• Investors increasingly prefer to establish a company in Türkiye for several grounds. Businesses in Türkiye can easily conduct trade with the rest of the world. The country with its growing economy, geopolitical position, and workforce, is a great alternative for companies looking to expand their business. In this article, we will briefly discuss company law, then explain the types of companies, and finally, examine the steps on how to set up business in Türkiye.

         Company Law in Türkiye

  • Company law in Turkey is regulated by the Turkish Commercial Code numbered 6102 (the “Turkish Commercial Code” or “Commercial Code”). Matters such as the establishment, management, change of type, merger, and demerger fall within the scope of the commercial code. Both foreigners and locals are eligible to establish and manage companies in Turkey. Foreigners are treated the same as local individuals. The types of companies regulated under the Turkish Commercial Code have separate legal personalities, so shareholders are not personally responsible for company debts. It shall be noted that company structures are not limited to those regulated under the Turkish Commercial Code.
  • There are also ordinary partnerships regulated in the Turkish Code of Obligations.  Partners of ordinary partnerships can be real or legal entities. There is no minimum capital specified by law for the establishment of an ordinary company. There is no citizenship requirement to establish an ordinary company. For this reason, a foreign national can establish an ordinary company in Türkiye. However, ordinary partnerships do not possess a legal personality. So, they are not suitable for investors searching for limited liability.
  • Foreigners can establish a company in Türkiye. Regarding foreign investors, the Direct Foreign Investors Law No. 4875 is applicable. In this law, the principles related to the freedom of investment, equal treatment and encouragement of foreign investors are adopted.
  • In accordance with the principle of equality based on Law No. 4875, foreigners can establish any type of company that Turkish citizens can establish in Turkey. During the old law period, foreigners were only allowed to establish joint stock companies and limited companies.
  • In the next chapter, the types of companies regulated under the Turkish Commercial Code are explained.

         Company Types in Türkiye

  • There are five different types of companies that are limitedly listed in the Turkish Commercial Code. These are;
    • Joint Stock Company
    • Limited Company
    • Collective Company
    • Limited Partnership
      • Ordinary Limited Partnership
      • Limited partnership divided into shares
    • Cooperative
  • Ordinary limited partnership and collective companies are partnership companies. In other words, they are an advanced form of the ordinary partnership regulated under the Turkish Code of Obligations. In partnership companies, shareholders are responsible for company debts, so they are usually not preferred both by locals and investors. Whereas, joint stock company, limited company and limited partnership divided into shares are the capital companies. In capital companies, the partners are only liable to the company, and their liabilities are limited to the capital they have committed in the articles of association. Joint stock companies and limited companies are the most common types of companies in Türkiye. Approximately 82% of all companies are limited companies, while 13% are joint stock companies and 4% are cooperatives. The total of collective and limited partnership companies is around 1%.
  • Joint-stock companies are equivalent to companies in different countries such as Corporation (Inc., Corp.), Societas Europaea (SE), Societé Anonyme (SA), Public Limited Company (plc), Società per Azioni (SpA), Sociedad Anónima (S.A.). Natural or legal persons can be shareholders of joint-stock companies. The minimum capital amount is 250.000-TRY, and 25% of the share capital must be paid before the registration of the company. The remaining amount must be paid within 24 months of the registration. General assembly approval is not required for the transfer of shares in joint-stock companies, and shares can be freely transferred.
  • Limited liability companies are equivalent to companies in other countries such as Limited Liability Company (LLC), Societas Privata Europaea (SPE), Gesellschaft mit beschränkter Haftung (GmbH), Private Limited Company (Ltd, Limited), Societé à Responsabilité Limiteé (SARL, SàRL), Società a Responsabilità Limitata (Srl), Sociedad Limitada (S.L.), Sociedad de Responsabilidad Limitada (S.R.L., S. de R.L.). Natural or legal persons can be shareholders of limited liability companies. The minimum capital amount is 50.000-TRY and must be paid within 24 months from the registration of the company. General assembly approval is required for the transfer of shares in limited liability companies.

         How to Set up Business in Türkiye

  • Establishing a company in Türkiye by foreign real and legal entities is subject to the same rules as domestic investors. The procedures are completed shortly after the preparation of the necessary documents and their submission to the trade registry offices. However, if there are deficiencies, the company establishment application will be rejected, leading to time and money loss. Therefore, it is recommended that individuals wishing to set up a company in Türkiye seek assistance from a lawyer. The procedures related to opening a company or a branch are performed electronically on the Central Registry System (MERSIS). The investors should decide on the trade name and company type. This information is required in the MERSIS application.

         Steps of Establishment a Company in Türkiye

         1- Prepare the company documents

  • The articles of association are the constitution of the company. These contracts include information such as the company’s name, purpose, subject, field of activity, shares of partners, management of the company, representation, and distribution of duties.
  • In relation to joint stock companies, Article 340 of the Turkish Commercial Code states that the articles of association can depart from the provisions in the Law relevant to joint stock companies only if allowed in the Law. Therefore, if there are multiple shareholders it is highly advisable to prepare a contract to regulate the relationship between shareholders such as a Shareholders Agreement as according to the law, articles of association provisions can only depart from the law where the latter clearly authorizes to do so.
  • The shareholders’ agreement should be prepared, taking into account the requests and expectations of the parties, and the will of the parties should be accurately reflected in the agreement. A registration application is made to the relevant Trade Registry Office with certain documents such as contracts, passports, and residence permits The documents must have Turkish translations. Therefore, foreigners who want to set up a company in Turkey must translate documents, obtain the apostille if necessary, and notarize them.
  • If the shareholder is a legal person, documents such as the operating certificate, board resolution approving the establishment, and documents indicating who will represent the company should be prepared, translated, and submitted to the file.

         2- Obtain a potential tax number online through the official webpage of the Interactive Tax Office

  • The application for potential tax numbers for foreigners can be completed online through the official webpage of the Interactive Tax Office by filling out the form.  In this step, the passport information is required and the scanned copy of the passport must be uploaded to the system.

          3- Apply online via the Central Registry System (MERSIS) for the establishment of your company

  • An application must be made through MERSİS. MERSIS directs the user to fill in the legally required elements of the contract and the company contract is prepared by entering the necessary information. The contract is prepared in Turkish.
  • The company’s potential tax number is also automatically assigned by MERSIS. The founders then sign the contract and it is verified by a competent authority, whether the signatures actually belong them or not. For this process, the founders or their authorized representatives are required to go to the relevant organization.

         4- Find a location for your company headquarters

  • The address where the company’s headquarters will be located is required. This address can be provided by renting or by acquiring ownership of the immovable property.
  • The commercial lease agreement is submitted to the relevant tax office, and the consistency of the declared address with the address in the lease agreement is inspected by the tax authority.

          5- Open a bank account

  • Foreigners wishing to establish a company in Türkiye must open a bank account in the name of the company to make necessary payments and deposit the capital. Having a bank account is crucial for tracking all financial transactions and ensuring transparency.
  • For joint stock companies, 25% of the share capital must be deposited to the bank account before the registration of the company. This rule does not apply to limited liability companies.

          6- Application to the Trade Registry Office for registration procedures

  • An application that has been made through MERSİS, consists of a request number. An appointment with the trade registry must be obtained with that given number. Depending on the type of company, the required documents are taken to the competent trade registry office. In the office, the company’s records are approved, documents are reviewed, and if everything is in order, the company establishment process is completed.
  • Subsequently, the registry office informs the tax office and the Social Security Institution about the company’s establishment.
  • If the articles of association will be signed by proxy, there is no need for the shareholders to come to the Directorate if the original or notarized copy of the power of attorney is presented.
  • Before the registration, 0.04% of the company’s total capital must be deposited into the account of the Competition Authority by paying from the Trade Registry Office cashier.

          7- Obtain a tax certificate

  • After the documents are obtained and the registration phase is completed at the Trade Registry Office, the Directorate informs the relevant tax office and the Social Security Institution about the establishment of the company. After providing this information, the shareholders or proxy must go to the tax office and obtain a tax certificate.
  • As mentioned in the fourth step, the commercial lease agreement is submitted to the relevant tax office, and the consistency of the declared address of the company within the lease agreement is inspected by the tax authority.

          8- Obtain signature circulars

  • The signatures of the persons authorized to represent the company under the title of the company shall be approved by the notary and signature declarations shall be prepared. In order to obtain a signature circular document, it is necessary to apply to a notary. Documents required for application are the identity of the legal entity and its copy, the tax certificate and the relevant registry gazette.

 

NO DOCUMENT SPECIFICATION
1 Registration request petition It must be signed by the company’s board of directors or members authorized to represent it; The tax office to which the company will be affiliated must be specified and the attached document must be included.

In the petition; The company’s title, capital, headquarters, opening date and the subject of its actual activity on this date should be clearly shown together with the NACE code, and it should be written that this information is correct and that if it is determined otherwise, the responsibility belongs to the person or persons who signed the petition (Trade Registry Regulation article 24/1).
2 Chamber registration declaration It must be signed by the authorities and there must be photographs of the partners.
3 Establishment notification form If the partner is a foreign national or a Turkish citizen whose residence address is abroad, an establishment notification form is prepared (1 copy).

The relevant fields must be filled in and signed by the authorized person.
4 Notarized passport copies with Turkish translation of foreign real person shareholders, tax identification numbers obtained from the tax office or a document showing the identification numbers specific to foreigners. The notarized copies of the Turkish translated passports of foreign real person partners, tax identification numbers obtained from the tax office or a document showing the identification numbers specific to foreigners.

It shall be noted that a notarized residence permit is required if foreign shareholder resides in Türkiye.
5 Articles of Association Articles of Association must be signed by all founder shareholders either i) in the presence of authorized personnel of the Trade Registry or ii) Notary Public.

If there is a foreign legal person authorized person / legal person shareholder, the tax identification number must be stated in the Articles of Association.
6 Power of Attorney If the articles of association prepared in MERSİS will be signed by the shareholders, the shareholders must be present in the Trade Registry at the appointment time.

If the articles of association will be signed by proxy, there is no need for the shareholders to be present in the Trade Registry on the condition that the original or notarized copy of the power of attorney is presented. If that is the case, it is sufficient for the person to whom the power of attorney is given to be present.
7 Proof of payment indicating that the Competition Authority’s share has been paid %0.04 of the company’s share capital
8 For companies whose establishment is subject to the approval or appropriate opinion of the Ministry or other official institutions, the letter of this permission or appropriate opinion*
9 If there is a non-shareholder board member, their written statements stipulating they accept this duty* If board of directors consists of a non-shareholder member, they should sign an acceptance of duty statement.

In this document;

a) if non-shareholder board member is a Turkish citizen, place of residence, nationality, and identification number must be stated.

b) If a foreign national, tax identification number or identification number specific to foreigners, and a notarized passport copy along with its Turkish translation must be stated.

For foreign nationals residing in Türkiye, an additional notarized residence permit must be included.
10 If the board of directors consists of a legal person, i) the name and surname of a real person that is determined by the legal person to act on behalf of the legal person along with that legal person and; ii) the notarized copy of the resolution of the competent body for this decision* If the legal entity is a foreign entity, this decision must be approved by the Consulate of the Republic of Türkiye situated in the country where the company is based or in accordance with the provisions of the Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents (also known as the Apostille Convention), and their notarized Turkish translations must be submitted.

If the real person representative designated by the legal entity is a foreign national and resides in Turkey, a notarized copy of the passport along with the residence permit and its Turkish translation is required.
11 If the board member or shareholder is a foreign legal person, a document containing the current registry records of the legal entity* This document must be approved by the Consulate of the Republic of Turkey in the country where the company is located or in accordance with the provisions of the Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents (also known as the Apostille Convention), and a notarized Turkish translation must be submitted.

If there is a foreign legal person authorized person / legal person shareholder, the tax identification number must be stated in the articles of association.
12

 

 Signature declarations of persons authorized to represent and bind the company Only in two situation, the signature declarations are not necessary:

i)               The articles of association is signed by the founder in personand in the Trade Registry and the founder is also authorized to represent the company, a separate signature declaration is not required.

ii)             The articles of association is signed by proxy in the Trade Registry, and the founder is also authorized to represent the company, a separate signature declaration is not required on the condition that the power of attorney submitted to the Trade Registry has a wet-ink signature signature.

It shall be noted that physical signature declaration can be prepared by the notaries as well as trade registry offices. However, for limited company establishments, the physical signature declaration can only be prepated by the trade registry offices.[1]
13 Document showing that at least twenty-five percent of the capital committed in cash is deposited in the bank Bank letter must show the name-surname/title of each partner and the total deposited amount.
14 Valuation reports prepared by the expert appointed by the court for the determination of value of the share capital where there is non-cash commitment* It is necessary when there is committed capital other than cash such as movable or immovable property, intellectual property etc.
15 If capital other than cash is committed, letter to be taken from the relevant registry stating that there is no restriction on the capital in kind*
16 If capital other than cash is committed, document showing that the immovable, intellectual property rights and other values put as capital in kind are annotated to the registries in which they are registered*
17

 

 Contracts between the company (that is in the process of establishment) and its founders and other persons in relation to the establishment All contracts related to the establishment which the company under establishment is a party, including those concerning the takeover of non-cash assets and acquisition of business corporations.
18 If there is a legal entity shareholder, competent body decisions stipulating the approval of the establishment* If there are any special conditions for the establishment of the company (company name, field of activity, etc.), these conditions should be stated in the decision.
19 If there is any company director, notarized copy of the documents containing the identity information of the director a)     If the company director is a Turkish citizen; a notarized copy of the Turkish identity card of the manager

b)    If the company director is foreign, notarized
passport copy of the foreign director and notarized copy of the residence permit if they reside in Türkiye.

It is important to note that, according to regulations at least one manager whose place of residence is in Türkiye must be appointed. It shall be noted that foreign director need to obtain a work permit.

 

[1] Article 12(5), Communiqué on the Signing of the Company Establishment Agreement at the Trade Registry Offices, Official Gazette Date: 06.12.2016 Official Gazette Number: 29910.