Opening Branch Offices in Turkey

Foreign companies incorporated outside of Turkey may establish branch offices to conduct commercial activities in Turkey. According to Turkish commercial law, foreign companies may open branches by completing specific legal procedures. The relevant articles of the Turkish Commercial Code and the Foreign Direct Investment Law form the legal basis for these legal procedures. This post will examine the processes that foreign companies should follow to open a branch office in Turkey.

Opening a branch is relatively simple compared to establishing a company considering the volume of documentation and investment required. Also, the minimum capital requirement is not stipulated for the branches.

For each branch to be opened in Turkey, a fully authorized commercial representative whose place of residence is in Turkey must be appointed. This representative carries out various activities on behalf of the company, including; representing the company, executing the transactions in the company's articles of association, representing the company as plaintiff or defendant in a case when necessary, appointing a proxy for other branches to be opened.

Turkish Commercial Code allows the branches of foreign companies to be registered the same way as a domestic company, provided that legislation of source country regarding legal name is reserved. Each branch to be opened after the first one, will be established the same way as a domestic company's branch. More specifically, there will be no need to re-collect the documents referring to a parent company listed below.

The legal name of the branch will be registered as (the legal name of the parent company) + (the name of the country where the parent company is located) + (the location where the branch will be established) + (the “Main Branch” phrase).

Due to info pollution, it is worth mentioning that, before the current FDI Law (Foreign Direct Investment Law), opening branches of foreign companies were subject to the Ministry of Treasury and Finance permission. However, there is no longer a requirement to obtain a preliminary permit.

Foreign investors must register their branches with the relevant Trade Registry and Chamber of Commerce (the "Registry"). Some documents must be submitted to the relevant trade registry before opening a branch:

1.Petition

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

2.Resolution

The resolution of the competent organ of the parent company to open a branch

3.Corporates of the parent company

A certified original copy articles of association, good standing certificate of the parent company, or any equivalent documentation that sets forth registration and current status

4.Power of attorney

Granted by the parent company in favour of its resident representative, assigning full representation and accountability

5.Declaration form

The form must be filled and signed by the authorized person, and the Registry requires five copies.

6.Identification of the branch representative

A notarized copy of their ID card if the branch representative is a Turkish national. If not, a notarized copy of the authorized representative’s passport translated into Turkish

7.Signature declaration

Two copy of signature declaration of the branch representative under the branch title.

8.Letter of commitment

Must be signed by the authorized person

9.Chamber Registry declaration form

After the examination of these documents, the branch gets registered by the Registry.

According to the latest changes made in the Implementation Regulation of the FDI Law, companies and branches with foreign capital are required to make some notifications such as the list of partners, the list of investors, subsidiaries (if any) via E-TUYS (Electronic Incentive Application and Foreign Capital Information System) to the Ministry of Industry and Technology.

Branches that make profits will have to pay taxes such as; corporate tax, value-added tax, income tax; although the tax liability changes according to the activities carried out.

Last but not least, although it is not required by law, it is recommended to open a bank account in the branch's name for practical purposes.

In our next information note on the initiatives of foreign investors in Turkey, you may examine equity company types in Turkey.

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.