Foreign Investors' Setting up a Turkish Company

Turkish Commercial Code and the Foreign Direct Investment Law regulate all legal and practical processes that foreign investors must comply with to establish any business in Turkey. Turkish law is based on equal treatment and allows international investors to have the same rights and liabilities as local investors. Hence, the conditions for setting up a business are the same applied to local investors.

There are five different forms set out in the Turkish Commercial Code regarding the company types. These are Joint Stock Company (JSC), Limited Liability Company (LLC), General Partnership, Limited Partnership, Partnership Limited by Shares. Foreign investors have the opportunity to establish any of these types of companies, just as a local investor. However, there are a certain number of joint-stock company types which are subject to the permission of the Turkish Ministry of Commerce before establishment.

First of all, the investors must decide which of the above-mentioned company types is the most appropriate in line with their business plans and goals. Afterwards, it is essential to create a road map about how the establishment process will work because the conditions for establishing a company in Turkey vary according to the type.

The establishment process takes place in several stages. Which are:

1. Preparing articles of association of the company

For this document, it would not be wrong to call it the company's most important document, even the company's constitution, which includes elements such as the legal name of the company, the field of activity. From this point of view, it is necessary to carry out a careful study by considering the goals and subjects of the company while preparing the articles.

2.Registering and submitting articles of association online to Mersis

According to the Trade Registry Regulation, trade registration transactions must be fulfilled through MERSIS (Central Registry Record System).

3.Preparing company officials' notarised signature declarations

4.Payment of start-up capital

Foreign investors are obliged to open a bank account in Turkey to establish a business. At least 25% of the capital committed in the articles of association must be deposited into the bank account to be opened in the company's name. In addition, it is possible to withdraw this money deposited in the bank, depending on the type of company.

5.Application to the trade registry directorate for registration

The last stage of the establishment process is applying to the relevant trade registry directorate for registration. The founders must complete all the steps mentioned above and gather the documents regarding prior transactions. After an examination of all documents, the company gets registered. All businesses operating in Turkey are also obliged to keep certain legal records. Right after registration, these records must be certified by the trade registry directorate.

Indeed there are some other legal procedures and obligations arising from Turkish legislation (such as tax obligations, data privacy compliance) that must be followed for the company to proceed its commercial activities in Turkey without any problems after registration.

In terms of the representation and sustainability of the company, the founders are strongly suggested to receive professional support in all these matters. It is possible to carry out this entire process described above by a proxy authorized by power of attorney.

Additionally, there are privileges granted by the Turkish government for foreign investors to encourage foreign investment. Investors may benefit from these privileges by determining the appropriate method for themselves. Furthermore, foreign personnel to be employed in companies, branches and organizations established within the scope of Foreign Direct Investment Law are also provided with facilities such as granted work permits by the Ministry of Labour and Social Security.

In our next information note on the initiatives of foreign investors in Turkey, you can examine the establishing company at Turkish Free Zones.

Att. Eda Idil Tokdemir

Att. Merih Okuyaz

This information note has been prepared for informational purposes only and does not constitute advertising, offer or legal advice in anyway. We recommend that you consult your legal advisor for your questions and problems on the subject. All rights of this article belong to its author, it cannot be used without permission, even partially.