Introduction
Choosing the right company structure is one of the most important steps when starting a business. Understanding the main types of companies in Turkey helps ensure long-term success.
This article provides a comprehensive overview of the most common company types under Turkish law—especially Limited Liability Companies (Ltd. Şti.) and Joint Stock Companies (A.Ş.)—highlighting their similarities, differences, and strategic uses.
What Are the Main Types of Companies in Turkey?
The types of companies in Turkey officially recognized under the Turkish Commercial Code (TCC) No. 6102 include the following legal forms:
- Joint Stock Company (A.Ş.)
- Limited Liability Company (Ltd. Şti.)
- Collective Company
- Commandite Company
- Cooperative Company
In practice, Joint Stock and Limited Liability Companies are by far the most commonly chosen by both domestic and international investors. Therefore, we will focus this guide primarily on these two types.
What is a Joint Stock Company (A.Ş.) in Turkey?
According to Article 329 of the Turkish Commercial Code, a Joint Stock Company (A.Ş.) is a legal entity with a fixed capital divided into shares. Shareholders are only liable to the extent of their subscribed capital, and the company itself is responsible for its debts with its assets.
A.Ş. companies can issue share certificates, offer public shares, and benefit from advanced corporate governance structures. These features make them attractive for large-scale or international ventures.
What is a Limited Liability Company (Ltd. Şti.) in Turkey?
Defined in Article 573 of the same code, a Limited Liability Company (Ltd. Şti.) is formed by one or more persons, with capital divided into share portions. Although subject to fewer formalities, these companies cannot operate in specific sectors like banking or insurance and are limited to a maximum of 50 shareholders.
Similarities Between A.Ş. and Ltd. Şti.
- Both are capital companies.
- Can be founded by at least one real or legal person.
- No requirement for founders to be Turkish citizens or residents.
- Eligible for all lawful business activities (except for restricted sectors in Ltd. Şti.).
- Must have a General Assembly.
- Management can be undertaken by legal entities represented by real persons.
- In-kind capital contributions allowed under specific conditions.
- Both subject to Turkish corporate tax and dividend withholding tax.
- Profit distribution advances are permitted.
- Dissolution takes at least 3 months under standard procedures.
Joint Stock vs Limited Liability Company in Turkey: Key Differences
| Criteria | Joint Stock Company (A.Ş.) | Limited Liability Company (Ltd. Şti.) |
|---|---|---|
| Minimum Capital | TRY 250,000 (TRY 500,000 for registered capital) | TRY 50,000 |
| Shareholders | Minimum 1, unlimited (500+ subject to CMB rules) | Minimum 1, maximum 50 |
| Capital Blockage | 25% required before registration | No pre-registration deposit required |
| Liability for Public Debts | Only board members liable under conditions | Shareholders liable proportionally if company defaults |
| Share Transfer | Freely transferable, no notary required | Notarized agreement + General Assembly approval needed |
| Capital Gains Tax | Tax exempt after 2 years (individuals); 75% for corps | Always subject to capital gains tax |
| Public Offering | Allowed | Not allowed |
| Bond Issuance | Allowed | Not allowed |
| Legal Counsel | Mandatory if capital ≥ TRY 1,250,000 | Not mandatory |
| Management Structure | Board of Directors (can include non-shareholders) | Manager(s), at least one must be a shareholder |
| Ministry Representative | Required in certain meetings | Not required |
| Sectoral Restrictions | None | Prohibited in finance, banking, insurance, etc. |
| Voting Rights | Max 15 votes per share | No limit; veto rights possible |
| Amending Articles | 50% quorum + majority vote | 2/3 capital + majority of votes |
| Company Duration | Unlimited | Maximum 99 years |
Factors to Consider When Choosing a Company Type
Selecting the most appropriate company type depends on several key criteria, including:
- the amount of capital you plan to invest,
- your growth strategy,
- number and nationality of shareholders,
- and whether you aim to raise funds via public offering or maintain a closely held structure.
For example, foreign investors often prefer A.Ş. structures for flexibility in share transfers and potential access to capital markets.
Taxation and Incentives for Company Types in Turkey
Both Joint Stock and Limited Liability Companies are subject to the standard corporate income tax rate in Turkey (currently 25%).
They can equally benefit from government-backed investment incentives, including:
- VAT exemption on machinery and equipment,
- customs duty exemption,
- social security premium support,
- and potential interest support in priority regions.
However, the auditing threshold differs. A.Ş. structures with higher capital may be subject to mandatory independent audit, while Ltd. Şti. may not.
Conclusion: How to Choose Between Different Types of Companies in Turkey
Among all types of companies in Turkey, both A.Ş. and Ltd. Şti. are equally eligible for government incentives…
However, if you’re planning a large-scale investment, considering foreign partners, or seeking access to capital markets, a Joint Stock Company (A.Ş.) offers a more suitable structure. In contrast, if your focus is on simplified operations, cost-efficiency, and closely held management, a Limited Liability Company (Ltd. Şti.) may better align with your business model.
FAQ: Types of Companies in Turkey
Q1: What is the best company type for a foreign investor in Turkey?
A: Joint Stock Companies (A.Ş.) are often preferred by international investors due to their flexible governance structure and easier share transfer rules.
Q2: Can I convert my company from Ltd. Şti. to A.Ş. later?
A: Yes, type transformation is legally allowed under the Turkish Commercial Code, subject to procedures and shareholder approval.
Q3: Are both company types eligible for tax incentives?
A: Yes. There is no discrimination between A.Ş. and Ltd. Şti. in terms of eligibility for government incentives.
Related Resource: Employment Contracts in Turkey
Once you decide on the right company type, it’s equally important to understand the legal framework of hiring employees. For a detailed overview of employment agreements and their types, you may refer to our guide: Types of Employment Contracts in Turkey
Need Tax Advice in Turkey?
Choosing the right company type is only the first step. Understanding your tax obligations and planning your structure accordingly is just as important. If you’d like to get expert support on corporate tax, transfer pricing, or investment incentives in Turkey, we recommend visiting our tax-dedicated partner site:
🌐 metropolpartners.com/en
💬 Reach out directly for tailored advice from our former tax inspectors and expert consultants.