Limited or joint stock: which Turkish company to set up

Most foreign founders setting up in Türkiye register a limited şirket, the limited company. It is the default recommendation, it has the lower capital requirement, and the paperwork is slightly shorter. The choice usually takes about ten minutes.

It then decides three things that show up years later: who can be chased personally if the company falls behind on tax, how much of the money you keep when someone buys you, and how easily you can take investment.

One thing it does not decide is your incentives. Article 3 of Decision No. 10962 defines a beneficiary as a company resident in Türkiye and established under the Turkish Commercial Code, which both forms are. Rates, caps, filing windows and the 70% target country uplift are identical either way. So the programme leaves this choice entirely to you, which is why it should be made deliberately.

The two forms in one paragraph

A limited şirket needs 50,000 TL of capital, about $1,050 at roughly 47.7 TRY to the dollar, payable within 24 months of registration. It can have up to 50 shareholders, and at least one shareholder has to serve as a manager.

An anonim şirket, the joint stock company, needs 250,000 TL, about $5,240, with a quarter of it paid into a blocked account before registration and the rest within 24 months. There is no ceiling on shareholder numbers, and its directors do not have to be shareholders at all.

Both can be owned entirely by foreigners, and both can have a single shareholder, whether or not those owners live in Türkiye.

Who gets chased for unpaid tax

This is the difference that surprises people, because it cuts straight through the idea of limited liability that the name promises.

Under Article 35 of Law No. 6183, shareholders of a limited company are personally liable for public debts, meaning tax and social security, that cannot be collected from the company. The liability is proportional to shareholding and it is strict: no fault, no wrongdoing and no involvement in management is required. A passive 30% shareholder can be pursued for 30% of an unpaid tax bill. A shareholder who is also a manager, which a limited company must have, can be pursued for all of it.

In a joint stock company, shareholders are not liable for the company's public debts. The exposure sits with board members acting as legal representatives, who are jointly liable for the full amount if it cannot be collected from the company. Because a joint stock company can appoint directors who hold no shares, you can decide who carries that responsibility rather than having it attach automatically to ownership.

For a founder who intends to own shares and not run the Turkish entity day to day, that distinction is the whole argument.

What happens when you sell

The second difference is the one with a number attached to it.

Under repeated Article 80 of Income Tax Law No. 193, gains from selling shares in a joint stock company are exempt from income tax for individual shareholders where the shares were held for more than two years and are represented by properly issued share certificates. Both conditions have to hold. Companies are not obliged to print certificates and plenty never do, which is how founders end up outside a rule they otherwise satisfy.

A limited company has no version of this. The holding period makes no difference and the gain is taxed at the rates in force at the time of sale. Limited companies can issue certificates under Article 593 of the Commercial Code, but those serve as proof of ownership rather than the instruments the exemption refers to.

The mechanics of the transfer differ too. Joint stock shares move by endorsement and delivery under Article 490, with no notary involved. A limited company share transfer needs a written agreement with notarised signatures, usually general assembly approval, registration with the Trade Registry and publication in the Trade Registry Gazette. Inside a transaction with a foreign buyer, that is a visible piece of friction and a slower closing.

If you ever want to raise

Investors putting money into a Turkish company generally expect a joint stock company. It supports share classes and preference rights, it can issue new shares without the notarial machinery, it has a board structure that accommodates an investor seat, and it is the only form that can eventually go public.

None of that matters to a bootstrapped studio with two founders. It matters a great deal the first time a fund runs diligence, and converting under time pressure while a term sheet is live is the worst moment to do it.

What the choice costs

The capital gap is 200,000 TL, about $4,200, and only a quarter of the joint stock figure has to be paid before registration. That is roughly $1,300 up front, with the rest due over two years. It is company capital rather than a fee, so it stays in the business and gets spent on the business.

Set that against the alternative. A founder holding 50% of a limited company that runs into a tax dispute is personally exposed to half of it. A founder selling a limited company pays income tax on a gain that a joint stock structure could have made exempt. On a meaningful exit, the difference is not close.

When to make the call

The best moment is before registration, because everything downstream is cheaper then. The second best is now.

Two clocks argue for moving early. The two-year holding period for the tax exemption runs from when the shares are acquired, so a conversion done this year starts counting this year. And the certificates have to exist, which is a task that gets forgotten until someone asks for them under time pressure.

There is no clock at all on the liability question. From the day the company converts, the shareholders who are not on the board stop carrying proportional exposure to the company's tax and social security position. That protection is not retroactive, but it starts immediately.

The practical recommendation

Set up a joint stock company if an exit or an investment round is plausible, which for most game studios and SaaS companies it is. Issue the share certificates at incorporation, while it is a twenty minute item on a list rather than a problem discovered during diligence. Decide who sits on the board with the representative liability in mind.

A limited company remains a reasonable choice for a small consultancy, a services business with no exit in view, or a founder who wants the lowest possible starting cost and accepts the trade. Just make it a decision rather than a default.

If you already have a limited company, conversion is available and the sooner it happens the sooner the two-year clock starts. What it costs to set up and run a Turkish company covers the running side of either form, and the calculator shows what the incentives are worth to the company once it exists.