Can a company exist without legal personality?

Entrance

“I want to set up a company, but the place where I'm getting the tax registration certificate told me 'there is no legal entity.' What does this mean?” We encounter this question very frequently. It is often thought that a company must have legal personality to exist . However, Turkish law also recognizes a type of company that conducts commercial activities without having legal personality: the General Partnership (Ordinary Partnership).

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1. What is a Legal Entity?

Legal personality is the recognition of an institution or group as a person by the legal system.
This allows that structure to:

• He can buy property in his own name

• You can file a lawsuit

• You can pay taxes,

• They can enter into a contract.

Examples:

• Limited companies

• Joint-stock companies

• Associations

• Foundations

However, not every company a legal entity . This is where the ordinary partnership comes in.

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2. A General Partnership is Not a Legal Entity – So, is it Considered a Company?

Yes, it counts.
A general partnershipis in Articles 620 and subsequent articles of the Turkish Code of Obligations .

"A company is a contract in which two or more people undertake to combine their labor and assets to achieve a common purpose."

This definition makes no mention of legal personality.
This is because ordinary partnerships are not registered in the commercial registry. Therefore, they are not legally recognized as a person (legal entity).

However, this does not mean that the general partnership ceases to exist. A general partnership:

• You can obtain a tax registration certificate

• Can conduct commercial activities

• They can file a lawsuit through their partners

In other words: It doesn't have legal personality, but it is a "company".

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3. What are the characteristics of a General Partnership?

• It has no legal personality.

Each transaction is conducted directly on behalf of the partners.

• It is formed with at least two people.

Partners can be natural or legal persons.

• A written contract is recommended.

Although not legally required, it facilitates proof.

• Registration in the commercial registry is not required.

Therefore, it cannot obtain a trade name and does not have an official company name.

• Partners have unlimited and joint liability.

One partner can pay the company's debt and seek recourse from the other partner.

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4. Establishing a General Partnership – Simple Steps That Don't Require Legal Entity

1. A partnership agreement, either verbal or in writing, is made between at least two people.

2. The partners determine the scope of their business.

3. Before commencing operations, an income tax registration must be opened at the relevant tax office .

4. Depending on the type of activity, a license can be obtained from the municipality (if required).

5. SGK/BAĞ-KUR registrations are completed.

Example: Two people who want to produce handmade soap can form a general partnership and sell their products on e-commerce websites. They don't need to establish a limited liability company.

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5. The Practical Effects of Not Having Legal Personality

A private company does not have the right to file a lawsuit in its own name.

→ Opened in the name of the partners.

Bank accounts cannot be opened under the name of a "company".

→ Partners' individual accounts are used.

There are restrictions in areas such as tenders, loans, and incentives.

→ Official procedures are difficult because the corporate identity is not recognized.

However:

• A tax registration certificate can be obtained.

• A business ledger is kept.

• An invoice can be issued.

• A profit and loss statement is prepared.

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6. Advantages of a Company Without Legal Personality

• Establishment costs are free; notarization or registration with the commercial registry is not required.

• It can be set up quickly.

• It provides flexibility in operations.

• Ideal for families and small businesses.

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7. Disadvantages of Not Having Legal Personality

• The partners' personal assets are at risk against the debts.

• Corporate trust is low.

• The company will cease to exist if the ownership structure changes.

• It is not recognized as a "company" in official documents.

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8. In what situations should a general partnership be established?

If there is a startup with low capital

If a partnership based on trust is established

If you are looking for a quick and low-cost solution

If a low tax burden is important

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Conclusion: It can be a company even without legal personality!

The lack of legal personality does not prevent an enterprise from existing as a company. partnershipsare a type of partnership that has a legal basis, tax obligations, and the ability to conduct commercial activities. They are an ideal option, especially for small businesses, family enterprises, and temporary projects.

However, the risks should be understood, and written documentation should be used at every step whenever possible.

Gozdenur Turna