DIFFERENCES BETWEEN A JOINT STOCK COMPANY AND A LIMITED LIABILITY COMPANY
The following are some of the more important differences and similarities between a Joint Stock Company and a Limited Liability Company under Turkish laws :
• A single shareholder is sufficient to establish A Joint Stock Company or A Limited Liability Company. A limited Liability Company may not have more than fifty shareholders, but no such maximum applies to A Joint Stock Company. Neither A Joint Stock Company nor a limited Liability Company require mandatoryTurkish shareholders (i.e., they may be 100% foreign-owned).
• The minimum capital required for a limited Liability Company is 10.000 Turkish opposed to 50.000 Turkish for Joint Stock Companies. For non-public Joint Stock Companies who adopted the registered capital system the minimum capital is 100.000. If the shares are stipulated in cash in A Joint Stock Company, at least 25% of the capital should be paid during the registration process and the unpaid amount shoul be paid within 24 months after registration. In a Limited Liability Company the total amount of the capital shall be paid during registration.
• A Joint Stock Company is managed by its board of directors. A limited Liability Company may be ruled by one or more managers. If there is more than one manager in A Limited Liability Company, one of them should be appointed as the chairman of the board of managers Although, all authorities of the shareholders relating to the management of a limited Liability Company may be granted to a general manager or one of the shareholders, at least one of the managers should be a shareholder. Furthermore, at least one member of the board of directors of a Joint Stock Company must be a Turkish citizen and shall be resident in Turkey and at least one of the managers in the board of managers of the Limited Liability Company must reside in Turkey.
• The New Turkish Commercial Code provides a new category of minority rights for the purpose of minority shareholder protection both in A Joint Stock Company and in A Limited Liability Company . The minority shareholders right to demand information, examination and complaint are strengthened by the formation of new auditing system with independent auditors. The requirement to sell the shares of the minority shareholders who are acting in bad faith or in the event of a merger to the parent company is the exemption of the protection.
• While with the enactment of the new Turkish Commercial Code, the Limited Liability Company is recovered from the limitations of a personal company and is constituted more like a Joint Stock Company, the bankruptcy of a shareholder no longer results in the bankruptcy of a Limited Liability Company.
• Limited Liability Company shareholders, unlike Joint Stock Company shareholders, may be jointly liable for amounts owed by the Limited Liability Company to government authorities for taxes, duties and charges which cannot be collected from the Company. The liability of the shareholders will be proportional with their capital contribution but is not limited to the amount they contributed.
• The shares of a limited Liability Company, unlike those of a Joint Stock Company, cannot be represented by negotiable share certificates. Any transfer of shares in a limited Liability Company must be decided by the general board with the majority of the votes unless otherwise agreed by the articles of incorporation and the transfer document must be notarized. A share transfer in a Joint Stock Company has not need to comply with such requirements.
For the purpose of ensuiring transperency both for the Limited Liability Companies and Joint Stock Companies commercial books shall be kept in accordance with the Turkish Commercial Code and comply with Turkish Accounting Standards and Companies ought to have websites which must include significant financial documents, informations, signature circulars etc.
Both for the Joint Stock Companies and Limited Liability Companies the "Ultra Vires" principle is no longer valid meaning that if the Company carries out a business which is not mentioned at the articles of incorporation, the Company will still be responsible, and liable to third parties.