Minimum Capital Amounts for Joint Stock Companies and Limited Liability Companies Increased

Pursuant to the Presidential Decree No. 7887 published in the Official Gazette dated 25/11/2023 and numbered 32380 [1] (Presidential Decree), the minimum capital amounts of joint stock and limited liability companies regulated in the Turkish Commercial Code No. 6102 (TCC) have been increased.

Minimum Capital Amounts Prior to the Amendment

Joint Stock Companies: Pursuant to Article 332 of the TCC titled "minimum capital amount" for joint stock companies, the initial capital of a joint stock company is regulated to be less than TRY 50,000, and for non-public joint stock companies subject to the registered capital system, the initial capital is regulated to be less than TRY 100,000. It is also stipulated in this regulation that the minimum capital amounts may be increased by the President of the Republic.

Limited Liability Companies: Article 580 of the TCC, titled "minimum amount" regarding the capital of limited liability companies, stipulates that the share capital of limited liability companies cannot be less than TRY 10,000. Similarly, this article also stipulates that the minimum capital amount of limited liability companies may be increased by the President of the Republic. However, in limited liability companies, unlike joint stock companies, the increase authorization granted to the President is limited to ten times. Evidently, the President is authorized to determine the minimum capital amounts for both joint stock companies.

New Minimum Capital Amounts

With the Presidential Decree, the minimum capital amounts required for the establishment of joint stock and limited liability companies have been increased. As a result of the new regulation;

• The minimum capital amount of TRY 50,000 for joint stock companies is increased to TRY 250,000,
• The minimum capital amount of TRY 100,000 regulated for non-public joint stock companies accepting the registered capital system is increased to TRY 500,000, and
• The minimum capital amount of TRY 10,000 for limited liability companies is increased to TRY 50,000.

Although it was stated in the Presidential Decree that the relevant regulation would be effective as of 1 October 2024, it was announced [2] that the said regulation would enter into force on 1 January 2024 with the correction announcement published in the Official Gazette dated 26 November 2023 and numbered 32381.

With this regulation, the President of the Republic increased the minimum capital amounts of joint stock and limited liability companies by five times. Pursuant to the new regulation, companies to be established as of 1 January 2024 must be established in accordance with these minimum capital requirements.

Status of Existing Companies

The aforementioned Presidential Decree does not contain any explanation regarding the companies that are already established but whose capital amounts are below the minimum amounts introduced by the new regulation.

As a matter of fact, in the statement made by the Ministry of Trade, it was stated that existing companies are not obliged to increase their capital at this stage, however, it is beneficial for them to increase their capital to the specified minimum amounts in order to strengthen their equity structures.

As a result, existing companies with capital below the new minimum amounts are not obliged to increase their capital in line with the Presidential Decree at this stage.

Obligation of Joint Stock Companies to Have a Contracted Lawyer

Pursuant to the third paragraph of Article 35 of the Law on the Legal Profession No. 1136, joint stock companies with a share capital five times or more than the minimum share capital amount stipulated in the TCC are obliged to have a contracted attorney. Pursuant to the current regulations, joint stock companies with a share capital of TRY 250,000 and above are obliged to have a contracted attorney, whereas this limit has been increased to TRY 1,250,000 as a result of the new regulation. In other words, as of 1 January 2024, the obligation to have a contracted attorney will apply to joint stock companies with a share capital of TRY 1,250,000 and above.

[1] https://www.resmigazete.gov.tr/eskiler/2023/11/20231125-23.pdf

[2] https://www.resmigazete.gov.tr/eskiler/2023/11/20231126-5.htm