Can a Limited Liability Company Be Converted into a Joint Stock Company?

Company Formation and Articles of Association

Prepared by: Constantinople

Yes. A limited liability company may convert into a joint stock company; the company in its new legal form continues the previous company. The transaction is planned under the Turkish Commercial Code's conversion provisions. This process is different from closing the company and transferring all agreements afresh to a new one. The formation requirements of the new legal form and protection of shareholders' rights must nevertheless be assessed separately.

Depending on the file, a conversion plan, report, financial statements, any required interim balance sheet and capital documents are prepared. Shareholders' inspection rights and the resolution quorum are checked; the necessary resolution is followed by trade registry registration. Where statutory conditions are satisfied, some small and medium-sized businesses may have options such as dispensing with the report. A single document list should not be applied to every file.

For conversion of a limited liability company into a joint stock company, TTK Art. 189/1-c requires an affirmative decision by shareholders representing at least three quarters of the capital and also constituting three quarters of all shareholders. A simple majority of attendees or a capital majority alone is not sufficient. The conversion and new articles of association are registered; conversion becomes legally effective upon registration. The number of shareholders, distribution of shares and articles to be prepared must therefore be checked together before the resolution.

It is incorrect to calculate every transaction as if there were an invariable sixty-day wait or a fixed total fee. The inspection period, preparation of resolutions, missing documents and registry practice affect the actual timetable. The joint stock company's minimum capital requirement, existing capital and payment documents must also be assessed at the outset. Registry and notarial expenses from an earlier year are not a current quotation.

Prepare the conversion's purpose, number of shareholders, share allocation and current financial statements. The conversion resolution, new capital and tax conditions are checked together.

File review is a paid service. The scope and fee are set out in writing before work begins.