Establishment Procedures of a Joint Stock Company

Regarding the topic of "Establishment Procedures of a Joint Stock Company";

Introduction and Theoretical Framework: The Emergence and Significance of Joint Stock Companies

In the systematics of commercial law, joint-stock companies are among the leading institutions that form the backbone of modern economic life and large-scale commercial organizations. Joint-stock companies are the most advanced model of capital company, enabling the pooling of enormous capital, spreading risk across a wide range of people, limiting shareholders' liability to their committed capital share, and possessing legal personality. For a joint-stock company to gain legal existence, enter commercial life, and acquire legal capacity, it must complete all the very strict, formal, and structured establishment stages stipulated by law.

The Turkish Commercial Code No. 6102 (TTK), which forms the basis of Turkish commercial law, has brought about a significant paradigm shift in the incorporation regime of joint-stock companies. It has largely moved away from the permit system of the previous law, adopting a more modern, faster, and electronically supported structure based on the principles of registration and transparency. However, the incorporation of a joint-stock company is not a simple legal transaction involving only the signing of a contract with the declaration of intent of two parties. It is a laborious process requiring legal discipline, extending from the convergence of the founders' intentions to the preparation of the articles of association, the actual commitment and deposit of capital in a bank, supervision by official authorities, and finally registration in the commercial registry.

The main objective of this study is to examine the incorporation procedures of a joint-stock company in detail and comprehensively, using a style that is understandable to everyone but maintains academic depth. This includes the legal nature, founding elements, preparation and signing of the articles of association, capital commitments and cash payment terms, ministerial or relevant authority permits, notary approvals, Central Registry System (MERSİS) processes, registration and publication stages in the trade registry, and the legal consequences arising from the completion of the incorporation.

1. Legal Nature and Fundamental Principles of Establishing a Joint Stock Company

The establishment of joint-stock companies differs from classic contractual relationships in debt law. The founders coming together, uniting around a common purpose, and declaring their intention to create an economic legal entity constitutes a unique (sui generis) multi-party legal transaction. The fundamental principles observed in this process directly affect the company's future corporate governance, the interests of creditors, and commercial security.

A. Distinction Between Immediate and Gradual Establishment

The Turkish Commercial Code, in its previous form, divided the establishment of joint-stock companies into two methods: immediate and gradual (through a public offering). However, in the current Turkish Commercial Code system, the gradual establishment method has been largely phased out due to its complex structure and near complete lack of application. In today's practice, joint-stock companies immediate method. Immediate establishment means that all founders come together, either individually or through their representatives, sign the company's articles of association, commit the entire capital, and complete the incorporation procedures within a single timeframe.

B. Minimum Founding and Capital Requirements

The primary legal requirements for establishing a joint-stock company include the number of founders and the minimum capital amount. According to the Turkish Commercial Code, at least one founder (natural or legal person) is sufficient to establish a joint-stock company. The possibility of establishing single-shareholder joint-stock companies is an important legal innovation that facilitates the establishment of a corporate structure for small and medium-sized enterprises.

However, there are also legal minimum limits regarding the initial capital of joint-stock companies. In joint-stock companies that adopt the authorized capital system, the minimum capital amount cannot be below the minimum limit determined by law or relevant Presidential decrees. This capital is a legal requirement for the company to commence its commercial activities and to provide a minimum level of security to its creditors.

2. Preparation of the Articles of Association and the MERSIS Process

The articles of association , which serve as the constitution of a joint-stock company, are the most fundamental document defining the company's name, headquarters, purpose and scope of business, capital, types of shares, structure of the board of directors, and the operating principles of the general assembly. Ensuring that the articles of association are legally compliant, complete, and fully capable of addressing the company's commercial activities is the most critical step in the incorporation process.

A. Application and Draft Creation via MERSIS

In modern commercial law, the incorporation of joint-stock companies is conducted entirely through an electronic infrastructure. The Central Registry System (MERSİS) , coordinated by the Ministry of Trade , forms the central hub for these incorporation procedures. Founders or their authorized legal advisors prepare the draft articles of association through the MERSİS system. At this stage, it is essential that the company name is unique, not already in use by another company, and complies with the title rules of the Turkish Commercial Code (e.g., core title and statements specifying the business subject).

B. Mandatory Clauses (Minimum Elements) to be Included in the Articles of Association

According to the Turkish Commercial Code, the following elements are absolutely mandatory in the articles of association of a joint-stock company:

• The company's trade name and registered office (in which province/district it will be located).

• The company's primary purpose and its main areas of activity aimed at achieving that purpose.

• The company's capital, the nominal value of each share, the form of issue (registered or bearer) of the shares, and the payment terms.

• The number of board members, appointment procedures, terms of office, and those authorized to represent the company.

• Procedures for convening the general assembly, voting rights, and quorum requirements for decisions.

• The company's accounting period and the principles for preparing the balance sheet.

• The means by which the articles of association will be published.

The absence of any of these mandatory elements will prevent the completion of the main contract and disrupt the registration process.

3. Capital Commitment and Blocking of Cash Capital

The most significant financial and legal aspect of establishing a joint-stock company is the commitment of capital and the actual allocation of this capital to the company. To prevent the emergence of "shell companies" that exist only on paper but have no cash reserves, the legislator has introduced extremely strict rules regarding capital payments.

A. Cash Capital Payment Rate and Maturities

According to the provisions of the current Turkish Commercial Code, at least one-quarter (25%) of the share capital committed in cash must be paid before registration, and the remaining portion must be paid within twenty-four months following the company's registration . This one-quarter portion that must be paid before registration is deposited in cash into a temporary bank account opened in the company's name during the incorporation phase.

B. Bank Blocking and Establishment Certificate

The founders, using the incorporation reference number they received via MERSİS (Turkish Commercial Registry System), apply to a bank to open an account in the company's name (as a "joint-stock company in the incorporation phase" since it has not yet acquired legal personality). 25% of the committed capital is deposited into this account. The bank issues an incorporation block letter or receipt confirming the deposit. This document is among the mandatory documents to be submitted to the trade registry office. After the company is registered in the trade registry, this block is lifted, and the money is transferred to the company's active accounts and used in commercial activities.

C. Special Conditions in Case of In-Kind Capital Contribution

If the founders contribute real estate, intellectual property rights, machinery, equipment, or similar in-kind capital instead of cash, the process differs from cash capital contributions. A formal valuation report, determined by experts appointed by the court, is mandatory to ascertain the value of the in-kind capital. It is also essential that the in-kind capital is free from any liens, mortgages, or restrictions, and that it can be transferred to the company without any problems.

4. Permits, Declarations and Application for Registration in the Commercial Registry

After the articles of association are prepared via MERSİS, the capital is deposited in the bank, and other necessary documents are completed, the official application stage begins. At this stage, additional permits may be required for certain company types or business activities.

A. Ministry or Official Institution Permits

Under normal circumstances, the establishment of joint-stock companies is no longer subject to the permission of the Ministry of Industry and Technology; registration is carried out directly through applications to the relevant Trade Registry Directorate. However, for companies subject to certain special laws (e.g., banks, financial leasing companies, factoring companies, insurance companies, asset management companies, or general merchandising companies), obtaining establishment permits is a legal requirement. Registration applications cannot be submitted to the trade registry without obtaining these permits.

B. Notary Approvals and Signature Declarations

After the incorporation documents are completed, there are documents that must be signed by the founders and board members in the presence of the relevant parties:

• Signature declarations of company directors or board members, prepared under the company name (issued before a notary public or an authorized official at the trade registry office).

• Statements from the board members confirming their acceptance of the position.

• Founders' declaration and, if applicable, in-kind capital agreements.

C. Application and Registration to the Trade Registry Directorate

Once all these documents are prepared in full, an application is made to the Trade Registry Directorate in the location of the company's headquarters . Experts at the registry office examine the legality of the documents, whether the articles of association meet the legal requirements, and whether the capital blocks are complete. If no deficiencies or legal irregularities are found as a result of the examination, the company is registered with the Trade Registry . With registration, the joint-stock company acquires legal personality .

5. Post-Registration Procedures and Completion of Establishment

A company comes into existence upon registration with the Commercial Registry; however, for the legal and administrative establishment to be fully completed, there are certain secondary procedures and notifications that must be carried out after registration.

A. Announcement in the Turkish Trade Registry Gazette

A company registered in the commercial registry is automatically the Turkish Commercial Registry Gazette (TTSG). This announcement signifies the moment when the company's legal existence becomes public (it is assumed to be known to everyone). The publication costs are paid in advance by the founders during the establishment phase.

B. Tax Office Registration and Financial Declarations

Once the company is registered, its legal tax liability begins. Within the legal timeframe from the registration date, the company management must apply to the relevant tax office to obtain a tax certificate, submit signature circulars, and have its books (journal book, general ledger, inventory book, share register, board of directors' resolution book, etc.) notarized or certified through the system.

C. Social Security Institution (SGK) Procedures

At this stage, social security law obligations such as submitting the workplace declaration for the employees to be employed by the company and completing the Bağ-Kur (4/1-b) registration procedures depending on the status of the board members or partners are also fulfilled. In addition, municipal licenses and relevant professional chamber (Chamber of Commerce) registrations are completed, making the company ready for operation.

6. Legal Disputes and Responsibilities Encountered During the Establishment Phase

Transactions carried out during the establishment of a joint-stock company, or during the preparatory phase before its establishment, entail certain specific legal responsibilities.

A. Founders' Responsibility

As a rule, founders or board members are personally and jointly liable for debts arising from transactions they conduct on behalf of the company before it acquires legal personality (during the incorporation or preparatory phase). After the company is registered in the commercial registry, it acquires the right to assume these debts; however, if the company is not registered or registration is refused, the founders' personal liability continues.

B. Collusive Transactions and Arbitration Review

Fraudulent transactions, such as obtaining fraudulent bank statements when the capital has not actually been paid, or deliberately inflating the value of in-kind capital, lead to severe legal and criminal penalties (e.g., forgery crimes, liability for making false statements) under the Turkish Commercial Code and the Turkish Penal Code. Therefore, strict adherence to the principle of honesty and legal procedures during the establishment process is of vital importance.

Conclusion

The incorporation process of a joint-stock company is not a simple administrative application; it is a corporate process with legal, financial, and penal dimensions, subject to strict formal requirements. The preparatory phase, which begins electronically via MERSİS, concludes with the drafting of the articles of association, the duly committed and blocked cash or in-kind capital, obtaining the necessary official approvals, and finally, the registration application submitted to the Trade Registry Directorate.

Upon registration, the joint-stock company acquires legal personality and becomes an independent entity with rights and obligations in the market, while the founders' responsibilities are shaped within the framework of the principle of limited liability. In commercial life, the protection of trust, stability, and the rights of creditors depends on the complete adherence to these strict and mandatory rules during the establishment phase. A legally compliant, transparent, and fully conducted establishment process is the greatest guarantee of the company's future commercial success and corporate soundness.