Company foundation in Turkey

The foundation of a company in Turkey is with the “direct investment law” from the year 2003 for foreign investors substantially one simplified. Now, in particular foreign investors are on an equal footing with turkish entrepreneurs after abolishing different hurdles like e.g. the minimum investment border at a value of 50.000 USD. Now consists the only one difference in the fact that foreign investor has fulfill some additional formalities as e.g. settled the translation of the documents.

However this equalization position was lightly affected by a judgement of the supreme court in 2008, which leads to the introduction of a licensing procedure for real estate acquisition.

Since 2001 the turkish economy grows more stably and over 7% annually, so that the purchasing power of the recent population increases substantially. The size of the local Turkish market with its about 71.5 million inhabitants and 11,170 USD Gross Domestic Product per inhabitant (conditions 2008) is thus for foreign investors and exporters of outstanding importance. Also the labour costs and work time advantages, play a substantial role for the choice of Turkey as location.

With foreign direct investments in Turkey, turkish limited companies (limited sirket) and turkish corporations (anonim sirket) represent, depending upon individual case the most popular company forms. For this reason our explanations are limited on that in the following.

1. Foundation – Limited Company in Turkey (limited sirket)

The conditions of the Turkish limited are listed in the Turkish commercial code in Article 503 pp.

After Turkish corporate law at least 2 natural or legal entities are necessary to establish a Turkish limited in Turkey. The one-man limited is in Turkey not yet permissible at present, but in the current corporate law reform it is intend to allow ist.

The minimum capital stock of the limited company in Turkey amounts to 5,000 Tl (approx. 2,400 Euros). The turkish Limited is liable to its creditors only with their capital stock. The individual partners are liable with their personal fortune only exceptionally because the limited is in debt at the State of (tax and social security debts).

The turkish Limited possesses at least 2 organs after the law: The company general meeting and the managing directors. The company general meeting may take place also outside of the registered place of business and seize resolutions even with the circulation method. Here it is to be still pointed out that also a foreign citizen can be managing director of a turkish Limited. In this case he has to request for a residence- and work permit for itself afterwards.

The resolutions of the turkish Limited over portion transmission, capital increase, dissolution of the partnership etc. must be approved of ¾ of the shareholders who own together ¾ of the capital stock. This regulation makes the unanimity the rule and must be well considered by the founders, in particular with the turkish Limited with 2 partners.

With the conclusion of the articles of association, before the notary the actual establishment of the turkish Limited begins. The articles of association must be closed in writing, notarize and are subject to legally given minimum requirements, like e.g. the data concerning the partners, i.e. their first names, surnames, domicile and nationality. The founders can assign a lawyer for the completion of all establishment formalities by a notarially authenticated authorization, whereby they must come for the establishment not personally into Turkey. The foundation method is finished after the entry into the Register of Companies and the proclamation in the Register of Companies sheet. The turkish Limited attains its legal capacity with the entry in the Register of Companies.

The establishment takes place within 2 – 7 days after the filing of an application. The foundation charges behave between approx. 600 and 1,200 euros depending upon the number of partners, length of the articles of the association and the number of documents which have to be translated.

2. Foundation – Corporation in Turkey (anonim sirket)

After turkish corporate law at least 5 natural or legal entities must act together, in order to be able to create a corporation in Turkey.

The minimum capital stock of the corporation in Turkey amounts to 50,000 TL (approx. 24,000 euros). The Turkish corporation is liable to its creditors like the turkish Limited only with their capital stock. However contrary to the Turkish Limited there are no liability of the partners (shareholders) with private fortune, even they also have public debts by the State of (tax and social security debts).

The corporation compared with the turkish Limited is in particular more favourable concerning the organization of share transfers. Differently than at a turkish Limited the partners can sell their shares without restrictions at will and for the transmission there is notarial contract necessary.

The corporation in Turkey possesses at least 3 organs after the law: The general meeting, the executive committee and the supervisory board. The general meeting must take place annually at least once and in principle within the competence borders of the respective Register of Companies, since also a representative of the Ministry of Trade must be present thereby. The executive committee consists at least of 3 persons and may take place also outside of the registered place of business and seize resolutions even with the circulation method. In the supervisory board at least one person must sit, who is not to be however with the society in an employer-employee relationship. Also at a corporation foreigners may be ordered to the executive committee and be requested afterwards the residence and work permit.

With the conclusion of the articles of association before the notary the actual establishment of the corporation in Turkey begins. Exactly the same as during the establishment of the Turkish Limited the articles of association must be closed in writing, notarized and are subject to legally given minimum requirements, like e.g. the data concerning the partners, i.e. their first names, surnames, domicile and nationality. The founders can assign a lawyer for the completion of all establishment formalities by a notarially authorization, whereby they must come for the establishment not personally into Turkey. The foundation method is finished after the entry into the Register of Companies and the proclamation in the Register of Companies sheet. The turkish corporation attains its legal capacity with the entry in the Register of Companies.

The establishment of the Turkish corporation takes place within 2 – 7 days after the filing of an application. The foundation charges behave between approx. 800 and 1,600 euros, depending upon the number of partners, length of the articles of the association and the number of documents which have to be translated.