This article explains Types of Investment Funds in Turkey in details. When you see Turkey’s investment scenario, you will face very flexible regulations related to the establishments. Both non-professional and professional investors can get benefits from these laws provided for the establishment of these funds.
If a property is used to manage various instruments accepted by the capital markets, it is known as an investment fund under Turkish legislation. Turkey has a large variety of investment funds such as gold, real estate, and other assets.
The essential laws which govern the investment funds and their establishments in Turkey are as follows:
- The Principles Concerning Mutual Funds;
- The Principles Concerning Exchange Trade Funds;
- The Principles Concerning the Registration and Sale of Mutual Funds;
- The Principles Concerning the Establishment and Operation of Pension Funds.
As per the Turkish legal system, companies are divided into private companies and capital companies. When a company commands a vast market and is made up of collective companies, it is known as private. When a company is a limited liability and incorporated company, it is known as the capital company. In Turkey, the majority of companies are joint-stock and limited liability companies instead of individual companies.
Types of Investment Funds in Turkey
The Turkish government has accommodated businessmen with various types of investment funds, and among them, the biggest ones are Turkish and foreign funds.
What are the types of investment funds?
What follows are the types of Turkish investment funds accommodated by the Turkish government:
- Protected funds
- Hedge funds
- Bond-bill funds
- Equity funds
- Index funds
- Sector funds
These funds are grouped as mutual funds. Additionally, the Turkish legislation also offers its residents a pension, exchange-traded funds, and real estate investment funds independently. You can also benefit by using venture capital type of investment funds.
Now, you have decided to set up an investment fund in Turkey but don’t know the steps. No worries!
Steps to Set Up a Company and Investment Fund in Turkey
In Turkey, no matter the type of fund you have selected, the setup and registration process usually stays the same. The approval of the Capital Market Boards is necessary for Turkey. The fund must also be set by a portfolio management company established as a Turkish company in the future.
Once the company is registered with the official Turkish Company Register, an agreement with a depositary acknowledgment will be prepared by the CMB. The main work of a depositary is to keep the funds’ assets per Turkey’s company laws.
A set of documents containing the investment’s internal rules and regulations should be drafted, and you have to get it approved from the CMB. Plus, registration with the Trae Register is also necessary. The primary tool to establish companies in Turkey is the Ministry of Commerce’s web portal MERIS, and you can register regardless of its type.
Type of the company, its full title, address, founding partners, objectives and subjects, capital, Board of directors/directors, signature officials, preferred shares (if any), share transfer restrictions (if any), and other information are entered through this portal.
Once you have entered the information, MERSIS will prepare the Company’s Articles of Association for you and your company. When all the pending permissions are approved, the place where the company will be established is to be referred to the Commercial Registry Office.
Open an Investment Fund in Turkey
The established company’s founding partners, registration declarations, and all the essential and related documents must be presented and deposited.
As per the Turkish commercial code, you have to pay a minimum of ¼ of the capital from joint-stock companies before the registration. Suppose the established company is a joint-stock company and has cash as capital. In that case, an account must be opened by the new company’s name after the signature and approval have been done by the Articles of Association by the Commercial Registry Office. You have to pay the capital over ¼ by the name of the bank.
The bank shall block the deposited capital until registration, and the bank shall prepare a letter of the blockade. The Joint Stock Company shall be registered with the submission of the blockage letter to the Directorate of Trade Registry.
When you want to place your property as real capital, you can include assets containing intellectual property rights, virtual environments, which have no limited real rights, seizure, and injunctions, which can be evaluated and transferred in cash.
If you own a limited company, you need not have deposit capital before registration according to the Turkish Commercial Code. Hence, the Articles of Association’s signature and deposition of the Commercial Registry Office’s fees register the company.
The company’s type doesn’t matter. Regardless of how much capital has been invested in the company before registration, you have to do its total capital within 24 months after the partners’ registration.
Taxation is also an essential factor when you are looking to establish an investment fund in Turkey.
Information about Taxation of Investment Funds in Turkey
In Turkey, investment funds are separated by a few exceptions. Here is a point that will give you a detailed view of the venture capital funds, the real estate investment funds, the securities funds, and the investment fund, including gold and other precious metals.
Some commodities such as the income derived from warrants, foreign exchange, loans, financial assets, derivatives, and transactions by the foreign investment fund are not taxable. At the same time, local portfolio management businesses are also exempt from the tax.
This tax exemption is given to these management companies because of their significant amount of foreign investment.
Final Words – Types of Investment Funds in Turkey
Turkey has become one of the top destinations globally to open your business. Many foreign entrepreneurs are attracted to the opportunity to extend their investment fund in Turkey due to the country’s developed economy. Furthermore, the Turkish government is working very hard to make the country the hub of long-term investment from foreign investors by preparing essential reforms.