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Joint Stock Company in Turkey

Joint Stock Company in Turkey: Formation & Regulations Guide

A Joint Stock Company (JSC) is a popular corporate structure in Turkey, especially for large-scale businesses. The Turkish Commercial Code (TCC) governs the formation, operation, and dissolution of JSCs, making them one of the most flexible and widely adopted business entities in the country. This article will provide a detailed overview of Joint Stock Companies in Turkey, covering their formation, legal structure, governance

Table of Contents

What is a Joint Stock Company (JSC)?

A Joint Stock Company (JSC) in Turkey is a legal entity where the capital is divided into shares, and the liability of shareholders is limited to the value of their shares. This type of company is often chosen for medium to large-scale businesses, especially those considering public offerings or seeking to raise capital through investors. JSCs are governed by the Turkish Commercial Code (TCC), which outlines the rights and obligations of shareholders, directors, and the company.

image representing a "Joint Stock Company in Turkey." The visual elements include a modern Turkish corporate office what written "JOINT STOCK COMPANY on it, with Turkish flag, a boardroom meeting, financial documents, and symbols of growth and investment.
Joint Stock Company in Turkey
Key Features of a Joint Stock Company in Turkey

1. Legal Personality

  • A JSC has its legal personality, separate from its shareholders. This means it can own property, enter contracts, sue, and be sued in its name.

2. Shareholders & Liability

  • It may be seted up by at least one or more individuals or legal entities.
  • If the number of shareholders exceeds 250, it will be subject to the supervision of regulatory institutions such as the Capital Markets Board of Turkiye(CMB)
  • Non-managing shareholders are liable only to the extent of the capital they subscribe. They are not personally liable for the company’s debts beyond their capital contributions.
  • Managing shareholders have unlimited liability

3. Capital Requirement

  • The minimum capital required to establish a JSC in Turkey is 250,000 Turkish Liras. However, for publicly held JSCs, the minimum capital is 500,000 Turkish Liras.
  • 1/4 of the capital must be blocked in a bank account before its establishment.

4. Transfer of Shares

  • Shares in a JSC can be freely transferred unless otherwise restricted by the company’s articles of association. This feature makes JSCs attractive for investors and facilitates capital raising.

5. Board of Directors

  • A JSC is managed by a Board of Directors, which must consist of at least one member. The board is responsible for the company’s management and representation. Directors can be shareholders, but this is not mandatory.
Formation of a Joint Stock Company in Turkey

1. Preparation of Articles of Association

  • The process begins with drafting the articles of association, which must comply with the provisions of the Turkish Commercial Code. The articles should outline the company’s name, purpose, capital, and shareholder information.

2. Registration with the Trade Registry

  • The JSC must be registered with the local Trade Registry where the company’s headquarters is located. The registration process involves submitting the articles of association, identification documents, and proof of capital contribution.

3. Publication in the Trade Registry Gazette

  • After registration, the JSC’s establishment must be announced in the Turkish Trade Registry Gazette, which makes the company’s formation public.

4. Tax Registration

  • Once the company is registered, it must also register with the local tax office to obtain a tax identification number. The company will be subject to corporate tax on its profits.
  • Click for more info about Tax Registration in Turkey

5. Social Security Registration

  • Joint stock companies must register with the social security institution in order to employ workers.
  • Payroll requirements and premium payments are carried out with the Social Security ID number.

6. Opening a Bank Account

  • The JSC must open a corporate bank account in Turkey, into which the shareholders’ capital contributions are deposited.
  • Click for more info about Opening Bank Account in Turkey
Governance of a Joint Stock Company in Turkey

1. General Assembly

  • The General Assembly of Shareholders is the supreme decision-making body of the JSC. It meets at least once a year to approve financial statements, decide on profit distribution, and appoint directors.

2. Board of Directors

  • The Board of Directors is responsible for the company’s management. Directors are elected by the General Assembly and can be appointed for a maximum of three years. The board represents the company in all legal matters.

3. Auditors

  • While JSCs are not required to have an internal auditor, they must undergo an independent audit if they meet certain criteria related to size and turnover.
Taxation of a Joint Stock Company in Turkey

1. Corporate Income Tax

  • JSCs in Turkey are subject to corporate tax, which is levied on the company’s worldwide income. The corporate tax rate is 25%, but this can be adjusted by the government.

2. Dividend Withholding Tax

  • When dividends are distributed to shareholders, a withholding tax of 10% is applied. However, this rate may be reduced under double taxation treaties.

3. Value Added Tax (VAT)

  • JSCs must also comply with VAT regulations, which apply to the sale of goods and services. The standard VAT rate in Turkey is 20%.
  • In Turkey, various VAT rates are applied for different goods and services, such as 1%, 8% and 10%.

4. Withholding Tax (WHT)

Joint-stock companies are required to withhold taxes on the following payments and remit them to the tax office on behalf of the recipient:

  • Salaries and compensation for employees
  • Rent payments for the workplace
  • Payments to freelancers
  • Progress payments for construction contracts and repair work extending over more than one calendar year.

5. Stamp Duty

  • Joint stock companies are subject to stamp duty at variable rates for certain documents they issue (purchase agreements, lease agreements, payrolls).

Need more detail about Turkish Tax System? Click then.

Advantages of Forming a Joint Stock Company in Turkey

1. Limited Liability

  • Shareholders’ liability is limited to their capital contribution, protecting personal assets from the company’s debts.

2. Attractive to Investors

  • The ability to freely transfer shares makes JSCs attractive to investors, particularly for those interested in exit strategies.

3. Ease of Raising Capital

  • JSCs can issue shares and bonds, making it easier to raise capital for expansion.

4. Corporate Structure

  • The formal corporate structure with a Board of Directors and General Assembly provides clear governance and management.
  • It also provides high reputation on lenders
Challenges of Forming a Joint Stock Company in Turkey

1. Initial Capital Requirement

  • The minimum capital requirement may be a barrier for small businesses or startups.

2. Regulatory Compliance

  • JSCs which exceeding a certain size or sales volume are subject to strict regulatory requirements, including independent audits and detailed financial reporting.

3. Operational Complexity

  • Managing a JSC can be complex, especially for companies with many shareholders or extensive operations.
Setup your JSC in Turkey

A Joint Stock Company in Turkey offers numerous advantages, including limited liability, ease of raising capital, and a formal governance structure. However, it also comes with challenges, such as the need for significant initial capital and compliance with regulatory requirements. For businesses looking to operate on a larger scale, particularly those with plans to go public or attract significant investment, a JSC is often the ideal corporate structure.

When considering forming a Joint Stock Company in Turkey, it is crucial to consult with Turkish Tax Advisors to ensure compliance with Turkish laws and to optimize the company’s operations for success.

A&M Consulting Co. is a Turkish Accounting and Tax Consultancy company specialized in providing end-to-end company establishment services for especially global investor and foreign entrepreneurs which wants to walk into to Turkey’s market

We continue to offer cost-effective solutions to global and individual entrepreneurs who want to enter the Turkish market smoothly and quickly, to ensure their full compliance with local legislation and to facilitate their access to tax exemptions and incentives.

DISCOVER OUR SERVICES:

Company Registration in Turkey

Tax Services

Accounting & Bookeeping Services

HR & Payroll Services

Business Consultancy for Turkey

Social Security Registration

You can reach out to our experienced consultans via email or by filling out the Contact Form on our website’s contact page.

FAQs About Joint Stock Company in Turkey

The minimum capital required is 250,000 Turkish Lira for private JSCs and 500,000 Turkish Lira for publicly held JSCs.

Yes, foreigners can establish a JSC in Turkey, either as individuals orcorparate.

Yes, JSCs may be subject to an independent audit if they meet certain size and turnover criteria.

The documents required to establish a joint stock company in Turkey vary depending on whether the shareholders are individual or corporate entities.

For Individual Shareholders:

  • Tax number
  • Passport translation
  • Residence address
  • Contact information
  • Picture
  • Residence permit and Turkish ID number (if based in Turkey)

 

For Corporate Shareholders:

  • Notarized and apostilled board decision of parent company
  • Representative’s contact information, address, Turkish ID number, and passport translation

Forming a JSC in Turkey typically costs about 4,000 – 5,000 EUR. This includes:

  • Virtual office fee: 10 EUR/Month
  • Company registration service: Approximately 3,000 EUR
  • Accounting and tax consultancy: Around 500 EUR/Month
  • Bank account opening service: 500 EUR/Bank

 

Establishment fees and costs may be higher for free zones or Technoparks.

The duration of the establishment of a JSC may vary depending on whether the shareholders are exist in Turkey phizicilly or not and whether they are indivicual or legal entities.

While this period is 1-3 days for indivicual founders located in Turkey, it may be longer for corparate and founders outside of Turkey.

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