Setting Up a Company in Turkey November 8, 2018 – Posted in: Blog
Setting Up a Company in Turkey
Turkey is the correct address for investors because of the currency exchange rates, the need for investments, investment incentives and finally its geographic position.
Turkey has progressed in an investor-friendly fashion in recent years. Therefore the legislation is evolving to this purpose each day.
Foreign Direct Investment law in Turkey is based on the principle of equal treatment, allowing international investors to have the same rights and liabilities as local investors.
The conditions for setting up a business is the same as those applied to local investors. International investors may establish any form of a company set out in Turkish Commercial Code. Turkish Commercial Code offers a corporate governance approach that meets international standards, fosters private equity and public offering activities, create transparency in managing operations and aligns the Turkish business environment with EU legislation.
Turkey has introduced reforms with a view to making it easier to do business in order to enhance the investment environment, eliminating red tape in setting up a business and minimizing costs and procedures.
Most Commonly Preferred Types of Companies
- Limited Liability Company
- Joint Stock Company
- Deciding the Corporate Name
Before starting the procedure, you need to choose the trade name of the company. There are some rules that you have to follow. Some fundamental principles while preferring a trade name are defined in the Turkish Commercial Code. The trade name for companies are made up of three elements;
- The company’s name,
- The company’s areas of activity,
- The company’s type
The trade name of the company must include one of the areas of business activity. Also, it is obligatory to use the type of the company. For example;
A limited liability company which is establishing a business in the tourism and the construction areas, its trade name should be Abc Turizim(Tourism) Ticaret Limited Şirketi or Abc İnşaat(Construction) Limited Şirketi or Abc Turizm İnşaat Limited Şirketi
The trade name of the company has to be distinctive. If there is a former company with the same trade name, the new company has to take an addition to its trade name. If the areas of activities are different, then it is not a necessity to use addition.
You have to research the trade name that you choose for your company to figure out a former company is using the same/similar trade name or not. If there exists a company with the same/similar trade name, your application for registration is going to deny. You can contact us to research the trade name that you choose is eligible or not.
It is possible to use foreign words in the trade name, but the expressions of the type of the company have to be in Turkish.
If you want to use the country name in a trade name, the consent of the competent authorities of that country required. If you want to use Turk, Turkish or Turkey expressions in a trade name, the consent of the Council of Ministers of Turkey required.
- Deciding the Type of the Company
There are five different types of corporate and non-corporate forms for companies under the code which states that companies may be established. In this article, the most common types of companies which are Limited Liability Company and Joint Stock Company will define. If you need information about other kinds of companies, you can contact us.
- Limited Liability Company; Company partners and shares have to be determined. There have to be at least one, at most fifty shareholders. The minimum capital of the company has to be 10.000.TL (Turkish Lira) The capital must be pledged and transferred to the company’s account within 24 months.
- Joint Stock Company; Company partners and shares have to be determined. There have to be at least five, at most five hundred shareholders. The minimum capital of the company has to be 50.000.TL (Turkish Lira). Before establishing the company, %25 of the capital must be deposited to a bank account. The remaining balance of it must be transferred to the company’s account within 24 months.
- Establishing the Company
The proceedings are similar for both types.
The address of the company has to be determined. The acting partner and the company representatives have to be determined. The articles of the association have to be prepared and notarized. Pursuant to the Trade Registry Regulation, trade registration transactions must be fulfilled through MERSIS (Central Registry Record System). MERSIS is a central information system for carrying out commercial registry processes and storing commercial registry data electronically on a regular basis.
The following documents are required for registry application at the relevant Trade Registry Office
Articles of association signed by all the founders before Trade Registry Office’s authorized personnel or a Notary Public.
- Notarized signature declarations
- In case the foreign partner is a real person, two copies of their passports.
- Notarized identity cards of the company managers
- In case the foreign partner is a legal entity, the required documents are: The Certificate of Activity of the legal entity designated as the shareholder issued by the relevant authority in the investor’s country. The certificate must bear information regarding the current status and signatories of the company. Resolution(s) of competent corporate organ of legal entity shareholder(s) authorizing the establishment; if there will be any specific condition for the prospective company to be incorporated (name of the company, field of activity, etc.) it must be stated in the resolution for the sake of clarity.
- In case a legal entity is going to be appointed as a member in the board of directors of the prospective company to be incorporated, the name of the real person who will act in the name of the legal entity and the legal entity board member’s appointment must be stated within the same or with a separate resolution for the sake of clarity. If the process is going to be followed by proxy, a notarized copy of a power of attorney authorizing the attorneys who will follow up the application before the competent Trade Registry Office and other official authorities in order to proceed with the application
- 04% of the company’s capital must be paid to the Competition Authority account through the Trade Registry Office.
It should be noted that, except the first item above, all the necessary documents that will be issued and executed outside Turkey must be notarized and apostilled or alternatively ratified by the Turkish consulate where they are issued. The original executed, notarized, and apostilled documents must be officially translated and notarized by a Turkish notary.
In the presence of the authorized personnel of the Trade Registry Office on the date the Company is registered in the Trade Registry Directorate, the signatory circulars of the signatory authorities of the company shall be arranged.
The company must obtain potential tax identity numbers for non-Turkish shareholders, and non-Turkish board members of the company from the relevant tax office. This potential tax identity number is necessary for opening a bank account in order to deposit the capital of the company to be incorporated.
- Liability for debts
In Joint Stock Companies and Limited Liability Companies, the liability of the shareholders is limited with their participation to their share capital and except the public debts like tax debts or social security premium debts, the shareholders have no any responsibility from the debts of the company provided they have not given an individual guaranty. Once the capital share is paid shareholders have no any liability for the debts of the company.
- Lawyer obligation for Joint Stock Companies
According to Turkish Attorneyship Law, there is a Lawyer Obligation for Joint Stock Companies with capital of 250.000 TL . In the same way, building cooperatives with 100 or more members are required to have a contracted lawyer.