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Differences Between Joint Stock Companies (Jsc) And Limited Liability Companies (Llc)In Turkey
1. Differences on Capital
One of the most important differences between joint stock companies and limited liability companies in Turkish law is the minimum amount of capital that the company should have. This difference is as shown below;
• The minimum capital required for the establishment of a joint stock company is TRY 50.000
• For limited liability companies, the Capital is TRY 10.000
2. Differences according to public offering status
• Turkish Law has prevented limited companies from being offered to the public.
• Under Turkish Law, only joint stock companies are entitled to conduct public offerings
3. Differences according to the obligation to have an attorney within the company
Every company has the right to have an attorney within it. According to Turkish law, there is no restriction on this issue. However, some companies are required to have an attorney. These rules can be explained as follows;
• Joint stock companies with a minimum capital of two hundred fifty thousand Turkish Liras are mandated to make a consulting agreement with an attorney.
• There is no requirement for limited liability companies to have an attorney present.
4. Differences in the number of shareholders
The number of shareholders is an important expression in terms of Turkish Commercial Law. The rules that the law applies to companies in this regard are as follows;
• Limited liability companies and joint stock companies may both be launched with a single shareholder.
• In joint stock companies, there are no restrictions as to the number of shareholder.
• Limited liability companies cannot have more than 50 shareholders.
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5. Differences in terms of shareholders’ liabilities
• The liability of the shareholders for the actions and debts of the company is one of the most important issues. Knowing these differences and acting accordingly is extremely important in terms of Turkish law. These differences are as follows;
• In joint stock companies, shareholders’ liabilities regarding corporate debts are limited. The partners are solely responsible for fulfilling the capital they have committed and only to the company. The partners cannot be held liablefor the public debts of the company. This characteristic of the joint stock companies ensures that the shareholders’ personal assets are exempted from the losses and risks undertaken by the company.
6. Differences according to the obligation of the shareholders to be a manager
• In joint stock companies, it is possible for the shareholders to participate in the Board of Directors as managers; however, it is not obligatory for at least one shareholder to be a member of the Board of Directors. According to common practice, shareholders in joint stock companies do not usually hold positions in the Board of Directors as managers or legal representatives. Experts and professionals of the fields in which the company operates manage the company. This provides a more functional and effective operation for the company. The obligations arising from public debts and criminal liabilities of the company are undertaken not by the shareholders but by the persons assigned to that position. The responsibilities of shareholders are thereby limited significantly.
• In limited liability companies, the directors carry out the management operations. Management and representation of the company may be granted to one or more shareholders or all shareholders or third parties bearing the title of manager by the articles of association. However, at least one shareholder has to assume management and representation authority of the company. The obligation of legal representation and management by at least one shareholder constitutes an economic risk for the said shareholder, and also imposes legal and criminal liability arising from the managerial duties. In this regard, particularly limited liability companies with single-shareholder face unexpected economic, legal and penal risks and challenges.
7. Differences determined in terms of share transfer
• In joint stock In joint stock companies, it is not mandatory to perform the transfer of shares before the notary public or to register these transfers in the trade registry. In joint stock companies, the shares are divided into two types as registered shares and bearer shares:
• Registered shares may be transferred freely unless otherwise provided in the articles of association. The transfer of registered shares occurs by endorsement and delivery to transferee.
• The transfer of bearer share certificates takes effect for the company and the third parties only after simple delivery. Procedural convenience of share transfer in joint stock companies meets the speed and efficiency requirements of business.
• In limited liability companies, transfer of shares is subject to certain conditions and formal requirements. The transfer must be made by a notarized transfer agreement, the approval of the general assembly (Shareholders holding at least three quarters of the capital must approve) and the share transfer must be registered in the trade registry. If the transfer is not registered, the transfer shall not be deemed legally valid.
CONCLUSION
The differences between joint stock companies and limited liability companies in Turkish Law can be summarized in this way.
• Joint stock companies may be preferred over limited liability companies for minimizing the financial liabilities and risks for the shareholders commercial activities and personal assets, the easy and rapid transfer of capital shares, and the various advantages in terms of management.
