Principal Types of Business Entities In Turkey

This post is on principal types of business entities in Turkey.

Single Person Businesses:

Single person businesses are the simplest, oldest and most common form of business in practice. The business has one owner. For this reason, the owner of the business takes, implements and supervises all kinds of decisions regarding business activities. Any operational risks that may arise belong entirely to him. They are legally easy to install and terminate. Insufficient capital and unlimited liability to creditors prevent them from growing.

Companies:

Companies established by combining the labor and capital of more than one person with a contract to realize common economic goals and interests or as a requirement of a certain economic purpose and interest are called companies. In order to talk about the existence of a partnership, the following qualifications must be present:

– Partners must be more than one person. These persons can be natural or legal persons. These persons are called partners, shareholders, sheriffs or shareholders.

– A common purpose must be found.

– In order to achieve the common goal, there must be a contract between the partners.

– In order for the company to achieve its purpose, it should bring the goods and labor of its partners to the company as capital.

Ordinary Companies:

It is a type of company formed by two or more people by putting their goods and efforts to achieve a common goal. Ordinary companies are companies that do not have an entity separate from the owner. It is the simplest company model. Ordinary companies that are subject to the Law of Obligations do not have legal personality. Therefore, partners have joint ownership over their own assets. All partners are obliged to act together in legal actions and transactions regarding the company and the company’s assets.

-The establishment has not been subjected to a specific shape.

– It can be established verbally or with a written contract in terms of difficulty of proof. The contract is approved by the Notary. Unless otherwise specified in the contract, although the amount of capital is different, the share of the partners’ profit and loss is equal

– Decisions are taken unanimously by the partners.

– The management of the company belongs to all of the partners

– Partners are jointly responsible for the debts of the company

– The company does not have to be registered and announced in the Trade Registry.

– If the person who will establish a name company is a trader, he / she has to register individually with the Chamber of Commerce of the region to which he / she is affiliated.

– There is no minimum capital stipulated. Which partner will put how much capital is optional. If the receivable is put as capital, the partner who put the capital is deemed to have transferred this receivable to the company and committed to its payment. If the labor is invested as capital, this joint may not be included in the loss, but it receives a share from the profit. This joint responsibility cannot be exempted. It does not have to use a trade name.

– There is a participation ownership on everything brought as capital. Each partner participates at a certain rate and has no right of disposition on his own share. The Ordinary Company should rather be established in temporary partnerships, and should not go this way for permanent business.

Trade Companies:

Trading companies are divided into two according to their characteristics.

Individual Companies:

These are the types of companies that have legal personality and have unlimited responsibilities of the partners. Partnerships established by a certain number of people as a requirement of a common economic interest or interests and whose responsibilities are personal are called private companies. The number of partners is generally small and the transfer of the partnership is very difficult. In individual companies, partnership shares cannot be sold or transferred to others without the approval of all partners. The responsibility of a partner leaving the company to third parties due to company relations continues for a while. The partners are real persons and are liable (with all their assets) against company debts. Private companies are divided into two according to the TCC. Unlimited company and Commandite company.

Collective Companies:

It is a type of company established between real persons in order to operate a commercial enterprise under a trade name, and the liability of none of its partners is not limited to the receivables of the company. According to the Turkish Commercial Code, partnerships established between real persons in order to operate a commercial enterprise under a trade name, where each of the partners is unlimitedly liable to the creditors of the company, is called a collective company. Each partner is responsible for the management of the company. Unless there is a provision to the contrary in the foundation agreement, the partnership cannot be removed without the consent of the other partners. Likewise, the consent of all partners must be required to hire a new partner to the company. Only natural persons can become partners in collective companies. The partners can divide the profit or loss equally or at the rates previously stated in the articles of association.

Active partner:

It is a partner whose responsibility is unlimited and chained. They can be elected to the management of the company and consist of real persons Commitment partner: Partners whose responsibility is limited to the capital in the company. They cannot be elected to the management of the company. The active partners can be natural and legal persons.

The trade name of the limited partnership companies must bear the name of one of the active partners and an expression indicating the subject of the company. It is forbidden to include the name and surname of the active partners in the trade names of these companies. Commandite companies are managed and represented by active partners. The matters required to be included in the articles of association of the collective company and the documents required for registration are also valid for limited partnership companies. Commandite companies are divided into two as Ordinary Commandite and Limited Partnership with Shares.

Capital Companies:

In capital companies, the responsibilities of the partners are limited to the amount of capital they have committed to bring to the company. In such companies, the partnership is not broken with the departure of one of the partners. The partnership shares of the partners in the company are not personal. These shares can be sold or transferred to someone else.

One of the most important characteristics of capital companies is that being a shareholder in the capital and dealing with the management of the company are separated from each other. Such partnerships are called capital companies because the partners remain in the background and the main one is the capital brought to the company. The company draws its strength and reputation from its capital and management. Company assets constitute an assurance against company receivables. There are three capital companies included in the TCC: joint stock companies, limited liability companies, and limited partnerships with shares divided into shares.

Joint Stock Companies:

Partnerships established by at least five or more real or legal persons and have a basic capital divided into shares, an economic purpose and subject, and are liable only for the existence of the company due to their debts are called joint stock companies. Its most important features are:

– The number of partners must be at least five. Partners can be natural or legal persons.

– The basic capital of the company should be certain and the minimum amount of this amount should be fifty thousand TL.

– The basic capital of the company is divided into equal shares.

– The commercial title of the company must be found and the subject of work must be specified.

– The company’s liability to third parties is limited to the existence of the company.

– The financial liability of the company partners towards third parties is limited to the amount of capital they bring to the company.

Joint stock companies are established in two ways as instantaneous and gradual. In the sudden establishment, all of the capital is committed by the founding partners. In the sudden establishment, founding partners must pay at least 25% of their capital commitments within 3 months from the establishment, and the remaining 75% within 3 years. In the gradual establishment, on the other hand, during the contract phase, all of the capital is not committed by the founding partners, only one tenth (1/10) is provided, and the remainder is consulted.

Limited Liability Companies:

Companies that have been established under a trade name by two or more real or legal persons for economic purposes and issues and whose responsibility is limited to the capital they commit to bring to the company and whose basic capital is known are called “limited liability companies”. Its most prominent features are:

– The number of partners cannot be less than two and more than fifty.

– Its basic capital should be at least five thousand YTL.

– They cannot deal with banking, insurance and stock market banking.

– Shares cannot be issued for the capital brought to the company.

– Regardless of the amount of the partnership share, each partner has a share.

– Transfer of partnership shares generally requires the permission of other partners.

– The basic capital of the company must be specified in envelopes, papers and other printed documents regarding the company and the company title must bear the word “limited company”.

Limited companies are managed and represented by partners. In such companies, there is a general meeting of partners. In addition, it is obligatory to have at least one auditor in limited companies with more than 20 partners.

Limited Partnership, the Capital of which is Divided into Shares:

It is a company whose capital is divided into shares and one or more of its partners are liable to the receivables of the company as a collective company, others as a joint stock company partner. In this type of company, responsible partners such as collective company partners are called “limited liability”, and those responsible such as joint stock company partners are called “commanding” partners.

Cooperatives:

The cooperative is an economic organization established to ensure that human needs are met through mutual assistance and to protect the interests of the partners. According to the law on cooperatives, if it is a cooperative: It is established by real and public legal entities and private administrations, municipalities, villages, societies and associations in order to provide and protect certain economic interests of its partners and especially their profession and livelihood requirements through mutual assistance, solidarity and surety. Organizations with variable partners and variable capital are called “cooperatives”. Cooperative organizations carry out their activities under the following cooperative principles in line with the economic principles followed by other enterprises:

– Free entry and exit (open membership)

Democratic rule

– Giving limited interest to the capital

– Development of cooperative education

– Cooperation with cooperatives

Leave a Reply

Your email address will not be published.

× How can I help you?