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Change of Company Type

Interim balance sheet, conversion plan and report, general meeting resolution, registration and tax returns for the conversion of a limited liability company into a joint stock company, the transfer of a sole proprietorship to a capital company and other changes of company type.

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Overview

A company in Türkiye can change its legal form. The company converted into the new type is the continuation of the old one; in a change of type (tür değiştirme), the company is neither liquidated nor formed again. (Turkish Commercial Code No. 6102, Art. 180) The most common example in practice is a limited liability company (limited şirket) that is growing or whose shareholder structure is changing converting into a joint stock company (anonim şirket).

In a change of type, the provisions on the formation of the new type apply. However, for capital companies, the provisions on the minimum number of shareholders, contributions in kind and the founders’ signing of the articles of association do not apply. (Turkish Commercial Code No. 6102, Art. 184/1) For this reason, for example, the capital of a limited liability company converting into a joint stock company must meet the minimum capital amount set for joint stock companies.

The change-of-type provisions may also be applied by analogy where a commercial enterprise (a sole proprietorship, şahıs işletmesi) converts into a commercial company. (Turkish Commercial Code No. 6102, Art. 194/2) For tax purposes, the transfer as a whole, with its assets and liabilities, of a sole proprietorship whose profit is determined on the balance-sheet basis to a capital company does not give rise to a capital gain if the conditions in the Income Tax Law are met. (Income Tax Law No. 193, Art. 81/2)

KEYBIZ CPAs & Advisors prepares the interim balance sheet and financial statements for the change of type, drafts the financial sections of the conversion plan and report, analyses the tax consequences of the transaction and handles the records and the tax office returns; for the text of the articles of association and the registration application, it works together with the company’s lawyer and the notary. For amendments to the articles of association and registry filings, see our Amendments to the Articles of Association page; for mergers and demergers, see our Mergers and Acquisitions page.

Permitted Changes of Type and Resolution Quorums

Types It Can Convert IntoConversion Resolution
Joint Stock CompanyA capital company of another type (e.g. a limited liability company) or a cooperative (Turkish Commercial Code No. 6102, Art. 181)Two thirds of the votes present at the general meeting, provided they represent two thirds of the basic or issued capital; in a conversion into a limited liability company, the consent of all shareholders if an additional payment or personal performance obligation will arise (Turkish Commercial Code No. 6102, Art. 189/1-a)
Limited Liability CompanyA capital company of another type (e.g. a joint stock company) or a cooperative (Turkish Commercial Code No. 6102, Art. 181)A resolution of three quarters of the shareholders, provided they hold at least three quarters of the capital (Turkish Commercial Code No. 6102, Art. 189/1-c)
Capital Company into CooperativeCooperative (Turkish Commercial Code No. 6102, Art. 181)Consent of all shareholders (Turkish Commercial Code No. 6102, Art. 189/1-b)
General and Limited PartnershipA capital company or a cooperative; a general partnership into a limited partnership, a limited partnership into a general partnership (Turkish Commercial Code No. 6102, Art. 181, 182)Unanimity of all partners; the partnership agreement may provide for the affirmative vote of two thirds of all partners (Turkish Commercial Code No. 6102, Art. 189/1-e)
CooperativeA capital company (Turkish Commercial Code No. 6102, Art. 181)A majority of the votes present, provided at least two thirds of the members are represented; if an additional payment or personal liability is introduced, the affirmative vote of two thirds of the registered members (Turkish Commercial Code No. 6102, Art. 189/1-d)
Commercial Enterprise (Sole Proprietorship)A commercial company (Turkish Commercial Code No. 6102, Art. 194/2)TTK Art. 182–193 may be applied by analogy; for a tax-neutral transfer, the conditions of GVK Art. 81/2 must be met

TTK No. 6102, Art. 181, 182, 189 and 194; GVK No. 193, Art. 81 (current texts on mevzuat.gov.tr, November 2026).

Change of Type Process

  1. Financial Statements and Interim Balance Sheet

    If more than six months have passed between the balance sheet date and the date on which the conversion report is drawn up, or if significant changes have occurred in the company’s assets since the last balance sheet, an interim balance sheet is drawn up. A physical inventory count is not required for the interim balance sheet; the valuations in the last balance sheet are adjusted to the extent of the book movements, and depreciation, value adjustments and provisions are taken into account. (Turkish Commercial Code No. 6102, Art. 184/2, 184/3)

    • Financial statements for the last three years
    • An interim balance sheet and its supporting trial balance, if required
    • Capital and equity analysis of whether the minimum capital of the new type is met

  2. Conversion Plan

    The management body draws up a written conversion plan. The plan contains the company’s trade name and registered office before and after the change of type and the words indicating the new type, the articles of association of the new type, and the number, class and amount of the shares the shareholders will hold after the change of type. (Turkish Commercial Code No. 6102, Art. 185)

    In a change of type, the shareholders’ shares and rights are preserved; the equivalents provided for in the Law are given for non-voting shares, privileged shares and dividend-right certificates (intifa senetleri). (Turkish Commercial Code No. 6102, Art. 183)

  3. Conversion Report

    The management body prepares a written report explaining, from a legal and economic perspective, the purpose and consequences of the change of type, that the formation provisions for the new type have been complied with, the new articles of association, the exchange ratio for the shares and any additional payment and personal performance obligations. Small and medium-sized companies may dispense with this report if all shareholders consent. (Turkish Commercial Code No. 6102, Art. 186)

  4. Making Documents Available to Shareholders

    The company makes the conversion plan, the conversion report, the financial statements for the last three years and any interim balance sheet available for inspection by shareholders at its registered office thirty days before the general meeting resolution. Copies of these documents are given free of charge to shareholders who request them, and shareholders are duly informed of their right of inspection. (Turkish Commercial Code No. 6102, Art. 188)

  5. General Meeting Resolution

    The management body submits the conversion plan and the articles of association of the new type to the general meeting. The resolution is adopted with the quorums shown in the table, which vary by company type. (Turkish Commercial Code No. 6102, Art. 189/1)

  6. Registration and Announcement

    The management body has the change of type and the articles of association of the new company registered with the trade registry. The change of type becomes legally effective on registration, and the resolution is announced in the Turkish Trade Registry Gazette (Türkiye Ticaret Sicili Gazetesi). (Turkish Commercial Code No. 6102, Art. 189/2) TTK Art. 158 and 178 apply to the shareholders’ personal liability and to debts arising from employment contracts. (Turkish Commercial Code No. 6102, Art. 190)

  7. Tax Return and Records

    Because a change of type is treated as a transfer, if the conditions are met, a corporate tax return is filed for the income the company earned up to the date of the change of type. According to the announcement of the Revenue Administration (GİB), the corporate tax return relating to a change of type is filed electronically by the converting corporation within thirty days of the date of announcement in the Trade Registry Gazette. (Corporate Tax Law No. 5520, Art. 19/2, 20/1; GİB announcement of 10.11.2022) The balance-sheet values are carried over unchanged into the books of the new type.

Tax Consequences

Change of type between capital companies: Changes of type made by corporations whose legal seats or business centres are in Türkiye, on condition that the balance-sheet values are taken over as a whole and carried unchanged into the balance sheet, are treated as a transfer. (Corporate Tax Law No. 5520, Art. 19/1, 19/2) When these conditions are complied with, only the income earned up to the transfer date is taxed; no profit arising from the transaction is calculated or taxed. The transfer date is the date on which the resolution of the competent body is registered with the trade registry. (Corporate Tax Law No. 5520, Art. 20/1)

Transfer of a sole proprietorship to a capital company: No capital gain is calculated or taxed if the balance sheet of a sole proprietorship whose profit is determined on the balance-sheet basis is transferred as a whole, with its assets and liabilities, to a capital company, is carried unchanged into the acquiring company’s balance sheet, and the business owner receives from the company a shareholding equal to the owner’s equity calculated according to the transfer balance sheet. The shares representing this shareholding must be registered shares. (Income Tax Law No. 193, Art. 81/2) The conversion of general partnerships and ordinary limited partnerships into capital companies by change of type under the same conditions is also within this scope. (Income Tax Law No. 193, Art. 81/3)

VAT: The transactions specified in Article 81 of the Income Tax Law and transfers and demergers made under the Corporate Tax Law are exempt from VAT (KDV). The transaction exemption and the deduction of acquired VAT are separate matters. VAT borne and not deducted by taxpayers that cease their activity, are demerged or are dissolved as a result of the transaction is deducted by the taxpayer taking over the business according to the result of a tax inspection, carried out in a way that does not lead to double deduction and regardless of the statute of limitations periods in the Tax Procedure Law; the inspection requirement applies from 2 August 2024. (VAT Law No. 3065, Art. 17/4-c; Law No. 7524, Art. 19) Under a provision entering into force on 1 January 2030, VAT that cannot be recovered by deduction over five calendar years will become non-deductible tax. (VAT Law No. 3065, Art. 30/f; Law No. 7524, Art. 20, 60)

Closing the sole proprietorship’s tax record: The individual taxpayer who transfers its business to a capital company notifies the tax office of the cessation of business within one month of the date of the event. (Tax Procedure Law No. 213, Art. 160, 168)

Frequently Asked Questions

Is the Company Liquidated in a Change of Type?

No. The company converted into the new type is the continuation of the old one. (Turkish Commercial Code No. 6102, Art. 180) There is no liquidation and no new formation; the company’s assets, rights and obligations continue in the new type.

What Should the Capital Be When a Limited Liability Company Converts into a Joint Stock Company?

Because the formation provisions of the new type apply in a change of type, the company’s capital must meet the minimum capital amount set for joint stock companies. (Turkish Commercial Code No. 6102, Art. 184/1) This amount was raised to TRY 250,000 by Presidential Decision No. 7887; for non-public joint stock companies under the registered capital system, the initial capital is TRY 500,000. (Turkish Commercial Code No. 6102, Art. 332)

When Is an Interim Balance Sheet Required?

If more than six months have passed between the balance sheet date and the date on which the conversion report is drawn up, or if significant changes have occurred in the company’s assets since the last balance sheet, an interim balance sheet is drawn up. (Turkish Commercial Code No. 6102, Art. 184/2)

Can the Conversion Report Be Dispensed With?

Yes. Small and medium-sized companies may dispense with the conversion report if all shareholders consent. (Turkish Commercial Code No. 6102, Art. 186/3) The conversion plan, however, is drawn up in writing in every case and submitted to the general meeting for approval. (Turkish Commercial Code No. 6102, Art. 185)

When Does a Change of Type Take Effect?

A change of type becomes legally effective on registration with the trade registry; the resolution is announced in the Turkish Trade Registry Gazette. (Turkish Commercial Code No. 6102, Art. 189/2) For corporate tax purposes, the transfer date is also the date on which the resolution is registered with the trade registry. (Corporate Tax Law No. 5520, Art. 20/1)

Does a Change of Type Give Rise to Corporate Tax?

If the conditions in KVK Art. 19 are met, a change of type is treated as a transfer; only the income the company earned up to the transfer date is taxed, and no profit arising from the transaction is calculated or taxed. (Corporate Tax Law No. 5520, Art. 19/2, 20/1) If the conditions are not met, the tax consequences are assessed separately.

Can a Sole Proprietorship Be Transferred to a Company Tax-Free?

If the balance sheet of a sole proprietorship whose profit is determined on the balance-sheet basis is transferred as a whole, with its assets and liabilities, to a capital company, carried unchanged into the acquiring company’s balance sheet, and the business owner is given a shareholding equal to the equity, no capital gain is calculated. (Income Tax Law No. 193, Art. 81/2) Businesses keeping books on the single-entry (business account) basis (işletme hesabı esası) do not meet the condition in this subparagraph.

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