Cooperative Company in Turkey | Structure, Partners & Registration

What is a Cooperative Company?

A Cooperative Company in Turkey is a unique form of business entity regulated under the Cooperatives Law No. 1163. Unlike capital companies (A.Ş. or Ltd. Şti.) or private companies, cooperatives are based on partnership, solidarity, and mutual economic benefit of their members.

They are widely used in sectors like agriculture, housing, trade, and professional associations where collective effort is crucial.

Key Characteristics

• Partners: Can be real or legal persons.
• Minimum number of partners: Seven (unless a special cooperative type requires otherwise).
• Shares: Each partner must undertake at least one and at most 5,000 shares.
• Share value: Each cooperative share is valued at TRY 100.
• Liability:
  • If stipulated in the articles, partners may have limited liability (up to additional contributions).
  • Alternatively, partners may have second-degree unlimited liability for cooperative debts.

Governance Structure

• General Assembly (GA): Highest decision-making organ. All members (except those who joined less than three months before the GA) may participate and vote.
• Board of Directors: Must include at least three Turkish citizens who meet the legal requirements. Members are elected for up to four years and may be re-elected.
• Auditors: At least one auditor must be elected annually by the General Assembly to supervise cooperative activities.

For comparison with corporate-style management, see: Limited Company in Turkey.

Establishment Requirements

To register a cooperative:

• Company contract must be signed and approved.
• Minimum seven partners required.
• Signature declarations of authorised representatives submitted to the Trade Registry Directorate.
• If capital contributions are non-cash, valuation reports and registry annotations are mandatory.

For detailed paperwork see: Documents for Company Registration in Turkey.

Advantages & Disadvantages

Advantages:

• Encourages collective economic activity and solidarity.
• Flexible shareholding model (scalable up to thousands of partners).
• Effective in housing, agriculture, and professional services sectors.

Disadvantages:

• Less attractive for foreign investors seeking profit-driven corporate structures.
• Governance may be complex due to large number of members.
• Liability rules can vary and expose members to additional obligations.

Suitability for Foreign Investors

While cooperatives are not the usual choice for foreign entrepreneurs entering Turkey, they may be relevant in specific sectors such as:

• Agricultural trade & production,
• Housing and construction projects,
• Professional services associations.

For most international investors, more protective structures like Joint Stock Companies or Limited Companies are more suitable.

Dissolution & Liquidation

Cooperatives can be dissolved by:

• General Assembly decision,
• Bankruptcy,
• Fulfillment of their purpose.

Liquidation follows similar rules to capital companies. For details see: Liquidation of a Company in Turkey.

Professional Support

Due to the complex liability rules and governance structure, establishing a cooperative requires careful legal drafting. MFY Legal assists in:

• Drafting articles of association,
• Registering cooperatives,
• Advising on partner liability, governance, and compliance.

Contact us today if you are considering establishing a cooperative in Turkey.