HOW TO ESTABLISH A BUSINESS IN TÜRKİYE: A COMPLETE GUIDE FOR FOREIGN INVESTORS

TÜRKİYE OFFERS A RELATIVELY STRAIGHTFORWARD FRAMEWORK FOR BOTH DOMESTIC AND INTERNATIONAL INVESTORS WHO WISH TO ESTABLISH A BUSINESS. UNDER TÜRKİYE’S FOREIGN DIRECT INVESTMENT (FDI) LAW, INTERNATIONAL INVESTORS ARE GENERALLY ENTITLED TO THE SAME RIGHTS AND ARE SUBJECT TO THE SAME OBLIGATIONS AS DOMESTIC INVESTORS.

FOREIGN INVESTORS CAN ESTABLISH COMPANIES UNDER THE FORMS RECOGNIZED BY THE TURKISH COMMERCIAL CODE (TCC), AND THE PROCEDURES FOR ESTABLISHING A COMPANY AND TRANSFERRING SHARES ARE GENERALLY THE SAME AS THOSE APPLICABLE TO LOCAL INVESTORS.

TÜRKİYE HAS ALSO INTRODUCED REFORMS DESIGNED TO REDUCE BUREAUCRACY, SIMPLIFY COMPANY FORMATION PROCEDURES, LOWER COSTS, AND MAKE THE INVESTMENT ENVIRONMENT MORE EFFICIENT.

1. TYPES OF COMPANIES AVAILABLE IN TÜRKİYE

THE TURKISH COMMERCIAL CODE PROVIDES SEVERAL DIFFERENT LEGAL STRUCTURES FOR CONDUCTING BUSINESS.

CORPORATE FORMS

THE TWO MOST COMMONLY USED CORPORATE STRUCTURES ARE:

• JOINT STOCK COMPANY (JSC)
• LIMITED LIABILITY COMPANY (LLC)

ALTHOUGH THERE ARE DIFFERENCES BETWEEN THESE TWO STRUCTURES REGARDING CAPITAL REQUIREMENTS, CORPORATE ORGANS, GOVERNANCE AND CERTAIN LEGAL MATTERS, THE BASIC COMPANY ESTABLISHMENT PROCEDURES ARE BROADLY SIMILAR.

NON-CORPORATE FORMS

THE TCC ALSO RECOGNIZES:

• GENERAL PARTNERSHIP
• LIMITED PARTNERSHIP
• PARTNERSHIP LIMITED BY SHARES

ALTHOUGH SEVERAL LEGAL STRUCTURES ARE AVAILABLE, JOINT STOCK COMPANIES AND LIMITED LIABILITY COMPANIES ARE THE MOST COMMONLY PREFERRED FORMS BOTH INTERNATIONALLY AND IN TÜRKİYE.

2. SUBMITTING THE ARTICLES OF ASSOCIATION THROUGH MERSİS

COMPANY REGISTRATION PROCEDURES ARE CARRIED OUT THROUGH MERSİS (CENTRAL REGISTRY RECORD SYSTEM).

MERSİS IS THE CENTRAL ELECTRONIC SYSTEM USED FOR COMMERCIAL REGISTRY TRANSACTIONS AND FOR MAINTAINING COMMERCIAL REGISTRY INFORMATION ELECTRONICALLY.

THE SYSTEM ALLOWS NEW COMPANIES TO BE ESTABLISHED ONLINE AND PROVIDES REGISTERED COMPANIES WITH AN ELECTRONIC INFRASTRUCTURE FOR THEIR COMMERCIAL REGISTRY RECORDS.

THE COMPANY’S MEMORANDUM AND ARTICLES OF ASSOCIATION ARE PREPARED AND SUBMITTED THROUGH THE SYSTEM AS PART OF THE ESTABLISHMENT PROCESS.

3. PREPARATION AND NOTARIZATION OF COMPANY DOCUMENTS

THE FOUNDERS MUST PREPARE THE DOCUMENTS REQUIRED FOR REGISTRATION AND SUBMIT THEM TO THE RELEVANT TRADE REGISTRY DIRECTORATE.

THE COMPANY’S ARTICLES OF ASSOCIATION MUST BE SIGNED BY ALL FOUNDERS BEFORE AUTHORIZED PERSONNEL OF THE TRADE REGISTRY DIRECTORATE OR BEFORE A NOTARY PUBLIC.

FOR FOREIGN INDIVIDUAL SHAREHOLDERS, DOCUMENTATION GENERALLY INCLUDES:

• COPIES OF THE SHAREHOLDER’S PASSPORT;
• A NOTARIZED TURKISH TRANSLATION OF THE PASSPORT;
• A NOTARIZED RESIDENCE PERMIT WHERE THE FOREIGN SHAREHOLDER RESIDES IN TÜRKİYE;
• A TAX IDENTIFICATION NUMBER OBTAINED FROM THE RELEVANT TAX OFFICE.

ADDITIONAL DOCUMENTS ARE REQUIRED WHERE THE SHAREHOLDER IS A FOREIGN LEGAL ENTITY.

A FOREIGN CORPORATE SHAREHOLDER MAY BE REQUIRED TO PROVIDE DOCUMENTATION ISSUED BY THE COMPETENT AUTHORITY IN ITS HOME COUNTRY SHOWING THE COMPANY’S CURRENT STATUS AND AUTHORIZED SIGNATORIES.

THE CORPORATE SHAREHOLDER MAY ALSO NEED TO PROVIDE A RESOLUTION OF ITS COMPETENT CORPORATE BODY APPROVING PARTICIPATION IN THE ESTABLISHMENT OF THE TURKISH COMPANY.

4. OBTAINING A POTENTIAL TAX IDENTIFICATION NUMBER

FOREIGN SHAREHOLDERS AND FOREIGN MEMBERS OF THE COMPANY’S MANAGEMENT MAY NEED TO OBTAIN A POTENTIAL TAX IDENTIFICATION NUMBER FROM THE RELEVANT TURKISH TAX OFFICE.

THIS NUMBER IS PARTICULARLY IMPORTANT FOR OPENING THE BANK ACCOUNT INTO WHICH THE COMPANY’S CAPITAL WILL BE DEPOSITED.

5. PAYMENT TO THE COMPETITION AUTHORITY

A PAYMENT CORRESPONDING TO 0.04% OF THE COMPANY’S CAPITAL MUST BE MADE TO THE ACCOUNT OF THE COMPETITION AUTHORITY THROUGH THE TRADE REGISTRY DIRECTORATE AS PART OF THE COMPANY ESTABLISHMENT PROCESS.

6. DEPOSITING THE REQUIRED CAPITAL

FOR COMPANIES SUBJECT TO THE RELEVANT CAPITAL PAYMENT REQUIREMENT, AT LEAST 25% OF THE SUBSCRIBED SHARE CAPITAL MUST GENERALLY BE DEPOSITED INTO A BANK ACCOUNT BEFORE REGISTRATION.

THE REMAINING 75% MAY BE PAID WITHIN TWO YEARS.

ALTERNATIVELY, THE ENTIRE SUBSCRIBED CAPITAL MAY BE PAID BEFORE REGISTRATION.

THERE IS AN IMPORTANT EXCEPTION FOR LIMITED LIABILITY COMPANIES: THE REQUIREMENT TO DEPOSIT 25% OF THE SUBSCRIBED CAPITAL BEFORE REGISTRATION DOES NOT APPLY. THE SUBSCRIBED CAPITAL OF AN LLC MAY BE PAID WITHIN 24 MONTHS FOLLOWING ESTABLISHMENT.

7. APPLYING FOR REGISTRATION WITH THE TRADE REGISTRY DIRECTORATE

ONCE THE REQUIRED DOCUMENTS HAVE BEEN PREPARED, THE FOUNDERS MAY SUBMIT THE REGISTRATION APPLICATION TO THE RELEVANT TRADE REGISTRY DIRECTORATE.

THE REGISTRATION FILE MAY INCLUDE:

• REGISTRATION REQUEST PETITION;
• COMPANY ESTABLISHMENT NOTIFICATION FORM;
• ARTICLES OF ASSOCIATION SIGNED BY ALL FOUNDERS;
• PROOF OF THE PAYMENT MADE TO THE COMPETITION AUTHORITY;
• SIGNATURE DECLARATIONS FOR AUTHORIZED REPRESENTATIVES;
• FOUNDERS’ DECLARATION;
• CHAMBER OF COMMERCE REGISTRATION FORMS;
• WRITTEN DECLARATIONS FROM RELEVANT NON-SHAREHOLDER BOARD MEMBERS ACCEPTING THEIR DUTIES;
• BANK DOCUMENTATION CONFIRMING THE REQUIRED CAPITAL DEPOSIT.

WHERE CAPITAL IS CONTRIBUTED IN KIND RATHER THAN ENTIRELY IN CASH, ADDITIONAL DOCUMENTATION MAY BE REQUIRED.

8. REGISTRATION AND POST-REGISTRATION NOTIFICATIONS

AFTER THE REGISTRATION PROCEDURE IS COMPLETED, THE TRADE REGISTRY DIRECTORATE NOTIFIES THE RELEVANT TAX OFFICE AND THE SOCIAL SECURITY INSTITUTION (SGK) OF THE COMPANY’S ESTABLISHMENT.

THE COMPANY’S ESTABLISHMENT INFORMATION IS ALSO PUBLISHED IN THE TURKISH TRADE REGISTRY GAZETTE.

FOLLOWING NOTIFICATION BY THE TRADE REGISTRY DIRECTORATE, THE COMPANY SHOULD OBTAIN ITS TAX REGISTRATION DOCUMENTATION FROM THE RELEVANT TAX OFFICE.

A SOCIAL SECURITY REGISTRATION NUMBER MUST ALSO BE OBTAINED FOR THE COMPANY.

9. CERTIFICATION OF STATUTORY BOOKS

CERTAIN STATUTORY COMPANY BOOKS ARE CERTIFIED DURING THE ESTABLISHMENT PROCESS BY AUTHORIZED PERSONNEL OF THE TRADE REGISTRY DIRECTORATE.

THESE INCLUDE:

• JOURNAL;
• GENERAL LEDGER;
• INVENTORY BOOK;
• SHARE LEDGER;
• BOARD OF DIRECTORS MEETING MINUTES BOOK;
• GENERAL ASSEMBLY MEETING MINUTES BOOK.

PROPER MAINTENANCE AND CERTIFICATION OF STATUTORY BOOKS IS AN IMPORTANT PART OF CORPORATE COMPLIANCE IN TÜRKİYE.

10. TAX OFFICE INSPECTION AND NOTIFICATION

FOLLOWING NOTIFICATION OF THE COMPANY’S ESTABLISHMENT, THE RELEVANT TAX OFFICE MAY CONDUCT AN INSPECTION AT THE COMPANY’S REGISTERED HEADQUARTERS.

A TAX OFFICER PREPARES A DETERMINATION REPORT CONCERNING THE COMPANY’S ESTABLISHMENT.

AT LEAST ONE AUTHORIZED REPRESENTATIVE OF THE COMPANY MUST SIGN THE RELEVANT DETERMINATION REPORT.

11. ISSUANCE OF THE SIGNATURE CIRCULAR

ON THE DATE THE COMPANY IS REGISTERED WITH THE TRADE REGISTRY DIRECTORATE, THE INDIVIDUALS AUTHORIZED TO REPRESENT AND BIND THE COMPANY MAY ISSUE THE COMPANY’S SIGNATURE CIRCULAR.

THE SIGNATURE CIRCULAR IS AN IMPORTANT DOCUMENT DEMONSTRATING THE AUTHORITY OF INDIVIDUALS WHO ARE ENTITLED TO REPRESENT THE COMPANY.

12. E-TUYS AND FOREIGN DIRECT INVESTMENT REPORTING

TÜRKİYE USES THE E-TUYS ELECTRONIC SYSTEM FOR CERTAIN INFORMATION RELATING TO FOREIGN DIRECT INVESTMENT.

THE SYSTEM COVERS INFORMATION RELATING TO:

• FOREIGN DIRECT INVESTMENT OPERATIONS;
• FOREIGN DIRECT INVESTMENT CAPITAL;
• FOREIGN DIRECT INVESTMENT SHARE TRANSFERS.

THE ELECTRONIC SYSTEM IS INTENDED TO FACILITATE THE COLLECTION OF UP-TO-DATE INFORMATION CONCERNING INTERNATIONAL INVESTMENTS IN TÜRKİYE.

13. JOINT VENTURES IN TÜRKİYE

A JOINT VENTURE CAN BE STRUCTURED IN DIFFERENT WAYS DEPENDING ON THE PARTIES’ COMMERCIAL OBJECTIVES.

A JOINT VENTURE MAY TAKE THE FORM OF AN ORDINARY PARTNERSHIP, WHICH GENERALLY DOES NOT CONSTITUTE A SEPARATE LEGAL ENTITY UNDER TURKISH LAW.

ALTERNATIVELY, THE PARTIES MAY ESTABLISH A COMMERCIAL COMPANY, SUCH AS A JOINT STOCK COMPANY.

IT IS COMMON FOR THE PARTIES TO ENTER INTO A SHAREHOLDERS’ AGREEMENT TO REGULATE THEIR RELATIONSHIP, MANAGEMENT RIGHTS, DECISION-MAKING PROCEDURES, FINANCING OBLIGATIONS AND SHARE TRANSFERS.

14. ESTABLISHING A BRANCH IN TÜRKİYE

A FOREIGN COMPANY MAY ESTABLISH A BRANCH IN TÜRKİYE RATHER THAN INCORPORATING A SEPARATE TURKISH SUBSIDIARY.

A BRANCH:

• DOES NOT HAVE SHAREHOLDERS;
• IS NOT AN INDEPENDENT LEGAL ENTITY SEPARATE FROM ITS PARENT COMPANY;
• GENERALLY HAS A DURATION LINKED TO THE DURATION OF THE PARENT COMPANY;
• DOES NOT HAVE A STATUTORY CAPITAL REQUIREMENT;
• CAN CONDUCT ACTIVITIES WITHIN THE SCOPE OF THE PARENT COMPANY’S BUSINESS PURPOSES.

PROFITS GENERATED BY THE BRANCH MAY BE TRANSFERRED TO THE HEAD OFFICE, SUBJECT TO APPLICABLE TAX RULES.

15. LIAISON OFFICES IN TÜRKİYE

A FOREIGN COMPANY INCORPORATED UNDER THE LAWS OF ANOTHER COUNTRY MAY ESTABLISH A LIAISON OFFICE (REPRESENTATIVE OFFICE) IN TÜRKİYE AFTER OBTAINING THE REQUIRED PERMISSION.

THE KEY DISTINCTION IS THAT A LIAISON OFFICE CANNOT CONDUCT COMMERCIAL ACTIVITIES IN TÜRKİYE.

ITS ACTIVITIES MAY INCLUDE MARKET RESEARCH, COMMUNICATION, REPRESENTATION AND PROMOTION, DEPENDING ON THE SCOPE OF THE PERMISSION GRANTED.

16. DURATION AND EXTENSION OF LIAISON OFFICE PERMITS

FOR AN INITIAL APPLICATION, A LIAISON OFFICE AUTHORIZATION MAY BE GRANTED FOR A MAXIMUM PERIOD OF THREE YEARS, DEPENDING ON THE ACTIVITIES DECLARED IN THE APPLICATION.

A LIAISON OFFICE WISHING TO CONTINUE OPERATING MUST APPLY FOR AN EXTENSION BEFORE ITS AUTHORIZATION EXPIRES.

EXTENSION APPLICATIONS MAY BE EVALUATED BY CONSIDERING:

• THE LIAISON OFFICE’S ACTIVITIES DURING PREVIOUS YEARS;
• THE FOREIGN COMPANY’S FUTURE BUSINESS PLANS AND OBJECTIVES IN TÜRKİYE;
• ACTUAL AND PROJECTED EXPENDITURE;
• THE NUMBER OF EMPLOYEES;
• THE NATURE AND SCOPE OF THE OFFICE’S ACTIVITIES.

17. OBLIGATIONS OF LIAISON OFFICES AFTER ESTABLISHMENT

A LIAISON OFFICE MUST PROVIDE THE RELEVANT AUTHORITY WITH THE REQUIRED TAX REGISTRATION DOCUMENTS AND LEASE AGREEMENT WITHIN THE APPLICABLE PERIOD.

CHANGES CONCERNING:

• THE OFFICE’S ADDRESS;
• THE AUTHORIZED REPRESENTATIVE OR REPRESENTATIVES;
• THE FOREIGN COMPANY’S CORPORATE NAME;

MUST ALSO BE REPORTED WITHIN THE PRESCRIBED PERIOD, TOGETHER WITH THE RELEVANT SUPPORTING DOCUMENTS.

IF THE LIAISON OFFICE CEASES ITS ACTIVITIES, THE REQUIRED TAX OFFICE DOCUMENTATION CONCERNING TERMINATION MUST BE SUBMITTED TO THE COMPETENT AUTHORITY.

CONCLUSION

TÜRKİYE PROVIDES SEVERAL OPTIONS FOR INTERNATIONAL INVESTORS SEEKING TO ESTABLISH A BUSINESS, INCLUDING JOINT STOCK COMPANIES, LIMITED LIABILITY COMPANIES, BRANCHES, JOINT VENTURES AND LIAISON OFFICES.

FOR INVESTORS SEEKING TO CONDUCT COMMERCIAL ACTIVITIES, A TURKISH COMPANY OR BRANCH MAY BE APPROPRIATE DEPENDING ON THE BUSINESS MODEL. A LIAISON OFFICE, BY CONTRAST, IS INTENDED FOR NON-COMMERCIAL ACTIVITIES AND REQUIRES SPECIFIC AUTHORIZATION.

THE COMPANY ESTABLISHMENT PROCESS HAS BEEN SIGNIFICANTLY STREAMLINED THROUGH THE TRADE REGISTRY DIRECTORATES AND THE MERSİS ELECTRONIC SYSTEM.

NEVERTHELESS, FOREIGN INVESTORS SHOULD PAY PARTICULAR ATTENTION TO DOCUMENT AUTHENTICATION, APOSTILLE REQUIREMENTS, TURKISH TRANSLATIONS, CAPITAL REQUIREMENTS, TAX REGISTRATION, CORPORATE REPRESENTATION AND SECTOR-SPECIFIC REGULATIONS.

BECAUSE COMPANY FORMATION REQUIREMENTS, CAPITAL THRESHOLDS, TAX RULES AND ADMINISTRATIVE PROCEDURES MAY CHANGE OVER TIME, INVESTORS SHOULD VERIFY THE CURRENT REQUIREMENTS WITH THE COMPETENT TURKISH AUTHORITIES AND OBTAIN PROFESSIONAL LEGAL AND TAX ADVICE BEFORE ESTABLISHING A BUSINESS IN TÜRKİYE.

OFFICIAL SOURCE

THIS ARTICLE HAS BEEN PREPARED BASED ON INFORMATION PUBLISHED BY THE PRESIDENCY OF THE REPUBLIC OF TÜRKİYE INVESTMENT OFFICE – INVEST IN TÜRKİYE.

SOURCE: INVEST IN TÜRKİYE – ESTABLISHING A BUSINESS

OFFICIAL SOURCE – INVEST IN TÜRKİYE

IMPORTANT NOTICE: THIS ARTICLE IS PROVIDED FOR GENERAL INFORMATIONAL PURPOSES ONLY. IT DOES NOT CONSTITUTE LEGAL, TAX, INVESTMENT OR FINANCIAL ADVICE. APPLICABLE LEGISLATION AND ADMINISTRATIVE PROCEDURES MAY CHANGE. INVESTORS SHOULD OBTAIN CURRENT PROFESSIONAL ADVICE BEFORE TAKING LEGAL OR COMMERCIAL ACTION.