Company Establishment

Key Points Regarding Article of Association’s of Startup Companies

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Start-ups are structures where low budgets and big goals are commemorated together. Therefore, the legal, economic and structural risks that may arise in the future should be minimized at the establishment stage. In terms of your initiative, where growth will be at the forefront, you need to pay special attention to the steps you will take in the organization so that it does not complicate your business in the following processes. The most important of these is the process in which your idea will turn into institutionalization, namely the establishment of a company. A main contract is also required for the establishment of a company.

What is this Article of Association?

Once your idea, business plan and capital are ready, the next step is to establish your company. By establishing a company, it will now be possible for your enterprise to have a tax identity, issue invoices and pay taxes.

During the establishment of the company, there are many issues that you should pay attention to in order not to get your job difficult in the future, one of the most important of these is the company’s articles of association.

The articles of incorporation of the company are the contracts that must bear the minimum elements stipulated by the law in order to start the commercial life of the company and must be approved by applying to the trade registry provincial directorate where the company will be established.

While preparing the articles of association, it should be decided the company type first. oint stock companies require at least 50,000 TRY as capital amount and at least the ¼ of that amount should be paid at the establishment. To establish a limited liability company, it is sufficient to declare minimum 10,000 TRY as capital amount and it is possible to pay decided amount in two years. Also, there are differences between the types of companies in terms of responsibility, corporate bodies, meetings and decision-making mechanisms. Once the type of company to be established is selected, the company’s articles of association must be meticulously prepared around the needs of the enterprise and the entrepreneur.

What should be considered when preparing the Company’s Articles of Association?

There are some key points to consider in the articles of association of your start-up company, which you have established with dreams and goals of growth, investment acquisition and perhaps public offering in the future:

  • Company Title:A company title that is compatible with the activity to be carried out by your enterprise and the purpose and subject in the main contract should be determined. In addition, the guide in which the Istanbul Chamber of Commerce explains the criteria to be taken into account when determining the company title in terms of companies to be established in Istanbul should be examined.
  • Company partners and their capital amounts: You can set up your company alone or with multiple partners, regardless of which type of company you decide. If you want to move forward with more than one partner, the share ratio that each of the partners will have in the company should be determined in such a way as not to aggravate the decision-making mechanism considering the proportions of the general assembly meeting to be held in the future.
  • Company’s headquarter address and which tax office the address will be located in:As long as it is registered in the Central Registry System (“MERSİS“) as the central address of your company, you can show any property that is suitable for business. It is seen that many entrepreneurs show their home addresses as their central address in order to avoid the cost of renting/buying an additional office, but there are some risks. If the home address is shown as the central address, it is obligatory to pay withholding tax and the person’s home address may become public. Therefore, the virtual office solution can be a more useful solution for entrepreneurs in terms of tax exemptions and providing the company with a notification address in accordance with Turkish Law.
  • Board members/directors of the company and other signatories: It is possible for the founder(s) or any external person to be a member of the board of directors in joint stock companies, while in limited companies at least one of the directors must be appointed from the partners. Boards of too many people at the initial stage can lead to confusion and a decrease in decision-making speed. In addition, the system in which the signatories will be authorized to represent the company with their signatures together (jointly) or alone (individually) must be carefully considered.
  • Disincorporate from the company, privileged shares, details of the distribution of profits, the registration and announcement procedures and more: The initial decisions to be made in these and other matters are very important in order to prevent the slowing process in an investment opportunity.

Especially in joint stock companies, the process of changing the articles of association can take quite a long time in terms of being subject to the permission of the Ministry of Commerce. For this reason, it is useful for entrepreneurs to seek advice from people who are expert about start-up processes when preparing their article of association.

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