LIMITED LIABILITY COMPANY (Ltd. Şti.)

1. LIMITED LIABILITY COMPANY(Ltd. Şti.) • TTK m.573: • Limited şirket bir veya daha çok gerçek veya tüzel kişi tarafından bir ticaret unvanı altında kurulur; esas sermayesi belirli olup, bu sermaye paylarının toplamından oluşur. • Ortaklar şirket borçlarından sorumlu olmayıp, sadece taahhüt ettikleri esas sermaye paylarını ödemekle ve şirket sözleşmesinde öngörülen ek ödeme ve yan edim yükümlülüklerini getirmekle yükümlüdürler.

2. Limited şirket kanunen yasak olmayan her türlü ekonomik amaç ve konu için kurulabilir.

3. Like stock company, limited liability company (Llc) is also a capital company. • Capital: The capital is predetermined (fixed), and must be at least 10.000 TL. This capital is divided into shares. Unlike stock corporations, the Llc can not issue stock (share) certificates representing the shares. • Shareholders have share interest. • Personal services or work cannot be contributed as capital. • The minimum of a share must be 25 TL.

4. The formation of a limited liability company is similar to stock corporation. The founders prepare and sign partnership agreement and notary authenticates their signatures. • The partnership acquires legal personality upon registration in the commercial registry.

5. LIMITED LIABILITY COMPANY(Ltd. Şti.) • Number of shareholders: Minimum 1, and maximum 50 persons (real/legal). • Purpose and subject matter: Any commercial activity (except some activities that reserved only for stock companies like banking, insurance, and leasing etc). It must be indicated in the articles of incorporation, as well as in the firm name.

6. Management: Llc is managed (internal reletionship) and represented (external relationship) by the directors. In the articles of incorporation names and nationality of directors must be shown. Directors can also be appointed among the non-shareholders. But at least one director must be shareholder. • Their signatures, on behalf of the company, are required on any document to which the company is supposed to be a signatory.

7. Liability of the shareholders: It is limited to their capital contribution. This rule can not be applied when there is a public obligation. Article 35 of the Code Regarding Collection of State Receivables (Amme Alacaklarının Tahsil Usulü Hakkında Kanun) states that shareholders are responsible for their company’s debts to the State for a percantage of unpaid taxes equal to his percentage of shares. To be able to apply shareholder, the company must be unable to pay the debt.

8. General assembly: • Ordinary general assembly convene once each year, within 3 months following the end of fiscal year. • Extra ordinary meetings are held when it is necessary. • Written consents in lieu of meeting are permitted.

9. Right of Resign (Çıkma hakkı) • TCC art.638. • In the company agreement, right of resign can be regulated. It can be subject to some conditions. • Each partner can apply to court to for court decision of resign when there is just grounds.

10. Dismissal of a partner • TCC art.640. • In the company agrement provisions related to dismissal can be regulated. • The partner who is dismissed by general assembly, can bring an action for nullity.

11. LIMITED LIABILITY COMPANY(Ltd. Şti.) Transferability of shares: • Rule: Share interest in the Llc is transferable. • Exceptions: • Transfer of share interest is not valid against the company, unless it has been notified to the company and registered in the share book of the company. For registration the consent of the shareholders is required. In genereal assembly transfer can be dismissed.

12. LIMITED LIABILITY COMPANY(Ltd. Şti.) • The free transfer of share interests can be restricted or even forbidden by the charter. • Agreements on share transfer must be in writing, and the signatures must be authenticated by the public notary.

13. Audit • The new TCC provides a system for auditing of the firms that is completely new. Through the new regulation, the audit currently included among the mandatory organs of the companies, and exercised trough an auditor who does not necessarily have expertise in the subject matter, is replaced by the independent audit mechanism.

14. But not all companies are not subject to independent audit mechanism. Companies that are subject to independent audit mechanism are determined by Council of Ministers.

15. Audit should be conducted by independent audit firmes or by sworn financial advisers(Yeminli Mali Müşavir) or independent accounting financial advisers (serbest muhasebeci mali müşavir) The audit is required to be performed in accordance with Turkish Auditing Standarts which are identical with international auditing standarts.

16. Dissolution • any reason set forth in the articles of corporation • Decision of general assembly • Bankruptcy • A court order based on just ground, upon the request of a shareholder *Upon termination, a limited company is liquidated and deregistered.

17. A limited liability corporation is ideal for medium-size family business, as the internal organization is relatively simple and the liability of the share interest holders is limited.

18. STOCK CORPORATIONS (A.Ş.) • A stock corporation is a company with its own firm name whose predetermined capital (share capital) is divided into parts (shares) and whose liability is limited to the company’s assets. • The liability of shareholders is limited to their capital contribution in the company. They are not personally liable for the debts of the company.

19. Advantages: • It is the most suitable company type for the capitalist economic system. • It enables to collect large amounts of capital from different people. • The large capital collected suits the market economy relying on perfect competition. • Big entrepreneurships can be better organized and incorporated. • The enterprise risk can be shared among large number of partners and minimized.

20. Disadvantages: • It requires greater expense and effort to be created and operated. • In comparison with limited partnerships decision-making process works slower. • The power of minority shareholders can sometimes be misused against the majority in the general assembly.

21. Disadvantages: • The only relationship between the shareholders is material. • The managers can negligently or maliciously damage the common interests of the innocent shareholders in majority.

22. Characteristics of Stock Corporations: 1-) Legal personality: • A stock corporation has a private law legal personality. It can acquire rights and incur obligations. It can sue and be sued at law. • It has independent and separate assets from the assests of its shareholders. Corporate debts are payable only out of corporation’s assets.

23. Characteristics of Stock Corporations: 2-) Capital fixed in advance: • The (share) capital of the corporation refers to the sum of shareholder’s contributions. It must be predetermined in the articles of incorporation (charter). • The share capital of the corporation shall amount to a minimum of 50.000 YTL. • For some corporations dealing with certain business types a higher share capital can be predetermined by law (for

24. Characteristics of Stock Corporations: example banks, foreign trade capital corporations, leasing companies, insurance companies etc.). • As a rule, to increase or decrease the capital, the articles of incorporation (charter) must be amended; moreover this amendment must be registered in the commercial registry and published in the Commercial Registry Gazette.

25. Characteristics of Stock Corporations: 3-) Stock Certificates and Free Transferability of Shares: • A stock certificate is a negotiable instrument issued by a corporation that evidences ownership of a specified number of shares in the corporation. • According to Turkish Law, stock corporations is the only type of companies which can issue stock certificates. • Stock certificates are negotiable and generally freely transferable by indorsement and delivery.

26. Characteristics of Stock Corporations: 4-) Limited Liability: • The liability of the corporation is limited to its assets (movable property, immovable property, rights having an economic value etc.), but not to the amount of share capital. In other words, the shareholders are not personally liable for the company’s debts. The share capital illustrates the minimum, and the assets the maximum guarantee for the creditors of the corporation.

27. Characteristics of Stock Corporations: 5-) Purpose and Subject Matter: • A stock corporation can be established to operate a commercial enterprise in any business which is not forbidden by law.

28. Characteristics of Stock Corporations: 6-) Number of Incorporators: • As a rule, for the establishment of a stock corporation the existence of only one shareholder is sufficient. Incorporators can be a real person or a legal person in nature. • There is not any limitation by law for the maximum number of shareholders.

29. Single Share Holder Company • The single shareholder is allowed to exercise all the authorisations granted to the general assembly, and can take all types of decisions. • In addition, the board of directors are allowed to be formed with the only partner.

30. Single shareholder company is reflected to the Turkish legislation as a requirement of the 12th European Union directive concerning the one shareholder companies. • The reason relates to the protection of small and medium size enterprises. In this way, SMEs with one real person merchant shall be discharged from unlimited liability.

31. ORGANIZATION OF STOCK CORPORATIONS • General Assembly The general assembly of the shareholders is the decision organ of the corporation that has the ultimate word. Its decisions are binding upon all the shareholders. The new TCC, allows the online audio visual gathering of general assemblies, and the use of online votes.

32. Board of Directors It is the executive organ of the corporation. In the new TCC, Board of Directors can consist of just one member and board of directors do not have to be shareholders in the company.

33. ORGANIZATION OF STOCK CORPORATIONS The board meetings can be held in electronic media. The board resolutions can be also signed with electronic signatures.

34. Audit • The new TCC provides a system for auditing of the firms that is completely new. Through the new regulation, the audit currently included among the mandatory organs of the companies, and exercised trough an auditor who does not necessarily have expertise in the subject matter, is replaced by the independent audit mechanism.

35. But not all companies are not subject to independent audit mechanism. Companies that are subject to independent audit mechanism are determined by Council of Ministers.

36. Audit should be conducted by independent audit firmes or by sworn financial advisers(Yeminli Mali Müşavir) or independent accounting financial advisers (serbest muhasebeci mali müşavir) The audit is required to be performed in accordance with Turkish Auditing Standarts which are identical with international auditing standarts.

37. Yeni TTK'nın 400'üncü maddesinde kimlerin denetçi olabileceği düzenlenmiştir. Denetçi, Yeminli Mali Müşavir (YMM) veya Serbest Muhasebeci Mali Müşavirler (SMMM) olabileceği gibi, ortakları YMM veya SMMM olan sermaye şirketleri de olabilir. Ancak, ister YMM olsun, ister SMMM olsun, ister sermaye şirketi olsun bunların Kamu Gözetimi, Muhasebe ve Denetim Standartları Kurumu tarafından yetkilendirilmesi gerekmektedir. Kurul tarafından sermaye şirketlerine Bağımsız Denetim Kuruluşu Belgesi ve meslek mensuplarına da Bağımsız Denetçi Belgesi verilecektir.