1- Definition of Limited Liability Company
(1) A limited liability company is established by one or more natural or legal persons under a trade name, basic capital is determined and this capital consists of the sum of basic capital shares.
(2) The shareholders are not responsible for the debts of the company, they are only obliged to pay the basic capital shares they have committed and to fulfill the additional payment and ancillary performance obligations stipulated in the company contract.
(3) A limited liability company can be established for any economic purpose and subject that is not prohibited by law.
2- Number of Shareholders
(1) The number of shareholders cannot exceed fifty.
(2) If the number of shareholders decreases to one, the situation is notified in writing to the directors within seven days from the date of the transaction for this result. From the date of receipt of the notification to the end of the seventh day, it is registered and announced the directors register, that the company is a sole proprietorship, the name, place of residence and citizenship of this shareholder. Otherwise, they will be responsible for the resulting damage. The same obligation applies where the company is established with one shareholder.
(3) The company cannot acquire the basic capital share in such a way that it will transform into a company whose sole shareholder will be itself.
3- Articles of Association
The articles of association must be made in writing and signed by the founders in the presence of authorized personnel in the trade registry directorate. In the establishment of the company, valuable paper price is not collected from the papers containing the articles of association.
(1) The following records must be clearly stated in the company agreement:
a) The company’s trade name and place of headquarters.
b) Business subject of the company, with its essential points specified and defined.
c) Nominal amount of basic capital, number of basic capital shares, nominal values, privileges, if any, groups of basic capital shares.
d) Names, surnames, titles, citizenships of the directors.
e) The form of the announcements to be made by the company.
m) Provisions regarding termination reasons other than those specified in the law
– Capital in Cash
The main capital of the limited company is at least ten thousand Turkish Liras.
– Capital in Kind
Assets including intellectual property rights, virtual environments and names, which do not have limited real rights, liens or measures, which can be evaluated and transferred in cash, can be invested as capital in kind. Acts of service, personal labor, commercial reputation and unpaid receivables cannot be capital.
In the articles of association, the nominal values of the basic capital shares can be determined as at least twenty-five Turkish Liras. This value may be lowered to improve the company’s condition.
5- Responsibility of shareholders
The company is liable for its debts and liabilities only with its assets.
6- Dividends and reserves
(1) Dividend can be distributed only from the net profit for the period and the reserves set aside for this. Dividend distribution can only be decided if the legal reserves required to be set aside in accordance with the law and the Articles of Association and the reserves stipulated in the Articles of Association are set aside.
(2) Unless otherwise stipulated by the Articles of Association, the dividend is calculated in proportion to the nominal value of the declared capital share. In addition, the amount of additional payment obligations fulfilled is added to the nominal value in the calculation of the profit share.
(3) The general assembly of the company can decide to allocate reserves in amounts that are not foreseen or exceeded in the law or company contract,
a) If necessary to cover damages,
b) If the need to invest for the development of the company has been seriously demonstrated, if the interests of all shareholders justify such a reserve fund, and if these issues are clearly stated in the Articles of Association.
7- Obligation of loyalty and prohibition of competition
(1) Shareholders are obliged to protect company secrets. This obligation cannot be removed by the articles of association or the resolution of the general assembly.
(2) The shareholders can not engage in acts that can harm the interests of the company. In particular, they cannot engage in transactions that provide a special benefit to them and harm the purpose of the company. With the Articles of Association, it can be foreseen that the shareholders have to avoid transactions and behaviors that compete with the company.
(3) The provisions of Article 626, which stipulates the prohibition of competition for directors, are reserved.
(4) If all the remaining shareholders give their written consent, the shareholders can engage in activities contrary to the obligation of loyalty or the prohibition of competition. The Articles of Association can stipulate the approval decision of the general assembly of the shareholders instead of the approval in the first sentence.
8- Right to get information and examine
(1) Each shareholder can ask the directors to provide information about all the business and accounts of the company, and can examine certain issues.
(2) If there is a danger that the shareholder will use the information they have obtained to the detriment of the company, the directors can prevent the obtaining and examination of information to a necessary extent, and the general assembly decides on this issue upon the application of the shareholder.
(3) If the general assembly unjustly prevents obtaining information and examination, the court decides on this matter upon the request of the shareholder. The court decision is final.
9- Powers of the general assembly
(1) The inalienable powers of the general assembly are as follows:
a) Changing the Articles of Association.
b) Appointment and dismissal of directors.
c) Appointment and dismissal of the group auditor and (…) (1) auditors.
d) Approval of the Group’s year-end financial statements and annual activity report.
e) Approving the year-end financial statements and annual activity report, deciding on the profit share, determining the profit shares.
f) Determination of the wages of the directors and acquittance
g) Approval of the transfer of declared capital shares.
h) Requesting the court to remove a shareholder from the company.
i) Authorization of the director for the acquisition of the company’s own shares or approval of such an acquisition.
j) Dissolution of the company.
k) Deciding on matters that the general assembly is authorized by law or company contract or on matters submitted by the directors to the general assembly.
(2) The following are the inalienable powers of the general assembly if they are stipulated in the Articles of Association:
a) The cases where the approval of the general assembly is sought in accordance with the Articles of Association and the approval of the activities of the directors.
b) Making a decision on the use of the right to be the subject of a proposal, pre-emption, redemption and purchase.
c) Approval regarding the establishment of a pledge right on the declared capital shares.
d) Issuing an internal directive on ancillary performance obligations.
e) In case the shareholders do not find the approval sufficient in accordance with the fourth paragraph of Article 613 of the Articles of Association, giving the necessary permission for the approval of the directors and shareholders to engage in activities incompatible with the obligation of loyalty to the company or the prohibition of competition.
f) Dismissal of a shareholder from the company due to the reasons stipulated in the Articles of Association.
(3) In limited liability companies with one shareholder, this shareholder has all the powers of the general assembly. The decisions to be taken by the sole shareholder as the general assembly must be in writing in order for them to be valid.
10- Meeting of the general assembly
(1) The general assembly is called for a meeting by the directors. Ordinary general assembly meeting is held every year within three months following the end of the accounting period. In accordance with the Articles of Association and when necessary, the general assembly is called for an extraordinary meeting.
(2) The general assembly is called to the meeting at least fifteen days before the meeting date. The Articles of Association can extend this period or shorten it up to ten days.
(3) Provisions regarding joint stock companies on convocation, minority’s right to call and propose, agenda, proposals, general assembly without invitation, preparatory measures, minutes, unauthorized participation, except for the Ministry representative, are applied by comparison. Each shareholder can have himself represented in the general assembly through a shareholder or non- shareholder.
(4) Unless any shareholder requests an oral meeting, general assembly resolutions can also be made by obtaining the written approval of the other shareholder for the proposal of one of the shareholders regarding the agenda item. Submitting the same proposal to the approval of all shareholders is essential for the validity of the decision.
Source: Revenue Administration of Republic of Turkey – Translated by Karen Audit – The rights of this translation belong to KarenAudit and unauthorized use is prohibited.
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