Collective company is a company established between real persons in order to operate a commercial enterprise under a trade name, and none of its partners’ liability is limited to the creditors of the company.
Establishment of a Collective Company
Mandatory records for the establishment of a collective company are specified in the Commercial Code.
ARTICLE 213 – (1) The following records must be written in the collective company agreement:
a) The names and surnames of the partners, their place of residence and citizenship.
b) The company is collective.
c) Company’s trade name and headquarters.
d) The business subject of the company with its essential points specified and defined.
e) The amount of money that each partner has committed to put as capital; the value of non-monetary capital and how this value was appraised; if personal labor is put as capital
the nature, scope and value of this labor.
f) The names and surnames of the persons authorized to represent the company, whether they are authorized to sign signatures alone or together.
(2) The partners may include any records they wish in the articles of association, provided that they are not contrary to the mandatory provisions. In case of any deficiency in these records, the provision of m.214 is applied.
ARTICLE 214 – (1) A collective company whose contract has not been legally concluded or whose one or some of the records required to be included in the contract is incomplete or invalid is deemed to be an ordinary company, and the provisions of the Turkish Code of Obligations regarding ordinary companies shall apply, without prejudice to the provision of Article 216.
ARTICLE 212 – (1) The collective company agreement is subject to a written form; In addition, the signatures in the contract must be notarized or the company contract must be signed in the presence of the trade registry manager or his assistant.
Registration in the Trade Registry
ARTICLE 215 – (1) Those who establish a collective company are obliged to request the registration of the company by submitting a notarized copy of the company agreement to the trade registry in the place where the company headquarters is located within fifteen days from the date of approval. The copy is kept by the registry office and the records required to be included in the contract as per Article 213 and other matters required by law are registered and announced. (Additional sentence: 15/7 / 2016-6728 / article 67) In case the company agreement is signed in the presence of the director of the trade registry or his assistant, the copy is kept by the trade registry directorate and the registration and announcement foreseen above is provided.
Management of the Collective Company
ARTICLE 218 – (1) Each of the partners has the right and duty to manage the company separately. However, management affairs can be assigned to one, several or all of the partners by the articles of association or by the decision of the majority of the partners.
(2) Provisions regarding commercial agents and other commercial agents are reserved.
ARTICLE 221 – (1) If the management of the business of the company is given to all or a few of the partners, each of them has management rights and duties alone. However, if some of the partners who are obliged to manage the company claim that a job to be done is not in line with the interests of the company, other shareholders with management rights and duties can do that job by majority decision.
(2) If the joint venture of the partners assigned to the management of the business of the company is written in the articles of association, the partners must agree on every business, except in cases where there is danger in delay. If they cannot agree, the situation is taken to the board of partners and action is taken according to the decision to be made by this board.
ARTICLE 222 – (1) If the management is given to a partner by the company agreement, this partner may take the necessary actions for the management of the company, provided that they are not based on fraud, even if the other partners object and oppose.
Sharing Profit and Loss
ARTICLE 227 – (1) At the end of the operating period of the company, the managing partners prepare and sign the financial statements in accordance with the provisions of Articles 64 to 88 of this Law regarding the commercial books and submit them to the approval of the board of shareholders. Financial statements are finalized with the approval of the majority of the partners. Without prejudice to the provisions of the second paragraph, the distribution of the profit is also decided at the same meeting. In the event that this decision is contrary to the law, company agreement, company decisions or the rule of integrity, they can file an action for annulment within three months from the date of the decision on the use of the profit.
(2) The shareholders may leave the determination of their share of profit and loss to one of them or to a third party, through a company contract or a decision they will take later. It is imperative that the decision of this partner or third party is not unfair. In cases where three months have passed since the said decision was learned, the determined dividend was fully or partially taken by the shareholder or transferred to another person, or the loss was paid, the right of action is forfeited.
(3) If the decision regarding the sharing of profit and loss is against the rules of fairness, it shall be annulled by the court. In this case, the profit and loss is distributed according to the provisions of the ordinary company.
(4) If stipulated in the articles of association, interest and fees are paid within the activity period.
ARTICLE 228 – (1) Each shareholder shall pay the share of the company from the profit realized at the end of the operating period, the interest of the money lent to the company and the interest of the capital, if agreed, the wages he deserves in accordance with the company contract; has the right to request that it be issued if the year-end balance sheet has not been issued according to the law or the company agreement, to be determined if the profit share is not determined in the balance sheet and its receivables.
(2) The terms of the contract that result in abolishing or restricting the rights granted to the partner by this article are invalid.
ARTICLE 229 – (1) No shareholder may be forced to complete the portion that has lost its capital, unless the partners decide unanimously.
(2) The part of the capital that decreases with a loss is closed with the profit to be realized unless there is a contrary decision.
Partners’ Responsibility
ARTICLE 236 – (1) The partners are responsible for the debts and commitments of the company jointly and with all their assets.
(2) The new entrant, even if he was born before the date of entry, is jointly responsible for the debts and commitments of the company together with other partners and with all his assets.
(3) Conditions put into the contract contrary to the first and second paragraphs shall not be valid for third parties.
ARTICLE 237 – (1) The company is primarily responsible for the debts and commitments of the company. However, if the enforcement proceedings against the company have failed or the company is terminated for any reason, a lawsuit can be filed against the company only together with the partner or partner and a follow-up can be made.
(2) The above provisions do not prevent the lien of the personal property of the partners. The period stipulated in the first paragraph of Article 264 of the Execution and Bankruptcy Law for the precautionary lien imposed by this paragraph begins to run as of the date of the first sentence of the second sentence of the first paragraph of the lawsuit against the partner or the authorization to initiate prosecution. However, if a prosecution or a lawsuit is not initiated against the company within the legal period after the notification of the precautionary attachment report, the precautionary lien becomes imposed.
Dissolution of the Company
ARTICLE 245 – (1) The just cause is that the actual or personal reasons that led to the establishment of the company have been eliminated in a way that makes it impossible or difficult to obtain the business subject of the company; especially;
a) If a partner has betrayed the company in the management of the company or in the removal of accounts,
b) Failure of a partner to fulfill its primary duties and obligations,
c) If a partner misuses the company’s trade name or property for the sake of his personal interests,
d) The situations such as the loss of the ability and competence of a partner to carry out the business of the company he undertook due to a permanent illness or any other reason are justifiable reasons.
(2) The partner whose reason for termination has arisen in accordance with subparagraphs (a), (b) and (c) has no right of action.
ARTICLE 246 – (1) In order to file a termination action due to failure to fulfill the debt to invest capital, a notice including the appropriate period is sent to the partner through a notary public first. The notice also includes the notice to fulfill the debt within the given period.