There are many advantages to foreigners establishing companies in Turkey. State support for foreign investors to establish companies in Turkey continues to increase day by day. In recent years, the procedures for foreign entrepreneurs to establish companies in our country have been reduced and the processes have been made easier. The Law on Direct Foreign Investments No. 4875 is regulated as the basic law regarding foreign investments. The establishment of companies and commercial activities of foreigners are subject to the provisions of the Turkish Commercial Code and the Turkish Code of Obligations, in addition to the aforementioned law.
Foreign investors have many advantages in establishing a company in Turkey. The government support for foreign investors to establish a company in Turkey continues to increase day by day. In recent years, the procedures for establishing a company in Turkey for foreign entrepreneurs have been simplified by reducing the processes. The Law on Direct Foreign Investment No. 4875 is regulated as the basic law for foreign investments. The establishment of companies and commercial activities of foreigners are subject to the provisions of the Turkish Commercial Code and the Turkish Code of Obligations, in addition to the mentioned law.
Regarding whether foreigners can establish companies in Turkey, based on Law No. 4875 on Direct Foreign Investment in Turkey, the right to establish any type of company that Turkish citizens can establish is equally offered to foreign investors. The relevant provisions are as follows:
Among these types of companies, the most preferred ones nowadays are the General Partnership Company (sole proprietorship), Limited Liability Company, and Joint Stock Company. Other types of companies now only exist in theory.
A sole proprietorship is a type of company where all responsibilities for debt, credit and management are the sole responsibility of the owner. This type of company can be established with one or more partners. However, it is not possible for foreign individuals to establish a sole proprietorship without a work permit. Having a residence permit alone is not sufficient to establish a sole proprietorship. According to Article 7 of Law No. 4817 on Work Permits for Foreigners, “Foreigners who will work independently can be granted independent work permits by the Ministry provided that they have resided legally and continuously in Turkey for at least five years.” This permit allows individuals to establish a sole proprietorship.
What is a Limited Company?
A limited company is a type of business entity with a commercial name that can be founded by natural or legal persons with a minimum capital and a maximum number of shareholders. The limited company can have up to 50 shareholders and requires a minimum capital of 10,000 TL to be established.
Joint Stock Company (Corporation)
Corporation, is defined in Article 329 of the Turkish Commercial Code as a company with a definite capital divided into shares and liable for its debts only with its assets. All shareholders of an corporation can be foreign, but the members of the board of directors must be Turkish citizens and reside in Turkey. The minimum capital for a corporation is determined as 50,000 (fifty thousand) Turkish Liras.
Procedure for Establishing a Company for Foreigners
Regardless of the type of company to be established, before starting the establishment process, the company’s name, scope of activity, headquarters, manager or representative, capital and shares, and board of directors should be determined.
The necessary and important stages for establishing a company are as follows:
Documents Required for Potential Tax Number Application:
Registration request petition
Articles of association (original)
Lease agreement (showing the registered address of the company)
Documents Required for Registration Application:
Registration request petition
Establishment declaration form (must be in 4 copies)
Company agreement (signed by all founders in the presence of a TSM personnel or a notary, with a total of 4 originals)
Payment document to the Competition Authority (up to 0.04% of the company’s capital)
Signature declarations for each person authorized to represent the company’s founders (required for limited companies, with two copies each)
Establishment declaration (original)
Registration form of the Chamber of Commerce (two different forms are required for individual or legal entity partners)
Bank receipt for the minimum paid-up capital deposit (must be at least 25% of the promised capital)
Mandatory Books for Foreigners in Company Formation:
Board Meeting Minute Book
General Meeting Minute Book
It is necessary to follow this entire process with the help of a lawyer. Because when we look at the legal problems that foreign-owned companies face, we see that they are mostly due to mistakes made during the establishment process.