Local government-owned companies in Turkey: Structure, legal basis and issues

There has been a rapid increase in the number of companies established or subsequently joined by municipalities, metropolitan municipalities and special provincial administrations (SPA) since 1980s.In this study, it is aimed at scrutinizing the reasons for founding Local Government-owned Companies, their structural and legal basis; determining and assessing problems especially concerned with audit issues and presenting practicable suggestions to overcome these matters. In this context, not only companies founded by municipalities but also those founded by SPAs are analyzed in compliance with the title of the study. Whether the arrangements come along with the laws enacted in recent years, The Law No. 5393 on Municipality, The Law No. 5216 on Metropolitan Municipality and The Law No. 5302 on Special Provincial Administration, has served the needs or not is tried to be put forward as well.In general, Local Government-owned Companies are operated by the policies and manipulations of local governments instead of market conditions. Nearly turned into holding companies, they lose money due to problems regarding employment, auditing, legal infrastructure, administration and finance.Concerning the current issues, a special legal arrangement for Local Government-owned Companies should be made regarding founding basis, organizational structure, organs, duties, audit procedures, legal status of employees and qualifications, conditions, rights, authorities, financial liabilities and legal responsibilities of managers.