LIMITED LIABILITY COMPANY LIMITED LIABILITY COMPANY A) Concept Article 573 – (1) A limited liability company shall be incorporated by one or more real persons or legal entities under a trade name; its basic capital shall be definite and consist of the sum of basic capital shares.
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LIMITED LIABILITY COMPANYLIMITED LIABILITY COMPANY
A) ConceptArticle 573 – (1) A limited liability company shall be incorporated by one or more real persons or legal entities under a trade name; its basic capital shall be definite and consist of the sum of basic capital shares.
(2) Partners shall not be responsible for the debt of the company; they shall be responsible only for paying for the basic capital shares for which they subscribed and for fulfilling their obligations to make additional payments and for secondary performances set forth in the articles of association.
(3) Limited liability company can be incorporated for all kinds of economic purposes and scopes that are not prohibited by law.
SHAREHOLDERSSHAREHOLDERSCAPITAL REQUIREMENTCAPITAL REQUIREMENTFounding share holders: Minimum 1 –
Maximum 50Capital requirement: In Total Minimum
10.000 TL
Legal Status: Independent Turkish CompanyShareholder Liability: Limited with the payment of the capital guaranteed by themIssuing Stocks: AllowedManagement: Managing partnersGovernance: Partners Assembly meetingTransfer of Shares: AllowedTaxation Liabilities: Corporation tax 20% (2011)
Definition of LLCDefinition of LLC
LLC defined as companies which have declared principal capital divided into shares and founded by real or legal people under a title. Partners of a LLC are only responsible with amount of the capital which they have guaranteed to put in and with the subsidiary performance and supplementary payment which are anticipated in the main contract, not with the debts of the company (Art.573).
The main contract should be in written and signs of the founders should be approved by notary. The issues to be written on the main contract are regulated under the Art.576 as:
The commercial name of the company and the place where is the company’s center is located.
Field of operation of the company defining the principal points
The nominal amount of the principal capital, the number of shares of the principal capital and their nominal amount, prerogatives if there are and the groups of the principal capital
The name, surname, nationality and degrees of managers
The form of announcements that will be made by the company
The minimum amount of the principal capital should be 10.000 TRY however it can be increased by the decision of Council of Ministers up to 10 times of 10.00 TRY.5
The moment of establishment is defined under the Article 585 of NTCL as indicated below:
The company is established after the declaration of intent to establish the company by founders, the commitment of the capital unconditionally and the payment of the cash part of the capital.
Registry and Announcement
To the Art.587 the main contract of the company will be registered at the commercial registry and announced on the commercial registry gazette within 30 days following the approval of the notary the founder’s signs. The company obtains its legal entity by being registered to the commercial registry, by the statement of the Art.588.
Limited şirket kanunen yasak olmayan her türlü ekonomik amaç ve konu için kurulabilir.
Like stock company, limited liability company (Llc) is also a capital company.
Capital: The capital is predetermined (fixed), and must be at least 10.000 TL. This capital is divided into shares. Unlike stock corporations, the LLC can not issue stock certificates representing the shares.
Shareholders have share interest.Personal services or work cannot be
contributed as capital. The minimum of a share must be 25 TL.
The formation of a limited liability company is similar to stock corporation. The founders prepare and sign partnership agreement and notary authenticates their signatures.
The partnership acquires legal personality upon registration in the commercial registry.
LIMITED LIABILITY COMPANYLIMITED LIABILITY COMPANY(Ltd. Şti.)(Ltd. Şti.)
Number of shareholders: Minimum 1, and maximum 50 persons (real/legal).
Purpose and subject matter: Any commercial activity (except some activities that reserved only for stock companies like banking, insurance, and leasing etc). It must be indicated in the articles of incorporation, as well as in the firm name.
Management: LLC is managed (internal reletionship) and represented (external relationship) by the directors. In the articles of incorporation names and nationality of directors must be shown. Directors can also be appointed among the non-shareholders. But at least one director must be shareholder.
Their signatures, on behalf of the company, are required on any document to which the company is supposed to be a signatory.
Liability of the shareholders: It is limited to their capital contribution.This rule can not be applied when there is a public obligation. Article 35 of the Code Regarding Collection of State Receivables (Amme Alacaklarının Tahsil Usulü Hakkında Kanun) states that shareholders are responsible for their company’s debts to the State for a percantage of unpaid taxes equal to his percentage of shares.To be able to apply shareholder, the company must be unable to pay the debt.
General assembly: Ordinary general assembly convene once
each year, within 3 months following the end of fiscal year.
Extra ordinary meetings are held when it is necessary.
Written consents in lieu of meeting are permitted.
Right of receiving informationRight of receiving informationTCC art 614 states that each partner can ask information about all the company’s works and accounts from directors and each partner can make an inspection about the works of the company.The directors can refuse the application of information if there is a possibility of using these information against company.
Right of Resign (Çıkma hakkı)Right of Resign (Çıkma hakkı)
TCC art.638.In the company agreement, right of resign
can be regulated. It can be subject to some conditions.
Each partner can apply to court to for court decision of resign when there is just grounds
Dismissal of a partnerDismissal of a partner
TCC art.640.In the company agrement provisions
related to dismissal can be regulated.The partner who is dismissed by general
assembly, can bring an action for nullity.
LIMITED LIABILITY COMPANYLIMITED LIABILITY COMPANY(Ltd. Şti.)(Ltd. Şti.)
Transferability of shares: Rule: Share interest in the LLC is transferable. Exceptions: Transfer of share interest is not valid against the
company, unless it has been notified to the company and registered in the share book of the company. For registration the consent of the shareholders is required. In genereal assembly transfer can be dismissed.
LIMITED LIABILITY COMPANYLIMITED LIABILITY COMPANY(Ltd. Şti.)(Ltd. Şti.)
The free transfer of share interests can be restricted or even forbidden by the charter.
Agreements on share transfer must be in writing, and the signatures must be authenticated by the public notary.
Dissolution any reason set forth in the articles of
corporationDecision of general assemblyBankruptcyA court order based on just ground,
upon the request of a shareholder
*Upon termination, a limited company is liquidated and deregistered.
A limited liability corporation is ideal for medium-size family business, as the internal organization is relatively simple and the liability of the share interest holders is limited.
What are the main differences between a limited liability company and a corporation?
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