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Corporate Law
A company is established when two or more people come together in order to fulfil a common goal by joining their efforts and assets with a contract. As may be concurred from this definition a company consists of these components; contract, capital, common goal and common effort.
- In order to establish a company two or more persons are required.
- Apart from a simple company for other companies to be established the company contract must be made in writing, the signatures must be notarized and it must be registered in the commercial register and announced.
- Capital is a necessary component because of the fact that a company is an economic union. Although money is the first thing that comes to mind as a capital apart from joint stock companies and limited companies in the other types of companies effort (work power) may be brought as a capital as well.
- Where the minimum capital amount for a joint stock company is 50.000,00 TL limited companies minimum capital amount is 5.000,00 TL. Because in these companies the maximum capital amount is determined by law these companies are called principle capital companies. In order to mention a company all of the 5 components must be present. Otherwise a company contract will not be valid.
Companies are mainly divided into two types. These are private companies and capital companies. Simple companies, unlimited companies and commandite companies are private companies whereas a commandite company which has its capital divided into shares, limited companies and joint stock companies are capital companies. In the private companies the partners’ identities, personalities and relationships are important whereas in capital companies only the capitals brought by the partners are of importance.
Companies according to their capitals are divided into three as; Fixed (principle) capital companies, changing capital companies and registered capital companies.
Simple partnership does not have a legal entity and in the establishing contract of the company there are no conditions for validity establishment of a simple partnership. On the base of these facts it is easy to establish a simple partnership. In order to achieve any goal which is not against the law, morals, ethics, imperative provisions, public order or personal rights and which is not impossible to achieve a simple company may be established.
According to the Ultra Vires rule the company only has a capacity to have rights for the activities shown in the main contract. Unless otherwise concluded in the contract the profits and damages are shared equally. In these companies the manager is also the person who has authority to represent the company. The partners’ responsibility for the debts of the company is in the first degree, unlimited and joint.
Unless obtaining other partners’ consent, a partner of the simple company is not entitled to transfer his shares, have a new partner or have a participant for his own shares. All law suits relating to the company contract are subject to a five year time limit starting from the maturity of the credit.
The common characters of the commercial partnership: All commercial companies require a registration procedure in order to gain a legal entity. The founders may only pick one type of company and may not create a mixed type of company out of these (limited number principle). The capacity to have rights of a commercial company is limited to the written business subjects found in the main contract. It is possible for companies to merge, change type and be divided.
Unlimited partnerships (company): It is the type of company established by real person where the responsibilities for the debts of the company are not limited, with the aim of managing a commercial business under a commercial title. It is a typical example of persons’ partnership. However in the unlimited partnership if there is more than one manager, every one of them may use the authorities of the management individually. One manager may use their right to object for the action which the other partner did with the reason that it was not made for the benefit of the company. At the unlimited partnership every partner has the right of inspection and all of them are subjected the competition prohibition. The partners’ responsibility is in the second degree, unlimited and joint.
Simple Commandite Company: It is the type of company established with the aim of managing a commercial business under a commercial title where only one or a few partners are unlimitedly responsible for the debts of the company and where the other partner or partners are limitedly responsible. The partners who are unlimitedly responsible are called active partners whereas the partners who are limitedly responsible are called dormant partners. Because the dormant partner’s responsibility may not pass the amount of capital which they have given or promised to give, if damage occurs their responsibility will be limited to the amount of their share. However if the dormant partner has expressed in writing that they are responsible for the amount which exceeds their share they promised as capital or if they have announced (published) this then they will be responsible for this amount against third persons or to the person the announcement was made to. The partners who have the authority to represent the company are the active partners.
Limited Company: They are commercial companies established under a commercial title by two or more real or legal entities which function on economic areas and where the company is responsible with its assets for its debts and the partner’s responsibility is limited to the capital they have promised and only to the company, also it is the type of company where the main capital is certain and divided according to the number of partners. The partner’s responsibility is limited and is only against the company. The right to vote is estimated according to the capital given by the partners. (25 TL=1 VOTE). The company’s mandatory institutions are the general committee and the managers. Along with this if the number of partners is more than 20 then a supervisor/supervisors must be appointed as well.
The title of partner is lost when the partner leaves or discharges. In these situations for the validity of the procedure the main capital decrease procedures must be made. The partners have these rights; profit share right, liquidation share right, right to acquire new shares, right to attend the general committee meeting, right to attend the management and representation of the company, right of inspection and right to leave. The partners have three obligations these are; to pay the capital, if not foreseen otherwise join management and representation and if foreseen in the main contract not to breach the competition prohibition.
Joint Stock Company: They are the companies which function under a commercial title and which have a definite main capital which is divided into shares and which the company is responsible for their debts with its own assets and where the partner’s responsibility is limited to the amount of capital they have promised. Joint Stock Companies may be established in two ways; as rapid and as gradual. In rapid establishment all the shares are promised by the partners whereas in a gradual establishment the company’s shares are obtained or promised by the founders whereas the rest of them are offered to the public. The Joint Stock Company has three mandatory institutions which are; the general assembly, board of management, and board of inspectors.
Shared Commandite Company: It is the type of company where its capital is divided into shares and one or more of the partners are responsible against claimants like they are in limited partnerships and where the other partners responsibility are like the responsibility of the partners of a joint stock company. The management and representation of the company is owned by the active partners (commandite partners) and they may not be the inspectors of the company. The active partners are also subjected to the competition prohibition.
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