What are the Characteristics of a Limited Company?

A limited liability company is a company established by two or more natural or legal persons under a trade name and the liability of the partners is limited to the capital they undertake to put in and the main capital is determined. Limited liability companies are more easily established than joint stock companies and can be established for any economic purpose not prohibited by law. Limited liability companies have some distinctive features different from other types of companies.

• The establishment procedures of a limited liability company are easier than the establishment procedures of a joint stock company.
• The company has a trade name and this trade name must be related to the subject of business.
• It can be established with a single person and the maximum number of partners is 50.
• Limited liability companies may engage in any activity not prohibited by law, except banking and insurance.
• The capital of a limited liability company must be at least 10.000 TL.
• The capital to be contributed by the partners must be at least 25 TL or multiples thereof.
• The liability of the partners for the debts of the company is limited to the capital they have committed.
• In a limited liability company, the partners are not liable for the debts of the company, they are only obliged to pay their subscribed shares and to fulfill the additional payment or side performance obligations stipulated in the company agreement.
• Capital, profits and other rights are divided according to the shares of the shareholders, not their shares.
• Limited liability companies are not authorized to issue shares and bonds. The transfer of partnership in limited liability companies is more difficult than in joint stock companies. The transfer of shares must be made before a notary public, registered in the trade registry and announced in the Turkish Trade Registry Gazette.
• The management of a limited liability company may be carried out by one or more of the partners, or an external manager may be appointed.
• Decisions in limited liability companies shall be taken by a majority vote of the shareholders.
• Limited liability companies with more than twenty partners must have an auditor.
• Not all partners in limited liability companies are subject to the prohibition of competition. Only managers are subject to this prohibition.
• The tax addressee in limited liability companies is the company itself. Limited liability companies are liable to corporate tax.
• Labor and commercial reputation cannot be included as capital.