Sevcan Gökalp İraz

Founding Partner| Senior Attorney

Pi Legal Consultancy 

Introduction

Overall, this article will explore the establishment of a company in Turkey under the Turkish regulatory framework. The present work is designed as a handbook for investors including foreigners. The establishment of a corporation in line with law involves a set of legal steps that must be followed by relevant foreign or national entrepreneurs. 

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What are the Main Legal Instruments Applicable to the Establishment of a Company in Turkey?

Turkish Commercial Code (Numbered 6102) is the most central legislation enforceable to founding a company in Turkey. In the light of the company type, Turkish Code of Obligations (Numbered 6098) and Turkish Civil Code (Numbered 4721) are also applicable to the Turkish company law under Article 126 of Turkish Commercial Code.  

Do companies have a legal personality? 

Under Article 125 of Turkish Commercial Code, commercial companies have legal personality. To clarify, A company shall acquire a legal personality upon registration with the Trade Registry according to the Turkish Commercial Code. Therefore a company is accepted to be a separate legal person. That necessarily follows that all commercial companies may benefit from all rights and undertake debts within the framework of Article 48 of the Turkish Civil Code. Besides, those who conduct transactions and enter into commitments on behalf of the company before registration may be personally and successively held responsible for these transactions and commitments. 

Can foreigners open a company in Turkey?

Owing to enactment of Foreign Direct Investment Law (Numbered 4875), the difference between foreign or national investors were eradicated under Turkish legal system in 2013. Presently, it is important to underline that foreign investors shall be subject to equal treatment with domestic investors. Besides, the principles and standards enumerated in Turkish Commercial Code facilitate foreign-led companies in Turkey. 

Which type of companies can be established in Turkey? 

According to Article 42 and 43 of the Turkish Commercial Code, five main company types can be formed:

*collective company,

*comandite company,

*cooperative company,

*joint stock company. 

How can I register a company in Turkey?

Above all, it is critical to take into account that the incorporation procedures can be carried out electronically through the Central Registry System (MERSİS). Markedly, the absence of any hassle in the formation process is of great significance in attracting foreign investments to Turkey.  What is very attractive is that the establishment of a single-shareholder joint stock company or single-member limited liability company is allowed under Turkish Commercial Law.

What are the main steps to establish a company? 

To summarize, investors should take a number of actions in the formation of a company. Duly preparation, performance and submission of paperwork concerned is critical for the below-mentioned requirements. Common requirements reads as follows: 

*Preparation and signature of of the company contract by founders,

*Preparation and approval of the signature declarations of company officials,

*Payment of Competition Authority share and cash capital,

*Relevant documents submission and the completion of the registration of the company by the Trade Registry. 

What are taxation liabilities for companies in Turkey? 

In general, companies are subject to a standard corporate income tax rate of 20% except for finance-centric companies including banks paying 25%. 

Is share transfer possible instead of the establishment of a company for foreigners? 

It is of course possible to make an investment through the acquisition of shares rather than establishing a company directly. That is the case for both alien or local investors. 

What are the steps in the liquidation process?

A company may terminate in case the realization of any of the reasons for termination stipulated at the law, and in line with the decision of the shareholders. There are two main types of liquidation: “compulsory” and “voluntary”. It requires a termination process of a legal entity. The Enforcement and Bankruptcy Code (Numbered 2004) is at the heart of this process. The main objective of the liquidation process is to sell the assets of the company and convert the assets of the involved company into money, collect their receivables, and pay debts. Article 536 of Turkish Commercial Code stipulates that the liquidation start-up, the appointment and announcement of Liquidor must be registered. 

Conclusion

In conclusion, this paper basically explores common norms of the incorporation of a company in Turkey. Nevertheless, considering that legal procedures of the establishment of each type of company in Turkey are very changeable partly or completely, careful and comprehensive work is necessary. The evidence reviewed here seems to suggest a pertinent role of full-fledged investment strategies during the formation of a company.

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