What is Capital Company?

A commercial capital company is a for-profit company established by shareholders by contributing a certain amount of capital. In these companies, the liability of the shareholders is limited to the capital they have subscribed. The company is managed by organs such as the general assembly and the board of directors.

A capital company is a type of company that is formed by shareholders contributing capital for a specific purpose and where rights and responsibilities are determined according to this capital. Limited liability companies and joint stock companies are the most common capital companies. In these companies, the personal property of the partners is not liable to the company; they are only liable for the amount of capital they have subscribed.

Investment capital companies, on the other hand, are financial institutions regulated by the Capital Markets Law and operate to invest the funds they collect from investors in companies that are in the start-up phase or have high growth potential. These companies are also known as venture capital firms or angel investors.

How is a Capital Company Established?

To establish a capital company, you need to follow these steps:

1. Prepare Articles of Association

An article of association must be prepared, which sets out the purpose of the company's establishment, its field of activity, its capital, the rights and obligations of the partners, and the form of management. The articles of association must be notarized. It is recommended that you have this agreement prepared by a lawyer.

2. Get partners' Signature Statements Approved

You need to have the signature statements of each partner notarized stating that they have read and accepted the articles of association.

3. Make the required payments

You must deposit at least 25% of your company's incorporation fee and capital shares to the bank.

4. Submit documents required for incorporation

You must submit the articles of association, signature declarations, bank receipt, and other required documents to the Trade Registry Office.

What are the characteristics of a capital company?

Limited Liability of Partners: Shareholders are liable limited to the capital they have subscribed to the company.

Legal Personality: The capital company gains a separate legal personality from the moment it is established and can carry out transactions in its name.

Shareholders: The capital of the company is divided into shares and each shareholder has certain rights and responsibilities towards the company.

Governing Bodies: Capital companies are governed by governing bodies such as the general assembly and the board of directors.

What are the types of capital companies?

Capital companies are companies that are registered in the trade registry and whose capital is divided into certain shares. These companies are divided into three main groups: joint stock companies, limited liability companies, and limited partnership companies. Each type of company has its way of establishment and functioning, rights and responsibilities, and taxation system.

1. Joint Stock Company (JSC)

Can be established with at least 5 partners.

The minimum capital is ₺50,000.

The liability of the partners is limited to the amount of capital they have committed.

It has organs such as a board of directors and a general assembly.

Can be established as a public or closed joint stock company.

Suitable for large-scale investments and public offerings.

2. Limited Company (LTD)

Can be established with at least 1 partner.

The minimum capital is ₺10,000.

The liability of the partners is limited to the amount of capital they have committed.

Managed by managers or board of directors.

Its establishment and functioning is simpler.

Suitable for small and medium-sized enterprises.

3. Commandite Company

It can be formed with at least one Commandite and one Commanding Partner.

There is no minimum capital.

The limited partners have unlimited liability and the commandite partners have limited liability.

It is divided into two subtypes: ordinary limited partnership and limited partnership with capital divided into shares.

It is a less common type of company.

The common characteristics of capital companies are as follows:

They have legal personality.

Their capital is divided into certain shares.

The rights and responsibilities of the shareholders are determined by law and the company agreement.

Profit distribution is based on shares.

They are registered in the trade registry.

They are obliged to keep books and pay taxes.

What are the advantages of capital companies?

The establishment and operation of capital companies provide some advantages:

• Limited Liability: The personal property of the partners is protected against the company.
• Legal Personality: The company can transact and enter into contracts in its name.
• Ease of Raising Capital: It is easier to raise capital through the sale of shares.
• Continuity: The change of partners does not affect the company.
• Possibility of professional management
• Possibility of capital increase

How many persons can a capital company be established?

Depending on the type of capital company, it can be established with at least 1 (Ltd. Şti.) or 5 (AŞ) partners.

The minimum number of partners varies according to the type of capital company to be established:

Limited Liability Company: At least 1 partner

Joint Stock Company: At least 5 partners

Limited Company: Can be established with at least 1 limited partner and 1 limited partner.

If you are considering setting up a capital company, it is important to determine the number of partners that best suit your type of company.  Each type of company has its advantages and disadvantages. It is also useful to seek advice from a lawyer and a financial advisor during the company formation phase. You should also be familiar with the rights and responsibilities of each type of partner.