Joint stock or limited company? A comparative guide
Comparing limited and joint stock companies in terms of capital, number of partners, management, share transfer, liability for public debts, insurance status, audit, public offering and investor relations; which to choose in which situation.
After deciding to set up a company, the first question is the type of company. Most entrepreneurs in Türkiye choose a limited company; however, if the goals include bringing in investors, changing the ownership structure often or limiting the partners' personal liability, a joint stock company comes to the fore.
Comparison table
| Limited company | Joint stock company | |
|---|---|---|
| Minimum capital | TRY 50,000 | TRY 250,000 (initial capital under the registered capital system TRY 500,000) |
| Payment of capital | According to the articles of association, within 24 months at the latest | At least one quarter of cash shares before registration, the rest within 24 months |
| Number of partners | 1 – 50 | 1 or more, no limit |
| Management | Manager or board of managers (at least one partner must be a manager) | Board of directors (may be one person; need not be a shareholder) |
| Share transfer | Written agreement, notarised signatures, general assembly approval (unless the articles provide otherwise) and registration | If share certificates have been issued, endorsement and delivery; if not, written assignment; entry in the share register |
| Partners' liability for public debts | Partners are liable for tax and SGK debts that cannot be collected from the company in proportion to their capital shares | Shareholders have no such liability; legal representatives (board of directors) are liable |
| Partners' SGK status | All partners Bağ-Kur (4/b) | Only shareholders who are board members Bağ-Kur (4/b) |
| Public offering and stock exchange | Not possible | Possible |
| Corporate tax and dividends | Same | Same |
Is there a tax difference?
No. Both types of company are corporate taxpayers; the rate, filing periods, advance tax, VAT and withholding rules on profit distribution are the same: Corporate tax · Dividends
When you might choose a limited company
- If there are a small number of partners who know each other,
- If the ownership structure is not expected to change often,
- If lower capital and a simpler management structure are wanted,
- If there is no plan to bring in investors or go public.
When you might choose a joint stock company
- If bringing in investors or a future public offering is planned,
- If limiting the partners' personal liability for the company's public debts is important,
- If shares will change hands often (such as generational transfer in family companies or giving shares to employees),
- If professionals who are not shareholders are to take part in management.
Additional obligations to watch
- Joint stock companies exceeding a certain capital size must retain a contracted lawyer under the Attorneys' Act.
- Some general assemblies of joint stock companies require a Ministry representative: General assembly
- Companies exceeding the thresholds are subject to independent audit, whatever their type.
Changing type later
A limited company can later become a joint stock company through a change of type. In a change of type the company's legal personality continues; however, the minimum capital requirement and transaction costs come up again. So if your long-term plan is to bring in investors, starting with a joint stock company from the outset is often more practical.
Compare formation costs for both types: Company formation cost · Formation process: Limited company formation · Joint stock company formation
For a comparison with a sole proprietorship: Sole proprietorship or limited company?
Legal basis: Turkish Commercial Code No. 6102 arts. 329 et seq. and 573 et seq.; Law No. 6183 arts. 35 and repeated 35; Law No. 5510 art. 4/1-b.