Limited Company or Joint Stock Company? In 2026 the Decision Is Made by the Exit, Not the Formation

Regulatory note. This article is prepared, as at 2 August 2026, principally on the following bases: Articles 332, 490, 580 and 595 of the Turkish Commercial Code No. 6102; repeated Article 80 of the Income Tax Code No. 193; Articles 5 and 32 of the Corporate Tax Code No. 5520; Article 35 of Law No. 6183 on the Procedure for the Collection of Public Receivables, for the shareholder’s liability for public debt; paragraph IV/16 of table (2) annexed to the Stamp Tax Code No. 488 and Article 123 of the Fees Code No. 492, for the stamp tax and fee exemption on share transfers; Presidential Decision No. 7887 for minimum capital (Official Gazette 25.11.2023, issue 32380); Presidential Decision No. 11066 for the independent audit thresholds (Official Gazette 17.03.2026, issue 33199); Income Tax General Communiqué No. 232 for the acquisition date of a share certificate in capital gains, and Income Tax General Communiqué No. 332 for the annual exemption amount (Official Gazette 31.12.2025, issue 33124, 5th repeated).

Most people who put this question to me are looking at it from the wrong place. “Which is more prestigious”, “which has the lower capital”, “which is easier to form” — these are all questions asked at the formation table. The most expensive difference between a limited company and a joint stock company, though, appears not when you form the company but when you sell the shares.

The short answer: while you are running the business there is no tax difference between the two; both are corporate taxpayers and the rate is the same. But if one day you sell your holding — buying a partner out, transferring the company, or giving shares to an investor — in a joint stock company the gain is entirely exempt if you have had share certificates printed and held them for two years, whereas in a limited company no such door exists. If you have an exit plan, the answer largely follows from this.

How different are the two company types, really?

The limited company and the joint stock company are two separate types of capital company under the Turkish Commercial Code. Both are legal persons; both can be formed with a single shareholder; as a rule the company’s own assets answer for the company’s debts.

There is, however, an important exception that most people skip. A shareholder in a limited company is liable with their personal assets, in proportion to their capital share, for public debt (tax, social security premiums) that cannot be collected from the company (Law No. 6183, Art. 35); in a joint stock company mere share ownership gives rise to no such liability.

(Legal representatives who actually hold the power of representation can also be held liable for the company’s public debt — that is a separate matter, and it does not attach automatically to a title: the liability of a manager in a limited company, or of a board member in a joint stock company, is assessed according to the concrete power of representation, any delegation of authority, and the period to which the debt belongs.)

This is what blurs the distinction in daily life: from the outside both are “companies”, but they diverge in liability and in exit tax.

The difference sharpens along three axes: capital, the transfer of the shareholding, and — most importantly — the tax that arises on the way out. Capital and the transfer procedure are set by the Commercial Code; the exit tax by the Income Tax and Corporate Tax Codes. The backbone of this article is the third axis, because the first two are easily learnt while the third is the one most people notice too late.

A comparison in figures (2026)

Let us put the measurable part on the table first.

The minimum capital figures here carry an important detail. Article 332 of the Commercial Code says “fifty thousand Turkish lira” for a joint stock company and (Art. 580) “ten thousand Turkish lira” for a limited company. But that is the floor in the statute, not the amount in force.

The same article says “This minimum capital amount may be increased by the President”; and Presidential Decision No. 7887 (Official Gazette 25.11.2023, issue 32380) raised the joint stock figure to TRY 250,000 and the limited figure to TRY 50,000 with effect from 1 January 2024. So do not trust sources saying “the statute says fifty thousand”; what governs is the amount in the Decision.

The real difference: the tax you will (or will not) pay on the way out

Now we come to the heart of the article. What happens when you sell your holding?

In a limited company the shareholding is not a “security”; it is a partnership right. However long you hold it, the gain arising on sale is subject to income tax as a capital gain (GVK repeated Art. 80). The only softening is the TRY 150,000 exemption available for a calendar year (2026, General Communiqué No. 332); anything above that is taxed. That door stays open whatever the holding period: even if you sell after ten years, the gain is in principle taxable.

In a joint stock company the distinction turns on whether you had share certificates printed. In listing capital gains, repeated Article 80 of the Income Tax Code uses this wording: “…gains derived from the disposal of securities, excluding share certificates belonging to full-liability companies and held for more than two years.” The word “excluding” is the whole issue: if you hold a certificated joint stock share for more than two years and sell it, the gain is not treated as a capital gain and is not taxed. (The statute looks not for “two full years” but for the period after two years have elapsed; a sale on the exact anniversary is on the line, and the safe course is to let two years pass.)

That result applies to an individual shareholder who has not brought the shareholding into a commercial enterprise; if the share is held among the assets of a business, or if the buying and selling carries continuity and commercial organisation, the gain is treated not as a capital gain but as commercial earnings and this exemption does not operate.

There is a piece of bad news to note as well. Because the exemption operates for a “security”, if you sell the share certificate having held it for less than two years you cannot even use the annual TRY 150,000 exemption available in a limited company — the gain is taxable from the first lira. So a certificated joint stock share has two extremes: either everything is exempt under the two-year rule, or nothing is.

There is a third situation that most comparisons miss. If no share certificate has ever been printed in the joint stock company, what you hold is not yet a security but a partnership right — just like a limited company share. The sale is then subject to the capital-gains rule with the TRY 150,000 exemption.

The moment the certificate is printed and duly acquired, the share turns into a security; and on the Revenue Administration’s settled view the two-year clock starts not from the old date on which you became a shareholder but from the date the share certificate was acquired. In practice the printing date of the certificate is in most cases the significant fact marking that start; even so, the printing, delivery and disposal documents are assessed together.

Let us keep separate the case in which the seller is a company. Where a company sells participation shares it has held among its assets for at least two full years, part of the gain is exempt from corporate tax (CTC Art. 5/1-e).

The statutory rate is 75%; but by Presidential Decision No. 9160 the exemption rate was reduced to 50% with effect from 27 November 2024 — so the rate applied on a sale made today is 50%, and the remainder is taxed. This is a corporate exemption, different from a sale by an individual shareholder, and it has its own conditions, such as collection of the sale price and holding the gain in a special fund account.

Transferring the shareholding: the notary door and the ease of a certificate

Tax aside, the procedure by which a shareholding changes hands also differs between the two types, and that difference is felt in practice.

The transfer of a limited company share is governed by Article 595 of the Commercial Code: “The transfer of a basic capital share and the transactions giving rise to an obligation to transfer are made in written form and the parties’ signatures are notarised.” To that is added general assembly approval, unless the articles of association provide otherwise; it is that approval that actually makes the transfer effective.

Afterwards the change has to be entered in the share ledger and registered with the trade registry — steps that provide record and publicity rather than validity. In practice the process runs as a notary-assembly-registration chain.

There is a risk here that often gets overlooked. A shareholder who acquires a limited company share can become liable, in proportion to the capital share, for company public debts that arose before the transfer; and the transferring shareholder is not automatically released from those debts (Law No. 6183, Art. 35). It is therefore sensible, before a limited company share transfer, to examine the company’s public debt position and to take contractual protection.

In a joint stock company, the transfer of a registered share tied to a certificate is effected by endorsing and delivering the certificate (TCC Art. 490); as a rule neither notarisation nor general assembly approval is required (restrictions on transfer arising from the statute or the articles are reserved). This is why the joint stock company is the natural home of investor entries and exits, quick changes of shareholder and option programmes — the share is liquid.

The good news is common to both. Documents drawn up for share transfers in joint stock and limited companies are exempt from stamp tax (table (2) annexed to Law No. 488, para. IV/16), and share transfer transactions in these companies are exempt from fees (Fees Code No. 492, Art. 123). The fear that “a large transaction tax will arise on the transfer” is misplaced; leaving aside notary charges and registration costs, the real difference lies in the practicality of the procedure.

A myth and a date: “a JSC gets audited more” and 31 December 2026

A sentence I hear often: “Do not form a joint stock company, you will fall into independent audit.” That is wrong. Being subject to independent audit depends on the company’s size, not its type. Presidential Decision No. 11066 (Official Gazette 17.03.2026, issue 33199) set the general thresholds, from the 2026 accounting period, at total assets of TRY 500 million, annual net sales revenue of TRY 1 billion and 150 employees; a company exceeding at least two of those three criteria in two consecutive accounting periods falls into audit.

Those general thresholds are the same for a limited company and a joint stock company: a small joint stock company does not fall into audit on these thresholds, while a large limited company does. (One addition: some companies may be subject to audit independently of these general thresholds because of their field of activity or special regulation; the general comparison does not cover those exceptions.)

The matter that depends on the calendar rather than the type is 31 December 2026. Companies formed before 1 January 2024 whose capital remains below the new threshold — TRY 250,000 for a joint stock company under the basic capital system, TRY 500,000 for a non-public joint stock company that has adopted the registered capital system, TRY 50,000 for a limited company — are deemed dissolved, that is terminated, if they do not raise their capital by that date (Decision No. 7887).

This is a quietly approaching deadline that applies to both types; if you have a company below the threshold, a capital increase needs to be on your agenda before the year is out.

Gökay Gül’s note, and an example from the field

Gökay Gül’s note. The mistake I see most in advisory work is having the share certificates printed too late and then counting the two-year rule wrongly. The exit advantage of a joint stock company is not automatic; it is earned by having the certificates printed in time.

The example below does not belong to a single taxpayer; it is a representative case distilled from situations I meet again and again in the field.

A taxpayer wanted to sell the holding they had had for twelve years in a joint stock company. Their thinking was: “I have been a shareholder for twelve years, I passed two years long ago, the exemption is mine.” But the company had never had share certificates printed; what they held was a bare share. They had the certificates printed immediately before the sale.

Here is the problem: on the Revenue Administration’s settled view (General Communiqué No. 232 and the rulings on the subject) the two-year period runs not from the date you became a shareholder but from the date the share certificate was actually printed. So what stood there was not a twelve-year shareholding but a certificate a few days old; because two years had not elapsed, the whole gain on the sale was taxable.

That is why I draw this distinction: the exit advantage of a joint stock company is not automatic; it is earned by having the certificate printed in time. If you are planning an exit, the certificate needs to be printed two years beforehand, not close to the sale. Not knowing this can turn the structure that looks most advantageous on paper into the most expensive one.

The real lesson that follows is this: when forming a company you have to think not about the moment you are in but about a few years ahead. I see a great many owners who are thinking of neither a sale nor an investment today; when the business grows and a fast investment or partnership opportunity appears in front of them, they wrestle with a tax burden created purely by the structure chosen at the very beginning.

A simple but important decision at the formation table can keep you from missing the opportunity of your life later on. So do not rush the choice of type; weigh the process with your next step in mind.

What to do?

Simplify the decision with three questions. One: do you envisage selling the shareholding in this company later, taking in an investor, or buying a partner out? If yes, the joint stock company comes forward for its exit tax advantage and ease of transfer — but remember that the advantage is earned by having the share certificates printed in time. Two: will the structure stay simple, with few shareholders and no public offering in mind? Then the operating life of the two types is identical anyway, and the decision comes down to other practical reasons.

Three: is your existing company’s capital below the threshold? If so, deal with the 31 December 2026 capital alignment before debating the type.

The answers to these three questions vary from person to person and are computed together with the figures — the amount of the gain, the holding period, the certificate position. Choosing a company type without thinking about your next sale is one of the most expensive mistakes there is.

If you would like to work through this computation for your own situation, get in touch; the SME tax guide and the article on sole proprietorship versus limited company set out the neighbouring decisions.

Gökay Gül — Sistem Global Danışmanlık