Lara Candoğan



Holdings And Group Of Companies

While managing a company is already challenging, it becomes even more difficult as the company grows and multiplies. Therefore, companies are brought together to facilitate the management of companies and also to increase the market share of companies. There are some established and well-known holdings in our country. However, although topics such as what exactly these holdings are, how they were established and what advantages there are in establishing a holding are interesting, they are not well-known. For this reason, in this article, the establishment of a holding company in general, the advantages of establishing it, and ‘group of companies’ will be examined and explained in detail.



Holding is not a well-known concept in Turkey in general. Turkish law also plays a part in this, because it does not focus much on holdings. While other types of companies such as joint stock, limited and general companies are regulated in detail in the Turkish Commercial Code No. 6102, holding companies are regulated only in accordance with Article 519 of the same law. Thus, disclosing the matters about holding companies is of great importance. 

A Holding is a commercial structure that one or more entrepreneurs create by gathering various companies that work in different areas in order to make a profit. A Holding company cannot engage in activities such as manufacturing and sales, but it participates into companies operating in these areas. It is often the senior partner of the companies in which it participates into, or holds dominance in other ways. The purpose of the holding's participation is to centralize the companies' managements. The companies affiliated with the holdings are managed from a single centre and operate in different fields. Holding companies can provide services to their affiliated companies in many fields such as R&D, financing, management consultancy, information technologies, human resources consultancy and legal consultancy. 
With the Communiqué dated November 15, 2012, the establishment of the holdings was held subject to the permission of the Ministry of Customs and Trade. The amendment of the articles of association of the holding companies has again been made subject to the permission of the Ministry by the same Communiqué. The type of holding companies is not defined in the Turkish Commercial Code, but according to the relevant Communiqué of the Ministry of Customs and Trade, the Holdings can be established as a joint stock company with the permission of the ministry. This means that the holding company must be established by at least one real or legal person, the basic capital in the establishment must not be less than 50,000.00 TL, and the basic capital of the non-public holding company in the establishment must not be less than 100,000.00 TL. 
We mentioned that a holding can be established directly as a joint stock company by obtaining permission from the General Directorate of Internal Trade of the Ministry of Customs and Trade. At the same time, it is also possible that an already existing joint-stock company can be transformed into a holding company, rather than directly establishing a holding. In this method, permission is obtained from the Ministry of Customs and Trade after making changes to the articles of association of an already existing joint stock company with the trade name and the subject of operation. With the granting of this permission by the Ministry, the partnership is transformed into a holding company. 
There are several advantages of establishing a holding company. We can briefly list them as;
·       Management from a single centre  
·       Having more investment power 
·       Ability to distribute risk
·       Having more competitive and marketing forces
·       Obtaining certain tax advantages
·       Improved marketing and competitiveness
·       Keeping the profits within the same group
·       Gaining an international aspect
·       Wider financing opportunities
Undoubtedly, one of the best advantages of establishing a holding is the tax advantages. We can briefly list them as;
·       In case of profit distribution of the participating companies, income tax is not withheld on the profit share distributed to the Holding company. 
·       Member companies of the Holding do not pay the corporate income tax of 75% of the proceeds if they sell the subsidiary shares among the assets of the holding company. 
·       Value added tax is not paid when selling participation stocks held by the holding company for a period of 2 years.
·       Participation earnings exception is applied to the dividends distributed to the holding.
·       The borrowings obtained by the Holding company from banks and financial institutions and made available to its subsidiaries under the same conditions are not considered to be disguised capital.
·       This transaction of the shareholders, who put the shares of other companies in their hands as in-kind capital into the holding, is a share sale. The gain from this sale is called a "gain from appreciation". However, in the Income Tax Law, if the shares are disposed of after holding them for a period of 2 years, the gain obtained is not considered an appreciation and is not taxed.
According to the definition in Article 195 of the Turkish Commercial Code No. 6102;
a) If a commercial company directly or indirectly:
·       Holds the majority of the voting rights of another commercial company, or

·       Has the right to ensure the election of members forming a resolution quorum in the management body of another commercial company in accordance with articles of association, or

·       Has the majority of the voting right of another commercial company alone or with other shareholders or partners based on a contract in addition to its own votes;

b) If a commercial company is able to hold another commercial company under its control in accordance with a contract or through other means;
The former company is the controlling company and the latter is the dependent company. If the headquarters of at least one of these companies is in Turkey, the provisions relevant to the group of companies in this law shall apply.
A "group of companies" is a legal structure without a legal entity consisting of an enterprise or company and trading companies that are directly or indirectly connected to them by certain means of domination. According to the Trade Registry Regulation, in order for a group of companies to be formed, if the control is in a company, there must be two companies affiliated to it, and if the control is in an enterprise, there must be three companies affiliated to it.

To the company that is the decision maker in the management in the group of companies is called the “controlling company", while the others are called “dependant company". Management dominance can be direct, as well as indirect (through other companies). There may also be cases when the controlling company and dependent company are bilateral, which happens when partner companies own at least 25% of each other's shares. 
When we look at the means of control, the most basic one is to have the majority of voting rights. Some additional examples are; having the power to elect the majority of the management body and keeping the other company under control with a control agreement.

The main purpose of the regulations on the group of companies in the law is to determine their formation, to ensure decency and accountability between parent-subsidiary partnerships. 


A holding company is often confused with the controlling company in group of companies. However, they are two different institutions. Although it is not written in the law, the controlling company in a group of companies is called a "holding" in practice. However, there is no obligation to be a controlling company to establish a holding company in the law.
In summary, the main differences between a holding company and a group of companies are as follows;
·        A holding is not a type of company, but a special form of a joint-stock company. The purpose of the holding company is to participate into another company. However, a single company that does not yet have any subsidiaries can also be a holding company. On the other hand, this is not the case with group of companies. In order to be a group, the existence of more than one company is mandatory. In this respect, unlike a group of companies, there is no minimum requirement for the number of companies which the holding company will participate in. If the holding company participates in only one company, a group of companies is not formed, but if the Holding company has subsidiary companies as a controlling partner, it is accepted as group of companies.
·        Dominance and controlling power are sought in the group of companies. This means that it is necessary to participate in a ratio that will ensure control in the group. However, the level of participation of the holding in other companies is insignificant.
·        As we have already explained, the Holdings must be established as a joint-stock company. However, it is not necessary to be a joint stock company in order to be the controlling company in groups of companies. The one who is in control can be a company of any structure or even a real person.


Within the scope of the explanations above, a Holding company can be established in a very short time by the company partner who wants to establish it. The establishment cost of the holdings varies between 10,000.00 TL and 20,000.00 TL. In order to benefit from the tax advantages of a holding, one can convert the other companies into joint stock companies and print shares. Thus making them participate in the Holding without any tax burden after 2 years.
In order to prevent confusion between the group of companies and the holding company, it is necessary to make evaluations based on concrete events whether the holding company constitutes a group of companies or not. That is, the provisions of the group of companies do not apply to each holding company; for there to be a group of companies, it is not required that the company on top is a holding company.

The similarities and differences between the concepts of Holding and Group of Companies, which are quite confused within the scope of Commercial and Corporate Law today, are explained in detail. Knowing the rights and characteristics of these two concepts will help the company owners to determine the steps to be applied by the company owners in accordance with the legal framework, especially in company management.