public Receivables: Art. 35
• Attorneys Law No. 1136: Art. 35 (mandatory in-house counsel)
• Foreign Direct Investment Law No. 4875: Art. 3

The current texts of Turkish laws and regulations are available on the official Legislation Information System, and decisions and amendments in the Official Gazette.

For company formation, capital increases or conversions, please contact us. Our services, which combine the legal and financial side, are described on our Corporate Law page.