Establishing a Joint Stock Company in Turkey – 2025 Guide
A joint stock company (JSC) in Turkey is a business structure where ownership is represented by shares, and shareholders are only accountable up to the value of their committed capital. This comprehensive guide outlines everything you need to know to establish a JSC in Turkey, from the foundational requirements to tax liabilities, capital rules, and shareholder dynamics.
Before proceeding, it is important to note that establishing a company in Turkey as a foreign national requires specialized expertise. Therefore, it is strongly recommended to work with a corporate lawyer based in Turkey at this stage. In this respect, Çetin Attorney Partnership provides the highest quality legal consultancy and attorney services throughout Turkey, primarily in İzmir and Istanbul, in a professional, corporate, and transparent manner.
If you have any questions or require legal support on this subject, feel free to reach out to us at info@cetinavukatlik.com.
Understanding Joint Stock Companies in the Turkish Legal System
Joint stock companies are legally defined under the Turkish Commercial Code as capital-based entities whose liabilities are limited to the corporate assets. JSCs can be formed by either individuals or legal entities, and there is no nationality restriction, foreigners can also incorporate them without the need for Turkish partners. While limited liability companies are more common, JSCs are often required in certain regulated sectors like finance, insurance, or publicly traded businesses.
In international terms, a Turkish JSC is similar to entities such as Corporations (Inc., Corp.), Societas Europaea (SE), Società per Azioni (SpA), Sociedad Anónima (S.A.), Aktiengesellschaft (AG) or Public Limited Companies (plc).
Legal Steps to Form a JSC in Turkey
A JSC can be founded for any lawful commercial activity. The first step is to draft the articles of association, which act as the company’s operational framework. This document must outline the company’s business purpose, capital structure, governance, and share-related provisions.
Once the articles are complete, they must be signed by the founders before an official at the Trade Registry Office. Afterward, the company is officially registered and announced in the Turkish Trade Registry Gazette, granting it legal entity status.
Minimum Capital Requirements and Share Structure
As of 2025, the minimum capital required to incorporate a JSC is 250.000-Turkish Lira. If opting into the registered capital system (frequently used by publicly traded companies), the initial capital must be at least 500.000-TRY.
Capital must be divided into shares, and this breakdown -including share types and nominal values- must be clearly stated in the articles of association. At least 25% of the subscribed capital must be paid in cash before registration, with the rest to be paid within 24 months. The timeline and method of payment can be predetermined in the articles or by a board decision.
Naming the Company: Trade Name Requirements
The trade name must be distinctive, reflect the business activity, and end with “Anonim Şirket” (JSC in Turkish). Before finalizing the name, a registry search is recommended to avoid duplication. The chosen name becomes the company’s legal identity and must be included in the articles of association.
Company Purpose, Scope, and Duration
The company’s purpose and field of operation must be clearly defined. Broad language can be used to allow flexibility for future expansion. In regulated sectors, specific language is often required such as in health tourism or financial services.
The articles must also state whether the company is established for a limited or indefinite term. If time-bound, an extension must be decided before expiry to avoid automatic termination.
Headquarters and Address Registration
The company’s headquarters must be declared during registration. This official address is recorded in the trade registry. If it changes, the update must be reported through a formal decision by the General Assembly. Companies not requiring a physical office can opt for a virtual address, provided it’s legally valid.
Who Can Establish a JSC in Turkey?
Only one founder (either an individual or a corporate entity) is sufficient to start a JSC in Turkey. There is no upper limit on the number of shareholders. Foreign nationals and foreign legal entities can freely establish companies under the same legal framework as Turkish citizens.
Foreign individual founders must complete extra steps, such as passport translation, obtaining a Turkish tax ID, and registering a power of attorney. If the founder is a foreign company, additional documents, including a resolution designating a representative and a trade registry extract, must be translated and submitted.
Governance Structure: Required Company Bodies
Turkish law mandates two governing bodies for JSCs:
- General Assembly: This includes all shareholders and decides on critical issues like capital changes, board elections, or dissolution.
- Board of Directors: Handles day-to-day operations and strategic decision-making. Members may be shareholders or external individuals.
While not obligatory, companies may also appoint an auditor to oversee financial practices.
Shareholder Rights and Transfer Rules
Shareholders enjoy financial rights (dividends), management participation (voting), and protection mechanisms like preemptive rights. These rights and obligations should be defined in the articles.
Shares can be:
- Registered: Linked to the owner’s identity, requiring documentation for transfer and registration in the share ledger.
- Bearer: Easily transferable through delivery of the certificate, though such transfers must be reported to the Central Securities Depository (CSD).
Preferred shares can grant superior rights in dividends, voting, or liquidation returns. Transfers may be limited by unpaid share capital or conditions in the articles of association.
Profit Distribution and Reserve Funds
The method of distributing profits, dividend ratios, payment timelines, and creation of legal reserves must be defined in the articles. Any conditions for reinvestment or retained earnings should also be specified to avoid conflicts among shareholders.
Representation and Signing Authority
The authority to legally represent the company typically rests with the Board of Directors unless delegated. These powers and any restrictions must be clearly outlined in the articles to define who can act and sign on behalf of the company.
Tax Responsibilities for Joint Stock Companies
Once incorporated, a JSC in Turkey becomes subject to several tax obligations:
1. Corporate Income Tax: Currently 25% on annual net profits.
2. Value Added Tax (VAT): Applied at 1%, 10%, or 20% depending on services or goods.
3. Withholding Tax: Applies to dividends, interest, or royalties and rates vary based on treaties.
4. Stamp Duty: Imposed on contracts and official documents.
5. Social Security Premiums: Employers contribute approximately 32.5%–37.5% of gross salaries.
6. Advance Taxes: Quarterly prepayments on estimated earnings are required.
Delays or errors in compliance may result in heavy penalties. Consulting a tax professional is highly advisable.
Share Types and Issuance
Shares in a JSC can be certified or uncertified. Uncertified (naked) shares are still valid but must be transferred via written assignment. Certified shares, whether registered or bearer, must follow legal transfer procedures to ensure validity and recognition.
Dissolution and Liquidation Procedures
A JSC may be dissolved under the following conditions:
- Expiration of its term (if defined)
- Impossibility of fulfilling its purpose
- Bankruptcy
- Voluntary decision by the General Assembly
- Other legal or statutory conditions
Upon dissolution, the company enters liquidation, and “in liquidation” is added to its name. Liquidators (appointed in the articles or by General Assembly) handle the process, which includes asset review, debt payments, and distribution of remaining funds.
Liquidation concludes when the liquidator requests the removal of the company’s name from the registry. Records must be kept for at least ten years after closure.
Conclusion
The process of registering a joint-stock company in Turkey remains one of the most commonly inquired topics among entrepreneurs seeking to establish this type of entity. As capital companies governed by the Turkish Commercial Code, joint-stock companies represent the second most frequently formed legal structure in the country. Certain business sectors are exclusively accessible through joint-stock companies, and the transfer of shares in such entities is generally more straightforward than in limited liability companies. A joint-stock company can be founded by a single individual whether a Turkish citizen or a foreign national or by multiple shareholders, provided that the minimum capital requirement of 250.000-TL is met. To ensure legal compliance and clarity, the articles of association which function as the company’s foundational charter should be drafted with professional legal assistance.
This article contains the assessments made within the framework of the legislation in 2025. Please do not hesitate to contact us for information about limited liability companies, agencies, branches and other investment opportunities.
Av. Alper ÇETİN (alper@cetinavukatlik.com)