Overview
Once a Turkish company is registered, almost everything that legally happens to it takes place through two channels: resolutions of the general assembly of shareholders and resolutions of the management body, which is the board of directors in a joint stock company (anonim şirket, JSC, shown as AŞ in the tables) and the manager or managers in a limited liability company (limited şirket, LLC, shown as Ltd). Nearly every action also touches the articles of association (the articles) or the trade registry, and often both. Turkish company law is procedural. A decision agreed commercially but taken by the wrong organ, without the required majority or without the formalities the Turkish Commercial Code No. 6102 (the Code) attaches to it, may be void or open to annulment, and the trade registry will simply decline to register it.
This guide follows on from our guide on company formation in Türkiye and covers the period after the company is up and running. The navigator above gives a one-card answer for each action. The sections below give the context, one action at a time, and each opens with a table showing at a glance who decides, the majority required and the formalities involved.
Who Decides What
| Matter | Joint Stock Company (AŞ) | Limited Liability Company (Ltd) |
|---|---|---|
| Elects and removes management | General assembly elects and removes the directors (arts. 359, 364) | General assembly appoints and removes the managers (art. 616) |
| Accounts, release, dividend | General assembly (art. 408) | General assembly (art. 616) |
| Amends the articles | General assembly (art. 408) | General assembly (art. 616) |
| Runs and represents the company | Board of directors, with the non-transferable duties of art. 375 | Managers, over everything not reserved to the general assembly (art. 623) |
| Approves share transfers | No approval unless the articles restrict transfers (art. 492) | General assembly, unless the articles remove the requirement (art. 595) |
Neither list can be delegated. The board’s non-transferable duties under article 375 include the senior management of the company, the accounting and financial planning systems, the appointment and removal of managers other than branch managers, the keeping of the share ledger, the board resolution book and the general assembly minute book, and the notification of over-indebtedness to the court. For foreign groups the practical consequence is that a resolution of the parent, however clearly worded, does not by itself bind the Turkish company. It has to be converted into a Turkish general assembly or board resolution in the proper form, in Turkish, and signed by the persons the Code identifies.
The Ordinary General Assembly
| At a glance | Joint Stock Company (AŞ) | Limited Liability Company (Ltd) |
|---|---|---|
| Who decides | General assembly, convened by the board (art. 410) | General assembly, convened by the managers (art. 617) |
| Deadline | Within three months of the financial year end (art. 409), so by 31 March for most companies | Same (art. 617) |
| Majority | One quarter of the capital present, majority of the votes present (art. 418) | Absolute majority of the votes represented (art. 620) |
| Ministry representative | Only if the agenda contains a trigger item | Never (art. 617/3) |
| Notary and registry | Notarized minutes and registration only for elections and articles amendments | Same |
| Notice | Two weeks through the Trade Registry Gazette (the Gazette) and the website, or none if all shares are represented (art. 416) | Fifteen days, which the articles may shorten to ten, or none (arts. 617, 416) |
The agenda is largely fixed by law: elections, the financial statements, the annual report, the use of the profit and the release of the directors or managers. A skipped meeting does not dissolve the company, but it leaves management without release, blocks distributions and is one of the first items a buyer or a lender examines. Missed years are caught up one meeting per year before a share sale can close.
Most closely held companies never use the notice procedure. Article 416 allows a meeting to take decisions without any notice where all the shares are represented and no shareholder objects, so for a wholly owned subsidiary the entire annual cycle can be handled in a single meeting attended by a proxy under a power of attorney. In an LLC the shareholders may also resolve by written circulation, provided the same proposal is put to every shareholder and none asks for a meeting (art. 617/4). Shareholders holding at least one tenth of the capital may require management, through a notary, to convene a meeting or to add items to the agenda (art. 411).
Quorums and Majorities
| Decision | Joint Stock Company (AŞ) | Limited Liability Company (Ltd) |
|---|---|---|
| Ordinary decisions, including elections, release and dividends | One quarter of the capital present, majority of the votes present; no quorum at a second meeting (art. 418) | Absolute majority of the votes represented, with no separate quorum (art. 620) |
| Amendments to the articles in general | One half of the capital represented, majority of the votes present; one third at a second meeting held within a month (art. 421/1) | Shareholders representing two thirds of the capital, unless the articles provide otherwise (art. 589/1) |
| Capital increase | As for an amendment to the articles | Two thirds of the votes represented together with the absolute majority of the entire voting capital (art. 621) |
| Capital reduction | Affirmative votes of 75% of the capital (art. 473/3) | Two thirds of the capital, as for an amendment (arts. 589, 592) |
| Limitation or removal of pre-emptive rights | Affirmative votes of 60% of the capital, and only for good cause (art. 461/2) | Qualified decision under art. 621 |
| Complete change of purpose, privileged shares, transfer restrictions | 75% of the capital, at the first and at every subsequent meeting (art. 421/3) | Qualified decision under art. 621, which also covers a change of the company seat and dissolution |
| Obligations to cover balance sheet losses, transfer of the seat abroad | Unanimity (art. 421/2) | Not replicated; a change of seat is a qualified decision |
Two points matter in negotiation. First, provisions in the articles that lower the statutory quorums for amendments in a JSC, or that provide for a relative majority, are invalid (art. 421/1). Second, the thresholds a minority can rely on are those measured against the whole capital rather than against attendance. A holding of just over 25% blocks the 75% decisions permanently, and just over 40% blocks the 60% decision, whereas the ordinary amendment quorum collapses at the second meeting. In an LLC the two-thirds rules of articles 589 and 621 mean that a holding of just over one third blocks every amendment. The threshold tool at the end of this guide works through these rules for any holding.
When a Ministry Representative Must Attend
Certain JSC general assemblies must be attended by a representative of the Ministry of Trade, and the minutes are invalid unless the representative signs them alongside the chair. The representative is mandatory in every meeting of a company whose incorporation and amendments require Ministry permission, in every electronic meeting or meeting held abroad, and otherwise whenever the agenda includes a capital increase or reduction, entry into or exit from the registered capital system, an increase of the registered capital ceiling, a change of the corporate purpose, or a merger, division or change of legal form. Single-shareholder companies are exempt unless they belong to the permission group. The representative is requested from the trade registry directorate in advance with the meeting file, which is where a meeting convened at short notice usually stalls. LLCs are outside the regime altogether (art. 617/3), a difference worth weighing at the entity selection stage for a group that expects frequent capital movements.
Board Resolutions and Signature Authority
| At a glance | Joint Stock Company (AŞ) | Limited Liability Company (Ltd) |
|---|---|---|
| Who decides | Board of directors (art. 390) | Managers, or the general assembly where it has limited their authority (arts. 624, 630) |
| Majority | Majority of the total number of members present, decision by majority of those present; circulation resolution possible | Majority of the managers, chair’s casting vote (art. 624/3) |
| Notary | Notarized copy of the resolution on representation (art. 373/1) | Same, by reference (art. 629) |
| Registry | Representatives and their manner of signing are registered and announced (art. 373) | Same |
| Signature declarations | At the trade registry directorate, not before a notary (art. 40/2) | Same |
Members may neither vote on behalf of one another nor attend through a proxy. Where no member requests a meeting, a resolution may be taken by circulation on the written approval of at least the majority of the members, provided the same proposal was put to every member, which is a condition of validity. Resolutions are valid only if written and signed (art. 390).
Representation belongs to the board and, unless the articles provide otherwise or the board has one member, is exercised jointly by two signatures (art. 370). The board may delegate representation to delegated directors or to managers, provided at least one director retains it, and limited authorities for employees are granted through an internal directive that is itself registered (art. 371/7). The representatives and the manner of their authority are registered and appear in the signature circular that banks and counterparties ask to see. Public authorities may rely only on the registry record and the Gazette (art. 373/3), but until a change is registered it cannot be asserted against third parties acting in good faith, so the outgoing representative still binds the company (art. 36).
Changing Directors or Managers
| At a glance | Joint Stock Company (AŞ) | Limited Liability Company (Ltd) |
|---|---|---|
| Who decides | General assembly (arts. 359, 364); the board fills a vacancy provisionally until the next meeting (art. 363) | General assembly (arts. 616, 630) |
| Majority | Ordinary (art. 418) | Ordinary (art. 620) |
| Term | Up to three years, re-election permitted (art. 362) | No statutory maximum |
| Ministry representative | No, unless the company is in the permission group | Never |
| Notary and registry | Notarized minutes, registration and announcement; application within fifteen days (art. 30) | Same |
Directors may be removed at any time by the general assembly if the item is on the agenda, and without an agenda item where there is good cause (art. 364). A legal entity may sit on the board, registered together with the one natural person who acts for it (art. 359/2). A foreign national joining the board needs a Turkish tax number before the filing, and the resolution allocating the chair and representation authority is filed in the same step so that the signature circular is updated at once. In an LLC, at least one shareholder must remain a manager (art. 623), and a shareholder may ask the court to remove or limit a manager for good cause (art. 630/2).
Capital Increases
| At a glance | Joint Stock Company (AŞ) | Limited Liability Company (Ltd) |
|---|---|---|
| Who decides | General assembly by articles amendment (art. 456), or the board within a registered capital ceiling authorized for up to five years (art. 460) | General assembly, always (art. 590) |
| Majority | One half of the capital represented, majority of the votes present (art. 421/1); 60% of the capital to limit pre-emptive rights (art. 461/2) | Two thirds of the votes represented together with the absolute majority of the entire voting capital (art. 621) |
| Ministry representative | Always | Never |
| Payment | 25% of a cash increase before registration, evidenced by a bank letter, balance within 24 months | No pre-payment requirement (art. 585); payment within 24 months |
| Registry | Within three months of the resolution, or the resolution lapses (art. 456/3) | Registration and announcement |
Except for an increase from internal resources, the capital cannot be increased while the cash consideration for the existing shares remains unpaid, apart from insignificant amounts (art. 456/1), which catches companies that deferred part of their capital at incorporation. Every shareholder has a pre-emptive right to subscribe in proportion to its shareholding, with at least fifteen days to exercise it (art. 461/3). Where a foreign investor enters through a capital increase rather than a share purchase, those rights have to be dealt with expressly, by waiver or by a resolution limiting them for good cause explained in a registered board report.
An increase from internal resources converts free reserves and the funds the legislation permits to be added to capital, confirmed by an approved annual balance sheet or a new one if more than six months have passed. Where such funds exist the capital cannot be increased by subscription alone without converting them, although both may be done together, in the same proportion (art. 462/3). Companies incorporated before 1 January 2024 that are still below the current statutory minimums must raise their capital by 31 December 2026, a deadline we examined in a separate alert.
Capital Reductions
| At a glance | Joint Stock Company (AŞ) | Limited Liability Company (Ltd) |
|---|---|---|
| Who decides | General assembly by articles amendment, on a board report that is registered (art. 473) | General assembly; the JSC rules apply by analogy (art. 592) |
| Majority | Affirmative votes of 75% of the capital (art. 473/3) | Two thirds of the capital (art. 589) |
| Ministry representative | Always | Never |
| Creditor procedure | Three announcements at seven-day intervals, two months for creditors to demand payment or security, waived where the reduction only covers losses (art. 474) | Same, by analogy |
| Registry | Only after the creditor period has run and the claims notified are paid or secured (art. 475) | Same |
A reduction that returns capital to the shareholders takes about three months because of the creditor procedure, and the registry will not accept the filing without a report confirming that the assets still cover the creditors’ claims in full (art. 473/2). A reduction that only covers balance sheet losses can be filed straight after the meeting and, combined with a simultaneous increase, is the usual cure for a loss of capital. The capital cannot fall below the statutory minimum (art. 473/5).
Share Transfers
| At a glance | Joint Stock Company (AŞ) | Limited Liability Company (Ltd) |
|---|---|---|
| Form | Endorsement and delivery of the certificate, or written assignment where none is printed (art. 490) | Written agreement with notarized signatures (art. 595/1) |
| Approval | None unless the articles restrict transfers (art. 492) | General assembly, which may refuse without reasons; deemed approved after three months of silence (art. 595) |
| Registry | No registration and no announcement; the share ledger governs (art. 499) | Registered and announced, application by the managers within thirty days (art. 598) |
| Publicity | Shareholders are not public record, except a single shareholder (art. 338/2) | Shareholders are public record |
| Timing | Same day is feasible | Notary appointment, general assembly, registry filing |
This difference is the single most common reason foreign investors choose the JSC. Registered shares in a JSC are freely transferable unless the law or the articles provide otherwise, and toward the company only the person recorded in the share ledger is a shareholder. The articles may allow the company to refuse a transfer for an important reason they set out, or by offering to take the shares over at their real value, and may require the transferee to declare that it acquires in its own name and for its own account (art. 493). Introducing a restriction after incorporation requires 75% of the capital. Bearer shares transfer only on notification to the Central Securities Depository (MKK) alongside delivery of the certificate (art. 489).
In an LLC the transfer, and the undertaking to transfer, must be in writing with notarized signatures, and unless the articles provide otherwise it takes effect only on the approval of the general assembly. Under the public receivables law the transferor and the transferee are jointly and severally liable for the tax and social security debts of the period before the transfer (Law No. 6183, art. 35), so either can be pursued for the full amount and a tax clearance review belongs in every LLC share purchase.
Amending the Articles: Seat, Trade Name and Purpose
| At a glance | Joint Stock Company (AŞ) | Limited Liability Company (Ltd) |
|---|---|---|
| Who decides | General assembly (art. 408); Ministry permission first for companies in the permission group (art. 333) | General assembly (art. 616) |
| Majority | One half of the capital represented, majority of the votes present (art. 421/1); 75% for a complete change of purpose (art. 421/3); unanimity to move the seat abroad (art. 421/2) | Two thirds of the capital (art. 589); art. 621 majority for purpose, seat, transfer rules and capital |
| Ministry representative | Only for a change of purpose or a capital item | Never |
| Registry | Effective against third parties on registration (art. 455) | Same (art. 589/2) |
| Address within the same city | Board resolution and registration, no amendment | Managers’ resolution and registration |
The articles name the city of the seat, so an address change within the same city is a management resolution and a registration rather than an amendment, whereas a move to another city changes the registry directorate and the tax office. A trade name change is checked for availability by the registry before the meeting. A complete change of the corporate purpose is a 75% decision in a JSC and an article 621 decision in an LLC, and a registered shareholder that voted against it is free from transfer restrictions for six months (art. 421/6).
Dividends
| At a glance | Joint Stock Company (AŞ) | Limited Liability Company (Ltd) |
|---|---|---|
| Who decides | General assembly, on approved accounts (art. 408) | General assembly (art. 616) |
| Majority | Ordinary (art. 418) | Ordinary (art. 620) |
| Source | Net profit for the period and free reserves only (art. 509/2) | Net profit and reserves set aside for that purpose (art. 608) |
| Reserves first | 5% of the annual profit until the legal reserve reaches 20% of the paid-in capital, and in every year 10% of the amounts distributed above 5% of the capital (arts. 519, 523) | Statutory and contractual reserves before any distribution (art. 608) |
| Formalities | No notary, no registry; withholding tax return | Same |
A dividend cannot be fixed until the legal and contractual reserves have been set aside, and the general assembly may set aside further reserves only where the Code allows (arts. 523, 608). Interim dividends in companies outside the capital markets regime follow the Ministry communiqué on advance dividends (art. 509/3). A company in a loss of capital position has nothing to distribute, so article 376 is the prior question.
When a Loss of Capital Forces a Corporate Action
Article 376 turns a financial position into a duty of management. If the last annual balance sheet shows that half of the sum of the capital and the legal reserves is unmatched by losses, the board must call the general assembly immediately and propose remedial measures. If two thirds is unmatched, the general assembly must resolve either to continue with one third of the capital or to complete it, failing which the company is dissolved automatically. Where there are indications of over-indebtedness, the board draws up an interim balance sheet on both going concern and realization values and, if the assets do not cover the creditors’ claims, notifies the commercial court and requests bankruptcy, unless creditors have subordinated sufficient claims in the manner the Code prescribes.
The Ministry of Trade communiqué on the application of article 376 governs the calculation and has been amended several times, so its current text should be checked before an assessment is finalized. The trigger is the annual balance sheet, so the assessment belongs to the moment the accounts are prepared rather than to the meeting that approves them. The check at the end of this guide runs the arithmetic on the three figures involved.
How We Can Assist
Semiz Law Firm handles the corporate housekeeping of Turkish subsidiaries for foreign groups: preparing and running ordinary and extraordinary general assemblies, including meetings held without notice under a power of attorney, director and manager changes with the signature circular updated in the same filing, capital increases and reductions in both the ordinary and the registered capital systems, share transfers together with the share ledger entries and registry filings, articles amendments and dividend resolutions, and the assessment required when a balance sheet shows a loss of capital. For further information you can visit our corporate law page.
This guide provides general information current as of its date of publication and does not constitute legal advice. Specific transactions should be assessed on their own facts.
For further information: [email protected] | www.semizlaw.com