Thus the must suitable type of investment will have been preferred by them. In fact, it is advisable to start with the characteristics of two types in Turkish Law. A.Ş. is a type of company that has a commercial title, having a certain main capital divided into shares, issuing stocks representing these shares and bearings responsibility only by its assets. On the other hand LO is a company established under a commercial title, the responsibility of the shareholders limited by their stipulated capital.

As for the common characteristics of the above mentioned companies to have legal entities and the responsibility of the shareholders are limited by their stipulated capital.

Now, let’s review the differences between. In an A.Ş. the minimum number of founders are minimum five and unlimited afterwards. Whereas a LO can be established with minimum two founders but the maximum number of founders can not exceed 50. While in an A.Ş. can not be less than 50.000 YTL. In a LO the minimum founding capital is 5000 YTL. Besides, an A.Ş. can issue negotiable instruments representing certain and divided shares, a LO does not have such a possibility. The shares issued by the A.Ş. can either be in the name of the owner or on behalf of its bearer. Besides the law has enabled an A.Ş. saving bonds to get loans. Such a situation will enable an A.Ş. to obtain capital and get credit from outsiders. LO’s can not issue stocks and bonds and can not deal with intermediary transactions concerning securities. An A.Ş. can be founded for any kind of legal and economical aims and subjects, as to the LO it can be established as an insurance company, except insurance agency, as a bank and factoring company.

From the point of concept of partnership in A.Ş. a partner is the one who has shares but in the LO a partner is who holds the share certificates. That has not the quality of negotiable instruments.

Besides in both kinds of companies the responsibilities of shareholders are limited by their stipulitated capital. The creditors of an A.Ş. can not take executive proceedings against the shareholders for the debt of the company. If they can not get their credits so they can claim the bankruptcy and the insolvency of the company.

There are certain stages in the establishment of both companies. The Article of Association must be in written form and signed by all founders. Signatures are to be approved by the notary public. The Permission of the Ministry of Industry and Trade is a must necessity for the establishment of an A.Ş. but not for a LO. For a LO with less than twenty partners is no must for annual General Assembly. But on the other hand the annual General Assembly must be done by any kind of an A.Ş. Generally must the General Assembly held in three months after the accounting period and at least once a year. If a LO has less than twenty shareholders that means that the shareholders can not participate through a representative to the General Assembly. General Assemblies are the most reason for problems at LO’s. If there are less than five shareholders all they have to participate to the General Assembly to be able to decide in points like to amend the company charter or to increase the company capital. Decisions about to increase the company capital or to expand the shareholders responsibility are to taken unanimously. To make decisions in other points by a LO it has to taken by the majority of the General Assembly. Three fourth of voices are necessary to register a share transfer into the share book.

There is no legal possibility against the rejection of an offer made by a LO’s General Assembly. Whereas it is possible by an A.Ş. because also the rejection of an offer is accepted as a decision.

By the A.Ş. three board members at least are necessary to form the board of directors and they can be nominated for three years as most. The members of the board of directors of an A.Ş. must be among the shareholders. Whereas the management and representation of a LO can be transferred to outsiders. Members of board of directors by a LO are carrying out many duties concerning the administration of the company like: to match and take measures in case of that the financial state of the company has been critical, to keep the accounts, to prepare the annual reports and etc. are among them. The equivalent of the board of directors of an A.Ş. is for the LO is the director. How mentioned above the director of a LO can be a shareholder or an outsider. A LO needs at least one director and can have three directors as maximum.

A controller is a must for an A.Ş. The controlling body can be a sole person or a board. The members can be a shareholder or an outsider. Whereas a LO with less than twenty shareholders does not need a controlling body as obligatory.

Having reviewed the main differences between those companies we see that both form of companies have advantages as also disadvantages as well. One of the advantages of an A.Ş. is that it is possible to form a big amount of capital by having a big number of shareholders, further it can obtain easily credits and collect money from stock markets by issuing stock shares. To exist without to be bound to persons is also a big advantage of an A.Ş. Whereas the establishment is really disadvantageous because of a lot of bureaucracy and a lot of bureaucracy in the further time by the management and daily life of an A.Ş.

A LO has main disadvantages by having smaller capital and poorer chances to get credits and the not existence of the possibility to collect money from the capital market by issuing stock shares. Also to get decisions especially by a LO with two shareholders can be really difficult. That is a reason to have a lot of shareholders by LO’s which are established for long term aims.