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Introduction
For entrepreneurs and investors planning to establish a company in Turkey, one of the main decisions is whether to choose a limited liability company (LLC) or a joint-stock company (JSC). This decision will have a significant impact not only during the establishment process but also throughout the company's existence, affecting tax obligations, management responsibilities, and share transfers.

Important changes in legislation in recent years, especially the regulation of bearer shares and the increase in the minimum authorized capital, have made this choice even more critical. In this article, we will explore the main differences between LLCs and JSCs, the tax benefits, the liability of directors and board members, and the process of company conversion.

The Legal Profession and Company Management: A Critical Difference
In Turkish law, there is a clear regulation on the participation of lawyers in the management of companies. Articles 11 and 12 of Law No. 1136 on the Bar restrict the commercial activities of lawyers, while clearly stating some exceptions.

Ban on the position of director in an LLC
Lawyers cannot be directors of limited liability companies. The main reason for this prohibition is that, according to Article 644 of the Turkish Commercial Code No. 6102, the directors of an LLC are personally and unlimitedly liable for the company's debts. As clearly stated in the 2015 decisions of the Disciplinary Council of the Turkish Bar Association, this heavy responsibility contradicts the nature of the free profession of law and the principle of independence.

Lawyers who are directors of an LLC are liable for the company's public debts with their personal assets, especially for taxes and social security contributions. This liability is regulated by additional Article 35 of the Law on the Collection of Public Debts No. 6183 and Article 88/20 of the Law on Social Security and Universal Health Insurance No. 5510. By the nature of the legal profession, taking on such financial risk is considered unacceptable from a professional ethics standpoint.

Although the term "directorship" is not explicitly mentioned in the text of the Law on the Bar, the Turkish Bar Association has consistently recognized directorship in an LLC as an activity incompatible with the legal profession since 2005. Lawyers in this position are subject to disciplinary action.

Membership in the Board of Directors of a joint-stock company
In joint-stock companies, the situation is completely different. Article 12 of the Law on Advocacy clearly states that lawyers can be shareholders in joint-stock companies and can hold the positions of chairman and member of the board of directors. This permission is due to the fact that joint-stock companies have a more institutional structure and a different distribution of responsibilities.

Lawyers can be both shareholders and chairpersons or members of the board of directors of a joint-stock company, actively participating in the management of the company. This also provides an opportunity to create a corporate structure for law offices.

Bearer Shares: The New Era After 2021
For a long time, bearer shares were considered one of the distinctive features of joint-stock companies. However, the fundamental changes that occurred in 2020-2021 have significantly altered the nature of this instrument.

Changes made by Law No. 7262
The regulation introduced by Law No. 7262 aims to comply with the recommendations of the Financial Action Task Force (FATF) and prevent money laundering. As of April 1, 2021, changes have been implemented to require the registration of bearer shares with the Central Registration Agency (MKK).
Article 484 of the Turkish Commercial Code regulates the issuance of bearer shares. However, the following conditions are now mandatory for the issuance of these shares:

• Full payment of the authorized capital
• Production of shares for a maximum of three months
• MKK Notification
• Registration of shareholders in electronic form

Now visible in the merchant register
Contrary to popular belief, bearer shares are now visible in the trade registry. The board of directors' decision to issue shares is registered in the trade registry and published in the Turkish Trade Registry. The type and number of shares of the company are registered in the MERSİS system, and the MKK records are known to the government.

Article 489 of the Trade Code was amended by Law No. 7262, and the transfer of bearer shares now requires both the transfer of ownership and notification to the MKK. Without notification to the MKK, it is not possible to exercise the rights of a shareholder. This provision has largely eliminated the traditional characteristic of "anonymity" of bearer shares.

Administrative penalties
Board members who fail to comply with their obligation to notify the MKK are subject to severe administrative fines. As of 2025, the fine amount is 138,498 Turkish liras. Therefore, it is crucial for companies that issue bearer shares to fully comply with their legal obligations.

A huge difference in taxation: the value of two years of waiting
Tax differences in the sale of LLC shares and JSC shares are one of the most critical factors in choosing a company type. Additional Article 80 of the Income Tax Act clearly regulates this difference.

LLC shares: permanent taxation
Shares of limited liability companies are not securities. According to Article 593 of the Turkish Commercial Code, shares can be issued with a certificate, but they are not securities. For this reason, shares of LLCs are subject to income tax as capital gains, regardless of when they are sold.

It doesn't matter if they're held for two, five, or ten years - in all cases, taxation applies. The tax calculation is as follows: the sale price minus the indexed purchase price (using the CPI index if the increase exceeds ten percent) minus the selling costs equals the net profit.

This amount is reduced by an exemption of 87,000 lire in 2024 and 120,000 lire in 2025. The remaining amount is subject to income tax rates. For 2025, these rates range from 15% to 40%.

Shares of the joint-stock company: more than two years
The situation is completely different with shares in joint-stock companies. According to additional Article 80/1 of the Income Tax Act, if shares or interests issued in a certificate are held for two full years, the income from their sale is completely exempt from income tax. There is no tax withholding, no declaration, and complete exemption.

Shares traded on the Istanbul Stock Exchange are exempt from tax without a holding period requirement. However, there is a critical point: the date of acquisition is the date of the share's printing. For this reason, companies that convert from LLC to АО and they can immediately print shares and sell their shares tax-free after two years.

Specific comparison
An investor who sells shares with a profit of 500,000 lira pays approximately 111,000 lira in taxes in the case of an LLC (at an average rate of twenty-seven percent of the taxable base of 413,000 lira after exemption). The same investor, in the case of a joint-stock company, pays zero taxes if they meet the two-year waiting period.

This saving of 111,000 lire clearly shows how important it is to choose the right corporate structure. For shareholders of companies planning a major sale, a logical tax planning strategy is to convert an LLC into an АО and wait two years.

Public Debt and Director's Responsibility: A Serious Risk
The state obligations of newly established companies begin as soon as the registration in the commercial register and the tax office is completed. These obligations continue regardless of whether the company is active.

Social Security contributions: the biggest expense
In 2025, the minimum wage is 26,005.50 liras. The employer's insurance contributions for one employee with a minimum wage are calculated as follows:

• Страховые взносы по инвалидности, старости и смерти: одиннадцать процентов (2 860,61 лиры)
• Взносы на всеобщее медицинское страхование: семь с половиной процентов (1 950,41 лиры)
• Краткосрочные страховые взносы: два с четвертью процента (585,12 лир)
• Взносы по страхованию от безработицы: два процента (520,11 лир)

The total amount of employer's insurance contributions is 5,916.25 lira per month. This is a calculation without benefits. With the application of the contribution discount, this amount is slightly reduced. Additionally, if the minimum wage support discussed in parliament is implemented, the net costs will decrease.

Other government obligations
Withholdings paid on a short declaration are also an important item. If a company rents an office, it is necessary to pay a withholding from the rent. For a net rent of 10,000 liras, a twenty percent withholding is 2,500 liras per month.

We should not forget about stamp duties for declarations. The stamp duty for a short declaration is 308.36 liras, for a VAT declaration - 308.36 liras. Even non-operating companies are required to submit an empty VAT declaration.

Total monthly state load
The total monthly government burden for an actively operating company with one employee on minimum wage and office rent is:

• Страховые взносы работодателя: 5 916 лир
• Удержание с арендной платы: 2 500 лир
• Гербовые сборы за декларации: 616 лир
• Итого: примерно 9 000 лир в месяц (около 300 долларов США)

In companies with two or three employees, this amount easily reaches 12,000-15,000 lire (400-500 US dollars). Therefore, the claim of "monthly government debts of 400-500 US dollars" is quite realistic for an active company.

The Director's Responsibility: Innocent and Heavy
The liability of directors for public debts is extremely high and is an innocent liability. Additional Article 35 of Law No. 6183 stipulates that public debts that have not been collected from the legal entity of the company will be collected from the personal property of the legal representatives.

The director cannot release himself from this responsibility by saying, "I did my best, I have no fault." Especially with regard to social security debts, the situation is even stricter. Article 88/20 of Law No. 5510 provides that in case of non-payment of insurance premiums without a valid reason, members of the Board of Directors and directors are jointly and severally liable with their personal property.

This provision means that there is no obligation to first recover from the company. This means that the social security authorities can contact the director directly. The statute of limitations is also ten years (five years for tax debts).

There is no significant difference between the director of an LLC and a member of the Board of directors of an JSC in terms of liability for government debts. Both are personally responsible if they have the authority of a representative office. The only difference is that LLC participants are also liable in proportion to their shares in the capital, while JSC shareholders are exempt from this liability.

Company Transformation: a strategic decision
The transformation of a limited liability company into a joint-stock company (change of type) is regulated by Articles 180-194 of the Turkish Commercial Code. This process takes three to six months and costs an average of 30,000 to 40,000 liras.

The process of changing the type
The process includes mandatory waiting periods. First, a plan and a type change report are prepared. Participants are given thirty days to review, followed by another thirty-day waiting period, after which a general meeting is convened. The total mandatory waiting period is sixty days.

The quorum for decision-making is high: a positive vote of three-quarters of the participants who own at least three-quarters of the capital is required. This high quorum is provided due to the importance of the structural change.

A report by a sworn financial consultant or an independent accountant-auditor is mandatory. This report indicates that the capital has been paid, is not secured, and the company's property has been determined. The cost of preparing the report ranges from 5,000 to 15,000 lira. Including notary procedures, registration fees in the commercial register (7,229 lira), and publication costs, the total cost reaches 30,000-40,000 lira.

Advantages and disadvantages
Main advantages of transformation into a joint-stock company:
Tax Planning: The ability to sell without taxes after two years is a great advantage. By updating the acquisition date by printing shares, it is possible to sell without taxes after two years.
Shareholder protection: Shareholders are not responsible for government debts. While in an LLC, participants are responsible in proportion to their shares in the capital, there is no such responsibility in an АО.
Number of shareholders: There is no limit to the number of shareholders. An LLC can have a maximum of fifty members, while an АО не имеет такого ограничения.
Prestige and reliability: Joint-stock companies are perceived as a more institutional structure.
Freedom of transfer of shares: Transfer of shares does not require approval of the general meeting, and a record in the share registry is sufficient for registered shares.
On the other hand, there are some disadvantages:
High minimum capital: The minimum capital for joint-stock companies is 250,000 liras, and for limited liability companies it is 50,000 liras.
Conversion cost: As mentioned above, the conversion cost is approximately 30,000-40,000 liras.
Bureaucratic burden: More bureaucratic obligations and complex accounting are required.
Decision-making processes: Decision-making processes are longer and more complex.

Tax aspect
A change of type is considered a transfer for tax purposes. A declaration for the reporting period must be submitted. Exemption from VAT and stamp duty. A deduction must be made on the date of registration in the social security declaration and the short declaration.

Important note: If the capital of the LLC is less than 50,000 liras, the capital must be increased to at least 250,000 liras when converting to an АО. At least a quarter of the capital must be paid before registration, and the remaining three quarters can be paid within twenty-four months.

Conclusion and strategic recommendations
The choice between a limited liability company and a joint-stock company should be based on the size of the company, growth goals, shareholder structure, and tax planning strategy. Both structures have their own advantages and disadvantages.

You should prefer LLC
In the following situations, a limited liability company may be more suitable:

• Small family businesses
• The number of participants is less than ten and will not change.
• No growth plans
• Capital increase is difficult
• The transfer of shares will be carried out very rarely
• It is important to reduce the cost of the institution

You should prefer a joint-stock company
In the following situations, a joint-stock company structure should be preferred:

• There is growth and the search for investors
• The transfer of shares will be carried out frequently
• It is planned to sell shares in two years (for tax advantage)
• There is a goal to enter the stock exchange
• International business is underway
• Shareholders want to protect themselves from the risks of government debt
• Corporate identity and prestige are important

Conversion strategy
For owners of existing LLCs, conversion is recommended in the following cases:

• The existing company is growing, and new investors will join
• There is a plan to sell shares (conversion two years before the sale may provide a tax advantage)
• Shareholders want risk management
• Corporate identity is of strategic importance to the company

Recent warnings
The most critical warning for future directors and board members is to make sure that insurance premiums are paid on time. There is no innocent liability, a ten-year statute of limitations applies, and there is direct personal liability. Even after leaving office, the responsibility for past debts continues.

As for bearer shares, the advantage of "privacy" no longer exists. The Central Registration Agency system has been fully operational since 2021. Unless there is a specific reason, registered shares are more practical and less risky.

Finally, by the end of 2026, joint-stock companies and limited liability companies must increase their minimum share capital. Companies that fail to meet this requirement will be liquidated. It is crucial that company owners complete the necessary procedures in a timely manner.

The decision on the choice of corporate structure and transformation should be made with the receipt of professional legal and financial advice. The information presented in this article is general in nature, and the specific situation of each company should be assessed separately.