An Increase in the Minimum Capital Requirements for Joint Stock and Limited Liability Companies

In the ever-evolving landscape of business regulations, it is crucial for entrepreneurs and established companies alike to stay updated on any changes that may impact their operations. Recently, a presidential decree has been issued, amending the minimum capital requirements for joint stock and limited liability companies in Turkey. Published in the official gazette on November 25, 2023, Decree No. 7887 encompasses significant alterations to the Turkish Commercial Code Articles 332 and 580.

The Revised Minimum Capital Requirements:

According to the presidential decree, the minimum capital for joint stock companies has been increased from 50,000 TL to 250,000 TL. For non-public joint stock companies that have adopted the registered capital system, the minimum starting capital has been raised from 100,000 TL to 500,000 TL. Furthermore, limited liability companies will now be required to have a minimum capital of 50,000 TL, a significant increase from the previous 10,000 TL. Consequently, the amounts specified in Articles 332 and 580 of the Turkish Commercial Code have been multiplied by five.

Implementation Date:

While the presidential decree initially specified October 1, 2024, as the effective date of these changes, an official correction issued on November 26, 2023, and published in the official gazette, reinforces that the new minimum capital requirements will commence from January 1, 2024. Therefore, companies must ensure compliance with the revised regulations in preparation for the implementation date.

Implications for Businesses:

As entrepreneurs and business owners, it is crucial to acknowledge the implications of these amendments. The increase in minimum capital requirements may affect companies planning to establish new entities or existing entities seeking to maintain their compliance. It will require careful financial planning and potentially necessitate additional resources for start-ups or limited companies looking to expand or continue operations.

Reasoning behind the Amendments:

The initiative to raise the minimum capital requirements aims to enforce stability, financial robustness, and shareholder protection within companies. Sufficient capitalization allows for a stronger financial structure and better safeguards against potential risks or unforeseen circumstances. The amended regulations align with the global trend of ensuring companies possess a solid financial foundation to support their growth.

In light of the presidential decree dated November 25, 2023, Turkish registered anonymous and limited companies must prepare for increased minimum capital requirements effective from January 1, 2024. It is essential for businesses to proactively assess their financial positions, evaluate their capital structures, and develop strategies to meet the new standards. By adapting to these changes, companies can enhance their financial security, enable sustainable growth, and foster investor confidence in Turkey's business environment.