Last Updated on 28/11/2023
Presidential Decision No. 7887, published in the Official Gazette on 25.11.2023, marks a significant milestone in the Turkish business landscape. This decision, focusing on the increase of the minimum capital amount for joint-stock and limited liability companies, has far-reaching implications for businesses operating in the country.
Joint-Stock Companies: A Shift in Capital Requirements
Joint-stock companies play a crucial role in the Turkish economy. Consequently, the recent decision reshaped the financial landscape for these entities. In fact, according to Article 332 of the Turkish Commercial Code numbered 6102, the initial minimum capital amount for joint-stock companies was TRY 50,000. However, the recent decision propelled this figure to a substantial TRY 250,000.
Besides, for non-public joint-stock companies operating under the registered capital system, the minimum capital amount increased from TRY 100,000 to TRY 500,000. Therefore, this adjustment in capital requirements reflects the government’s commitment to fortifying the financial foundation of businesses. It ensures their resilience and sustainability in the ever-evolving market.
Limited Liability Companies: Adjusting to New Capital Realities
Limited liability companies ae another cornerstone of the Turkish business landscape. Consequently, they are not exempt from the impact of Presidential Decision No. 7887. As per Article 580 of the Turkish Commercial Code, the minimum capital amount for these companies was initially set at TRY 10,000. However, the recent decision has pushed this figure to TRY 50,000.
The flexibility granted by the provision allowing the President to increase the minimum capital amount up to tenfold underscores the government’s intention to align capital structures with the evolving economic landscape. This change aims to bolster the financial robustness of limited liability companies, promoting a sustainable and competitive business environment.
Effective Date and Implications
The increase of minimum capital amount was declared through the presidential Decision No. 7887. It came into force on the date of its publication, with its provisions becoming effective from 01.01.2024. Companies affected by this decision are urged to promptly assess their capital structures and take necessary measures to meet the revised minimum capital requirements.
Businesses operating in Turkey must recognize the implications of this decision on their financial planning and compliance obligations. Failing to adhere to the updated capital requirements may result in legal consequences, underscoring the importance of timely adjustments.
Key Differences Between Joint Stock Companies and Limited Liability
Grasping the essential distinctions between Joint Stock Companies and Limited Liability Companies holds paramount importance for entrepreneurs and business proprietors. The judicious selection of the legal framework and requirements such as the minimum capital amount for a business carries substantial implications for its expansion, resilience, and enduring prosperity. Each framework comes with distinct benefits and factors to weigh, and opting for the suitable one harmonizes with the business’s objectives and overarching vision.
Take a look at this article for a better understanding of the main difference between joint stock and limited liability companies.
This update signifies a pivotal moment in the Turkish business landscape, specifically impacting joint-stock and limited liability companies. The decision to increase the minimum capital amount reflects the government’s commitment to fostering a financially robust and competitive business environment. As companies navigate these changes, staying informed and seeking professional advice will be crucial to ensuring compliance and sustaining growth in the evolving market.
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