The Importance of Partnership Rights in Turkey
Partnership rights in Turkey are one of the most fundamental aspects of corporate law, both for domestic and foreign investors. The partnership structure determines the rights and obligations in many areas, ranging from company management to profit distribution, from liquidation to share transfer. For this reason, understanding partnership rights correctly is of critical importance for the financial security of both investors and company managers.
Legal Basis of Partnership Rights
Partnership rights in Turkey are primarily regulated by the Turkish Commercial Code (TCC, Law No. 6102) and relevant legislation. In addition, the Income Tax Law (GVK) and the Corporate Tax Law include provisions regarding the taxation of income derived from partnership rights.
The main types of companies are:
- Joint Stock Companies (A.Ş.)
- Limited Liability Companies (Ltd. Şti.)
- Ordinary Partnerships and Personal Companies
The scope, transfer, and taxation of partnership rights vary depending on the type of company.
Key Elements of Partnership Rights in Turkey
1. Dividend (Profit Share) Right
Shareholders have the right to receive a share of the company’s profits. According to the TCC, profit distribution is subject to the general assembly’s decision. In joint stock and limited liability companies, dividends are distributed in proportion to shareholding.
2. Voting and Management Right
Shareholders have the right to participate in company management by voting at general assembly meetings. In joint stock companies, minority rights play an important role in protecting small shareholders.
3. Right to Information and Audit
Shareholders have the right to obtain information about the company’s financial statements and activities. This right ensures transparency and accountability within the company.
4. Liquidation and Capital Refund Right
In the event of company dissolution, shareholders are entitled to receive a share of the liquidation balance in proportion to their capital contribution.
5. Share Transfer and Exit Right
The transfer of partnership shares varies depending on the type of company:
- In limited liability companies, share transfers require notary approval and registration with the trade registry.
- In joint stock companies, bearer shares can be transferred more easily, while registered shares may require company approval.
Taxation of Partnership Rights
Partnership rights in Turkey are significant not only in terms of corporate law but also from a taxation perspective.
- Dividends (profit shares): Classified as investment income under the Income Tax Law and subject to withholding tax at specific rates.
- Share transfers: Taxed as capital gains depending on the holding period.
- Foreign-source income: Evaluated under double taxation avoidance agreements (DTAs).
Partnership Rights in Turkey for Foreign Investors
Foreign investors can become shareholders in Turkish companies and enjoy the same rights as domestic partners. However, different rules may apply regarding share transfers, profit repatriation, and tax obligations. In particular, capital movements, investment incentives, and DTAs should be carefully considered.
The Importance of Partnership Rights for Businesses in Turkey
- Ensure corporate governance and transparency.
- Prevent disputes among shareholders.
- Increase investor confidence.
- Minimize tax risks.
Professional Support
Partnership rights in Turkey include detailed regulations regarding company type, shareholding structure, share transfer, and tax obligations. Therefore, managing the process with professional support provides both legal and financial security.
At OzbekCPA, we provide comprehensive advisory services on partnership rights, share transfers, dividend distribution, and tax obligations. We aim to ensure that your company achieves sustainable and compliant growth in Turkey.
