Limited Liability Companies and Their Establishment

 DEFINITION AND ELEMENTS OF A LIMITED LIABILITY COMPANY

The Turkish Commercial Code No. 6102 does not contain a direct definition of a limited liability company. However, the law regulates the provisions of limited liability companies in detail. A limited liability company can be defined as follows: A limited liability company is a type of commercial enterprise established by at least two natural or legal persons, where the partners commit a specific share of capital and have limited liability to that share. Limited liability companies operate for commercial purposes and have legal personality. The company's articles of association determine the rights and obligations of the partners, the purpose and subject matter of the company, its capital structure, and its management method. Partners of limited liability companies can participate in the decision-making bodies as well as in the management of the company. Limited liability companies require less capital than other types of companies, and the limited liability of the partners is limited to the amount of capital risked by the investors. Therefore, it is a frequently preferred type of business for small and medium-sized enterprises.

The basic elements in the definition of a limited liability company are as follows:

• A type of company established by at least two natural or legal persons.
• It is a business established for commercial purposes and has legal personality.
• Its initial capital must be a fixed amount.
• Partners are limited to the share capital they have committed.
• A limited company must have a trade name.
• The company operates in accordance with the purposes and subject matter stated in its articles of association.
• Partners can participate in decision-making bodies and be involved in company management.

A limited liability company (LLC) is not a sole proprietorship. A sole proprietorship is a business established by only one person, and that person assumes all responsibility for the business. However, a limited liability company must be established by at least two natural or legal persons, and the liability of the partners is limited to the capital share they have committed. Therefore, a limited liability company is considered a type of joint venture.

It should also be noted that a Limited Liability Company (Ltd. Şti.) can be established by at least two natural or legal persons. It can have a maximum of 50 partners. However, except for certain exceptions stipulated in the Turkish Commercial Code No. 6102, partnerships exceeding this number must be established as a joint-stock company.

 

How to Establish a Limited Liability Company?

To establish a limited liability company, certain documents must be collected. These documents are prepared for registration through a notary during the establishment phase. The necessary documents for establishing a limited liability company are as follows:

1. Articles of Association: One of the most important documents in the establishment of a limited liability company is the articles of association. These articles specify the company's purpose, subject matter, capital, shareholders' responsibilities, governing bodies, and operating principles.
2. Share Capital Certificate: The amount of share capital stated during the establishment of the limited company must be proven with a share capital certificate.
3. Agreement Between Partners: When establishing a limited liability company, an agreement must be made between the partners. This agreement specifies the rights and responsibilities of the partners, as well as matters such as the sharing of company profits.
4. Registration Statement: To register a company, a registration statement must be prepared. This statement includes information such as the company's name, headquarters, purpose, capital, shareholders, and governing bodies.
5. Tax Certificate: To register a company, a tax certificate must be obtained. This certificate contains the company's tax identification number and other tax-related information.
6. Signature Circular: In the establishment of a limited company, a signature circular is prepared to determine the management bodies and their signing authorities.

After all these documents are prepared, the company agreement is notarized, and all documents are registered with the Commercial Registry. One of the stages of establishing a limited company is the preparation of the company agreement and the notarization of the founders' signatures. However, this stage alone is not sufficient. The stages of establishing a limited company can be summarized as follows:

1. Defining the company's purpose and scope: The purpose and scope of a limited liability company must be clearly stated in the company's articles of association.
2. Determining the company partners: A limited liability company can be established with a minimum of two partners. These partners can be natural persons or legal entities.
3. Determining the company capital: The share capital of a limited company must be a specific amount and must be at least 10,000 TL.
4. Preparation of the company agreement: The company agreement must be prepared through a notary public, and the signatures of the founders must be certified.
5. Registration with the Commercial Registry: After the company agreement and other necessary documents are notarized, they must be registered with the Commercial Registry.
6. Application to the tax office: After the company is registered, an application must be made to the tax office and a tax certificate obtained.
7. Commencement of operations: Once all these procedures are completed, the limited liability company will be officially established and can begin operations.

According to Article 580 of the Turkish Commercial Code, the minimum share capital of limited liability companies must be at least 10,000 TL. Furthermore, all assets that can be considered as company capital include real rights, intellectual property rights, digital platforms, and names. In this way, the resources required for the company's operations are not limited to cash capital alone, but can also be obtained from other assets.

Mandatory Registers That Must Be Kept:

The books that a limited company must keep can be examined in two categories: those related to accounting and those not related to accounting.

The accounting ledgers include the following:

1. General Ledger: This is the general accounting ledger in which all financial transactions are recorded.
2. Auxiliary Ledgers of the General Ledger: These are ledgers in which accounts such as receivables, payables, inventory, cash, and bank accounts are recorded in detail.
3. Invoice Book: This is the ledger in which a company's incoming and outgoing invoices are recorded.
4. Delivery Note Register: This is the register in which a company records its goods receipts and shipments.
5. VAT Ledger: This is the ledger in which the company's VAT purchases and sales are recorded.
6. Balance Sheet and Income Statement: These are the books that show the financial status of a company.

The following are ledgers that are not related to accounting:

1. Commercial Registry Book: This is the book in which a company is registered in the commercial registry.
2. Minutes Book: This is the book in which the decisions made by the company's governing bodies, such as the general assembly, the board of directors, and the shareholders' meeting, are recorded.
3. Copy of Identity Card: This is the register in which copies of the identity cards of the company partners are recorded.
4. Signature Register: A register in which the signatures of the company's authorized representatives are recorded.

Limited companies are required by law to maintain all these books in an orderly manner and retain them for specified periods.

The accounting records that a limited liability company must keep are of serious importance and must be maintained correctly to ensure legal protection. Therefore, these records need to be regularly updated and audited. Furthermore, attention must be paid to tax regulations when maintaining these records. Working with a lawyer or accountant specializing in these matters can be a crucial step towards the long-term success of a limited liability company.

The cost of establishing a limited liability companyvaries from country to country and region to region. In Turkey, as of 2023, the cost of establishing a limited liability company may vary, but generally it may consist of the following items:

• Legal fees for incorporation procedures: This includes legal fees for drafting the company agreement, notarization, and other legal procedures. These fees may vary depending on the lawyer's level of experience, the size and complexity of the company.
• Notary fees: These include the fees for notarizing company agreements and other legal documents.
• Tax office fees: Tax office fees arising from the procedures required for the establishment of a limited liability company.
• Trade Registry fees: These are the fees required for a company to be registered in the trade registry.
• Other expenses: Other expenses such as bank account opening, company stamp, operating permits, office rent, personnel costs, etc., may also be included in the costs of establishing a limited liability company.

The sum of all these items can determine the costs of establishing a limited liability company. However, it is still impossible to give an exact figure, as each case may vary. It is recommended to consult with a specialist lawyer or accountant for a more accurate assessment of the costs of establishing a limited liability company.

Establishing a Limited Liability Company (LLC) to conduct e-commerce activities is a preferred method for many entrepreneurs. A LLC has divisible capital and a limited number of partners. Therefore, it can be a suitable option for those wishing to start an e-commerce business.

Here are some important points to consider when establishing an e-commerce limited liability company:

1. Company type: Establishing a Limited Liability Company (LLC) for e-commerce can be a suitable option. However, the choice of company type should be determined by considering the business's field of activity and objectives.
2. Capital: The minimum capital requirement for establishing a Limited Liability Company is 10,000 TL. This amount must also be met when establishing an e-commerce Limited Liability Company.
3. Tax obligations: The e-commerce Limited Company will be a taxpayer and will be required to submit tax returns periodically. The necessary tax identification number and other formalities must be completed for this purpose.
4. Legal regulations: An e-commerce limited company must operate in accordance with the legal regulations of the country in which it operates. Particular attention must be paid to issues such as data protection and consumer rights.
5. Trade name: Limited companies must use the phrase "Limited Company" in their trade names. Furthermore, the choice of trade name is important and should be appropriate for the target audience.

When establishing an e-commerce limited liability company, the above points should be considered, and operations should be conducted in accordance with legal regulations by obtaining the necessary permits.

When establishing or operating a Limited Liability Company (LLC) or an e-commerce LLC, several precautions can be taken to avoid errors or negligence. These precautions include carefully following legal regulations, obtaining necessary permits, fulfilling tax obligations on time, and ensuring the security of business operations. However, all these processes are quite complex and detailed, and in some cases, legal assistance may be required.

Therefore, those planning to start an e-commerce business can consult a corporate law attorney for advice on legal regulations and procedures. An experienced lawyer can provide the necessary advice to ensure the business operates in compliance with legal regulations and avoids legal risks.

Furthermore, a corporate law attorney can also assist with the establishment of an e-commerce Limited Company and the acquisition of relevant permits. This ensures a safer and less risky process for legally establishing and launching the business.