STARTING UP A COMPANY
The Turkish Foreign Direct Investment Law is built on the idea of equal treatment, allowing international investors to enjoy the same rights and obligations as domestic investors in their adventure of Business Turkey.
The same rules apply to starting up a business and transferring shares as they do to local investors. International investors may form any of the companies listed in the Turkish Commercial Code (TCC), which establishes a corporate governance framework that meets international standards, promotes private equity and public offering activities, ensures operational transparency, and aligns the Turkish business environment with EU legislation and the EU accession process.
Turkey has begun measures to make it easier to do business to improve the investment climate by removing red tape in establishing a company and reducing expenses and procedures. As a result, forming a business is currently solely done through Trade Registry Directorates, housed in Chambers of Commerce, and are supposed to be a “one-stop-shop.” The procedure is finished in a single day.
TCC Company Types and Alternative Forms
Firms can be formed in both corporate and non-corporate forms, according to the TCC, which stipulates that companies can be formed in the following types:
a. Corporate forms
Limited Liability Company (LLC)
Joint Stock Company (JSC) (LLC)
Even though some financial thresholds (such as minimum capital) and organs differ, the procedures for forming a JSC or an LLC are the same.
b. Non-corporate forms
General Partnership
Limited Partnership
Partnership Limited by Shares
Although these five types of corporations can be formed, the JSC and LLC are the most frequent in both the world economy and Turkey.
Establishing a Company
If you want to start a business in Turkey, you must follow the following rules and regulations: Send the memorandum and articles of incorporation to MERSIS online.
Trade registration transactions must be completed through MERSIS, according to the Trade Registry Regulation (Central Registry Record System).
MERSIS is a central registration system for conducting commercial register activities and regularly storing retail registry data electronically. Legal entities that are actively engaged in business are assigned a unique number. On MERSIS, new firms can be formed online, and existing companies can operate through the system when their records have been transferred.
Notarize and execute corporation documents
Obtain a possible tax identification number
Deposit a percentage of your capital to the Competition Authority’s account.
At least 25% of the initial capital should be deposited in a bank, and evidence of this should be obtained.
Submit an application to the Trade Registry Directorate for registration.
Ensure that the legal books are in good working order.
Follow up on the Trade Registry Directorate’s company establishment notification with the tax office.
Signature circulars are issued.
Convert some documents to electronic format using the E-TUYS technology.
Joint Ventures (JVs)
A joint venture is commonly referred to as an ordinary partnership (Adi Ortaklk), which is not a formal entity under Turkish law but is widely used by shareholders to form a business organization.
Due to the possibility to create groups of shares and the reduced aspect of shareholder liability compared to limited liability corporations, joint-stock firms are the favored alternative.
There is no particular legislation establishing joint ventures; instead, the regulations that apply to the type of firm founded apply. It is usual practice to engage in a shareholders’ agreement to manage the joint venture partners’ relationship and the joint venture’s upkeep.
Except in specialized areas like television broadcasting, maritime, and civil aviation, there are no limits on the nationality of shareholders and those holding management rights.
Branch Office
There are no shareholders.
It is not a separate legal entity. The parent company’s existence constrains its existence.
Although there is no necessity for capital, it is prudent to set aside funds for the operations of a branch office.
A branch office can only be established for the same purposes as the parent firm.
Profits from branches can be repatriated. The gain transferred from the branch to the headquarters is subject to a 15% dividend withholding tax, which may be reduced under Double Taxation Prevention Treaties.
For the registration of a branch, an application containing the following documents must be filed to the relevant Trade Registry Directorate:
Requisition (must be signed either by an authorized signatory under the company seal or by proxy; if signed by the latter, then the original or the notarized copy of a power of attorney must be attached to the petition)
The decision of the parent company’s competent organ to open a branch
a verified original copy of the articles of incorporation of the parent firm
The parent company’s certificate of activity, or any equivalent documentation, must state the parent company’s registration and current status.
A power of attorney provided by the parent firm to its resident representative, granting complete representation and accountability to the resident representative required.
The Establishment Declaration Form in five copies (the related fields must be filled and signed by the authorized person)
Two copies of a power of attorney naming Turkey as the representative
A notarized copy of the branch representative’s ID card if they are a Turkish national. Otherwise, a notarized copy of the authorized representative’s passport has been translated into Turkish.
Two copies of the branch representative’s signature declarations under the branch title
A commitment letter (must be signed by an authorized person)
A Declaration Form for the Chamber Registry, The Trade Registry Directorate, will provide a statement (including photographs of the branch representatives)
It should be noted that all relevant documents issued and performed outside of Turkey must be notarized, apostilled, or validated by the Turkish Consulate where they are published. A Turkish notary must formally translate and notarize the original executed, notarized, and apostilled documents.
Liaison Offices
After acquiring a license from the Ministry of Industry and Technology, any company incorporated under the laws of a foreign nation may open a liaison office (also known as a representative office) in Turkey, as long as the company does not participate in any commercial activity in Turkey. The following documents should be presented to the Ministry of Industry and Technology, General Directorate of Incentive Implementation and Foreign Investment, to establish a liaison office (GDIIFI).
Application form*
A statement defining the work to be performed by the liaison office, a promise that the office will not engage in any commercial activities*, and verification that the company fully authorizes the signatory to the statement
A certificate of activity granted by a foreign country and certified by the Turkish Consulate in that country, or in compliance with the Hague Convention Abolishing the Legalization Requirement for Foreign Public Documents (the Apostille Convention)
A certificate of activity, or a balance sheet and income statement, issued to international corporations.
A certificate of authorization is given to the person or people in charge of the liaison office’s activities.
If the procedures for establishing the liaison office are carried out by another representative, a power of attorney is required.
The Ministry of Industry and Technology can provide you with this information.
If original papers are presented to GDIIFI, GDIIFI must approve copies of these documents. The applicant will receive the originals back.
Licenses for liaison offices are given for a maximum of three years during the first application process, within the scope of the indicated activity. Before their terms of operation expire, liaison offices that wish to prolong their period of operation must apply to GDIIFI. GDIIFI may approve petitions for term extensions depending on the nature of the office’s activity in the preceding year, the business plan, the company’s future aspirations in Turkey, the amount of current and expected expenditure, and the number of employees. The duration of operation of offices permitted to perform market research or promote the products or services of foreign companies will not be extended.
Applications for establishment and tenure extensions must be completed within fifteen working days of the application date, assuming that all needed information/documents are complete and accurate.
Foreign companies wishing to establish a liaison office to conduct financial activities subject to special legislation, such as money and capital markets or insurance, must apply to competent agencies such as the Capital Markets Board of Turkey and the Banking Regulation and Supervision Agency, both of which are duly authorized bodies under special legislation. After consultation with relevant entities that are legitimately allowed to give such permits or licenses, the ministry may complete foreign firms’ petitions to set up liaison offices in other industries that require permits for operations or equivalent authorizations.
Within one month, copies of the liaison office’s tax registration and tenancy agreement must be sent to GDIIFI. Any changes to the office representative(s) or foreign company title must be reported to GDIIFI within one month of the change. Liaison offices must prepare a new rental agreement that includes the new location, the newly designated representative’s certificate of permission, or the document(s) relevant to the change of title of the foreign company.
If a liaison office’s operations are terminated, it must provide GDIIFI with a statement of termination acquired from the relevant tax authority. Except for sums that remain due after termination and liquidation, offices are not permitted to demand funds transfers.
For detailed Business Turkey information, find the shared links in the article.
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