Joint Stock Company - JSC | News

3.1. Joint Stock Company - JSC

Number and Qualities of the Shareholders:
Number and Qualities of the Shareholders: Joint stock companies may be established with one or more shareholders; there is no maximum limit on the number of shareholders. Therefore, a sole shareholder joint stock company may be established.

According to the current Turkish Trade Law, banks, private finance institutions, insurance companies, financial leasing companies, factoring companies, holding companies, companies operating as foreign currency exchange offices, companies dealing with public warehousing, publicly held companies subject to the Capital Markets Law, companies that are founders and operators of free zones should be established as Joint Stock Associations and these companies are still subject to permit from Ministry of Industry and Trade for their foundations.

Minimum Capital Amount:
The minimum capital required for a Joint Stock Company is TRY 50.000. Where the capital of the company shall entirely or partially be undertaken in cash, ¼ of the nominal value of the shares to be contributed should be paid before the registration, while the remaining amount shall be paid within 24 months subsequent to the registration. In other words, in a joint stock company that shall be established with the minimum capital amount, and where this capital is undertaken in cash, at least TRY 12.500 should be deposited to the bank account to be opened in the name of the joint stock company to be established.

It is also possible to contribute assets as capital in kind. Assets, including intellectual property rights, virtual environments and domains, which are marketable, transferable and free of any encumbrance, attachment or lien, may be contributed as capital in kind. However, services, personal labor, goodwill and undue receivables may not be contributed as capital.

Trade Name:
Each merchant should perform its commercial activity under a trade name and use its trade name when signing any deed related to its commercial enterprise. The registered trade name should be written in a legible manner and placed in plain sight within its workplace. Also, the documents used in relation to the commercial enterprise should specify the trade registry number, trade name, head office, and if required its registered internet address.

Furthermore, the trade name of the company should contain the words limited liability and refer to the company's activities.

Some names require special permission to use like Turkiye and Turk and needs permission from Turkish Senate.

A majority of %25 is sufficient to approve most actions; a majority of more than 50% is required for major decisions including the change of the articles of association.  A minority of 10% of equity capital (5% in public company(s)) can call an extraordinary shareholders’ meeting or add topics on the agenda of shareholders’ meetings. A single shareholder may request an extraordinary shareholders’ meeting or add topics on the agenda of the shareholders’ meeting irrespective of his capital contribution, provided that the request is approved by the board of directors or the local court.

The legal representatives of Joint Stock Companies are jointly and severally liable for any unpaid taxes and other fiscal liabilities that cannot be collected from the entity. Where a director is appointed as a fully authorized board member to represent the company or a manager is appointed to represent the company, the directors in the board would not be personally liable for any unpaid taxes and other fiscal liabilities.

Board of directors
Joint Stock Company is governed by board of directors and they have been granted the authority to represent and bind the company. Board of directors can be constituted by one or more member and board members no longer need to be shareholders. Legal entity can be a board member too, but it must be represented by real person. There are no restrictions on nationality or residence of board members.

One or several board members can be appointed. The general assembly may appoint the board members for up to 3 years and may re-appoint for additional terms.

Board members are not required to be shareholders. Real and legal entities are allowed to be selected as a board member. The physical presence of board members is not required for board meetings; The commercial code allows board meetings to be held in an electronic environment and board resolutions may also be approved via electronic signatures.

In case, a corporate body becomes a board member, an individual shall be appointed to act on behalf of the corporate body and this individual shall also be registered with the local trade registry.

Independent Auditors
Companies are not obliged to have an internal auditor as a statutory organ. Companies to be subject to independent auditing are determined by the Cabinet of Ministers. Companies exceeding the following limits of at least two criteria among three criteria in two successive fiscal periods shall be subject to independent audit.

Total Assets: Min TRY 150 Million TL

Net Sales: Min TRY 200 Million TL

Number of Employees: Min 500

Furthermore, a minority of 10% or shareholders owning 1 million TL equivalent shares can request a special audit provided that the founders or directors act against the rights and/or interest of the company and shareholders.

Articles of Association:
The articles of association of the company should be in written form, and notary public should approve the founders' signatures. Within this framework, the following shall be clearly stated in the articles of association:

Company's trade name and location of its head office;
Scope of company business with main points defined and specified;
Nominal value of the capital, number of shares in the capital, their nominal values, privileges attached thereto, if any, and groups of shares in the capital;
Names, surnames, titles and nationalities of the managing directors;
Form of notices to be made by the company

Also, the TCC includes provisions that shall be binding if they are stipulated in the articles of association:

Regulations diverging from the statutory provisions regarding restrictions on the transfer of shares;
Granting to the shareholders or the company the right of pre-emption, right of first refusal and option to purchase regarding the shares in the capital;
Imposing additional payment obligations, and the form and scope thereof;
Imposing ancillary performance obligations, and the form and scope thereof;
Provisions granting veto rights to designated shareholders or superior voting rights to certain shareholders in the event of a tie on a general assembly resolution;
Penalty provisions that may be applied when the liabilities set forth in the TCC or in the articles of association are not fulfilled at all or in due time;
Provisions pertaining to non-compete obligations diverging from the legal provisions;
Provisions granting privileged rights as to the convocation to a general assembly meeting;
Provisions diverging from the legal provisions regarding the decision making at general assembly meetings, voting rights and the calculation of voting rights;
Provisions authorizing the assignment of company's management to a third party;
Provisions diverging from the legal provisions regarding the disposal of balance sheet profits;
Granting the right to withdraw and terms of its exercise, and the type and the amount of cash payment to be made in such cases;
Provisions determining special cases regarding the dismissal of a shareholder from the company;
Provisions governing dissolution on grounds other than those specified under the TCC

Required Documentation:
The following documents must be attached to the application:

A notarized copy of the articles of association of the company; Founder's declaration with its annexes; and The document indicating the persons authorized to represent the company together with their addresses and the appointed auditor

Further, the following information shall be provided in the application:

Names and surnames or titles, addresses and nationalities of the shareholders;
Shares in the capital subscribed by each shareholder and total amount that they have undertaken;
Names and surnames or titles of each managing director, whether they are a shareholder or a third party;
Representation method of the company

We would like to emphasize that even though the TCC provides a general framework for the required documentation, the content and form of the documents should be checked with the related trade registry.