What is a Legal Entity? What are the Types of Formations Receiving the Legal Entity Title?
In your e-commerce adventure, you may frequently encounter the term “legal entity”. Because you too may be a legal entity. Not only in trade, but in every field, the legal structure is based on individuals, that is, people. When viewed from the perspective of trade, individuals have rights such as indebtedness and credit. However, in trade, there are also structures consisting of more than one person. A personality assignment is needed to determine the rights and responsibilities of these structures in the legal process. Formations that do not directly represent a specific person are accepted as “legal entities” in law. So what exactly is a legal entity, what rights does it have? A legal entity is a general name given to groups of people or goods that come together in accordance with legal regulations. These groups are accepted as a single person in official transaction processes and may have various rights and responsibilities.
What is a Legal Entity
A legal entity is a general name given to groups of people that come together in accordance with legal regulations. These groups can consist of commodities as well as individuals. Legal entity formations originating from a person or a commodity community are considered as a single person in official transaction processes. In other words, a company authorized by more than one person is considered as a single person with legal status in official processes.
Legal entities that come together to trade or realize any other purpose are formations that can acquire debts and receivables and have various rights and responsibilities. Formations such as companies, universities, municipalities, associations and foundations can be given as examples of legal entities. The largest legal entity in a country is considered as the “state”. People who have a say in the administration of the country come together in a legal status and form the state.
The nature of formations with this status as a person or a commodity community can be understood in terms of their primary element in the establishment and service provision phase. For example, an association established for the purpose of fighting cancer does not expect to make a profit. Even if it earns money, the primary element is the person since it spends this money on cancer patients. Therefore, associations are considered as a group of people.
Foundations are defined as a community of goods/commodities. For example, a foundation established to support orphaned children spends money on individuals, like an association. But the difference here is that foundations generate income from goods. The income obtained from a land plot within a campaign is spent on orphaned children. The main element here is not the children, but the land that generates the income. Therefore, foundations are communities of goods.
Who is a Natural Person?
Natural person – legal person are frequently confused terms. Although these two terms are directly related to each other, they are very different in meaning. Natural person is the title that a healthy person carries from birth to death. The expression “healthy” here stems from the requirement that the person in question be able to act of his own free will. In order for a person to be defined as a natural person, he must also be completely healthy in terms of mental health.
Legal person communities consist of natural persons. This is the relationship between them. However, natural persons cannot act as legal entities. A natural person who has financial rights such as borrowing or being a creditor can only use these rights on his own behalf. He cannot exhibit any legal behavior on behalf of someone else. In order to carry out financial transactions on behalf of the legal entity, he/she must have signature authority.
What are the differences between a natural person and a legal person?
The difference between a natural person and a legal person can actually be understood very simply. For this, it is necessary to know the answers to questions such as “What does a natural person mean?” and “What does a legal person mean?” Even in line with general definitions, fundamental differences can be seen. While a natural person is directly a human being, a legal person does not have to be a human being. An institution or group of people that has achieved legal status also acquires personal rights.
The differences between a legal person and a natural person include that legal persons are corporate, while natural persons are individual. Legal persons begin with establishment and end with closure; while natural persons begin with birth and end with death.
What are the Characteristics of Legal Entity Formations?
In order for a formation to reach the status of a legal entity, there are certain characteristics that it must have. First of all, the community that creates the formation must be organized. This organization must be in accordance with the legal framework. In addition, the formation must have a permanent purpose. Therefore, it is possible to examine these characteristics under 3 main headings.
- Organization
In order for an organization to become a legal entity, it must be independent from the person or persons who founded it or allocated its assets. This independence is only possible with organization. The organization of groups of people or goods requires that it have various purpose-oriented organs within itself. Therefore, the organizational structure of the legal entity is formed by the organs within it.
Which organs will provide the organization is determined within the framework of the law. There are certain obligations that come from the legal order to which the legal entity structure is subject. In this direction, mandatory organs are created and an organization is born from the sum of these. The resulting organization makes the legal structure independent of the real persons within it.
- Permanent Purpose
The definition of a legal entity includes coming together to achieve a specific purpose. The purpose that is the subject of the definition must be continuous. Only groups of people and goods that are directed towards a continuous purpose are called “legal persons”. The basis of the purpose in the community is to meet a common interest. This common interest is greater and more general than the interest of a single person.
The nature of the continuous purpose can be material or spiritual. For example, companies are organized to make a profit or share profits, while cooperatives are organized to provide their members with economic access to certain products. In such cases, there is a material purpose. Formations such as associations and foundations arise from the purpose of providing moral benefit. They do not aim to provide material gain. In any case, the purpose must be concretely stated in the document, deed or statute that shows the main status of the legal entity.
- Legal Order
Legal entities have a name, place of establishment, assets, in other words, an independent personality, independent of the real persons in the formation. Therefore, they appear before the law as legal persons. The fact that the individuals within the formation are recognized by law does not make the legal entity legal. In order for the legal entity to be legal and to obtain personal rights, it must have completed the necessary legal processes in accordance with its type. After the legal conditions are met, the group in question is granted independence and the group becomes a legal entity.
What are the Types of Formations That Can Receive the Title of Legal Entity?
Formations that can receive the title of legal entity are divided into two groups as “public” and “private law”. The most fundamental difference between these two groups is that public legal entities can only be established by a law. In other words, in order for a public entity to be established, a law must be enacted by the state. The formation established in accordance with the relevant law is terminated by a law of the same nature. Personalities subject to private law are again established within the framework of the relevant laws, but there is no need for a special law to be enacted. Every real person and group that meets the necessary conditions can establish a private law legal entity.
Public Legal Entities
Public legal entities are formations established by law and perform public duties. Private legal entities can be established by real persons or other legal structures and include examples such as trade partnerships, unions, associations.
The following examples can be given for entities established to perform public duties and have public authority:
Universities
Municipalities
Special provincial administrations
TÜBİTAK
YÖK
General Directorate of State Opera and Ballet
Undersecretariat of Defense Industries
General Directorate of Foundations
Social Security Institution
Atatürk Culture, Language and History High Institution
General Directorate of Highways
General Directorate of Forestry
General Directorate of Turkish Employment Agency
General Directorate of Electrical Resources Survey and Development Administration
General Directorate of Civil Aviation
Radio and Television Supreme Council
Energy Market Regulatory Authority
Information Technologies and Communication Authority
Tobacco and Alcohol Market Regulatory Authority
İSKİ, ASKİ, İETT, EGO etc.
Private Legal Entities
Private legal entities can be established by real persons and other legal entities. For example, limited companies can be defined as “legal persons” because they can be established by a single real person. Similarly, they can be established by the partnership of more than one real person. There are also private law entities other than companies. Private law legal entities are as follows:
Cooperatives
Unions
Associations
Foundations
Political parties
Trade partnerships
Joint-stock companies
Limited companies
Collective companies
Commandate companies with capital divided into shares
What are the opportunities of Legal Entity Companies?
Legal entity companies also have certain opportunities. For example, a real person who is engaged in trade cannot obtain an e-signature. However, when the same real person establishes a sole proprietorship and becomes a legal entity, they have an advantage in this regard. Because a legal entity can obtain an e-signature. In addition, a legal entity has the right to register in the e-notification system. In e-notification, the recipient, sender and content confirmation, as well as proof of sending and receiving times, are possible with an electronic signature and time stamp.
Who Can Become a Legal Entity?
Legal entity is not a title that concerns a single person. All real persons who do not have a legal impediment can become legal entities after fulfilling the necessary conditions. However, it is only possible for a single real person to become a legal entity with a sole proprietorship. For others, more than one legal entity or real person must come together. There are also people who can be both legal entities and real persons. For example, those who operate a commercial enterprise in their own name receive the title of real person merchant. The title of legal person merchant is given to groups organized for a commercial purpose.
What are the Requirements for Obtaining the Title of Legal Entity?
The conditions for obtaining the title of “Legal Entity” vary according to the structure and purpose of the establishment. For example, the only requirement for a public entity is the enactment of a law regarding the establishment of the organization. In personalities subject to private law, there are different requirements according to the type. Examples of these requirements include details such as associations being established with at least 7 people or limited companies having a maximum of 50 partners. In addition, the formation must not be an ordinary partnership. Because an ordinary partnership does not have the nature of a legal entity.
Can E-Commerce Companies Become Legal Entities?
E-commerce companies gain legal personality after registration. Each e-commerce company has legal personality and operates in accordance with legal regulations.
E-commerce companies can be established by one or more people. Regardless of the number of founders, e-commerce companies established gain legal personality after registration. Therefore, each e-commerce company already has a legal personality. In addition, multiple e-commerce companies can come together and establish a new e-commerce company with a different legal personality.
How to Establish a Company with a Legal Entity Title?
In order to establish a company with a legal entity title, you must meet certain conditions that vary depending on the type of company. First of all, you can establish a sole proprietorship on your own and obtain a “legal” title. Especially in e-commerce ventures, sole proprietorships are frequently preferred. If you need a sole proprietorship with a legal entity to enter e-commerce, you can choose the IdeaSoft infrastructure and benefit from our online company establishment service.
There is a partnership for the legal entity of a joint stock company. There is no upper limit for the number of partners in this type of company. Its capital must be certain and divided into shares. Shareholders must accept that they are only responsible to the company in line with the capital shares they have committed.
However, partnership is not mandatory for the legal entity of a limited company. It can also be established by one person. Partnership is limited to 50 people. A limited company is established under a trade name and its main capital consists of the total of the partner shares. It can be established for any economic purpose that is not prohibited by law.
How to Establish a Partnered Legal Entity? Who Can Become a Partner?
The responsibilities of legal entities include complying with legal regulations, avoiding actions that will lead to unfair competition, and exhibiting correct behavior in legal processes. These responsibilities protect the legal status of legal entities.
A partnered legal entity can be a joint-stock company, limited company, or other companies that can be established with a partnership. In a legal entity limited company, each partner can have a real or legal person identity. In other words, more than one company with a legal nature can establish another company as a partner. Therefore, regardless of whether they are a legal entity or a real person, every person and institution can become a partner of a legal entity if they meet the legal requirements. All details regarding the establishment of a partnered legal entity are regulated within the scope of the section of the Turkish Commercial Code regarding the establishment of a company, starting with Article 124.
What are the Responsibilities of Legal Entities?
Formations with a legal status have certain responsibilities before the law. First of all, it is the primary responsibility to comply with all legal regulations during both the establishment and the operation process. However, there are also responsibilities that need to be taken into consideration in order not to enter the legal process. Some of these responsibilities are as follows:
Not to take actions that will create unfair competition
Not to provide false or misleading information about products, services, commercial activities and businesses
Not to deceive employees and representatives within one’s own organization or in a rival company in order to obtain trade secrets
To prevent authorities or employees from carrying out an action that requires criminal action, to correct the actions that have taken place
What are the Criminal Liabilities of Legal Entities?
The criminal liability of legal entities arises in the above-mentioned cases and similar cases. When the relevant crimes are committed, if there is no second crime requiring more severe penalties, a prison sentence of up to two years or a judicial fine is imposed for each irregular act. This penalty is imposed on the members and partners of the body acting on behalf of the legal entity during the process in which the crime is committed.
How and Where to Make Inquiries Regarding Legal Entities?
E-government is the most useful platform for legal entity inquiries. Because the institutions that will provide information within the scope of inquiries have service pages on e-government. For example, information comes from the Revenue Administration Presidency in debt inquiries, and from the UYAP system in case inquiries. It is also possible to make inquiries by contacting the relevant institution for each subject. E-government is practical because it combines all inquiries under a single roof. The following examples can be given for inquiries that can be made via Turkiye.gov.tr:
Legal entity debt inquiry
Legal entity penalty inquiry
Legal entity lawsuit inquiry
Legal entity tax number inquiry
