In recent years, the Republic of Turkey has become one of the countries preferred by many foreign nationals for establishing companies. In light of developments around the world, it should be noted that Turkey has emerged as a centrally located country that continues to conduct trade with both the West and the East. In recent years, Turkey has introduced numerous legal regulations aimed at encouraging foreign investors to come to the country and make investments here.
We will discuss in another article the details of the legal regulations that remain applicable and provide tax exemptions and advantages to foreign investors. In this article, however, we will first examine the stages of establishing a company in Turkey. There are several types of companies in the Republic of Turkey. You can read our detailed article on these types of companies and the liabilities of company shareholders here.
Before starting the company formation procedures, it should be noted that there is no difference between the establishment of a company by foreigners in Turkey and the establishment of a company by Turkish citizens. Foreign nationals can also establish companies under the same rules as Turkish citizens. If they are only shareholders in the company, they do not even need any additional permit. However, if a foreign national is both a shareholder and an employee holding a position within the company, the foreign national must have a work permit in order to work in Turkey.
When foreign nationals decide to establish a company in Turkey, they must first decide which type of company they wish to establish. The main difference between the types of companies is related to the liability of the shareholders. There may also be differences in the organs and structures of the companies. Once the type of company to be established has been determined, the company formation procedures can begin.
The stages of company formation in Turkey are as follows:
PREPARATION OF THE COMPANY’S ARTICLES OF ASSOCIATION AND CERTIFICATION OF THE FOUNDERS’ SIGNATURES
Company formation procedures begin with the preparation of the company’s articles of association (partnership). As is known, the articles of association regulate the company’s basic structure, the rights and obligations of its shareholders, the relationship between the company’s organs, and matters such as representation, capital and registered address. They function as the constitution of the company. Therefore, it is useful to carefully determine the structure of the company to be established.
The articles of association are prepared through a system called MERSİS. Depending on the type of company being established, the mandatory elements required for that type of company are included in the articles of association. For foreign nationals, transactions are carried out using their passport numbers and tax identification numbers.
After the articles of association have been prepared, the signatures of the founders must be certified as genuinely belonging to them. This certification is carried out by the Trade Registry Directorate where the company is being established.
CERTIFICATION OF THE SIGNATURES OF THE COMPANY’S AUTHORIZED REPRESENTATIVES
After the company’s articles of association have been prepared and the founders’ signatures have been certified, the signatures of the persons appointed as representatives of the company under the articles of association must also be certified in the same manner. Since the authorized representatives will be responsible for representing the company, certification of their signatures is a requirement.
A written document confirming that the person or persons appointed as the company’s representatives have accepted the relevant position is also required as part of the formation procedures.
PAYMENT OF FEES AND THE COMPANY’S CAPITAL
For the establishment of the company, a fee corresponding to 0.04% of the company’s capital must be paid to the Trade Registry Directorate. In addition, if the company is an joint stock company (Anonim Şirket), the capital specified in the company’s articles of association must be paid before the establishment of the company. Accordingly, if the company is a Joint Stock Company, at least 25% of the subscribed capital must be paid before establishment.
If a Limited Liability Company is established, the entire capital may be paid after the establishment of the company. The remaining unpaid capital must be paid within 24 months from the establishment of the company. For this reason, foreign nationals often prefer to establish a Limited Liability Company, allowing them to transfer the entire capital from their home countries to Turkey after the establishment of the company as a company formation capital payment. In this way, they can also transparently explain in their home countries the legal reason for transferring their funds abroad.
Capital contributed to a company does not have to consist solely of cash. Other assets may also be contributed as capital. For example, it is possible to contribute real estate or a vehicle as capital instead of cash. In such a case, the amount of the contribution made by the shareholder who contributes the asset as capital can be determined through a valuation of the relevant asset. Such valuation can only be evidenced by reports prepared by experts appointed by the courts.
On the other hand, a commercial trademark or an already active business may also be contributed to a company as capital. The value of such assets must again be determined by experts appointed by the court. In addition, the necessary agreements between the business contributed as capital and the founders must be in place.
APPLICATION TO THE TRADE REGISTRY DIRECTORATE FOR REGISTRATION OF THE COMPANY
After all of the procedures explained above have been completed, an application is made to the relevant Trade Registry Directorate together with all required documents, requesting the official registration of the company. In addition, upon the establishment of Limited Liability Companies and Joint Stock Companies, the company’s commercial books are certified and delivered to the founders.
We can state that the company formation procedures in Turkey are completed upon completion of these four main stages. It is very important for foreign nationals to receive professional assistance during the company formation process in Turkey for the healthy development of the company.
In particular, the methods for determining liability arising from company transactions and for supervising the authority of the representatives must be properly formulated.
We will discuss detailed information regarding supervision, share transfers and the tax system according to the type of company in our future articles.
FREQUENTLY ASKED QUESTIONS
What are the differences between foreigners who wish to establish a company in Turkey and Turkish citizens?
There is no difference between foreigners who wish to establish a company in Turkey and Turkish citizens in terms of the establishment process. In other words, foreigners are subject to all the same rules as Turkish citizens.
Do foreigners who are not Turkish citizens need to obtain any permits if they establish a company in Turkey?
Foreign nationals do not need any additional permit if they are only shareholders in a company established in Turkey. However, if the foreign shareholder also works in a position within the company, they will be subject to the requirement to obtain a work permit in Turkey. In other words, if a foreign national is also a manager of their own company, they must obtain a work permit.
When is the company capital paid when establishing a company in Turkey?
The payment of capital varies depending on the type of company being established. For example, if a Joint Stock Company is established, at least 25% of the subscribed capital specified in the company’s articles of association must be paid before the establishment of the company. The remaining amount must be paid within 24 months from the establishment of the company.
If a Limited Liability Company is established, the company’s capital must be paid within 24 months from its establishment. In other words, there is no obligation to pay capital before establishment in a Limited Liability Company.
Can assets other than cash be contributed as the company’s capital?
Yes. In addition to cash, assets such as real estate, vehicles, receivables, trademarks and active businesses may also be contributed to the company as capital. However, the value of such assets must be determined by experts appointed by the court.
Can another company become a shareholder of the company?
Yes. Companies with legal personality may also become shareholders in other companies. Therefore, the name of the company that will become a shareholder and the representative of that company are also included in the articles of association.
In addition, a resolution of the general assembly of the shareholder company confirming that the company will thereafter be represented by the relevant representative must also be submitted.
