Legal persons and legal assets that can be established in Turkey are:
• Liaison Office
• Limited company
• Incorporated company
Liaison offices are one of the simplest legal entities without legal personality. There is no regulation regarding liaison offices in the Turkish Commercial Code. To establish a liaison office, permission must be obtained from the Ministry of Industry and Technology, General Directorate of Technical Implementation, and Foreign Capital. There is no minimum capital required, although engagement in commercial activities is not permitted. The relevant legislation is the Implementation Regulation of the Foreign Direct Investment Law. The permit can be obtained for a maximum of three years. This period can be extended by taking into consideration future business plans, the number of personnel employed, current and anticipated expenditure amounts and the office’s activities over the past year in Turkey.
A branch is a legal entity that does not have another legal personality. Branches, unlike liaison offices, can engage in commercial activities. To establish a branch of a company in Turkey, a company manager must be appointed by the decision of the General Assembly. The powers of this company director should be unlimited and the manager should be responsible for all of the branch’s transactions. It is also possible for a foreign company to open a branch in Turkey. Opening a branch entails the same process as that of establishing a company. If the director of the company is not a Turkish national, they must reside in Turkey.
Limited Company and Joint Stock Company
These two types of companies are the most preferred by foreign investors. While at least one partner is required for a joint-stock company, no upper limit is specified for the number of partners, which could be unlimited. A limited company, on the other hand, can consist of at least one partner, with a maximum of fifty partners.
When establishing a joint-stock company, a quarter of its capital, equating to at least 50.000 TL, must be paid before the company’s establishment and the remainder within the first two years. The nominal value of the share should consist of one penny and its multiples.
In contrast, when setting up a limited company, the capital does not need to be paid before the company’s establishment, but a minimum of 10.000 TL worth of capital must be paid within two years of this date. The nominal share value of the limited company should consist of 25 TL and its multiples.
An Articles of Association is made for the establishment of both limited liability companies and joint-stock companies. Conditions not included in this company’s articles of association are defined within the Turkish Commercial Code. These articles of association are signed by the partners at the establishment stage and approved by the Trade Registry. After the establishment of the company, they are published in the Turkish Trade Registry Gazette. It is also possible to sign the articles of association using a power of attorney.
Changes that can be made to the articles of association in joint-stock companies are more limited than in limited liability companies. The body that manages joint-stock companies is called the Board of Directors, who can stay in office for a maximum of three years. Partners do not have to be members of the Board of Directors. A company’s director may be appointed by the Board of Directors.
Limited companies, on the other hand, are managed principally by the Board of Directors, although at least one partner must have the authority to represent. Commercial representatives may be appointed.
For both types of companies, the members of the Board of Directors and the Board of Managers do not have to be Turkish citizens nor do they have to reside in Turkey. Legal entities can also be members of the Board of Directors and the Board of Managers. A natural person representative is elected for legal entities.
Stages of Company Establishment:
• When establishing a company, after providing information on the type, partners, managers, activities, location and representation of the company, the necessary documents are to be prepared according to the obligations required by the relevant trade registry.
• If the company’s partners reside outside of Turkey, it can be ensured that the establishment procedures are completed by a proxy in Turkey. The power of attorney coming from abroad must be notarized and apostilled.
• In the case of a foreign partner or authorized person, a potential tax number is obtained.
• The articles of association are created by entering company information on MERSIS.
• The articles of association created through MERSIS are registered and signed by the partners and, if any, their representatives.
• If a joint-stock company is to be established by opening a bank account after the approval of the articles of association in the registry, one-quarter of the capital (at least 50.000 TL) is deposited. If a limited company is to be established, there is no need to make any payment before its establishment.
• The required capital amount is deposited into the bank by the partners. Until the bank sees that the capital has been deposited and the incorporation procedures have been completed, it prepares a letter showing that it has put a block on this deposited amount.
• This letter from the bank is then submitted to the Trade Registry, who in turn complete the process and register the company’s establishment.
• Once it receives information that the establishment procedures have been completed, the bank removes the block it has placed on the deposited capital.