Due to the many opportunities it offers, Turkey is a country that is heavily preferred by natural and legal persons who want to invest abroad. Although there are many conveniences provided to foreign investors, there are also many important issues to be considered while making an investment and during the establishment of a company in Turkey. In this article, we have discussed the most frequently asked questions by foreign natural and legal persons who want to establish a company in Turkey.
II. Important Information Regarding Company Establishment
A) Companies that Foreigners Can Establish in Turkey
There are some regulations and limitations that foreign investors should be aware of before starting their activities in Turkey. The most important legal regulation regarding foreign investors is the Foreign Direct Investors Law No. 4875 and the regulation on the implementation of this law. In this law; the principles of freedom of investment, encouragement of foreign investors and equal treatment were taken as basis, and various assurances were given to foreign investors. In addition, there are issues that foreign investors should consider in their activities in Turkey in the Turkish Commercial Code, Turkish Code of Obligations and the Law on Work Permits of Foreigners.
In accordance with the principle of equality on which the law no. 4875 is based, foreigners can establish all types of companies that can be established by Turks in Turkey. However, companies that will operate in some fields such as insurance, banking and factoring must obtain the approval of the ministry before they are established and their articles of association are drawn up. The types of companies in Turkish law are as follows:
Sole Proprietorships: Collective Company, Limited Partnership, Ordinary Partnership, Cooperative Company.
Capital Companies: Joint stock company, Limited Liability Company, Limited Partnership in which the Capital is Divided into Shares .
The general characteristics of these types of companies are as follows;
1- Collective Company: It is a company established between at least two partners and real persons, which is a sole proprietorship. The liability of the partners to the creditors of the company is not limited and the partners have unlimited second-degree liability to the creditors. There is no capital requirement for this type of company.
2- Limited Partnership: There are two types of limited partnerships; common and divided into shares. An ordinary limited partnership is a sole proprietorship in which the liability of one or a part of the partners to the creditors is not limited (active partner) and the liability of the other partners is limited (silent partner). It can be established with at least two partners.
3- Ordinary Partnership: Ordinary partnerships are regulated in the Turkish Code of Obligations and do not have legal personality. It can be established with at least two real or legal persons. There is no set minimum capital. It is possible that all of the partners are foreigners. Since the ordinary partnership does not have a legal personality, the responsibility for the debts of the company belongs to the partners or the representative who performs the transaction in person, depending on the form of representation.
4- Cooperative Company: These companies are partnerships with variable partners and variable capital established by real and legal persons in order to provide and protect the specific economic interests of the partners, and especially their professional or livelihood needs, by means of mutual assistance, solidarity and surety with their labor and monetary contributions.
5- Joint Stock Company: These are the capital companies whose capital is determined and divided into shares, for which the legal entity is responsible only with its own assets due to the debts of the company. Shareholders are only liable to the company for the capital shares they have committed. It can be established with a minimum of 50,000 Turkish Liras and with at least one natural or legal person. There are no citizenship restrictions in its partners, all of them can be foreign nationals. In addition, there is no requirement that the members of the board of directors be Turkish citizens and be resident in Turkey.
6- Limited Liability Company: Limited liability company, which is one of the most preferred company types together with the joint stock company, is the type of company whose capital is divided into shares and which is responsible for its debts only with its assets. It is possible to be established with a single partner, the partners can be legal or natural persons and the maximum number of partners is fifty. The minimum capital amount is 10,000 Turkish Liras. The partners are not responsible for the debts of the company, they are only obliged to pay the basic capital shares they have committed and to fulfill the additional payment and ancillary performance obligations stipulated in the company contract. All of its partners can be foreign nationals. In addition, there is no requirement for the directors to be Turkish citizens or to be resident in Turkey.
7- Limited Partnership in which the Capital is Divided into Shares: It is a capital company that one or more of its partners is responsible to the creditors of the company as a collective company partner and the others as a joint stock company shareholder. It can be established with at least five partners.
Since the characteristics and establishment processes of each of these company types differ, the type of company suitable for the field of activity should be determined with experts in the field and the steps to be taken should be planned together before making an investment.
B) Company Establishment Procedure
Before starting the application process, subjects such as the type, activity, physical needs and capital of the company to be established should be determined and the articles of association should be prepared. It is very important to work with lawyers in this process, as there are some legal differences that should be considered in the establishment of a company with foreign capital. Otherwise, it is possible to encounter various legal problems both at the establishment stage and in the future.
1- Stages of Company Establishment with Foreign Partners:
- Preparation of pre-establishment and preparation of the articles of association,
- MERSIS (Central Registry Registration System) registration and sending of the articles of association,
- Preparation of documents, apostille and notary approval by signing,
- Obtaining a potential tax number of the company,
- Depositing a certain part of the capital to the Competition Authority bank account,
- Depositing a certain part of the capital into the company bank account and obtaining a bank letter,
- Application to the Trade Registry Office for registration procedures, making an appointment,
- Certification of some legal books related to the company,
- Requesting a company establishment statement from the tax office,
- Arrangement of signature circular.
The establishment process, which is summarized above with articles, is a very complex process that includes many legal details and documents, and should be followed carefully by experts. Failure to work with expert and experienced lawyers in the establishment of a company with a foreign partner will lead to loss of both time and money.
2- Required Documents in Establishment
The first document that will be required in this process is a power of attorney, where the person/persons who will manage the company establishment process on your behalf can perform the transactions on your behalf. This power of attorney should be prepared very carefully, it should cover the transactions at each step to be taken in the transactions. Otherwise, the process of preparing a new power of attorney, apostille, cargo and notary will prolong the process. Then, the preparation of the documents required for the first application to the Trade Registry Office can be started. These are:
- Company agreement,
- Passport copy of each shareholder (if the foreign partner is a natural person),
- Activity certificate about the current status of the company and the signatories (the document must be issued by the authority in the foreign legal partner’s country),
- The decision of the authorized body showing the approval of the legal entity partner for the company to be established,
- The decision of the authorized body, which includes the information and assignment of the natural person who will act on behalf of the legal person,
- Signature statement,
- Copies of the identity cards of the directors of the company.
The documents required by the Tax Office in order to obtain a potential tax number are as follows;
- Registration request petition,
- The original contract,
- Rental agreement showing the registered address of the company,
- If the process is followed by a attorney, the power of attorney mentioned above should include the authority to apply for a potential tax number to the tax office on behalf of the company.
The documents required for the registration appointment at the Trade Registry Office are as follows;
- Registration request petition,
- Organization notification form,
- Company main agreement,
- Payment document to the Competition Authority,
- Signature statements of the persons authorized to represent the founders of the company (required in limited companies),
- The original declaration of establishment,
- Chamber of Commerce registration form,
- Mission acceptance letters of non-partner members of the board of directors,
- Bank letter regarding the minimum paid-up capital deposit (The title or surname of the partners who deposited money into the account, the deposited amounts and the total amount must be shown),
- In case of any capital contribution in kind, a capital in kind expert report, a registry statement stating that there is no encumbrance on the real estate, a document regarding the annotations, and written agreements regarding the real estate are also required.
In this article, we tried to briefly explain the company establishment process to foreign natural and legal persons who want to establish a company in Turkey. As can be seen, it is very important to seek advice from professional and experienced lawyers in order to determine the need, make the appropriate choices and advance the proceedings. Otherwise, it is inevitable to face much bigger and more costly problems both during the establishment phase and afterwards. With its years of experience in the field, Edel Property Legal Unit provides consultancy to foreigners in the fields of investment and company establishment in Turkey, and carries out the entire process in the least cost and time.
You can contact us for any questions regarding the establishment of a company in Turkey.
Edel Property Team