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Setting up a Joint Stock Company in Turkey
Are you a foreign investor and want to open a company in Turkey? Luckily, there are numerous options to invest in Turkey as a foreign investor. These include; the Limited Liability Company, the partnership, and the Joint Stock Company (JSC).
Each type of business form follows the Turkish Commercial Law. Because the shareholders’ liability is restricted to the amount they contributed to the capital, the Turkish Joint Stock Company (which is “Anonim Sirket” in Turkish) type is sometimes known as a Public Limited Liability Company.1
If you want to open a Joint Stock company in Turkey, you need to find answers to several questions before making a final decision; What is a joint-stock company? How to set up a company in Turkey? And How is the establishment process in Turkey? etc.
Let’s start with an explanation of a Joint Stock Company in Turkey.
What is a Joint-Stock Company?
The Joint-Stock Company is a legal organization that functions similarly to a corporation and generates earnings in the form of stock shares.2 Even if there is a debt, all business activities are managed by a legal organization.
If you want to start a joint-stock company in Turkey, you’ll need the assistance of a Turkish law firm. The Turkish attorney can advise and assist you with legal matters, making the process of establishing your business easier and less stressful.
A Joint-Stock Company in Turkey can be formed by one or more legal entities with any amount of capital.1 There is no provision in Turkish legislation for a maximum limit on the number of shareholders. The foreign investor can own the Joint-Stock Company as its whole.
Even if a foreign investor has never visited Turkey, he or she is eligible to become a shareholder of a Joint-Stock Company in Turkey utilizing the power of an attorney.1
How to get approval for Establishing a Joint Stock Company in Turkey?
When it comes to opening a Joint-Stock company in Turkey, Turkish laws do not hold any permission of any authority. There are certain types of organizations such as banks, insurance companies, consumer finance, holdings that require the Ministry of Customs and Trade‘s approval.
But for these companies, the Ministry of Customs and Trade will interfere only during the conflict with the obligatory rules and regulations of the Turkish Commercial Code.
Apart from these companies, the Turkish Commercial Code mentions that a Joint-Stock Company established in Turkey requires no permission from any authority.
What are the conditions to Establish a Joint-Stock Company in Turkey?
Foreign investors interested in establishing a joint-stock company in Turkey must meet several requirements. The company must have at least one shareholder, who can be either a private individual or a legal organization.
The minimum sum required by law to establish a Turkish joint-stock corporation is 50,000.00₺ (roughly 5,000.00€), of which at least 25% must be paid before the company may be registered.
A Board of Directors, which can be made up of one or more individuals or businesses, is required for this type of company. Shareholders are not needed to serve on the Board of Directors.
A Turkish Joint-Stock Company with more than 250 shareholders that trade on the financial markets will be subject to the Capital Market Board’s requirements as well. In Turkey, this sort of business can also be used to establish investment funds.
Although foreign investors do not need any authority permission to open a Joint-Stock Company in Turkey, they require fulfilling several requirements. These include:
- Minimum one shareholder, it can be a person or a corporate entity,
- The minimum amount to set up a company is 50,000.00₺ (roughly 5,000.00€),
- Minimum 25% of the setup amount needs to be submitted before the company registration,
- The Board of Directors (BoD) is made of one or more individuals or corporate entities,
- Shareholders are not necessary to become part of the board,
- A company with more than 250 shareholders are subjected to follow the rules and regulations enforced by the Capital Market Board of Turkey.
Steps to register a Joint-Stock Company in Turkey
The Articles of Association, which must include details on the company’s members and activities, are the initial stage in establishing a Joint-Stock company in Turkey. The representative must then reserve a business name.
The Turkish Companies Registry must receive the statutory paperwork, as well as the shareholders’ and directors’ passports or other forms of identification. Certain permits may be required depending on the company’s activity. After registering a Turkish Joint-stock Company, it must hold annual general meetings within three months of the financial year’s conclusion.
Put simpler; The registration of a Joint-Stock Company in Turkey involves several steps that need to be followed carefully without any error. These include:
- The first step involves drafting the Articles of Association that must include the members’ information and the companies activities,
- The representatives of the company must finalize and agree on a company name,
- Then, statutory documents, as well as the passports or other ID documents of the shareholders and directors of the company, are also required to be filled with the Turkish Companies Registry,
- What activities the company involves in may obtain you certain licenses,
After the registration of a Joint-Stock company in Turkey, the company requires to organize annual general meetings every three months from the end of the fiscal year. If you want assistance in establishing a Joint-Stock Company in Turkey, it’s advised to contact a Turkish legal representative.
What are the requirements to Establish a Joint-Stock Company in Turkey?
The foreign investors interested in opening a large business in Turkey usually prefer to register a Joint-Stock Company in Turkey where some conditions are required to be fulfilled to make their company registered under Turkish Law. These conditions have already been discussed above. Please read them thoroughly.
In the shareholders’ meeting, certain decisions are taken towards the activities of the company. The auditors and the accountant are appointed. It’s always recommended to go for Turkish citizens for mentioned positions because they can easily understand Turkish and communicate with Turkish people more effectively. You must hire individuals who know what regulations are required to be followed in the Turkish market.
Let’s have a look at the required documents to Open a Joint-Stock Company in Turkey:
- Once you complete the preliminary preparations, you must submit the given documents to the relevant trade registry office,
- A letter of application must be signed by the members of the Board of Directors or it must be signed by the members who are responsible for representing the company. The application must include; share capital, address, company name, tax office name and, a list of extension information,
- Three copies of the Incorporation Declaration Form signed by authorized individuals. For foreign shareholders, four copies are required,
- Notarized copies of the Articles of Association,
- Chamber Registration Declaration form signed by the founders of the Joint-Stock Company,
- Notarized copies of passports and residence certificates of foreign shareholders and members of the Board of Directors,
- Notarized signature copies of individuals having authority to represent the company,
- Notarized acceptance letters as proof that mention the acceptance of roles by the non-shareholder members,
- The bank receipt,
- Bank letter with a company name and the total deposited amount as well as each of the shareholders,
- The contract between the Joint-Stock Company and shareholders,
- An approval letter signed by the Ministry of Customs and Trade,
The process of Joint-stock Company registration in Turkey may take a couple of weeks. The JSC’s registration is published in the Turkish Commercial Registry Gazette once the registration process is completed. Remember that a Joint-Stock Company opening process in Turkey can be easier with the help of a legal representative.