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Joint stock companies (“JSC”) incorporated in Turkey are called “anonim şirket”/ “A.Ş.” and they are regulated by the Turkish Commercial Law. JSCs are companies with a liability limited to their assets.
Incorporation
A JSC can be incorporated with one or more shareholders, that can be either real persons or legal entities. Shareholders of a JSC are only liable with the share capital they subscribed to the company.
Minimum legal share capital requirement for JSCs is TL 50,000. One fourth of the share capital must be paid prior to the registration of the company and the remaining amount must be paid within twenty-four months following the registration. Payment schedule can be determined in the articles of association or by the board of directors of the company.
JSCs can issue registered or bearer shares. They can also issue debt instruments such as bonds. JSCs are the only type of company under Turkish law, of which the shares can be listed and publicly offered.
JSCs, which are active in certain activities and JSCs, of which the total assets, annual net sale revenues or number of employees exceed certain thresholds, are subject to independent audit.
Incorporation of certain type of companies such as banks, insurance companies or asset management companies are subject to the approval of the Ministry of the Trade.
Incorporation of a JSC by foreign shareholders is subject to the same rules applied to local shareholders.
Governing Bodies of JSCs
1- General Assembly
General assembly is one of the governing bodies of a JSC and is composed of all the shareholders of the company. General assembly has some exclusive and non-transferable authorities, which are as follows:
- amendment of the articles of association,
- appointment and removal of the board members,
- appointment and removal of the auditors,
- distribution of dividends,
- sale of majority of the company’s assets,
- approval of the financial tables and
- termination of the company.
General Assembly Meetings:
Annual general assembly meetings are held once a year within three months following the end of the company’s fiscal year to resolve on matters such as (i) appointment of directors, (ii) release of the directors for the activities of the previous year and (iii) distribution of dividend, A company’s fiscal year is usually the same as the calendar year.
General assembly meetings can also convene extraordinarily when it becomes necessary.
Quorum:
Unless, a higher quorum is required under the TCC or the articles of association, a general assembly meeting can be held with the presence of at least ¼ of the share capital. If the quorum cannot be met in the first meeting, one is not required for the second meeting. Decisions are made with the majority of the attendants.
Certain decisions are subject to special quorum under the TCC, as follows:
| Subject | Meeting Quorum | Decision Quorum |
| Changing the nationality of the company | 100% | 100% |
| Increasing the subscriptions of the shareholders | 100% | 100% |
| Changing the objects of the company | 75% | 75% |
| Creation of privileged shares | 75% | 75% |
| Decision to sell a material part of the company’s assets | 75% | 75% |
| Restriction on transfer of registered shares | 75% | 75% |
| Dissolution of the company | 75% | 75% |
| Decreasing the share capital | 75% | 75% |
| Merger | 75% | 75% |
| Amending the AoA for purposes other than the purposes above | ½ (1st meeting) 1/3 (2nd meeting) | Majority of those present or represented |
2- Board of Directors
Composition:
A JSC is represented and managed by the Board of Directors. Board of directors can be composed of one or more directors. A board member can be a real person or a legal entity. Where a legal entity is appointed as a board member, such entity must appoint a real person to represent it in board meetings and sign the board resolutions on its behalf. Each year, board members appoint a chairman and a vice-chairman but each director has only one vote, including the chairman. Board of Directors is entitled to delegate certain authorities to one or more of the directors or to managers who are not directors or shareholders.
Appointment:
Board members are appointed by the general assembly for at most three years. Same person can be reappointed at the end of three years. Board members can be removed by the general assembly before the expiry of the term of their office.
Board Meetings:
Unless otherwise stipulated in the articles of association, a board meeting can convene with the majority of the members and decisions are made by the affirmative votes of the majority of the attendants. Articles of association cannot decrease the meeting or the decision quorum but can increase them.
Board members must participate board meetings in person. In the event that majority of all the board members approve a resolution in writing, it is not required to convene a meeting.
Renumeration:
Pursuant to the TCC, remuneration of the members of the board of directors is resolved by the general assembly unless it is regulated under the articles of association.
Restrictions:
Directors are not allowed (i) to contract business with the company, either directly or indirectly for themselves or on behalf of others, or (ii) to conclude any commercial matter concerning the company’s field of business or to participate in any other company dealing with similar commercial matters, as a shareholder, unless explicitly permitted by the general assembly.
Liabilities:
Apart from the liabilities under the TCC with respect to their duties, Board members, who are authorized to represent the company, are also liable with their personal assets for the public debts (including tax and social security debts) which cannot be collected from the company’s assets.
Work Permits:
Foreign directors, who are also shareholders of the company, are required to have a work permit. Foreign directors, who are not shareholders and who do not reside in Turkey, are not required to have a work permit.
Transfer of Shares
Bearer shares are transferred with the transfer of the possession of the share certificates.
Registered shares are transferred with the endorsement of the share certificates and transfer of the possession of the same. Transfer of registered shares must also be approved by the board of directors and registered in the share ledger of the company.
Transfer of shares of joint stock companies are not subject to registration or announcement.
