With the recent changes and innovations in Turkish Law, Turkey is becoming an attractive center for foreign investors who want to incorporate a company in Turkey. In fact, with the ‘Foreign Direct Investors Law’ and the innovations made accordingly, it can be said that local and foreign investors are subject to the same rights and obligations in terms of establishing a company in Turkey. With this law, foreign investors and Turkish investors are legally subject to equal treatment unless otherwise stipulated by special laws. Pursuant to Article 3 of the “Foreign Direct Investors Law”:
Article 3-
Unless otherwise provided by international treaties and special provisions of law, foreign investors shall be free to make foreign direct investments in Turkey. Foreign investors shall be subject to equal treatment with domestic investors.
With the relevant law, many legal obstacles and bureaucratic procedures were removed for foreign investors, and the permission-approval system was replaced by an “information” system. The conditions imposed on foreign investors in the previous period were abolished. Thanks to this law, the conditions for foreign investors to establish companies have been equalized with domestic investors. At the same time, foreign investors are now able to establish all types of companies permitted by the legislation in Turkey. In other words, foreign real and legal persons are free to make small, medium or large-scale investments without any limitations in terms of company type.
Accordingly, foreigners are now able to incorporate joint stock, limited liability, general partnership and commandite company under the Turkish Commercial Code, as well as simple companies under the Turkish Code of Obligations.
Company Types and Their Characteristics
Contents
Generally
Each type of company has its own pros and cons. In this respect, it would be beneficial for those who want to incorporate a company in Turkey to consult with legal or financial professionals and decide on the company they want to incorporate by considering their own working model and the business they want to do.
Although general partnership, commandite company and simple partnership are mentioned above in addition to joint stock and limited liability companies, these types of companies are not capital companies, but are companies in which the shareholder is liable with his/her personal assets.In this respect, they cannot serve the requirements of commercial life and threaten the personal assets of the shareholders by making the shareholders liable when a problem arises. In this respect, only joint stock and limited liability companies are mentioned below.
Joint Stock Company (A.Ş)
A joint stock company is a company whose capital is fixed and divided into shares, and which is liable for its debts only with its assets. Shareholders are liable to the company only for the capital shares they have subscribed. Joint stock companies may be established for any economic purpose and subject not prohibited by law.
A joint stock company may be established by one or more persons. In other words, a joint stock company can be established by at least one person and this one person can be a legal entity or a real person. At the same time, this type of company can be established with a maximum of 500 partners.
The capital shall be divided into shares of at least 0.01 Turkish Liras each. The founders of the company may freely determine the amount of each share.
At the same time, after completing the necessary legal procedures, joint stock companies may make public offerings, unlike limited liability companies.
Limited Company (Ltd. Şti.)
Limited liability companies are also a type of company established for the purpose of generating income, where the partners are liable only for their capital. These companies, just like joint stock companies, can be established for any purpose that is not against the law.
A limited liability company may be established by a single person or by partners. These persons may be legal or real. Apart from partnership, it is also possible to provide managers from outside. The number of partnerships of the limited liability company covers 1 and 50 people. In cases where the number of partners exceeds 20, the obligation to have an auditor in the company occurs.
The capital is divided into shares of at least 25 Turkish Liras each. Each share may be determined in multiples of 25.
Conditions in General
It was stated above that companies with foreign shareholders have been equalised with domestic investors within the scope of the Foreign Direct Investment Law. In this context, companies with foreign partners will be subject to the same establishment conditions as domestic companies.
|
Condition |
Joint-Stock Comp. | Limited Comp. | Branch |
Liaison Office |
| Minimum Capital | 250.000TL | 50.000TL | Optional | – |
| Partner | 1-500 | 1-50 | – | – |
| Domicile | Compulsory | Compulsory | Compulsory | Compulsory |
| Scope | Commercial | Commercial | Commercial | Non-Commercial |
| Authority | Place of residence trade registry office | Place of residence trade registry office | Trade registry office where the branch will be opened | Ministry of Industry |
| Code | Commercial Code | Commercial Code | Commercial Code | Law No. 4875 |
