What do you need to do to start Establishing a Company in Turkey?
The Foreign Direct Investment (FDI) Law in Turkey is built on the idea of fair opportunities, enabling foreign investors to abide by the same rules and obligations as domestic investors.1 The rules for establishing a company in Turkey and transferring shares are the same as those enforced on domestic investors.
Foreign investors may form any of the companies listed in the Turkish Commercial Code (TCC), which provides a corporate governance framework that meets international standards, promotes venture capital and public offerings, ensures operational transparency, and lines up the Turkish business environment with EU legislation and the EU accession procedure.1
Investors who want to maintain their business activities in Turkey within a company’s framework and establish a company in Turkey must do so in accordance with the Turkish Commercial Code’s Corporate Law sections.
Companies are divided into two categories in the Turkish legal system: Private Companies and Capital Companies. There are two types of Private Companies: which are Collective Companies and Commandwide Companies. Limited liability Companies and Incorporated (Joint-Stock) Corporations are examples of Capital Companies. Individual companies are rarely preferred in practice. Turkey’s Joint-Stock and Limited-Liability Companies account for nearly all of the country’s commercial enterprises.
If you don’t want to go through all the trouble of establishing a company in Turkey, then you can just simply purchase a company in Turkey in a matter of days and save time.
What are the steps of Establishing a Company in Turkey?
Regardless of the company type, the establishment of a company in Turkey is initiated through the Ministry of Commerce’s web portal the MERSIS. Type of the company, its full title, address, founding partners, objectives and subjects, capital, Board of Directors, signature officials, preferred shares (if any), share transfer restrictions (if any), and other information are entered through this web portal.2
After the necessary information is entered on the portal, the MERSIS prepares the Company’s Articles of Association. After the application is submitted for approval, the location where the company will be established is referred to the Commercial Registry Office.
The founding partners or their representatives accept and signs the Articles of Association, present registration declarations and necessary paperwork, and deposit fees at the Commercial Registry Office in order to complete the process of establishing a company in Turkey.
How can you establish a company in Turkey?
In accordance with the Turkish Commercial Code3, a minimum ¼ of the capital of Joint-Stock Companies must be paid before registration.
If the new company is to be established as a Joint Stock Company with cash capital, an account must be opened in the name of the new company at any bank, and the capital to be paid in excess of ¼ must be deposited in this account after the Articles of Association have been signed and approved by the Commercial Registry Office.
The bank must block the deposited capital until registration, and a letter of blockade must be prepared by the bank. With the filing of the blockage letter to the Turkish Directorate of Trade Registry, the Joint Stock Company will be registered.
If you have any questions about the taxation of the company, you can check out our article about; “Corporate Taxation in Turkey” and learn more information on the matter.
Doing Business in Turkey
The elements of the assets, including intellectual property rights and virtual environments, which have no limited real rights, seizure, and injunctions, which can be evaluated and transferred in cash, can be placed as real capital when establishing a company in Turkey.
If the capital of the Joint Stock Company to be established is real capital, the location of the company’s headquarters must be implemented to the Commercial Court of First Instance after the signature of the Articles of Association. The court will appoint an expert, who will determine the Turkish Lira equivalent of the month in the Valuation Report.
The founders have the right to appeal the pricing; the court will consider the appeal and may re-examine it if needed. If no objections are raised, the court will accept the expert’s report and determine the company’s real capital. With the filing of the court’s ruling to the Directorate of Commercial Registry, the Joint Stock Company will be registered.4
Final Words and Conclusions on Establishing a Company in Turkey
In accordance with the Turkish Commercial Code, when establishing a company in Turkey, limited companies have no obligation to deposit capital before registration. Therefore, the Company shall be registered with the signature of the Articles of Association and deposition of the fees at the Commercial Registry Office.
Regardless of the type of the company, and how much capital has been invested prior to registration, the total capital of the company must be completed within twenty-four months following the registration by the partners.
Remember to get counseling from an experienced law firm during this entire process.