I. INTRODUCTION

Under the Turkish Commercial Code No. 6102 (“TCC”), detailed provisions have been set forth regarding the incorporation, corporate bodies, and operations of joint stock companies and limited liability companies, which are categorized as capital companies. In commercial law, companies attain legal personality and their corporate structures take shape through qualified agreements executed by the founders.

The term “company agreement” (şirket sözleşmesi) refers to the articles of association (esas sözleşme) in joint stock companies, the company agreement (şirket sözleşmesi) in partnerships and limited liability companies, and the articles of association (ana sözleşme) in cooperatives (TCC Art. 135/1; Trade Registry Regulation [“TRR”] Art. 4/1-o). Accordingly, although both types of companies possess the nature of a capital company, the constitutional document of a joint stock company is titled “articles of association” (esas sözleşme), whereas the constitutional document of a limited liability company is titled “company agreement” (şirket sözleşmesi).

In this study, taking into consideration the provisions of the TCC, the administrative practice under the Trade Registry Regulation (TRR), and MERSİS (Central Registration System) processes, the fundamental principles regarding the incorporation of joint stock and limited liability companies, as well as the drafting of their respective constitutional agreements, are examined in sequence.

II. INCORPORATION OF JOINT STOCK COMPANY AND PREPARATION OF ARTICLES OF ASSOCIATION

A. Definition and Fundamental Characteristics of Joint Stock Company

A joint stock company is a company whose capital is definite and divided into shares, and which is liable for its debts only with its assets. Shareholders have no personal liability for the debts of the company. Shareholders are liable only to the company with the capital shares they have committed (TCC Art. 329).

For the incorporation of a joint stock company, the presence of one or more founders who are shareholders is mandatory (TCC Art. 338/1). Accordingly, joint stock companies can be established by a single person as well as by multiple persons.

The basic capital representing the entire capital subscribed in the articles of association cannot be less than two hundred fifty thousand Turkish Liras, and the initial capital cannot be less than five hundred thousand Turkish Liras in non-public joint stock companies which have adopted the registered capital system displaying the authorization ceiling granted to the board of directors in capital increases. This minimum capital amount may be increased by the President (TCC Art. 332/1).

B. Articles of Association of Joint Stock Company and Its Content

The company is incorporated upon the declaration of the founders’ intent to establish a joint stock company in the articles of association, which is prepared in accordance with the law, wherein they unconditionally commit to pay the entirety of the capital, and where their signatures are notarized or signed in the presence of the trade registry director or deputy director.

It is mandatory that the articles of association be made in writing and that the signatures of all founders be notarized or the articles of association be signed in the presence of the trade registry director or deputy director. The minimum mandatory provisions to be included in the articles of association are as follows (TCC Art. 339):

The trade name of the company and the location of its headquarters.
The field of operation of the company, specified and defined in its essential points.
The capital of the company, the nominal value of each share, and the terms and conditions of their payment.
Whether the share certificates are registered or bearer shares; privileges granted to certain shares; share transfer restrictions.
Rights and assets in kind contributed as capital other than cash; their values; the amount of shares to be issued in return; if the takeover of an enterprise or asset in kind is in question, their consideration; the costs of goods and rights purchased on behalf of the company by the founders for the incorporation of the company; and the amount of remuneration, allowance, or reward to be paid to those who rendered services in the incorporation of the company.
Benefits to be provided to founders, members of the board of directors, and other persons from the company’s profits.
The number of members of the board of directors and those authorized to sign on behalf of the company. How general assemblies shall be convened; voting rights.
If the company is limited to a specific duration, such duration.
How announcements pertaining to the company shall be made.
The types and amounts of capital shares committed by the shareholders.
The accounting period of the company.

C. Joint Stock Company Incorporation Stages and Trade Registry Registration Procedures

The process of registration and acquiring legal personality for joint stock companies is carried out within the framework of Articles 335 to 358 of the Turkish Commercial Code (TCC) and the Trade Registry Regulation (TRR).

Preparation of the Articles of Association via MERSİS and the E-Signature Process: The company’s articles of association are prepared through the Central Registry System (MERSİS) (TRR Art. 13/1). In cases where transactions are carried out using a secure electronic signature, the use of a time stamp on documents is essential (TRR Art. 13/8).
Capital Requirement and Bank Blockage: Pursuant to TCC Art. 344, it is mandatory that at least 25% of the nominal value of the shares committed in cash be deposited into a bank account opened in the name of the company prior to registration and documented. The remaining amount shall be paid within 24 months following registration.
Competition Authority Share: A Competition Authority share corresponding to four ten-thousandths (0.04%) of the capital must be paid.
Ministry Permission (Where Required): Pursuant to TCC Art. 333, the incorporation of joint stock companies listed in the communiqué published by the Ministry of Trade (such as banks, financial leasing companies, insurance companies, etc.) is subject to the permission of the Ministry of Trade.
Application to the Trade Registry Directorate and Required Documents: The registration application is submitted by the board of directors specified in the articles of association or by the authorized member(s) representing the company (TRR Art. 22/2-d-1). The principal documents to be submitted are as follows: a) Application petition prepared with the MERSİS request number.b) A Declaration of Commitment (Taahhütname) containing the NACE code, company capital, headquarters, and actual scope of activity (if these matters are declared in the petition, this document is not required separately) (TRR Art. 24).c) Articles of association signed by the authorized body or the founders.d) Bank letter and receipt showing that 25% of the capital committed in cash has been deposited.
e) Payment document for the Competition Authority share.
f) Representation and signature decisions (Board of Directors) of the company organs, along with signature declarations.
g) Chamber registration declaration and identity documents of the founders.
Registration, Announcement, and Registry Certificate: Following the examination of the documents, the company is registered in the trade registry. The date of registration is the date recorded in MERSİS with a time stamp (TRR Art. 25/2). Upon registration, a MERSİS number is assigned to the company (TRR Art. 13/2), and an approved Registry Certificate (Sicil Tasdiknamesi) is issued and delivered to the relevant party (TRR Art. 16). The company acquires legal personality upon being announced in the Turkish Trade Registry Gazette (TCC Art. 355). Registration and announcement generate legal consequences regarding third parties starting from the business day following the day the announcement is published (TRR Art. 30/1). Additionally, the initial commercial books (opening books) are certified by the registry directorate during registration.

III. INCORPORATION OF LIMITED LIABILITY COMPANIES AND DRAFTING OF THE COMPANY AGREEMENT

A. Definition and Fundamental Characteristics of Limited Liability Company

A limited liability company is established under a trade name by one or more natural persons or legal entities; its basic capital is fixed, and this capital consists of the total of the basic capital shares. The partners/shareholders are not liable for the company’s debts; they are only obligated to pay the basic capital shares they have committed to, and to fulfill additional payment and secondary performance obligations stipulated in the company agreement (TCC Art. 573). The number of partners/shareholders in limited liability companies must be between 1 and 50 (TCC Art. 574). A limited liability company may be established for any economic purpose and scope that is not prohibited by law.

B. Company Agreement of Limited Liability Company and Its Content

The company agreement must be drawn up in writing and signed by the founders in the presence of authorized personnel at the Trade Registry Directorate or before a notary public (TCC Art. 575/1).

The mandatory provisions that must be included in the company agreement of a limited liability company are as follows (TCC Art. 576/1):

The trade name and the location of the headquarters of the company.
The business objective and scope of activity of the company, specified and defined in its essential points.
The nominal amount of the basic capital, the number of basic capital shares, their nominal values, privileges (if any), and classes of basic capital shares.
The names, surnames, titles, and nationalities of the directors.
The form and medium of announcements/notices to be made by the company.

In addition, pursuant to TCC Art. 577, there are also optional provisions that are valid only if explicitly included in the company agreement. Imposing additional payment and secondary performance obligations on company partners, pre-emptive rights, rights of pre-emption/first refusal and call options, as well as transfer restrictions are among these optional provisions.

C. Incorporation Stages and Trade Registry Registration Procedures of Limited Liability Company

The incorporation of a limited liability company is carried out within the framework of Articles 573-588 of the TCC and the Trade Registry Regulation (“TRR”):

Preparation of the Company Agreement via MERSİS: The draft company agreement entered into the MERSİS system is approved and signed by the founders or authorized representatives (TRR Art. 13).
Capital Requirement and Payment Principles: The basic capital of a limited liability company is at least fifty thousand Turkish Liras. In limited liability companies, the requirement to pay cash-committed shares prior to registration (bank blockage) does not apply. The cash capital debt may be paid within 24 months following registration.
Competition Authority Share: The Competition Authority share in the amount of four ten-thousandths (0.04%) of the capital must be paid.
Application for Registration to the Trade Registry Directorate: In limited liability companies, the application for registration is made by all directors (TRR Art. 22/2-e-1). The main documents to be submitted are as follows:a) Application petition containing the MERSİS request number.b) Declaration of Undertaking stating the NACE code, capital, headquarters, and scope of activity of the enterprise (if stated in the petition, it is not required separately) (TRR Art. 24).c) Company agreement signed by the partners.d) Signature declarations and acceptances of office of the company director(s).
e) Payment receipt for the Competition Authority share.
f) Chamber registration declaration filled out via MERSİS.
Registration, Legal Personality, and Trade Registry Certificate: After the conformity of the documents with the legislation is verified by the trade registry directorate, the limited liability company is registered and announced with a MERSİS timestamp (TCC Art. 587; TRR Art. 25/2). A unique MERSİS number is assigned to the company (TRR Art. 13/2). Upon registration, a certified Trade Registry Certificate is issued to the company (TRR Art. 16). The company acquires legal personality upon registration in the trade registry (TCC Art. 588). Registration and announcement begin to produce legal effect for third parties starting from the business day following the day the announcement is published (TRR Art. 30/1).

IV. EVALUATION AND CONCLUSION

The provisions of the Turkish Commercial Code No. 6102 and the Trade Registry Regulation have brought both joint stock and limited liability company incorporations into a fast and secure structure through MERSİS integration and the one-stop-shop approach of Trade Registry Directorates.

When comparing the two types of capital companies; pursuant to TCC Art. 135/1 and TRR Art. 4/1-o, the term “articles of association” is used terminologically in joint stock companies, whereas the term “company agreement” is used in limited liability companies. Regarding their corporate structures, while the requirement to deposit at least 25% of the cash capital into a bank prior to registration (bank blockage) stands out in joint stock companies, this requirement does not apply to limited liability companies.

In terms of registration procedure within the framework of the TRR; procedural rules such as submitting a Declaration of Undertaking containing the NACE code, the application authority resting with the board of directors/representatives in joint stock companies and with all directors in limited liability companies, MERSİS e-signature/timestamp applications, the issuance of a Trade Registry Certificate post-registration, and the legal effect of the announcement on third parties commencing on the following business day are essential for the smooth acquisition of legal personality.