Turkey is one of the leading countries preferred by foreign investors due to various reasons including its rapidly growing economy, strategic geographical location, convenient population, qualified and low-cost labor and investment incentives provided to the foreign investors.
Foreign investment in Turkey is welcome. Local and foreign investors are equally treated and foreign investors are permitted to establish all types of companies permitted by the relevant legislation along with the Code of the Foreign Direct Investments No. 4875 except as otherwise stipulated in the provisions of the respective international treaties and special laws.
In this context, we would like to address the general specifications and the respective incorporation procedures of each type of companies in Turkey pursuant to the relevant Turkish legislation.
1. General Specifications of the Types of Companies that can be established by Foreign Nationals in Turkey
Based on the Foreign Direct Investments Law No. 4875, foreign nationals are allowed to establish corporations laid down in the Turkish Commercial Law and also ordinary partnerships stipulated in the Turkish Law of Obligations. Brief information on the forms of corporations is provided below:
Joint Stock Company is a corporation with a capital divided into definite shares. The company is liable for its debts with its assets and the shareholders are only responsible to the extent of the share in the registered capital. All shareholders can be foreign nationals. Furthermore, members of the board of directors are not required to be Turkish citizens and residents of Turkey.
Limited Liability Company is a corporation with a capital divided into definite shares and is liable for its debts only to the extent of its assets. All shareholders of the company can be foreign citizens. Furthermore, its directors are not required to be Turkish citizens and residents of Turkey.
Unlimited Liability Company is a private company incorporated by natural persons for the purpose of running a commercial enterprise under a tradename. The liability of the shareholders against the creditors of the company is not limited.
Limited Partnership is a private company incorporated for the purpose of running a commercial enterprise under a tradename. At least one shareholder of the company must be liable against the creditors without any limitation whereas the liability of other shareholders is limited to their respective amount of share capital.
Limited Partnership Divided into Shares is a partnership with a capital divided into definite shares. At least one shareholder is liable against the creditors of the company like the shareholder of an unlimited liability company and other shareholders are liable in line with the shareholder of a joint stock company. All managers as well as the representatives of the company can be foreign nationals.
Cooperative Companies are partnerships with changing partners and capital incorporated by natural and legal persons with the purpose of maintaining definite economic interests, in particular their professional interests or need for subsistence through mutual help, solidarity and suretyship in the form of contributions like labor force and money. Board of directors is formed by minimum three natural or legal persons who are Turkish citizens and meet the other requirements prescribed by the law.
Ordinary company regulated by the Turkish Law of Obligations has no legal personality. It can be incorporated by at least two natural or legal persons and there is no legal upper limit for the number of company shareholders. All shareholders can be foreign nationals.
Limited Liability Companies and Joint Stock Companies are the most preferred types of companies in practice.
2. Incorporation Procedures of the Companies
The incorporation of a company by foreign natural and legal persons in Turkey is subject to the same rules as for the local investors.
Procedures to be completed for the establishment of joint stock company, limited liability company, unlimited liability company, limited partnership and cooperative company
- Preparation of the articles of association of the company and the certification of the signatures of the founders
- Preparation of the signature declarations of the company officials
- Payment of the share of the Competition Authority and payment of share capital
- Application to the Registry of Commerce for registration of the company.
The formalities for the certification of the incorporation of the company will be completed by the Registry of Commerce upon the application of the founding shareholders together with the relevant documents (whereas the documents issued abroad must bear apostille certificates and be certified either by the consulate or notary public). The company shall acquire a legal personality through registration at the Registry of Commerce. Thereafter, foreign shareholders can require obtaining a work permit.
Incorporation Procedures for the Ordinary Company
It is sufficient to reach a verbal agreement on the Articles of Association between the shareholders in accordance with the provisions of the Turkish Law of Obligations in order to establish an ordinary company. However, we would like to draw your attention to the fact that it is impossible for foreign nationals to incorporate an ordinary company without having a work permit.
As mentioned above foreign nationals are allowed to establish all types of companies pursuant to the domestic laws in Turkey and have equal conditions as local investors. The process of establishment of a company requires technical and extensive procedures. For that reason, we would be pleased to provide you with more detailed information in this regard in order to obtain tailor-made solutions and to avoid potential risks and problems regarding the establishment of your company in Turkey.
For further information and inquiries please contact:
Av. Fatma ÇİMEN ([email protected])
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– Hansu Law Office is at your disposal to provide service to its local and foreign clients especially in the field of real estate, companies, tax and intellectual property rights. This bulletin aims at sharing the developments in the field of law. It should not be considered as a legal opinion or guidance. The opinion of the legal counselor should be taken regarding the private questions and problems.